BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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cash received and a liability recorded before services are performed.
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revenue for services performed and recorded as liabilities before they are received.
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revenue for services performed but not yet received in cash or recorded.
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revenue for services performed and already received in cash and recorded.
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Detailed explanation-1: -Unearned revenue is money received by an individual or company for a service or product that has yet to be provided or delivered. It is recorded on a company’s balance sheet as a liability because it represents a debt owed to the customer.
Detailed explanation-2: -Unearned revenue is not recorded on the income statement as revenue until “earned” and is instead found on the balance sheet as a liability. Over time, the revenue is recognized once the product/service is delivered (and the deferred revenue liability account declines as the revenue is recognized).
Detailed explanation-3: -Unearned revenue should be entered into your journal as a credit to the unearned revenue account, and a debit to the cash account. This journal entry illustrates that the business has received cash for a service, but it has been earned on credit, a prepayment for future goods or services rendered.
Detailed explanation-4: -Unearned revenue is the money received by a business from a customer in advance of a good or service being delivered. It is the prepayment a business accrues and is recorded as a liability on the balance sheet until the customer is provided a service or receives a product.
Detailed explanation-5: -Unearned revenues are received and recorded as liabilities before they are earned. Unearned revenues are payments that the client makes a pin advance and expects to receive the goods or services at a future date.