A business receives $40,000 for services that it will perform over the next four months.Which of the following accounts is credited?
A) Cash
B) Accounts Payable
C) Service Revenue
D) Unearned Revenue

Question

Quizplus · Accepted Answer

The account that is credited in this scenario is Unearned Revenue because the business has received payment for services that it has not yet performed. The money is therefore considered a liability until the services are actually rendered, at which point the liability will be reduced and the corresponding revenue account (in this case, Service Revenue) will be credited.

A Business Receives $40,000 for Services That It Will Perform