DQW3-1 - Where I work we provide an unearned revenue with...

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What types of industries have unearned revenue? Why is unearned revenue considered a liability? When is the unearned revenue recognized in the financial statements? Provide a specific example. Industries that have unearned revenue are rent, magazine subscriptions, customer deposits for future service, and the airlines. It is considered a liability because the company who receives money for doing nothing is liable to either perform a service to that party who paid them or to ship a product to the party who paid for it in advance. The unearned revenue is recognized in the financial statements when they receive the money for that particular service or product.
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Unformatted text preview: Where I work we provide an unearned revenue with our service. Customers pay us to ship their packages to another destination in the world and we then wait until our planes leave at night to fly overnight to a main hub where all the packages will get sorted to the correct sorting location which will then get sorted to the correct station for delivery. This is unearned revenue because we don’t actually deliver the package until the next day or whenever they have paid for us to deliver the package for them....
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