Is unearned rent an asset?
Understand the Problem
The question is asking whether unearned rent is classified as an asset in accounting terms. This involves understanding the definitions of assets and unearned revenue within financial accounting.
Answer
Unearned rent is a liability.
The final answer is that unearned rent is a liability.
Answer for screen readers
The final answer is that unearned rent is a liability.
More Information
Unearned rent is recognized as a liability on the balance sheet because the revenue has not yet been earned. It represents an obligation to provide future services or use of property.
Tips
A common mistake is to confuse unearned rent with earned revenue. Unearned rent is recorded as a liability until the rent is earned over the rental period.
Sources
- Is unearned revenue a liability or an asset? - Cube Software - cubesoftware.com
- Accounting for unearned rent - AccountingTools - accountingtools.com
- Unearned Revenue: What It Is, How It Is Recorded and Reported - investopedia.com
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