When an Unearned Revenue Is Initially Recorded as a Revenue

question 116

Multiple Choice

When an unearned revenue is initially recorded as a revenue, the adjusting entry has the following effect on the financial statements:

• A)Net income increases and assets decrease.
• B)Revenue increases and liabilities decrease.
• C)Net income increases and owner's equity increases.
• D)Revenue decreases and owner's equity decreases.

---

Definitions:

Plant Toxins

Naturally occurring poisonous substances produced by plants as a defense mechanism against herbivores and pathogens.

Detect

To find out or determine the presence or existence of something.

Monosaccharides

The simplest form of carbohydrates, consisting of single sugar molecules like glucose and fructose.

Carbon-to-hydrogen

The ratio of carbon atoms to hydrogen atoms in a molecule.