If a service is performed but payment is not yet received, which entry should be used?

If a service is performed but payment is not yet received, which entry should be used?

• A. A Sales Receipt
• B. An Invoice
• C. A Credit Memo
• D. A Bank Deposit

Answer: (B)

When you perform a service but haven’t been paid yet, you record revenue by billing the customer and creating a receivable. This is done by issuing an invoice. An invoice documents the amount owed and sets up a claim for payment, which aligns with recognizing revenue and accounts receivable on the books. If payment were received at the time of service, you’d use a sales receipt instead, since that records cash immediately. A bank deposit logs actual cash coming in, not the act of requesting payment. A credit memo is used to reduce amounts owed or issue refunds after a sale, not for the initial billing of a new service. So the invoice is the appropriate entry in this scenario, and when payment arrives you would then record the cash received and clear the receivable.

When you perform a service but haven’t been paid yet, you record revenue by billing the customer and creating a receivable. This is done by issuing an invoice. An invoice documents the amount owed and sets up a claim for payment, which aligns with recognizing revenue and accounts receivable on the books.

If payment were received at the time of service, you’d use a sales receipt instead, since that records cash immediately. A bank deposit logs actual cash coming in, not the act of requesting payment. A credit memo is used to reduce amounts owed or issue refunds after a sale, not for the initial billing of a new service. So the invoice is the appropriate entry in this scenario, and when payment arrives you would then record the cash received and clear the receivable.