Explanation Justification for the correct answer: c. Liabilities: Liabilities include the claims of the creditors on the assets of the business. The liability is the obligation of the business. Unearned revenue: It is an advance made by the buyer before receiving the product or service. In upcoming period seller will have an obligation to provide goods or perform the services to the buyer for the payment already received. It is a current liability until the goods are delivered or the service is performed. Justification for the wrong answer: a. Revenue: Revenue refers to the income received from the business activity or sale of the output, during the accounting period...

Financial Accounting, Student Value Edition (4th Edition)

4th Edition

ISBN: 9780134114811

Author: Robert Kemp, Jeffrey Waybright

Publisher: PEARSON

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Chapter 3, Problem 5SC

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Determine the nature of unearned revenue.

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Chapter 3 Solutions

Financial Accounting, Student Value Edition (4th Edition)

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Determine the nature of unearned revenue.

Solution Summary: The author explains that unearned revenue is an advance made by the buyer before receiving the product or service. Stockholders' Equity refers to the right the owner possesses over the resources of the business.

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Determine the nature of unearned revenue.

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