When invoices are sent to customers billing them for services that have been performed, the correct transaction analysis is:
A) Debit Accounts Receivable and credit Service Fees Earned
B) Debit Accounts Payable and credit Service Fees Earned
C) Debit Service Fees Earned and credit Accounts Receivable
D) Debit Cash and credit Service Fees Earned
E) Debit Accounts Receivable and credit Accounts Payable

Question

Quizplus · Accepted Answer

When services are performed and invoiced to customers, the company recognizes revenue and creates an account receivable. Therefore, the correct entry is to debit Accounts Receivable (increasing assets) and credit Service Fees Earned (increasing revenue).

When Invoices Are Sent to Customers Billing Them for Services