D is corrent because revenue collected 1 month in advance is unearned and, therefore, should be accounted for as a current liability. Current liabilities are obligations whose liquidation is reasonably expected to require the use of existing resources properly classifiable as current assets or the creation of other current liabilities. This includes collections received in advance of delivery of goods or services.
A is incorrect because unearned revenue is not included in stockholders’ equity.
B is incorrect because an accrued liability relates to an expense rather than to unearned revenue.
C is incorrect because rent collected 1 month in advance would be unearned. Under GAAP, revenue is not recognized until it is earned, regardless of when it is collected.
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