Question

The balance in the unearned revenue account will be zero after the adjusting entries for the satisfaction of some but not all of the performance obligations.

True of False??

Answer 1

Answer is false

Balance in unearned revenue represents the money received in advance from customers for the performance obligation to be performed. As and when the goods are delivered or service is rendered the portion of unearned revenue is transferred to revenue account through a journal entry. This is called adjusting entry and it reduces the unearned revenues for the satisfaction of the some but not all of the performance obligations. In order to make unearned revenue account as zero all the balance in the account has to be recognised as revenue through adjusting entry. Hence answer is false.