Final answer:
As of December 31, Year 2, all consulting services have been provided by Accounting Associates. Therefore, there would be no unearned revenue appearing on the balance sheet at the end of Year 2.
Step-by-step explanation:
The student has asked about the unearned revenue that would appear on the balance sheet for Accounting Associates after providing consulting services over a certain period. Given that the cash was collected on August 1 of Year 1 for services to be provided over the next year, we would need to calculate how much service has been provided by the end of Year 2.
From August 1, Year 1, to December 31, Year 1, is five months. Hence, five months of service would be recognized as earned revenue by the end of Year 1, leaving seven months (12 months - 5 months) of service to be provided in Year 2. As the fiscal year closes on December 31, and the services started immediately on August 1 of Year 1, by December 31 of Year 2, all services have been rendered and there would be no unearned revenue left.