Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 23 - No. 39)
What happens to the accounting equation when unearned revenue is earned?
Increases assets and decreases liabilities
Decreases assets and decreases liabilities.
Decreases liabilities and increases owner’s equity.
Increases liabilities and increases owner’s equity.
Explanation
Once service is provided for unearned revenue the liability is reduced. The revenue is earned increasing owner’s equity.
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