An internet service provider requires customers to prepay for six months' service. On August 1, 2010 Ricky Roberts paid $480 for internet service for the next six-month period. On August 1, how will the internet service record the amount received from Roberts?
A) Prepaid expense
B) Unearned revenue
C) Accrued revenue
D) Earned revenue
E) Long-term liability

Question

Quizplus · Accepted Answer

Unearned revenue is the correct answer because when the internet service provider receives payment for services that have not yet been provided, it is considered unearned revenue. This liability account represents the obligation of the company to provide services in the future.

An Internet Service Provider Requires Customers to Prepay for Six