Financial Statements – II · Class 11 · CBSE · Commerce Accountancy
Unearned income (Income received in advance) at the end of the accounting period is:
Practice question from Financial Statements – II (Class 11 · CBSE · Commerce Accountancy), with the correct answer and a step-by-step solution.
easy · MCQ · Q-4678B4
Unearned income (Income received in advance) at the end of the accounting period is:
- A.Added to the income and shown as an asset
- B.Deducted from the income and shown as a liabilityCorrect answer
- C.Added to the income and shown as a liability
- D.Deducted from the income and shown as an asset
Solution
Unearned income represents income received for services not yet rendered. It is deducted from the respective income in the Profit and Loss Account because it does not pertain to the current year, and it is shown as a current liability on the Balance Sheet.
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