Question

What is the adjusting journal entry to recognize unearned revenue?

Group of answer choices

debit asset, credit liability

debit revenue, credit liability

credit asset, debit liability

nothing. this is a trick question

debit liability, credit revenue

Answer 1

The Adjusting Journal entry for recognizing unearned revenue is :

Credit Revenue

And Debit Unearned Revenue Liability.

Please note that the initial entry when the cash is received and service is due to be delivered is ;

Debit Cash and

Credit Unearned Revenue Liability.

During the period when part of the Service obligation is delivered over time , the corresponding revenue is recognized through period end Adjusting Journal entries --

Credit Revenue

And Debit Unearned Revenue Liability.

So the last option is correct.