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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

Unearned revenue is classified as what type of account?

  1. (a) Asset
  2. (b) Liability
  3. (c) Owner’s Equity
  4. (d) Revenue
  5. (e) Expense

To determine

State the account under which the unearned revenue is classified.

Explanation

Justification for the incorrect options of (a), (c), (d) and (e):

Unearned revenue is not classified as an asset, owners’ equity, revenue or expenses since it is recorded as liability on the balance sheet. Therefore, all of these options are incorrect.

Justification for the correct option (b):

Liability:

Unearned is recorded as current liability on the balance sheet...

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