Skip to main content
Glite Dictionary
💰 Money not from work 📊 Money received early
unearned income

unearned income

6.4
Money a company receives in advance that it must earn later and is recorded as something the company owes
  • noun
  • Specialized
translation icon : ingresos no devengados
  • The company reported a large amount of unearned income as a liability on its balance sheet.

Examples

  • Interest collected in advance is classified as unearned income until it is earned over time.

  • Accounting guidelines require firms to distinguish between unearned income and revenue already earned.

  • The company reported unearned income on its balance sheet.

  • Is unearned income considered a liability?

  • According to the balance sheet, the company's unearned income is listed as a liability, indicating funds received for services not yet delivered.

  • The accountant explained that unearned income can affect the company's financial ratios until it is officially recognized as earnings.

  • In the financial report, unearned income showed that clients had pre-paid for services that the company had not yet completed.

Synonyms

unearned revenue
vsunearned income
  • Specialized
7.4

Money a company gets before giving products or services, kept as a debt until delivered

is the same accounting concept expressed with an alternative technical phrase

How Earned

revenue
  • Specialized
352 3.4
unearned income
  • Specialized
6.4

Surface Forms

unearned income singular
unearned incomes plural

Morphology

unearned + income

The phrase is compositionally built from 'unearned' (not earned/deserved) + 'income' (money received), so a B1 learner who knows both words can infer it refers to income that has not been earned. While accounting usage adds a technical nuance (prepaid receipts reported as a liability), the core meaning 'income that is not yet earned' is directly derivable from the constituents.

Etymology

Unearned income in company records comes from the idea of money paid in advance: a customer gives cash before you do the service, so the money is still unearned even though the company has the income. That's why businesses keep it as a 'debt' on their books until the work is done.