Unearned revenues are generally:
A)Revenues that have been earned and received in cash.
B)Revenues that have been earned but not yet collected in cash.
C)Liabilities created when a customer pays in advance for products or services before the revenue is earned.
D)Recorded as an asset in the accounting records.
E)Increases to stockholders equity.

Question

Quizplus · Accepted Answer

Unearned revenues are a type of liability that arises when a customer pays in advance for products or services before the revenue is earned. It is recorded as a liability because the company has an obligation to provide the goods or services in the future. Once the revenue is earned, the liability is reduced, and the corresponding revenue is recognized. Therefore, option C is the best choice.

Unearned Revenues Are Generally