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 common stock.

Question

Quizplus · Accepted Answer

Unearned revenues represent an obligation of the company to provide a product or service for which the customer has already paid in advance. Therefore, it represents a liability for the company until the revenue is earned. Option A is incorrect because unearned revenues are revenues that have not yet been earned. Option B is also incorrect because if the revenue has been earned, it is no longer considered unearned. Option D is incorrect because unearned revenues are not recorded as an asset but rather as a liability. Option E is also incorrect because unearned revenues do not affect common stock.

Unearned Revenues Are Generally