Unearned Revenue

question 186

Multiple Choice

Unearned revenue:

• A) Appears on the income statement as income.
• B) Appears on the income statement as a reduction to income.
• C) Appears on the income statement as a liability.
• D) Appears on the balance sheet as a liability.

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Definitions:

Expected Units Sold

The number of units of a product that a company anticipates selling in a particular period based on market research and sales forecasts.

Direct Materials Budget

An estimation of the quantity and cost of direct materials necessary for production, matching the production budget.

Beginning Inventory

The value of goods available for sale at the start of an accounting period.

Production Needs

The requirements necessary to manufacture products, including materials, labor, and machinery.