Question

Why is unearned revenue considered a liability?

Answer 1

Answer :

Unearned revenue is an account that reports the amount recieved in advance for the goods and services to be provided.It is recorded as liability because our part of the transaction is pending but the amount is recieved.principles of accounting says revenues should be recorded only when they are assured or realized.Therefore until goods and services were performed it should be recorded as liability.Once performed liability can be transferred to revenue account.

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