Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

Financial Accounting

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

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Multiple Choice

Which of the following journal entries records the adjustment for revenue earned but not yet received or recorded at the end of the accounting period?

Debit Unearned Revenue; Credit Cash

Debit Accounts Receivable; Credit Service Revenue

Debit Service Revenue; Credit Accounts Receivable

Debit Cash; Credit Unearned Revenue

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Verified step by step guidance

Understand the concept of accrued revenue: Accrued revenue refers to revenue that has been earned but not yet received or recorded by the end of the accounting period. This adjustment ensures that the revenue is recognized in the correct period according to the accrual basis of accounting.

Identify the correct accounts involved: Since the revenue has been earned but not yet received, the accounts involved are 'Accounts Receivable' (to record the amount owed by customers) and 'Service Revenue' (to recognize the revenue earned).

Determine the correct journal entry: To record the adjustment, you need to debit 'Accounts Receivable' to increase the asset account (representing the amount owed by customers) and credit 'Service Revenue' to increase the revenue account (representing the revenue earned).

Eliminate incorrect options: Review the provided options and eliminate entries that do not align with the concept of accrued revenue. For example, 'Debit Unearned Revenue; Credit Cash' is incorrect because it pertains to deferred revenue, not accrued revenue. Similarly, 'Debit Service Revenue; Credit Accounts Receivable' reverses the correct entry, and 'Debit Cash; Credit Unearned Revenue' pertains to cash transactions, not accrued revenue.

Confirm the correct answer: The correct journal entry to record revenue earned but not yet received or recorded is 'Debit Accounts Receivable; Credit Service Revenue'. This adjustment ensures compliance with the accrual basis of accounting.