Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 13 - No. 20)
When a company receives cash in advance for services to be performed, how is it recorded?
Debit Cash, Credit Service Revenue.
Debit Accounts Receivable, Credit Service Revenue.
Debit Cash, Credit Unearned Revenue.
Debit Unearned Revenue, Credit Cash.
Explanation
The company receives cash (debit cash), and it has an obligation to provide services (credit unearned revenue, a liability).
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