Question

Select the correct answer.

On March 1, Clean123 Inc. performs cleaning services for multiple customers. It sends customer invoices totaling $5,000. It expects to be paid at the end of the month for its services. How would Clean123 Inc. record this transaction?

A: Income 5,000 Accounts Receivable 5,000
B: Accounts Receivable 5,000 Service Revenue 5,000
C: Accounts Receivable 5,000 Income 5,000
D: Sales Revenue 5,000 Accounts Receivable 5,000

Answer 1

The correct answer is Choice B.

When a business makes a sale and expects to be paid in the near future it should be recorded as an Account Receivable. In this case the company will have a debit entry to Accounts Receivable and a credit entry to Service Revenue.