Receipt of a prepayment from a customer is originally recorded as a liability. Later, at the end of the accounting period, an adjustment is recorded causing a(n) in the liability account and a(n) in the revenue account.

When advance payment is received from a customer,the fact that the payment is not due and that the seller has not earned means it should be posted to a liability account,revenue prepayment account.

At the end of the period,when a part or all of the revenue is earned , an adjusting entry is required to reclassify the amount from the liability account to a revenue account, that way, amount shown as liability reduces and the revenue increases.

Receipt of a prepayment from a customer is originally recorded as a liability. Later, at the end of the accounting period, an adjustment is recorded causing a(n) ______ in the liability account and a(n) ______ in the revenue account.

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Receipt of a prepayment from a customer is originally recorded as a liability. Later, at the end of the accounting period, an adjustment is recorded causing a(n) in the liability account and a(n) in the revenue account.