All of the following situations contribute to the need for a company to recognize deferred revenues, except for:

A) partially executed contracts between buyers and sellers.
B) the requirement by sellers for the prepayment of goods and services.
C) mutually unexecuted contracts between buyers and sellers.
D) the seller has collected a deposit but has an outstanding performance obligation under the contract.

Mutually Unexecuted contracts refer to a situation where both parties being the buyer and the seller have not executed their parts of the bargain or rather fulfilled their parts of the contract.

In such a case, even though legally, there is an obligation to perform due to the signing of a contract, Accounting wise, there is no need to record a liability.

This is why Mutually Unexecuted contracts do not contribute to the need to recognize deferred revenue.

jayilych4real jayilych4real · Answer 2 · 2021-11-25T13:38:49+01:00

All of the following situations contribute to the need for a company to recognize deferred revenues, except

C) Mutually unexecuted contracts between buyers and sellers.

According to the given question, we are asked to show the exception to why there is a need to contribute to the need for a company to recognize deferred revenues

As a result of this, we can see that there is no need for a company to acknowledge a deferred revenue for mutually unexecuted contracts between buyers and sellers because this is a liability as there is not yet an execution of the binding contract

Therefore, the correct answer is option C