Ask Experts Questions for FREE Help !
Ask
    jorlyna's Avatar
    jorlyna Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Apr 9, 2009, 10:57 AM
    The difference between prepaid expenses and unearned revenue
    The difference between prepaid expenses and unearned revenue
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
    Ultra Member
    		  
    #2

    Apr 9, 2009, 11:55 AM

    Prepaid expense means you paid for something that is an expense before it is used. It is a current asset.
    An example is: Prepaid Insurance = you pay insurance for a period of one year or longer. As the insurance is used it transfers from prepaid insurance to insurance expense.

    Unearned Revenue is a current liability. This means that you received money for a service or something tangible and you have to provide the service or something tangible.
    An example is a magazine subscription or an advance payment for consulting fees.
    The company that receives the money will record the money received as Unearned Revenue, then as they the provide the service or tangible goods then they will transfer the amount of revenue that is now earned to Earned Revenue.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Recording Prepaid expenses and Unearned Revenues [ 2 Answers ]

Hello- This is my first time taking Accounting and I'm having a few problems with some of my entries. If anyone could look at my first entry and help it would be greatly appreciated. I have to do the following: Prepare entries for the transactions under the method that records prepaid...

Unearned Service Revenue STill Unearned. [ 5 Answers ]

If the Trial balance says Unearned Service Revenue Cr. 12,560 The adjusting entry says Unearned Service Revenue still unearned, $800, how do I enter this?

Unearned Service Revenue still Unearned journal Entry [ 1 Answers ]

I have unearned service revenue still unearned in the amount of 6,500 although my trial balance reflect $8,900. To make a journal entry would this be correct. Unearned Service Revenue 2400 Service Revenue 2400

Unearned Revenue [ 3 Answers ]

This entry applies to a company for the month of December, ended 12/31/ 2005. On January 2005, the company was paid $3,840 in advance to provide monthly service for one year. The company began providing the services on May 1, 2005. How do record the entry as for the month of December? ...

Unearned Revenue Still Unearned [ 1 Answers ]

I have to make an adjusting entry for this: Unearned Service Revenue still Unearned, $800 There is a previous credit balance of 5,300. At first I thought there was no entry, but then when I started to do the income statement the answer I'm suppose to have is not correct with the answer I...

View more questions Search