Unearned Revenue

Unearned Revenue is revenue for which payment is received before goods are delivered or services are rendered. Unearned revenue is classified as a current liability on the balance sheet until it is recognized as earned during the accounting cycle and reported on the income statement.

Examples of unearned revenue:

• airline tickets for future flights
• magazine subscriptions
• meal tickets sold by restaurants
• gift certificates
• software upgrade coupons
• season football tickets

Learn how to analyze a balance sheet in terms of company's liquidity and solvency using financial ratios such as the current ratio, quick (or acid) ratio, debt to asset ratio and debt to equity ratio.