Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 19 - No. 1)
What is the effect of unearned revenue on a company's balance sheet?
Increases assets and decreases liabilities.
Increases assets and increases liabilities.
Decreases assets and decreases liabilities.
Decreases assets and increases liabilities.
Explanation
Unearned revenue is a liability, so it increases liabilities. At the same time, Cash is being received which increases an asset.
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