When a customer buys services on account, it should be recorded by the company as:
A) a debit to Cash and a credit to Accounts Receivable.
B) a debit to Accounts Receivable and a credit to Revenue.
C) a credit to Unearned Revenue and a debit to Inventory.
D) a debit to Cash and a credit to Accounts Payable.

Question

Quizplus · Accepted Answer

When a customer buys services on account (i.e. they will pay at a later date), the company should record it as a debit to Accounts Receivable (an asset account that reflects the amount owed to the company by the customer) and a credit to Revenue (an income statement account that reflects the company's earnings). Therefore, the best choice is B.

When a Customer Buys Services on Account, It Should Be