If an adjusting entry were not made at the end of an accounting period to remove the earned revenue from the Unearned Revenue account,

Question

Quizplus · Accepted Answer

If the adjusting entry to remove earned revenue from the Unearned Revenue account is not made, then the liability in the account will remain overstated. This is because revenue that has been earned and is now recognized as income should be moved from the Unearned Revenue account to a revenue account. Failure to make this adjustment means that the liability in the Unearned Revenue account will be overstated, which will affect the accuracy of the firm's financial statements.

If an Adjusting Entry Were Not Made at the End