When a service has been performed, but no cash has been received, which of the following statements is true?
A)No journal entry is made.
B)The entry includes a debit to Accounts Payable.
C)The entry includes a credit to Deferred Revenue.
D)The entry includes a debit to Accounts Receivable.

Question

Quizplus · Accepted Answer

When a service has been performed but no cash has been received, the company has earned revenue on credit. Therefore, it records this transaction by debiting Accounts Receivable (to record the amount owed by the customer) and crediting a revenue account (to record the earned revenue). This reflects the increase in assets (Accounts Receivable) and the increase in equity (through earned revenue).

When a Service Has Been Performed, but No Cash Has