Question

Unearned income account is __________.

• A. an asset
• B. a liability
• C. an expense
• D. an income received in advance

Answer 1

Answer: (B)

a liability

Unearned income or unearned revenue occurs when a company receives money before the money is earned. This is also referred to as deferred revenues or customer deposits. The unearned amount is recorded in a liability account such as unearned revenues, deferred revenues, or customer deposits.