In November,cash is received in advance of rendering services.Assuming that the services have been performed by December 31,the adjusting entry would be

Question

Quizplus · Accepted Answer

The adjusting entry in this scenario involves recognizing the revenue that was previously received as unearned revenue. As the service has now been performed, the unearned revenue account should be reduced and the service revenue account should be increased by the same amount to reflect the earnings. Therefore, Option C (Unearned Service Revenue - Debit; Service Revenue - Credit) is the correct choice. Option A is incorrect because it increases cash instead of recognizing the earnings. Option B is incorrect because it decreases cash instead of recognizing the earnings. Option D is incorrect because it incorrectly implies that a prepaid asset is involved, when in fact the payment was for services not yet performed.

In November,cash Is Received in Advance of Rendering Services