An adjusting entry involving recognition of accrued revenue is necessary at the end of March in which of the following situations?
A)Midwood Consultants received payment in February for consulting services rendered in March.
B)Midwood Consultants began working for a client on March 15;bills will be sent monthly beginning April 15.
C)Midwood Consultants made payment in January for office rent for the first three months of the year.
D)On March 31,a major customer paid his bill for a consulting job completed in February.

Question

Quizplus · Accepted Answer

Accrued revenue refers to revenue that has been earned but not yet billed or received by the end of the accounting period. In option B, Midwood Consultants began working for a client in March but will not bill the client until April, making it necessary to recognize the revenue earned in March through an adjusting entry.

An Adjusting Entry Involving Recognition of Accrued Revenue Is Necessary