Is unearned revenue a permanent account?
Understand the Problem
The question is asking whether unearned revenue is classified as a permanent account in accounting. Permanent accounts, also known as real accounts, typically include assets, liabilities, and equity that are carried over from one accounting period to the next. This involves understanding the nature of unearned revenue and its implications in accounting practices.
Answer
Unearned revenue is a permanent account.
The final answer is that unearned revenue is a permanent account.
Answer for screen readers
The final answer is that unearned revenue is a permanent account.
More Information
Unearned revenue, also known as deferred revenue, is considered a liability because it represents services or goods yet to be delivered. Unlike temporary accounts (which are closed at the end of an accounting period), permanent accounts carry their balances forward to future periods.
Tips
A common mistake is confusing unearned revenue with temporary accounts due to its adjustable nature. However, it is a liability that remains on the balance sheet until services or goods are provided.
Sources
- Identify whether the account: Unearned fees, is a Temporary ... - homework.study.com
- Which of the following is not a temporary account a. Depreciation ... - homework.study.com
