A company performs $10,000 of services and issues an invoice to the customer. Using the accrual method. what’s the cored entry to record the transactions?

A company performs $10,000 of services and issues an invoice to the customer. Using the accrual method. what’s the cored entry to record the transactions?

(A) Debit unearned revenue $10,000, credit salles revenue $10,000

(B) Debit accounts payable $10,000, credit sales revenue $10,000

(C) Debit services expense $10,000, credit sales revenue $10,000

(D) Debit cash $10,000, credit sales revenue $10,000

(E) Debit accounts receivable $10,000, credit salles revenue $10,000

Answer: E. Debit accounts receivable $10,000, credit salles revenue $10,000

The accrual method of accounting recognizes revenue when it is earned not when cash payment made. In this regard, the firm provided a $10,000 services for an individual and issued invoice; hence the revenue was realized. It is reflected by a debit to Accounts Receivable, despite the fact that no cash has yet been received but now the debtor company rightfully owes this money in future. The related debit is to Sales Revenue, as $10,000 of revenue has been earned. The other options do not quite capture the accrual accounting method . The correct answer is E which shows that the revenue has been earned and a receivable for an amount to be received in future was created.