A Company Provided $12,000 of Consulting Services, and Was Immediately

question 72

Multiple Choice

A company provided $12,000 of consulting services, and was immediately paid in cash by the customer.Identify the journal entry below that properly records this transaction.

• A) \[\begin{array} { | l | r | l | }
• \hline \text { Accounts receivable } & 12,000 & \\
• \hline \text { Consulting services revenue } & & 12,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | r | r | }
• \hline \text { Accounts receivable } & 12,000 & \\
• \hline \text { Cash } & & 12,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | r | l | }
• \hline \text { Consulting services revenue } & 12,000 & \\
• \hline \text { Cash } & & 12,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | r | r | }
• \hline \text { Cash } & 12,000 & \\
• \hline \text { Consulting services revenus } & & 12,000 \\
• \hline
• \end{array}\]
• E) \[\begin{array} { | l | r | l | }
• \hline \text { Accounts payable } & 12,000 & \\
• \hline \text { Consulting services revenue } & & 12,000 \\
• \hline
• \end{array}\]

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Definitions:

Functional Currency

The primary currency used by a business or unit in its financial statements, reflecting the economic environment in which it primarily operates.

Income Tax Expense

The total amount of income tax a company is obligated to pay to governmental authorities based on its taxable income.

Functional Currency

The currency of the primary economic environment in which the entity operates, typically the currency in which an entity primarily generates and expends cash.

Foreign Subsidiary

A company owned or controlled by another company that is based in another country.