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What is Unearned Revenue?

In this article, we will know what is Unearned Revenue. Unearned income leads to increase in economic inequality in the society. The need to impose a withholding tax on such income has been voiced by everyone from economists like John Stuart Mill, David Ricardo to Fabian socialist thinkers.

What is Unearned Revenue

What is Unearned Revenue

Unearned Revenue is the income earned by a person without any effort. External economic and social factors automatically increase the income from property. Unearned revenue is money received by a person or company for a service or product that has not yet been provided or delivered. It can be considered as prepayment for goods or services that a person or company is expected to supply to the buyer at a later date.

Unearned revenue is money received from a customer for work that has not yet been done. It is essentially a prepayment for goods or services that will be delivered at a later date. It is usually associated with situations where the seller has authority over the buyer, or where the seller is providing customized goods to the buyer.

Examples of unearned income were rising corporate returns, rising debt, capital gains, or rising land and building prices as the city prospered. The unearned income also includes landlords’ dividends, dividends and ownership fees to mine owners.

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