Horizon Company, an internet service provider, has 1,000,000 customers. The customers make electronic payments of $70 each for that month's service on the last day of each month. Horizon Company does not send any bills to their customers.
The company's transaction on the day they receive the payment will include:
A) An increase to Internet Service Revenue for $70,000,000
B) An increase to Accounts Receivable for $70,000,000
C) A decrease to Accounts Receivable for $70,000,000
D) A decrease to Internet Service Expense for $70,000,000

Question

Quizplus · Accepted Answer

BA) The total revenue from 1,000,000 customers paying $70 each is $70,000,000, which increases Internet Service Revenue.B) Since customers make electronic payments and the company does not bill them, the payment directly increases Accounts Receivable by $70,000,000 before it is settled, assuming the company recognizes the revenue when the service is provided but before cash is received.

Horizon Company, an Internet Service Provider, Has 1,000,000 Customers