If an unearned revenue is initially recorded as a liability, the end-of-period adjusting entry records the earned portion.

Name: If an unearned revenue is initially recorded as a liability, the end-of-period adjusting entry records the earned portion.
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Question

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When unearned revenue is initially recorded as a liability, it represents an obligation to provide goods or services. As the revenue is earned, an adjusting entry is made to decrease the liability and recognize the revenue.

If an Unearned Revenue Is Initially Recorded as a Liability