When the original entry for unearned revenue is credited to Revenue, the adjusting entry will debit Revenue and credit Unearned Revenue for the unearned amount at the date of the Financial Statements.

Question

Quizplus · Accepted Answer

The adjusting entry will debit Revenue and credit Unearned Revenue for the unearned amount at the date of the Financial Statements because the original entry for unearned revenue is credited to Revenue. This is done to ensure that the revenue is recognized in the period in which it is earned, not when it is received.

When the Original Entry for Unearned Revenue Is Credited to Revenue