Question

A company billed a client for services rendered in January. The payment was received partially in January, and the balance in February. When should the entry be made to record the service revenue?

Answer 1

The entry to record the service revenue should be made in January, when the company billed the client for services rendered.

Step-by-step explanation:

The entry to record the service revenue should be made in January, when the company billed the client for services rendered.

Although the payment was received partially in January and the balance in February, this does not affect the recognition of the revenue. It is customary to recognize revenue when the company has completed the services and is entitled to payment, regardless of when the payment is actually received.

So, in this case, the entry to record the service revenue should be made in January, when the billing occurred.