BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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an asset account.
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a revenue account.
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a contra-revenue account.
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a liability account
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Detailed explanation-1: -Unearned revenue is recorded on a company’s balance sheet as a liability. It is treated as a liability because the revenue has still not been earned and represents products or services owed to a customer.
Detailed explanation-2: -Also known as deferred revenue, unearned revenue is recognized as a liability on a balance sheet and must be earned by successfully delivering a product or service to the customer. On a balance sheet, unearned revenue is recorded as a debit to the cash account and a credit to the unearned revenue account.
Detailed explanation-3: -The unearned revenue account is usually classified as a current liability on the balance sheet.
Detailed explanation-4: -Unearned revenue, sometimes referred to as deferred revenue, is payment received by a company from a customer for products or services that will be delivered at some point in the future.
Detailed explanation-5: -Examples of unearned revenue include: Service contract paid in advance. Legal retainer paid in advance. Advance rent payment.