Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 22 - No. 14)
What effect does an adjustment for unearned revenue have on the balance sheet?
Increase assets and liabilities.
Decrease assets and liabilities.
Increase liabilities and decrease equity.
Decrease liabilities and increase equity.
Explanation
As services are provided for unearned revenue, the liability decreases and the equity (revenue) increases.
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