Answer:
Increase Revenue, Decrease Liability
Explanation:
On December 1, They have recognized a liability of $6,000
with the journal entry:
(DR) Cash $6,000
(CR) Unearned Revenue $6,000
Now, on December 31 let's assume that the expiration is an exact
per month division of $2,000 ($6,000 / 3 months)
The adjusting entry would be:
(DR) Unearned Revenue $2,000
(CR) Service Revenue $6,000
The first effect is clear, there is an Increase in Revenue since
the company have rendered the services.
Now, the second effect is that the Liabilities have decreased
because of the debit to "Unearned Revenue" which is a liability.
