Deposits sent in by hotel room guests to hold rooms for some future period are s

Question

Deposits sent in by hotel room guests to hold rooms for some future period are shown on the balance sheet as a (an): asset reduction of accounts receivable contra account liability Deposits sent in by hotel room guests to hold rooms for some future period are shown on the balance sheet as a (an): asset reduction of accounts receivable contra account liability Deposits sent in by hotel room guests to hold rooms for some future period are shown on the balance sheet as a (an): asset reduction of accounts receivable contra account liability

Explanation / Answer

A customer deposit could be an amount paid by a customer to a company prior to the company providing it with goods or services. In other words, the company receives the money prior to earning it. The company receiving the money has an obligation to provide the goods or services to the customer or to return the money.

Hence it is required to show as Liability in yhe balance sheet

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