When a Customer Buys Services on Account,it Should Be Recorded

question 20

Multiple Choice

When a customer buys services on account,it should be recorded by the company as:

• A)a debit to Cash and a credit to Accounts Receivable.
• B)a debit to Accounts Receivable and a credit to Revenue.
• C)a debit to Services and a credit to Unearned Revenue.
• D)a debit to Cash and a credit to Accounts Payable.

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Definitions:

Substitution Effect

The change in consumption patterns due to a change in the relative price of goods, leading consumers to substitute away from higher-priced goods toward lower-priced ones.

Income Effect

How an adjustment in income levels for individuals or the economy affects the demand for goods or services.

Engel Curve

A graphic representation showing how a consumer's demand for a good varies with income, keeping other factors constant.

Strictly Convex Preferences

Preferences where consumers always prefer mixtures of goods to extremes, demonstrating a consistent desire for variety.