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.

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