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

Adjusting Entries: Accrued Revenues

Financial Accounting

3. Accrual Accounting Concepts

Adjusting Entries: Accrued Revenues

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Multiple Choice

Which of the following adjusting entries should be made on July 31 to record accrued revenues that have been earned but not yet received in cash?

Debit Accounts Receivable; Credit Service Revenue

Debit Cash; Credit Unearned Revenue

Debit Service Revenue; Credit Accounts Receivable

Debit Unearned Revenue; Credit Cash

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Verified step by step guidance

Understand the concept of accrued revenues: Accrued revenues are revenues that have been earned but not yet received in cash or recorded. These are typically recognized at the end of an accounting period to ensure the financial statements reflect all earned revenues.

Identify the correct accounts involved: Since the revenue has been earned but not yet received, the adjusting entry will involve increasing Accounts Receivable (an asset account) to reflect the amount owed and increasing Service Revenue (a revenue account) to recognize the earned revenue.

Determine the correct debit and credit: In accounting, debits increase asset accounts, and credits increase revenue accounts. Therefore, the adjusting entry should debit Accounts Receivable and credit Service Revenue.

Eliminate incorrect options: Review the other options provided. For example, 'Debit Cash; Credit Unearned Revenue' is incorrect because cash has not been received, and unearned revenue refers to revenue received in advance but not yet earned. Similarly, 'Debit Service Revenue; Credit Accounts Receivable' reverses the correct entry, and 'Debit Unearned Revenue; Credit Cash' pertains to a different scenario involving deferred revenue.

Conclude the correct adjusting entry: The correct adjusting entry to record accrued revenues on July 31 is 'Debit Accounts Receivable; Credit Service Revenue,' as this properly reflects the earned revenue and the receivable amount.