In October,cash is received in advance of rendering services.Assuming that half of the services have been performed by December 31,the year-end adjustment would:

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If cash is received in advance of rendering services, the company would record it as Unearned Service Revenue, which is a liability account. As half of the services have been performed, the portion of the advance payment that pertains to those services should be recognized as Service Revenue for that period. Therefore, the year-end adjustment would be to decrease Unearned Service Revenue (liability) and increase Service Revenue (revenue) accordingly. Cash is not affected by this adjustment since it has already been received.

In October,cash Is Received in Advance of Rendering Services