How does the adjusting entry to recognize the portion of the unearned revenue that a company earned during the accounting period affect the elements of the financial statements?
A)An increase in assets and a decrease in liabilities.
B)An increase in liabilities and a decrease in equity.
C)A decrease in liabilities and an increase in equity.
D)A decrease in assets and a decrease in liabilities.

Question

Quizplus · Accepted Answer

Recognizing the portion of the unearned revenue that a company earned during the accounting period involves a decrease in liabilities (unearned revenue)and an increase in equity (retained earnings as a result of revenue).

How Does the Adjusting Entry to Recognize the Portion of the Unearned