What is unearn commicion?

Answer 1

Unearned commission refers to compensation that a salesperson has not yet earned through completed sales or services rendered. It often applies to situations where a commission is promised based on future performance or sales that have not yet occurred. For example, if a salesperson receives an advance on commissions for anticipated sales, that amount is considered unearned until the actual sales are finalized. It is crucial for accounting purposes to differentiate between earned and unearned commissions to accurately reflect a company's financial position.