Robert Rogers,CPA performed accounting services for a client in December.A bill was mailed to the client on December 30.Roberts received a check in the mail on January 5.The revenue principle would require that which of the following accounts appear on the balance sheet for December 31?
A) Prepaid expense
B) Accounts receivable
C) Unearned revenue
D) Accounts payable

Question

Quizplus · Accepted Answer

The revenue principle states that revenues should be recognized when earned, regardless of when cash is received. Since the accounting services were performed in December, revenue should be recognized in December, and the corresponding account on the balance sheet should be accounts receivable, as the client has not yet paid for the services. Prepaid expense would not be appropriate, as it represents payments made in advance for goods or services that have not yet been received. Unearned revenue represents payments received for goods or services that have not yet been delivered, which is not the case here. Accounts payable represents amounts owed to vendors for goods or services received, which is not applicable in this scenario.

Robert Rogers,CPA Performed Accounting Services for a Client in December