The adjusting entry to record the amounts earned during the accounting period results in a(n)
Blank
______ to the Unearned Revenue account.

Question

The adjusting entry to record the amounts earned during the accounting period results in a(n) 
Blank
______ to the Unearned Revenue account.

BlackTom AI · Accepted Answer

Unearned revenue is a liability representing cash received before services are performed; when the services are performed the liability is reduced. Because Unearned Revenue normally has a credit balance, reducing that liability requires a debit.

1. Relevant knowledge points and concepts
- Unearned Revenue (Deferred Revenue) is a liability account recorded when cash is received before earning revenue.
- The revenue recognition principle requires recognizing revenue when it is earned, not when cash is received.
- Debits decrease liability accounts (which carry a normal credit balance); credits increase liabilities. Recognizing earned revenue also requires crediting a revenue account (which increases equity).

2. Complete reasoning process step by step
- Initially, an advance receipt is recorded: Debit Cash; Credit Unearned Revenue (liability).
- As services are performed, we must remove the portion of the liability that has been earned and recognize revenue.
- Removing (decreasing) a liability requires a debit to that liability account; recognizing revenue requires a credit to a revenue account.

3. Example with intermediate calculation steps
- Suppose a customer paid $1,200 in advance. Initial entry:
  - Cash Dr $1,200
  - Unearned Revenue Cr $1,200
- If $400 of the service is performed during the period, the adjusting entry is:
  - Unearned Revenue Dr $400  (reduces liability)
  - Service Revenue Cr $400  (recognizes revenue)
- New Unearned Revenue balance = $1,200 − $400 = $800 (liability reduced by debit).

4. Why the correct answer is correct
- The adjusting entry reduces the Unearned Revenue liability; because liabilities have normal credit balances, the reduction is recorded with a debit. Therefore the required adjusting entry results in a debit to Unearned Revenue.

5. Why other options are incorrect
- Credit: That would increase the liability, contrary to the requirement to reduce it when revenue is earned.
- No change: Incorrect because an adjusting entry must recognize earned revenue and thus change the liability and revenue balances.
- Increase: Unearned Revenue should decrease as services are performed, not increase.

6. Conclusion
The adjusting entry to record amounts earned during the period results in a debit to the Unearned Revenue account. This matches the provided correct answer: Debit.

The adjusting entry to record the amounts earned during the accounting period results in a(n) Blank ______ to the Unearned Revenue account.单项选择题

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