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which category would you put the entry to adjust the accounts involved (Service Revenues and Unearned Revenues)?
Unearned income represents revenue already collected but not yet earned. Unearned income should not be included as income yet, but should be recorded as a liability. It represents an obligation of the company to render services in the future
Under the liability method, a liability account is recorded when the amount is collected.
So the Unearned revenue account will be credited with the amount received by the law firm.
At the end of the of each or period , unearned revenue must be checked and adjusted if necessary.
For the law firm the entries will be debit unearned revenue and credit services revenue with the amount earned for the period.
