Do you credit unearned service revenue?

Unearned revenue should be entered into your journal as a credit to the unearned revenue account, and a debit to the cash account. This journal entry illustrates that the business has received cash for a service, but it has been earned on credit, a prepayment for future goods or services rendered.

What type of account is unearned service revenue?

current liability
The unearned revenue account is usually classified as a current liability on the balance sheet.

Is unearned service revenue accounts receivable?

Unearned revenue is not accounts receivable. Accounts receivable are considered assets to the company because they represent money owed and to be collected from clients. Unearned revenue is a liability because it represents work yet to be performed or products yet to be provided to the client.

Is unearned rent a debit or credit?

To account for this unearned rent, the landlord records a debit to the cash account and an offsetting credit to the unearned rent account (which is a liability account).

Is service revenue a liability or asset?

No, service revenue is not an asset. Assets are defined as resources with economic value that a business owns. Whereas service revenue is a business’ earnings from providing goods and services to its customers. So, service revenue is considered a revenue (or income) account and not an asset.

Is Accounts Receivable a debit or credit?

debit
On a trial balance, accounts receivable is a debit until the customer pays. Once the customer has paid, you’ll credit accounts receivable and debit your cash account, since the money is now in your bank and no longer owed to you. The ending balance of accounts receivable on your trial balance is usually a debit.

Is unearned revenue accounts payable?

The main difference between accounts payable and unearned revenue is that accounts payable is to be paid in cash for an already received service or product. While unearned revenue is the revenue that a company or provider receives before delivering its service or product.

How do you record unearned revenue?

When do you record unearned revenue? You record prepaid revenue as soon as you receive it in your company’s balance sheet but as a liability. Therefore, you will debit the cash entry and credit unearned revenue under current liabilities.

Is unearned revenue an asset?

Because the business has been paid but no product or service has been rendered, unearned revenue is considered a liability. The liability converts to an asset over time as the business delivers the product or service.

Is service revenue an asset?

Is service revenue an asset? For accounting purposes, service revenue isn’t an asset. An asset refers to an item that provides economic value within a year or less. Revenue is income that comes from a business’s primary service and most companies use it to reinvest in the company, which means it’s not an asset.