Online Computer Services Follows Accrual-Based Accounting

question 34

Multiple Choice

Online Computer Services follows accrual-based accounting. It receives $7,000 in advance for services to be performed in both the current and following fiscal period. Which of the following entries records this transaction?

• A) A debit to Cash and a credit to Service Revenue
• B) A debit to Cash and a credit to Accounts Payable
• C) A debit to Cash and a credit to Unearned Service Revenue
• D) A debit to Unearned Service Revenue and a credit to Service Revenue
• E) A debit to Service Revenue and a credit to Unearned Service Revenue

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