Final answer:
A Section 529 plan under GASB guidelines recognizes a liability both upon receipt of cash from depositors and when a withdrawal request is made, reflecting the plan's obligation to return the funds.
Step-by-step explanation:
Under GASB guidelines, a Section 529 plan recognizes a liability upon receipt of cash from depositors and when a depositor requests a withdrawal. When bank customers deposit money into a financial instrument such as a checking account, savings account, or a certificate of deposit, the bank, or in this case, the plan, views these deposits as liabilities. It's because the entity holding the deposits owes the deposited funds back to the depositors upon request. Accordingly, a liability is recognized both when the cash is originally deposited and when a depositor requests a withdrawal because the plan has an obligation to return the funds.