Jones Financial Services Company 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?
A) Service Revenue
B) Unearned Revenue
C) Accounts Payable
D) Prepaid Expense

Question

Quizplus · Accepted Answer

Service Revenue should appear on the income statement for the year ended December 31 since the services were performed in December, and revenue is recognized when earned regardless of when the payment is received. Unearned Revenue would be appropriate if the company received payment in advance for services not yet performed, but that is not the case here. Accounts Payable and Prepaid Expense are balance sheet accounts and not related to revenue recognition.

Jones Financial Services Company Performed Accounting Services for a Client