When a Company Performs a Service but Has Not Yet

question 195

Multiple Choice

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

• A)debits Service Revenue and credits Accounts Receivable.
• B)debits Accounts Receivable and credits Service Revenue.
• C)debits Service Revenue and credits Accounts Payable.
• D)makes no entry until cash is received.

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Definitions:

Unrealized Gain

A profit that results from an increase in value of an investment or asset but has not been realized through a sale.

Exchange Rates

The value of one currency for the purpose of conversion to another, implying how much of one currency can be exchanged for another.

Foreign Currency (FC)

Currency used in a transaction that is different from the currency of the primary economic environment in which the entity operates.

Historical Rate

The exchange rate at which a foreign currency transaction was converted to the reporting currency at the date of the transaction.