Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Adjusting Entries: Unearned Revenue

Financial Accounting

3. Accrual Accounting Concepts

Adjusting Entries: Unearned Revenue

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Multiple Choice

Unearned fees appear on the:

balance sheet as a liability

income statement as revenue

statement of cash flows as an operating activity

balance sheet as an asset

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Understand the concept of unearned fees: Unearned fees represent money received by a business for services that have not yet been performed. This is considered a liability because the business has an obligation to deliver the service in the future.

Identify the correct financial statement: Unearned fees are reported on the balance sheet, as they represent a liability rather than revenue or an asset.

Clarify why unearned fees are not revenue: Revenue is recognized only when the service is performed or the goods are delivered. Since unearned fees are payments received in advance, they do not qualify as revenue until the service obligation is fulfilled.

Explain why unearned fees are not an asset: Assets represent resources owned by the company that provide future economic benefits. Unearned fees are obligations, not resources, and therefore are classified as liabilities.

Conclude that unearned fees appear on the balance sheet as a liability, reflecting the company's obligation to provide services or goods in the future.