When a magazine company collects cash for selling a subscription, it is an example of:
A)An accrued liability transaction.
B)An accrued receivable transaction.
C)A prepaid expense transaction.
D)An unearned revenue transaction.

Question

Quizplus · Accepted Answer

When a magazine company collects cash for selling a subscription, it is considered as unearned revenue because the company has not yet earned the revenue from delivering the magazines to the subscriber. The revenue will be recognized over the subscription period as the magazines are delivered, and the unearned revenue will be reduced.

When a Magazine Company Collects Cash for Selling a Subscription