All else equal, a large increase in unearned revenue in the current period would be expected to produce what effect on revenue in a future period?
A. Large increase, because unearned revenue becomes revenue when revenue is earned.
B. Large decrease, because unearned revenue implies that less revenue has been earned, which reduces future revenue.
C. No effect, because unearned revenue is a liability, so payment will use assets rather than providing revenue.
D. Large decrease, because unearned revenue indicates collection problems that will reduce net revenues in future periods.
Answer: A
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