How is the "unearned revenue" account adjusted once the service is performed?

When services that were previously paid for in advance are performed, the "unearned revenue" account needs to be adjusted to reflect that the revenue is now earned. In this situation, the appropriate action is to debit the unearned revenue account, which reduces the liability. This is because the company is no longer obligated to provide a service in the future for that revenue, effectively recognizing it as earned.

Simultaneously, the revenue account is credited, which increases the recognized revenue on the income statement for the period. This correctly reflects the transition of the liability to earned revenue in the company’s financial statements, aligning with the revenue recognition principle that states revenue should be recognized when it is earned, not when cash is received.

In summary, debiting unearned revenue decreases the liability, and crediting the revenue account reflects that the services have been provided, recognizing the income earned from those services.