Unearned revenue is reported in the financial statements as
A)An asset on the balance sheet.
B)A revenue on the balance sheet.
C)A liability on the balance sheet.
D)An unearned revenue on the income statement.
E)An operating activity on the statement of cash flows.

Question

Quizplus · Accepted Answer

Unearned revenue represents an advance payment or deposit received from a customer for a product or service that has not yet been delivered. Until the product or service is provided, the company has an obligation to fulfill the customer's order, so it is recorded as a liability on the balance sheet. Once the product or service is delivered, the liability is reduced, and the revenue is recognized on the income statement.

Unearned Revenue Is Reported in the Financial Statements as