Mad Mags sells magazines with one-year subscriptions.They require the payment in full before they start sending out the magazines.The payment received would be an example of which of the following?
A)Unearned revenue
B)Prepaid expenses
C)Accrued liability
D)Revenue

Question

Quizplus · Accepted Answer

The payment received in advance for the one-year subscription represents unearned revenue because Mad Mags has not yet fulfilled its obligation to provide the magazines to the subscriber. As the magazines are sent out over the course of the year, the revenue earned will be recognized on Mad Mags' income statement.

Mad Mags Sells Magazines with One-Year Subscriptions