Dickens Services Company performed accounting services for a client in December.A bill was mailed to the client on December 30.The company received a check by mail on January 5.Which of the following accounts should appear on the balance sheet as of December 31 as related to the services performed?
A) Prepaid Expense
B) Accounts Receivable
C) Unearned Revenue
D) None, there is no entry in December.

Question

Quizplus · Accepted Answer

Since the service was performed in December, the company should recognize revenue for the work done. The revenue earned but not yet received is recorded as Accounts Receivable, and therefore it should be included in the balance sheet as of December 31. The fact that the client paid the bill in January doesn't affect the recognition of revenue in December. Therefore, choices A and C are not appropriate. Choice D is also incorrect because an entry should be made to recognize revenue earned in December.

Dickens Services Company Performed Accounting Services for a Client in December.A