The journal entry to record the performance of services for cash would include:
A)a debit to Cash and a credit to Fees Income.
B)a debit to Accounts Receivable and a credit to Cash.
C)a debit to Fees Income and a credit to Cash.
D)a debit to Cash and a credit to Accounts Receivable.

Question

Quizplus · Accepted Answer

When services are performed for cash, the company receives cash, which increases its assets. Therefore, Cash (an asset account) is debited. Simultaneously, the company earns income from the services, which increases its income. Hence, Fees Income (a revenue account) is credited. This reflects the accrual accounting principle that income is recognized when earned, regardless of when the cash is received.

The Journal Entry to Record the Performance of Services for Cash