PRC-1 · Chapter 4 · Question 76 of 100
If an entity receives Rs. 24,000 for a 12-month software subscription starting on September 1, what is the unearned revenue balance at its financial year-end of December 31?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 16,000
Explanation
The subscription covers September through August. By December 31, 4 months have been earned. The remaining 8 months (January to August) are unearned. 24,000 x (8/12) = Rs. 16,000.
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