Question

Select the most appropriate alternative from the given below:
Unearned income is shown on _______ side of Balance Sheet.

• A. Assets
• B. Liabilities
• C. Credit
• D. Debit

Answer 1

Answer: (B)

Liabilities

Income received in advance is a liability because under the accrual concept of accounting income is recorded in the books of accounts when they are earned and not when actually received. Hence, it is an obligation on the part of the company and will be recorded as income as and when it is earned.