When a magazine sells subscriptions to customers, it is an example of:
A)An accrued liability transaction.
B)An accrued receivable transaction.
C)A prepaid expense transaction.
D)An unearned revenue transaction.

Question

Quizplus · Accepted Answer

Selling subscriptions to customers is an example of unearned revenue transaction because the magazine has received payment but has not yet provided the service (delivering the magazine) to the customers. Therefore, the revenue is not yet earned and is considered a liability until the delivery is made.

When a Magazine Sells Subscriptions to Customers, It Is an Example