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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Definitions:

Government Regulation

Rules or laws established by governments aimed at controlling or guiding activities within various sectors of the economy, often to protect public interests.

Command Economy

A type of economic system where the government or a central authority makes all decisions regarding the production and distribution of goods and services.

Central Government

The government entity or authority that holds the highest level of governance within a nation, responsible for national policies and administration.

Consumer Sovereignty

The theory that consumer preferences and choices dictate the production and sale of goods and services in a market.