The adjustment for revenue received in advance,which has been earned in the current period,involves a
A)debit to unearned revenue.
B)debit to accrued revenue.
C)credit to accrued revenue.
D)debit to cash.
E)credit to cash.

Question

Quizplus · Accepted Answer

Revenue received in advance is initially recorded as unearned revenue, which is a liability account. When the revenue is earned in the current period, an adjusting entry is required to recognize the revenue as earned and to reduce the liability of unearned revenue. This involves debiting the unearned revenue account to reduce the liability and crediting the revenue account to recognize the revenue earned. Therefore, the correct choice is A) debit to unearned revenue.

The Adjustment for Revenue Received in Advance,which Has Been Earned