Is unearned revenue an asset?


Quick Answer

Unearned revenue is not an asset, according to Investopedia. Unearned revenue is actually a liability to the company that has the account on its books, because it represents payments already made for a promised good or service.

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Full Answer

The liability carried due to unearned revenue is carried on the accounts as long as the agreed upon good or service remains undelivered, according to Investopedia. Unearned revenue is a temporary account on the balance sheet, as it is created once the pre-payment for the good and service is received but then cleared out and closed as soon as the good or service is presented to the buyer.

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