What Is True Regarding Unearned Items

question 7

Multiple Choice

What is true regarding Unearned items?

• A)Unearned items consist of revenue a company has not earned and an adjustment is necessary to increase the revenue once it is earned and decrease the liability once the obligation is satisfied.
• B)Unearned items consist of expenses that have not yet been incurred. A company must reduce an asset,prepaid,and increase expense for what has been incurred.
• C)The adjusting journal entry related to Unearned items would increase a liability and reduce revenue to recognize what has been earned.
• D)The adjusting entry related to Unearned items records the amount that needs to be transferred between two accounts,an Expense and a Liability,to show the appropriate balance in each account.

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Definitions:

Uniform

Consistently the same in character or degree; in legal contexts, it often refers to laws that are the same across all jurisdictions within a certain area.

Preincorporation Contract

Agreements entered into on behalf of a corporation not yet formally established, often by its founders or promoters.

Fourteenth Amendment

The Fourteenth Amendment to the United States Constitution grants citizenship to all persons born or naturalized in the U.S. and guarantees all citizens equal protection of the laws, significantly impacting civil rights.

Citizen

An individual recognized under the law as being a legal member of a sovereign state or belonging to a nation, with associated rights and obligations.