What Types Of Accounts Are Debited And Credited In An Unearned Revenue Adjusting Entry?

Unearned Revenue Adjusting Entry Resulted In The Debit And Credit To What Accounts?

In an Unearned Revenue Adjusting Entry, we debit Unearned Revenue Account as a Current Liability and credit relevant Revenue Account when the company earned the revenue account. Initially, when the company received cash / bank from clients in advance for services which are to be rendered in future, then cash or bank account is debited and unearned revenue account, as a current liability, is credited as the company did not earn the revenue and now it has to performed the services against the cash or check / cheque received from the clients.

So, initially, when the company received Cash or check received, and deposited into bank account, from client, then we record the following entry as shown below:

                                Cash a/c / Bank a/c  XXX

 

                                                                 Unearned Revenue a/c  XXX

 

            (Cash Or Check Received, And Deposited Into Bank, From Client For Unperformed Services)

At the end of the accounting period, when the company actually earned the revenue by rendering the services to client, then following adjusting entry is recorded as shown below:

                                  Unearned Revenue a/c  XXX

 

                                                                        Revenue a/c  XXX

 

                                              (Revenue Earned By Performing Services To Clients)