Unformatted text preview: (cash) with a debit and by increasing a liability account (unearned revenue) with a credit. After one month, the insurance company makes an adjusting entry to decrease (debit) unearned revenue and to increase (credit) revenue by an amount equal to one sixth of the initial payment. Accounting records that do not include adjusting entries to show the earning of previously unearned revenues overstate total liabilities and understate total revenues and net income....
View Full Document
- Fall '10
- Revenue, insurance policy, insurance company, Unearned revenues, $1,800, one month, six months