A customer pays us in advance and the unearned revenue is recorded as a liability. When can we record the revenue?

Question

884 viewsJanuary 20, 2017

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Darshita 6.14K January 20, 2017 0 Comments

a) when it is earned

b) when it is realized or realizable

c) Both (a) and (b)

1 Answer

score 0 · Answer 1 · 2017-01-20T03:58:39+00:00

Answer:

a) when it is earned

Explanation to the answer:

Unearned amount wil be recorded in the liability account as Deferred Revenues,, Unearned Revenues, or the Customer Deposits. After such amount had earned, such liability account will be reduced and the revenue account will be increased.

1 Answer

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