A liability-revenue relationship exists with
A) prepaid expense adjusting entries.
B) accrued expense adjusting entries.
C) unearned revenue adjusting entries.
D) accrued revenue adjusting entries.

Question

Quizplus · Accepted Answer

A liability-revenue relationship exists with unearned revenue adjusting entries. Unearned revenue is a liability since the company has not yet earned the revenue but has received the payment from the customer. When adjusting entries are made to recognize the revenue that has been earned, the liability decreases and revenue increases, creating a liability-revenue relationship.

A Liability-Revenue Relationship Exists with