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

The adjusting entry to recognize work completed on unearned revenue involves which of the following?

Debiting Revenue and crediting Unearned Revenue

Debiting Unearned Revenue and crediting Revenue

Debiting Cash and crediting Revenue

Debiting Revenue and crediting Cash

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Verified step by step guidance

Understand the concept of unearned revenue: Unearned revenue refers to money received by a company for services or goods that have not yet been provided. It is recorded as a liability because the company has an obligation to deliver the service or product in the future.

Recognize the purpose of the adjusting entry: The adjusting entry is made to reflect the portion of the unearned revenue that has been earned during the accounting period. This ensures that revenue is accurately reported in the financial statements.

Determine the accounts involved: When unearned revenue is earned, the liability account 'Unearned Revenue' is reduced (debited), and the revenue account 'Revenue' is increased (credited) to reflect the earned income.

Write the journal entry: The adjusting entry involves debiting the 'Unearned Revenue' account to decrease the liability and crediting the 'Revenue' account to increase the income. This adjustment aligns the accounts with the earned portion of the revenue.

Verify the impact on the financial statements: The adjustment reduces liabilities on the balance sheet and increases revenue on the income statement, ensuring accurate financial reporting for the period.