Question

An accountant who keeps his books using accrual accounting performs a service but does not receive payment at the time the service is performed. The entry made by the accountant will require a credit to:

a) Deferred Expense
b) Unearned Service Revenue
c) Unearned Expense
d) Service Revenue

Answer 1

In accrual accounting, when a service is performed but payment has not been received, a credit is made to Service Revenue. An asset account, typically Accounts Receivable, is debited to reflect the owed payment.

Step-by-step explanation:

When an accountant who uses accrual accounting performs a service but does not receive payment at the time the service is performed, the journal entry should include a credit to Service Revenue. Accrual accounting requires that income is recognized when earned, regardless of when the payment is actually received. The corresponding debit would typically be to an asset account called Accounts Receivable, reflecting the fact that the client owes the accountant for the services rendered.