BM Ltd has a $30 000 balance in its Unearned service revenue account. Where would this account appear in the financial statements?

Question

Quizplus · Accepted Answer

Unearned service revenue is a liability because BM Ltd has received payment for services it has not yet provided. It would appear as a current liability in the balance sheet. Option A is incorrect because unearned revenue is not recognized as revenue until the services are provided. Option B is incorrect because although unearned service revenue has a monetary value, it is not considered an asset because it does not represent economic benefits to the company until the services are provided. Option D is incorrect as the question explicitly asks where the account would appear in the financial statements, and therefore there must be an answer.

BM Ltd Has a $30 000 Balance in Its Unearned