Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 27 - No. 12)
When a business provides services on credit, but has not yet received cash, how should this be reflected in the accounting records?
Debit cash, credit service revenue
Debit accounts receivable, credit service revenue
Debit service revenue, credit cash
Debit service revenue, credit accounts receivable
Explanation
Providing services on credit means accounts receivable increases. The revenue is earned, so revenue is recognized.
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