Unearned revenues should be classified as Other Revenues and Gains on the Income Statement.

Question

Quizplus · Accepted Answer

Unearned revenues are a liability on the balance sheet until they are earned. They should be recognized as revenue only when the services or products have been delivered. Once the revenue is earned, it should be classified as Sales Revenue or Services Revenue on the Income Statement, not as Other Revenues and Gains.

Unearned Revenues Should Be Classified as Other Revenues and Gains