Question

A company receives payment from one of his customers on August 5 for service performed on July 21. Which of the following entries would be recorded if the company uses accrual basis accounting?
a) account payable 1000
cash 1000
b) cash 1000
account receivable 1000
c) service revenue 1000
cash 1000
d) cash 1000
service revenue 1000

Answer 1

Answer:

b) cash 1000

account receivable 1000

Explanation:

Since in the question it is given that the company received payment from one of his customers on August 5 for the service performed on July 21

So under the accrual basis accounting, the journal entry is as follows

Cash Dr $1,000

     To Account receivable $1,000

(Being the payment received is recorded)

While debiting the cash and credited the account receivable