A Company Billed a Client for Services Performed on January

question 194

Multiple Choice

A company billed a client for services performed on January 10.The customer paid one-half of the amount owed on January 20 and the other one-half on February 24.When should the company record the related Service Revenue?

• A) On January 10
• B) On January 20
• C) One-half on January 20 and the other half on February 24
• D) At year-end in an adjusting entry

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Definitions:

Allowance for Uncollectible Accounts

A contra-asset account used to estimate the portion of accounts receivable that may not be collected.

Trade Accounts

Accounts used to record transactions carried out on credit between businesses, typically involving the sale of goods and services.

Aging of Accounts Receivable

An accounting process that categorizes accounts receivable according to the length of time an invoice has been outstanding to manage and collect debts effectively.

Allowance for Uncollectible Accounts

A reserve set aside in the accounting books for debts that are expected not to be collected, reflecting realistic income figures.