On January 1, Unearned Revenue of Commercial Plumbing Services, Inc. had a beginning balance of $1,800. During January, the company earned $500 of the deferred revenue. The company also collected $5,000 from a new customer for services to be performed the following month. At the end of January, the Unearned Revenue account should have a balance of $5,000.

Question

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At the beginning of January, the company had $1,800 of unearned revenue. During January, they earned $500 of this revenue, which means they have $1,300 left in unearned revenue. However, they also collected $5,000 from a new customer, which means they now have $6,300 of unearned revenue.

Therefore, at the end of January, the Unearned Revenue account should have a balance of $6,300, not $5,000. The statement is false.