Question

g Mary Richardo has performed $470 of CPA services for a client but has not billed the client as of the end of the accounting period. What adjusting entry must Mary make?

Answer 1

Answer: d. Debit Accounts Receivable and credit Service Revenue

Explanation:

As per the Revenue Recognition principle of Accounting, revenue must be recognized in the period it was earned. Mary Ricardo has already performed the services and so should post the $470 to the Service revenue account as revenue earned in the year.

The Accounts receivable account should also be debited to reflect that the client owes Mary Ricardo for services performed.