Practice prompt · Q:transactions-to-statements/customer-advance-equation-002

Cash received before the service

Determine the equation effects of a customer advance received before performance.

Updated Aug 30, 2026 Review due Nov 30, 2026

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Easton Fitness has $30,000 Cash and $30,000 Common Stock before a customer pays $9,000 for training sessions that will begin next month. What changes on the payment date?

Choose the best answer. A Assets increase $9,000; liabilities increase $9,000; equity does not change. B Assets increase $9,000; revenue and equity increase $9,000. C Assets and liabilities do not change until the service begins. D Assets increase $9,000; expenses decrease $9,000.

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Answer: A

Cash increases from $30,000 to $39,000. Unearned Revenue increases from zero to $9,000 because Easton Fitness owes the customer future training sessions. Equity remains $30,000.