Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 28 - No. 7)
Which of the following is correct regarding 'Unearned Revenue'?
It's a liability.
It's revenue that the company has earned.
It's cash that the company has received in advance for goods or services.
The balance is reduced when revenue is earned.
Explanation
It's a liability because the company owes a service or product. Cash has been received, and it is reduced as the revenue is earned.
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