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23 May, 23:01

Unearned fees appear on the a. income statement as revenue b. balance sheet in the current assets section c. balance sheet in the owner's equity section d. balance sheet as a current liability

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  1. 24 May, 00:18
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    The answer is D. balance sheet as a current liability

    Explanation:

    Unearned fee is the amount that has been collected before rendering a service. For example, a customer paid in advance for goods that have been delivered, a football season ticket holder. The full service has not been rendered. So it is recognized as a liability because the customer can terminate the contract anytime.

    As the service is being rendered, maybe monthly, quarterly or weekly, revenue is recognized and unearned fee decreases.

    For example, a customer paid a $12,000 on Jan 1. for monthly delivery of magazine for a year. Here, the customer paid for a service that last till Dec 31st.

    What will be recognized as revenue monthly is $1,000 ($12,000/12months) and unearned revenue too decrease by $1,000 monthly
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