Vick Vickers has a large consulting practice. New clients are required to pay one-half of the consulting fees up front. The balance is paid at the conclusion of the consultation. How does Vickers account for the cash received at the end of the engagement?
A) Cash Unearned Service Revenue
B) Cash Service Revenue
C) Prepaid Service Fees Service Revenue
D) No entry is required when the engagement is concluded.

Question

Quizplus · Accepted Answer

Since Vickers requires one-half of the consulting fees up front, the cash received at the conclusion of the engagement would represent the other half of the consulting fees earned. Therefore, it would be recorded as Cash Service Revenue. No unearned revenue account is necessary, as all fees are earned upon completion of the consultation.

Vick Vickers Has a Large Consulting Practice