Mary Richardo CPA has billed her clients for services performed.She subsequently receives payments from her clients.What transaction will she record upon receipt of the payments?

Question

Quizplus · Accepted Answer

Mary Richardo CPA has already billed her clients for services performed, which means she has already recorded an increase in Service Revenue and an increase in Accounts Receivable. Upon receipt of the payments, she will decrease Accounts Receivable (by recording the payment) and increase Cash (as she receives the payment). Therefore, the correct transaction to record is to increase Cash (asset) and decrease Accounts Receivable (asset). Option B is the best choice that matches this transaction. Option A is incorrect because unearned revenue is revenue that has been received in advance but has not yet been earned, which is not applicable in this scenario. Option C is incorrect because Accounts Receivable has already been recorded when Mary Richardo CPA billed her clients, and it is the amount due to the business from credit sales. Option D is incorrect because it does not reflect the decrease in Accounts Receivable due to the client's payment.

Mary Richardo CPA Has Billed Her Clients for Services Performed