A consultant performs accounting services for a client on 30 June 2016 and bills the client $350,to be paid within 60 days.Payment is received on 15 August 2016.Accrual accounting is used by both parties.
-What is the journal entry made by the consultant on 30 June 2016?

Question

Quizplus · Accepted Answer

The consultant provides a service on 30 June 2016 but has not yet received payment. Therefore, the consultant should record an increase in accounts receivable (debit) and an increase in service revenue (credit) for the value of the work completed. Choice A is incorrect because the consultant is not incurring any expenses that would result in an increase in accounts payable. Choice B is incorrect because the consultant is not receiving cash at this point in time. Choice D is incorrect because at least one of the provided answer choices is correct.

A Consultant Performs Accounting Services for a Client on 30