{"id":181018,"date":"2025-01-09T12:43:06","date_gmt":"2025-01-09T12:43:06","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=181018"},"modified":"2025-01-09T12:43:08","modified_gmt":"2025-01-09T12:43:08","slug":"a-company-performs-10000-of-services-and-issues-an-invoice-to-the-customer","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/01\/09\/a-company-performs-10000-of-services-and-issues-an-invoice-to-the-customer\/","title":{"rendered":"A company performs $10,000 of services and issues an invoice to the customer"},"content":{"rendered":"\n

A company performs $10,000 of services and issues an invoice to the customer. Using the accrual method. what’s the cored entry to record the transactions?<\/p>\n\n\n\n

(A) Debit unearned revenue $10,000, credit salles revenue $10,000<\/p>\n\n\n\n

(B) Debit accounts payable $10,000, credit sales revenue $10,000<\/p>\n\n\n\n

(C) Debit services expense $10,000, credit sales revenue $10,000<\/p>\n\n\n\n

(D) Debit cash $10,000, credit sales revenue $10,000<\/p>\n\n\n\n

(E) Debit accounts receivable $10,000, credit salles revenue $10,000<\/p>\n\n\n\n

The Correct Answer and Explanation is :<\/strong><\/mark><\/p>\n\n\n\n

The correct answer is:
(E) Debit accounts receivable $10,000, credit sales revenue $10,000<\/strong><\/p>\n\n\n\n

Explanation:<\/h3>\n\n\n\n

Under the accrual accounting method<\/strong>, revenue is recorded when it is earned, regardless of when cash is received. In this scenario, the company has provided services worth $10,000 to a customer, meaning the revenue has been earned. Since the company has issued an invoice but has not yet received payment, the amount is classified as accounts receivable<\/strong>, representing money owed to the company by the customer.<\/p>\n\n\n\n

The Journal Entry:<\/h4>\n\n\n\n
    \n
  1. Debit Accounts Receivable $10,000:<\/strong><\/li>\n<\/ol>\n\n\n\n
      \n
    • The company recognizes that it has a legal right to receive payment from the customer.<\/li>\n\n\n\n
    • Accounts receivable is an asset, and assets increase with a debit.<\/li>\n<\/ul>\n\n\n\n
        \n
      1. Credit Sales Revenue $10,000:<\/strong><\/li>\n<\/ol>\n\n\n\n
          \n
        • This reflects the earned income from providing the services.<\/li>\n\n\n\n
        • Revenue increases equity, and it is recorded as a credit.<\/li>\n<\/ul>\n\n\n\n

          Why Other Answers Are Incorrect:<\/h4>\n\n\n\n
            \n
          • (A) Debit unearned revenue, credit sales revenue:<\/strong>
            Unearned revenue is used when a company receives cash before providing services. In this case, services are already performed, so unearned revenue is not relevant.<\/li>\n\n\n\n
          • (B) Debit accounts payable, credit sales revenue:<\/strong>
            Accounts payable represents amounts the company owes to others (liabilities). This transaction doesn’t involve the company owing money.<\/li>\n\n\n\n
          • (C) Debit services expense, credit sales revenue:<\/strong>
            Service expenses relate to costs incurred to deliver services, not the revenue generated.<\/li>\n\n\n\n
          • (D) Debit cash, credit sales revenue:<\/strong>
            Cash is debited only when payment is received. Here, the company issued an invoice but hasn\u2019t received cash yet.<\/li>\n<\/ul>\n\n\n\n

            Using this entry ensures the financial statements properly reflect the revenue earned and the amount owed to the company. This is a fundamental principle of the accrual method and adheres to Generally Accepted Accounting Principles (GAAP).<\/p>\n","protected":false},"excerpt":{"rendered":"

            A company performs $10,000 of services and issues an invoice to the customer. Using the accrual method. what’s the cored entry to record the transactions? (A) Debit unearned revenue $10,000, credit salles revenue $10,000 (B) Debit accounts payable $10,000, credit sales revenue $10,000 (C) Debit services expense $10,000, credit sales revenue $10,000 (D) Debit cash […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-181018","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/181018","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=181018"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/181018\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=181018"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=181018"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=181018"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}