During June,Parker's Lawn Service mows 100 lawns a week.Parker received payment in advance,during May,for these services.The company uses the accrual basis of accounting.Which financial statement is impacted by these transactions?

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The requirement under accrual basis accounting is to record revenues when the performance obligation is satisfied.This means the company has done what it promised to do (mow lawns)in the month of June.The related revenues will be reported on the June income statement.Since the customers paid for these services in May,an asset,Cash,would be increased and a liability,Deferred Revenue,would be increased.In June,a liability,Deferred Revenue would be reduced and Service Revenue would be increased.

During June,Parker's Lawn Service Mows 100 Lawns a Week