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a. Asset b. liability c. Stockholders' (Owner's) Equity
Unearned Income is treated as Current liability till revenue is recognized
Unearned Revenue is considered as a Liability until it has been earned.
unearned revenue is a libability account, its mean that company received an amount in advance against goods and services.
it will show in liability account in balance sheet. and when the business wil provide the good and services it will change into revenue.
At the time of liability the entry wil be as follows.
Cash / Bank Account Debit
unearned Revenue credit
At the time of revenue
Unearned Revenue Debit
Revenue Account Credit
OPtion B is correct
B..
B
the answer is Liability
as the name inidacates Un-earned Revenue (A revenue which has been earned but services/products against it are yet to provided). Therefore, it is treated as current liability.
Unearned revenue is a liability for the recipient of the payment, so the initial entry is a debit to the cash account and a credit to the unearned revenue account.
If client compansates you for what you did not provide him yet then its your obligation to perform your part of the transaction and obligation is ultimatley leads towards liability.
Unearned revenue can be thought of as a 'pre-payment' for goods or services which a person or company is expected to produce to the purchaser. Contra Liability Account .
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