Unearned Revenue General Journal Entry

When payment from customers is received in advance the unearned revenue liability arises.

Unearned revenue general journal entry. The journal entry is given below. The accounting equation assets liabilities owners equity means that the total assets of the business are always equal to the total liabilities plus the total equity of the business. Example 1 unearned professional fees on january 1 a client made an advance payment of 1 000 for professional fees to be rendered over the next four months. Cash dr unearned revenue cr 2.

Unearned revenue general journal entry. Journal entries of unearned revenue. At the end of the period unearned revenues must be checked and adjusted if necessary. Learn how to prepare adjusting entries relating to unearned deferred revenue.

Accounting equation for unearned revenue journal entry. Journal entries related to unearned revenue. The adjusting entry for unearned revenue depends upon the journal entry made when it was initially recorded. There are two ways of recording unearned revenue.

To record this liability the cash account is debited and the unearned revenue account is credited. When the services are performed revenue is then earned and the following journal entry is required. Typical financial statement accounts with debit credit rules and disclosure conventions. For this transaction the accounting equation is shown in the following table.

This is true at any time and applies to each transaction.