In January, the Huntington Beach Resort (HBR) accepts your reservation and receives your $2,000 payment for a week of sun and fun in California during spring break. The $2,000 would be recorded by HBR during January as a debit to:
A) Cash and a credit to Unearned Revenue.
B) Accounts Payable and a credit to Service Revenue.
C) Cash and a credit to Service Revenue.
D) Service Revenue and a credit to Cash.

Question

Quizplus · Accepted Answer

The $2,000 payment is received in advance for services that will be provided in the future, so it is considered Unearned Revenue at the time of payment. Therefore, the transaction should be recorded as a debit to Cash (asset) and a credit to Unearned Revenue (liability).

In January, the Huntington Beach Resort (HBR) Accepts Your Reservation