Question

Unearned income is classified as a _________     in the balance sheet as, if the income is...

Unearned income is classified as a _________     in the balance sheet as, if the income is not earned, it my need to be repaid.

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Answer #1

Unearned income is classified as a  CURRENT LIABILITY in the balance sheet as, if the income is not earned, it my need to be repaid.

Analysis :-

Unearned revenue is payment received for which the service has not given yet. For example cloud company providing cloud sevices to a customer. For cloud company the payment is received first and the services is provided after a date from receipt.

Unearned revenue is usually CURRENT LIABILITY, but If the service is to provided after 12 months unearned revenue can be NON CURRENT LIABILITY.

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