A Transaction Has Been Recorded in the T-Accounts of Gibbs

question 21

Multiple Choice

A transaction has been recorded in the T-accounts of Gibbs Company as follows:


Which of the following could be an explanation for this transaction?

• A)Cash has been paid out to a company that will provide future services to Gibbs Company.
• B)Gibbs has completed services for which they had earlier received cash in advance.
• C)Gibbs has provided services to a customer on account.
• D)Gibbs has received cash for service to be provided in the future.

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Definitions:

Ending Accounts Receivable

Ending accounts receivable is the amount of money owed to a company by its customers for goods or services delivered but not yet paid for at the end of an accounting period.

Maturity Date

The date on which the principal amount of a bond, loan, or other financial instrument becomes due and payable.

Amount Due

The total sum of money owed for goods or services provided, payable by a certain date.

90-Day Note

A short-term loan or promissory note that is due for repayment within 90 days.