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

Question

Quizplus · Accepted Answer

Unearned revenue is money that a company has received but has not yet earned by providing goods or services. It is reported on the balance sheet as a liability because the company still owes a good or service to the customer. As the company provides the good or service, the liability is reduced and revenue is recognized on the income statement.

Unearned Revenue Is Reported in the Financial Statements As