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.

At the end of the accounting period,an adjustment causing a decrease in the liability account and an increase in revenue account is required

Explanation:

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.

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