When a Company Has Performed a Service but Has Not

question 182

Multiple Choice

When a company has performed a service but has not yet received payment, it

• A)debits accounts receivable and credits service revenue.
• B)debits revenue from services and credits accounts receivable.
• C)debits revenue from services and credits accounts payable.
• D)makes no entry until the cash is received.

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Definitions:

Cost of Goods Sold

Expenses directly related to the production of a company's sold merchandise.

Inventory-related Selling Costs

These are expenses directly tied to the selling of inventory items, such as shipping and handling fees.

Inventory Inspection Costs

Expenses associated with verifying the quantity and quality of inventory on hand.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, often equated to the book value of the company.