The adjusting entry to record services earned but not yet billed requires:
A)a debit to Accounts Receivable and credit to Service Revenue.
B)a debit to Service Revenue and credit to Accounts Receivable.
C)a debit to Accounts Payable and credit to Service Revenue.
D)no entry since revenues should not be recorded until collected.

Question

Quizplus · Accepted Answer

Companies that provide accounting,legal,or promotional services that span more than one month are unlikely to receive cash or bill customers until the services have been provided in full.The revenue recognition principle indicates they should be recorded during the period earned.Thus,an accrual adjustment is needed to increase Accounts Receivable (with a debit)and increase the related revenue account (with a credit).

The Adjusting Entry to Record Services Earned but Not Yet