Questions: Multiple Choice Question Chimney Sweeps provided chimney cleaning services to several clients during the month of February. Chimney's customers have not yet been billed. Chimney's customers owe 2,000 to Chimney. How will Chimney Sweeps record this transaction? Debit accounts receivable and credit services revenue Debit accounts receivable and credit cash Debit cash and credit services revenue

The answer is the first one: Debit accounts receivable and credit services revenue.

Explanation for each option:

1. Debit accounts receivable and credit services revenue: This is the correct option. When services are provided but not yet billed, the company recognizes the revenue earned by debiting accounts receivable (an asset account) to reflect the amount owed by customers and crediting services revenue (a revenue account) to record the income earned.

2. Debit accounts receivable and credit cash: This option is incorrect. Cash is not involved in this transaction because the customers have not yet paid. The transaction involves recognizing the amount owed by customers, not the receipt of cash.

3. Debit cash and credit services revenue: This option is incorrect. Cash is not debited because the customers have not yet paid. The correct entry involves accounts receivable, not cash, since the payment is still pending.

In summary, the correct accounting entry for services provided but not yet billed is to debit accounts receivable and credit services revenue.