Is unearned service revenue a debit or credit?
Understand the Problem
The question is asking whether unearned service revenue is classified as a debit or a credit in accounting terms. It seeks clarification on how unearned service revenue should be recorded in financial statements.
Answer
It is a credit.
Unearned service revenue is initially recorded with a credit.
Answer for screen readers
Unearned service revenue is initially recorded with a credit.
More Information
When a company receives payment for services not yet provided, it credits the unearned revenue account (a liability). As services are rendered, this account is debited and the revenue account is credited.
Sources
- The web page with info on - Example Source - gocardless.com
- What Is Unearned Revenue and How to Account for It - Baremetrics - baremetrics.com
- What Is Unearned Revenue? A Definition and Examples for Small... - freshbooks.com
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