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

Question

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If an unearned revenue is initially recorded as a revenue, the end-of-period adjusting entry would actually record the unearned portion as a liability and reduce the revenue recognized in the period. This is because unearned revenue represents money received in advance for goods or services that have not yet been provided, and therefore cannot be recognized as revenue until they are actually delivered or fulfilled.

If an Unearned Revenue Is Initially Recorded as a Revenue