Yelena Company received cash from a customer in advance of providing the service to the customer. Which of the following does not accurately describe the impact on the financial statements when Yelena later provides the service?
A)Liabilities are decreased.
B)Operating income increases.
C)Retained earnings increases.
D)Assets are increaseD.When Yelena provides the service revenue is recognized and the unearned revenue account is reduced.Assets are not affected.

Question

Quizplus · Accepted Answer

When Yelena provides the service, revenue is recognized, and the unearned revenue liability is reduced. Assets are not affected at this point because the cash was already received earlier.

Yelena Company Received Cash from a Customer in Advance of Providing