Meaning Of Unearned Revenue In Accounting

When the goods or services are provided this account balance is decreased and a revenue account is increased.

Meaning of unearned revenue in accounting. In accrual accounting revenue is only recognized when it is earned. Unearned revenue is money received by an individual or company for a service or product that has yet to be provided or delivered. A liability account that reports amounts received in advance of providing goods or services. Definition of unearned revenue in accounting.

Unearned revenue is a liability or money a company owes. Unearned revenue is the same thing as deferred revenue. If a customer pays for good services in advance the company does not record any revenue on its income. When the goods or services are provided an adjusting entry is made.

Unearned revenue is a liability for the recipient of the payment so the initial entry is a debit to the cash account and a credit to the unearned revenue account. It is a liability because even though a. Unearned revenue sometimes referred to as deferred revenue deferred revenue deferred revenue is generated when a company receives payment for goods and or services that it has not yet earned. Unearned revenue is money received from a customer for work that has not yet been performed.

It is recorded on a company s balance sheet as a liability. This is money paid to a business in advance before it actually provides goods or services to a client. In accounting unearned revenue is a liability. Unearned revenue also called deferred revenue is the liability or amount of money owed for payment of goods or services by a customer before the goods or services have been delivered to that customer in other words if a customer pays for a good or service before the company delivers it the company has to recognize that it owes the customer for that good or service.