Unearned revenue:
A) Appears on the income statement as income.
B) Appears on the income statement as a reduction to income.
C) Appears on the income statement as a liability.
D) Appears on the balance sheet as a liability.

Question

Quizplus · Accepted Answer

Unearned revenue refers to advance payments received by a company for goods or services that it has yet to deliver. As such, it represents a liability owed to customers. Therefore, unearned revenue appears on the balance sheet as a liability. It does not directly affect the income statement until the goods or services are delivered, at which point it is recognized as revenue.

Unearned Revenue