Unearned Revenue

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Unearned Revenue

Revenue for a company from a project that has not been completed or a product that has not been delivered. A common example of unearned revenue is prepayment for a lease or asset. Unearned revenue is a liability for the company until the project has been completed or the product delivered; at that point, it becomes earned revenue.
References in periodicals archive ?
Therefore, when a company sells a gift card, cash has been received, but goods or services have yet to be provided--the seller records this increase in cash along with a liability for unearned revenue.
When it delivers the digital camera, XYZ immediately recognizes $ 162 of previously unearned revenue from the gift card.
The company will record the entries shown in Exhibit 6 to reverse the entries shown in Exhibit 1, which initially record unearned revenue.
2) Represents unearned revenues reported each quarter less a) the unearned revenues attributable to products and services contributed by VMware to Pivotal on April 1, 2013 and b) the unearned revenues attributable to all lines of businesses which were disposed of in 2013, including Zimbra which was disposed of in July 2013.
VMware management believes that these measures are useful to investors because they allow investors to make meaningful comparisons of VMware revenues and unearned revenues across periods.
Similarly, the effects of the beginning and ending balances of unearned revenue are opposite upon conversion as well (ending balance subtracted and beginning balance added).
Accounts receivable (1,240) (2,452) Other current assets 44 (172) Accounts payable (321) 27 Accrued expenses 1,543 33 Unearned revenues (947) 1,170 Net cash used in operating activities: (4,359) (6,017)