Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 11 - No. 46)

What is the effect on the accounting equation when adjusting for unearned revenue that has been earned?

Increases assets and decreases liabilities.

Decreases assets and decreases liabilities.

Increases assets and increases liabilities.

Decreases liabilities and increases equity.

Unearned revenue is converted to revenue. The decrease in liabilities and the increase in equity offset each other.