Subscription in advance is classified in the balance sheet as?

A. an asset
B. a liability
C. a deficit
D. a surplus

Correct Answer: Option B

B. a liability

Explanation

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. The subscription in advance is a liability because it is a future earning that will be due in the future, it means the company is owing outsiders the said amount tied to the payment.