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 service revenue occurs when which of the following situations takes place?

A company provides a service and receives payment at the same time.

A company provides a service and receives payment after the service is performed.

A company incurs an expense but has not yet paid for it.

A company receives cash from a customer before providing the service.

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Verified step by step guidance

Understand the concept of unearned service revenue: Unearned service revenue is a liability that arises when a company receives payment from a customer before providing the agreed-upon service. This means the company owes the service to the customer in the future.

Analyze the options provided in the question: Each option describes a different financial scenario. We need to identify the one that matches the definition of unearned service revenue.

Evaluate the first option: 'A company provides a service and receives payment at the same time.' This describes a situation where revenue is earned immediately, not unearned service revenue.

Evaluate the second option: 'A company provides a service and receives payment after the service is performed.' This describes accounts receivable, not unearned service revenue.

Evaluate the fourth option: 'A company receives cash from a customer before providing the service.' This matches the definition of unearned service revenue, as the company has received payment but has not yet performed the service.