Vita Corporation performed services on account for €22,000.This transaction will

Question

Quizplus · Accepted Answer

When services are performed on account, it means that the customer has not yet paid for the services. Therefore, the amount is recorded as an increase in Accounts Receivable (an asset account) and an increase in Revenue (a revenue account). Option A is incorrect because there is no cash received yet. Option C is incorrect because there is no mention of any accounts payable related to this transaction. Option D is incorrect because it suggests that cash has been received but there is no indication in the question that this is the case.

Vita Corporation Performed Services on Account for €22,000