When a Service Has Been Performed but No Cash Has

question 16

Multiple Choice

When a service has been performed but no cash has been received, which of the following statements is true?

• A)No journal entry is made.
• B)The entry includes a debit to accounts payable.
• C)The entry includes a credit to unearned revenue.
• D)The entry includes a debit to accounts receivable.

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Definitions:

Consumer Surplus

The gap between the aggregate amount buyers are willing and able to spend for a good or service, versus what they actually spend.

Property Rights

The legally guaranteed rights to own, use, and dispose of assets, including physical and intellectual property.

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total benefits received by all parties involved.

Equilibrium Price

The price at which the quantity of a good demanded equals the quantity supplied, resulting in market stability.