All of the following are true regarding unearned revenues except:
A)They are payments received in advance of services performed.
B)The adjusting entry for unearned revenues increases assets and increases revenues.
C)The adjusting entry for unearned revenues increases revenues and decreases liabilities.
D)They are liabilities.
E)As they are earned,they become revenues.

Question

Quizplus · Accepted Answer

The adjusting entry for unearned revenues is to decrease the liability (unearned revenue) and increase the revenue account. This will not increase assets, as the payment has already been received and is reflected as an asset on the balance sheet.

All of the Following Are True Regarding Unearned Revenues Except