When income is received in advance ___________ account is debited.

Expense

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Profit and loss

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Income

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None of these.

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Solution

The correct option is C Income
When a company receives money in advance of earning it, the accounting entry is a debit to the asset Cash for the amount received and a credit to the liability account such as Customer Advances or Unearned Revenues.

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State the meaning of

(a) Outstanding expenses

(b) Prepaid expenses

(d) Accrued income

State the meaning of:

(a) Outstanding expenses

(b) Prepaid expenses

(d) Accrued income

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