The adjusting entry to record the amount of revenue earned that had been collected in advance requires a(n)
Blank
______ to Unearned Revenue and a(n)
Blank
______ to Sales Revenue.

Question

The adjusting entry to record the amount of revenue earned that had been collected in advance requires a(n) 
Blank
______ to Unearned Revenue and a(n) 
Blank
______ to Sales Revenue.

BlackTom AI · Accepted Answer

Unearned revenue is a liability and must be reduced when the company has now earned the revenue; revenue accounts normally carry credit balances, so recognizing revenue requires a credit to a revenue account.

1. Relevant knowledge points and concepts
- Unearned Revenue (also called Deferred Revenue) is a liability recorded when cash is received before services/goods are provided.
- Revenue is recognized when earned (revenue recognition principle), and revenue accounts have normal credit balances.
- To remove the liability and recognize income, you decrease (debit) the liability and increase (credit) the revenue account.

2. Step-by-step reasoning process
- When cash was received in advance, the initial entry was: Debit Cash; Credit Unearned Revenue. That created a liability.
- Later, when the service is performed or goods delivered, the company must reverse the liability (reduce it) and record the earned revenue.
- Reducing a liability requires a debit to the liability account (Unearned Revenue).
- Recording revenue requires a credit to the revenue account (Sales Revenue).

3. Journal entry with intermediate steps (example amount)
- Suppose $1,000 was collected in advance originally: initial: Debit Cash $1,000; Credit Unearned Revenue $1,000.
- When earned: Debit Unearned Revenue $1,000 (reduces liability); Credit Sales Revenue $1,000 (recognizes revenue on the income statement).

4. Why the correct answer is correct
- Debiting Unearned Revenue decreases the liability that was created earlier.
- Crediting Sales Revenue increases revenue (credit is the normal balance), properly reflecting earned income and increasing retained earnings via net income.

5. Why other options are incorrect
- "Credit; Credit": Crediting Unearned Revenue would increase the liability, contrary to the need to reduce it.
- "Debit; Debit": Debiting Sales Revenue would decrease revenue (opposite of what’s needed).
- "Credit; Debit": Crediting Unearned Revenue increases liability and debiting Sales Revenue reduces revenue—both opposite of required effects.

6. Conclusion
The correct adjusting entry is a Debit to Unearned Revenue and a Credit to Sales Revenue, matching the provided answer: Debit; Credit.

The adjusting entry to record the amount of revenue earned that had been collected in advance requires a(n) Blank to Unearned Revenue and a(n) Blank to Sales Revenue.单项选择题

类似问题

Adjustments ensure that in the balance sheet are reported at their correct values, reflecting amounts that are still available for future use.

What is the primary purpose of the accounting cycle?

Question at position 13 In the hybrid form of the combination structure, some divisions are oriented toward products while others are oriented toward market areasTrueFalse

Question at position 3 Weak ............................... protection in some countries implies that firms should expand overseas rapidly in order to preempt imitatorsproductpatentpolicyNone of the Above

Question at position 1 Netflix is trying to foster more growth by partnering with firms such as .............. for access to its hotel entertainment systems.Pearl ContinentalMcDonalds MarriottAll of the Above

If CPI in 2016 was 300, and CPI in 2017 was 312, what is the annual rate of inflation?

What is a budget deficit?

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单

The adjusting entry to record the amount of revenue earned that had been collected in advance requires a(n) Blank ______ to Unearned Revenue and a(n) Blank ______ to Sales Revenue.单项选择题