Question

A company bills customers for services rendered on account. Which of the following is part of recording this transaction?

a. Decrese service revenue
b. Decrease cash
c. Increase account receivable
d. Increase Unearned revenue

Answer 1

A company bills customers for services rendered on account by decreasing service revenue and increasing accounts receivable.

Step-by-step explanation:

When a company bills customers for services rendered on account, the transaction involves a decrease in service revenue and an increase in accounts receivable. Here's a step-by-step explanation:

1. Decrease service revenue: Since the company has provided services to the customers, they need to recognize the revenue generated from these services. By recording the revenue in the books, the service revenue account will decrease.
2. Increase accounts receivable: Since the customers haven't paid for the services yet, the company needs to record the amount owed to them. This is done by increasing the accounts receivable account, which represents the amount customers owe.

Therefore, the correct options are:

• Decrease service revenue
• Increase accounts receivable

Answer 2

c. Increase account receivable

Step-by-step explanation:

The journal entry for the record this transaction is

Accounts receivable A/c Dr XXXXX

To Service revenue A/c XXXXX

(Being the service is rendered on the account is recorded)

This transaction increases the account receivable as well as the service revenue account so the respective account is debited and credited.