Unearned revenue is a liability and should be reported on the income statement.

Question

Quizplus · Accepted Answer

Unearned revenue is a liability and should be reported on the balance sheet, not the income statement. It represents money received for goods or services that have not yet been provided, and it is recognized as revenue only when the obligation to provide the goods or services has been fulfilled. Thus, unearned revenue does not affect the income statement until it is recognized as revenue in a later period.

Unearned Revenue Is a Liability and Should Be Reported on the Income