Definition of Unearned revenue:
Payment received before a good is sold or a service is provided. Unearned revenue is classified as a current liability on the balance sheet until it is recognized as earned during the accounting cycle.
Unearned revenue is money received by an individual or company for a service or product that has yet to be provided or delivered. It can be thought of as a "prepayment" for goods or services that a person or company is expected to supply to the purchaser at a later date. As a result of this prepayment, the seller has a liability equal to the revenue earned until the good or service is delivered.
Unearned revenue is also referred to as deferred revenue and advance payments.
How to use Unearned revenue in a sentence?
- Once the product or service is delivered, unearned revenue becomes revenue on the income statement.
- The unearned revenue was mentioned during the meeting as the account suggested the optimal way to account and record this type of revenue.
- We received a lot of unearned revenue , but knew we would be getting paid really soon, due to pour track record.
- Unearned revenue is money received by an individual or company for a service or product that has yet to be provided or delivered.
- It is recorded on a company’s balance sheet as a liability because it represents a debt owed to the customer.
- You may think you are certain that something will sell but you should never count your unearned revenue until it sells.
Meaning of Unearned revenue & Unearned revenue Definition