Unearned revenue recorded initially as unearned revenue is adjusted by debiting a liability account.

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Unearned revenue is initially recorded as a liability because it represents money received for goods or services that have not yet been provided. When the goods or services are delivered, the unearned revenue is recognized as earned revenue by debiting the unearned revenue liability account and crediting a revenue account, thus adjusting the liability to reflect the fulfillment of the obligation.

Unearned Revenue Recorded Initially as Unearned Revenue Is Adjusted by Debiting