Recording revenues on the income statement which were previously reported as unearned revenues on the balance sheet results in a decrease in liabilities and an increase in net income,retained earnings and stockholders' equity.

Question

Quizplus · Accepted Answer

Recording revenues increases net income which flows through the financial statements to increase retained earnings and stockholders' equity. When unearned revenue is earned, the liability account decreases.

Recording Revenues on the Income Statement Which Were Previously Reported