Childers Service Company provides services to customers totaling $3,000,for which it billed the customers.How would the transaction be recorded?

Question

Quizplus · Accepted Answer

Childers Service Company has provided services to customers and billed them. This means that the company has earned revenue but has not received cash yet. Therefore, the transaction should be recorded as a debit to Accounts Receivable (an asset account that represents the amount owed to the company by customers) and a credit to Service Revenue (a revenue account that represents the amount earned by the company from providing services). Option A is incorrect because it records a cash transaction, but the company has not received cash yet. Option C is incorrect because it records a transaction that implies the company has received cash, but this is not the case. Option D is incorrect because it records the opposite of what should be recorded: a credit to Accounts Receivable and a debit to Service Revenue.

Childers Service Company Provides Services to Customers Totaling $3,000,for Which