When Customers Pay for Services with a Check,the Company Should

question 122

True/False

When customers pay for services with a check,the company should debit Accounts Receivable and credit Service Revenue.

Know the differences in accounting treatments for capital and operational contributions.

Understand the accounting for volunteer services and donated assets.

Comprehend the encumbrance system for recording obligations.

Recognize the implications of board restrictions versus donor restrictions on contributions.

---

Definitions:

Capital Balances

The amounts shown in a company's financial statements under shareholders' equity, representing the residual interests in the assets of the entity after deducting liabilities.

Goodwill Method

An accounting method used to evaluate the excess of purchase price over the fair value of net identifiable assets acquired in a business combination.

Journal Entries

Recorded transactions in the accounting records of a business that are used to transfer amounts from one account to another, ensuring the ledger remains in balance.

Fair Value

Fair value is an estimate of the market value of an asset, based on its current price in a fair and open market transaction.