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When services are performed on account, it means that the business provides a service to a customer without requiring immediate payment, creating an accounts receivable. This increases the company's revenue and assets, as it recognizes the income earned, while also establishing a liability to collect the payment in the future. It reflects a trust-based relationship with customers and can impact cash flow if not managed properly. Ultimately, this practice can support business growth by allowing customers to access services they may not afford upfront.

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1mo ago

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Is performed services a credit or debit?

Performed services is a revenue account and revenue account has credit balance as normal default balance so services performed also has credit balance.


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Services are sold on account by which, when you receive revenue or income, it will be receivable if the revenue or income are not earned when the services is/or/are already performed


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Unearned Consulting Fees is classified as a liability account. It represents money received by a business for services that have not yet been performed, indicating an obligation to deliver those services in the future. This account is typically recorded on the balance sheet until the services are rendered, at which point it is recognized as revenue.


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What is the journal entry for prepaid income?

The journal entry for prepaid income is a debit to the Cash account and a credit to the Unearned Revenue account. The Unearned Revenue account is a liability. The rationale for such an entry is that this is income received in advance. This means that the income has not been earned since the services have not yet been performed. When the services have been performed it is appropriate to recognize the revenue and offset the liability account, unearned revenue.


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