Final answer:
The correct journal entry for providing services on account is to debit Accounts Receivable and credit Service Revenue. This entry reflects the expected future cash inflow and recognizes the revenue earned from the services provided.
Step-by-step explanation:
The correct journal entry to record a transaction where services were provided to a customer on account is Debit Accounts Receivable, Credit Service Revenue. This entry increases the Accounts Receivable account, representing money owed by the customer to the company, and recognizes the revenue earned from the service that was provided, even though cash has not yet been received.
Accounts Receivable is an asset account and is debited because the company expects to receive cash in the future. Service Revenue is a revenue account and is credited because it reflects the increase in earnings as a result of providing the service.
Options 2, 3, and 4 do not accurately record the transaction on account since they involve either the incorrect debiting of revenue (Option 2) or the assumption that cash was received (Options 3 and 4), which is not the case in a transaction on account.