Module Accounting Services receives $8,000 cash for service revenue to be earned in the future.The company credits Service Revenue upon receipt of the cash.

Question

Quizplus · Accepted Answer

The correct accounting treatment for receiving cash for services to be performed in the future is to credit a liability account (such as Unearned Revenue or Deferred Revenue) rather than crediting Service Revenue, which is recognized when the service is actually performed.

Module Accounting Services Receives $8,000 Cash for Service Revenue to Be