Kostner Financial Services,Inc.performed accounting services for a client in December.A bill was mailed to the client on December 30.The company received the client's check by mail on January 5.Which of the following accounts should appear on the income statement for the year ended December 31 as related to the services performed?

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Quizplus · Accepted Answer

The income statement only reflects the revenue earned during the specific period being reported, which in this case is the year ended December 31. Since the services were performed in December, the corresponding revenue should be recognized in that same month, regardless of whether or not the payment was received in January. Therefore, the income statement should include Service Revenue as the account related to the services performed. The other options (B) Unearned Revenue, (C) Accounts Payable, and (D) Prepaid Expense are all balance sheet accounts and would not be included on the income statement for the year.