Unearned revenues are recorded by companies that
A) receive money in advance of the performance of a service.
B) pay money at the time the performance of a service is complete.
C) receive money at the time the performance of a service is complete.
D) pay money in advance of the performance of a service.

Question

Quizplus · Accepted Answer

Unearned revenues are also called deferred revenues, and they refer to the receipt of cash in advance of the performance of a service. This liability is recorded until the service is actually performed, at which point it becomes earned revenue. Therefore, Choice A is the correct answer.

Unearned Revenues Are Recorded by Companies That