A company provides services to clients during the period that are neither paid for, nor billed to the clients. What must the company do?
A) Bill the client prior to year-end in order to recognize the revenue.
B) Record the revenues as a liability at the end of the year.
C) Accrue revenue by making an adjusting entry at the end of the period.
D) All of the above are true.

Question

Quizplus · Accepted Answer

Services earned but not yet billed or collected require an accrual to recognize the revenue and the account receivable at the end of the period. The bill does not have to be sent prior to year-end and there is no liability at year end since money is owed to the company.

A Company Provides Services to Clients During the Period That