PRC-1 · Chapter 4 · Question 18 of 100
A company receives a one-year maintenance contract fee in advance. Which of the following accounting terms is NOT an appropriate classification for this receipt?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Accrued income
Explanation
Accrued income refers to money that has been earned but not yet received. Since the maintenance fee is received in advance but not yet earned, it is unearned income, not accrued income.
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