If a company receives payment two months after it provides a service:Multiple Choiceonly one journal entry will be needed.cash will be credited.a revenue account will be increased with a debit.stockholders' equity will increase.

Answered: If a company receives payment two…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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If a company receives payment two months after it provides a service:
Multiple Choice
only one journal entry will be needed.
cash will be credited.
a revenue account will be increased with a debit.
stockholders' equity will increase.

Expert Solution

Step 1

Services provided by a company may be encashed at the same time or amount can also be received in future.

At the time of providing services itself, revenue will be recorded and accounts receivable is recorded for the amount to be received. Assets will be debited and Sales Revenue is credited.

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