Oracle Financial Reporting and Analysis Cloud 2017 Implementation Essentials — Question 3

A consulting services company is currently working on a business transformation project for your client, which spans multiple years. At the first period close, the consulting services company has recognized revenue and the accounting entry created is:
Dr Unbilled Receivables 40,000
Cr Revenue 40,000
At the end of the period, the client is sent an associated bill. What would be the corresponding invoice accounting entry? (Choose the best answer.)

Answer options

• A. Dr Unearned Revenue 40,000 Cr Accounts Receivables 40,000
• B. Dr Accounts Receivables 40,000 Cr Unbilled Receivables 40,000
• C. Dr Accounts Receivables 40,000 Cr Revenue 40,000
• D. Dr Unearned Revenue 40,000

Correct answer: C

Explanation

The correct entry is C because it reflects the recognition of revenue against the accounts receivable, aligning with the revenue that has already been recognized. Option A is incorrect because it mistakenly involves unearned revenue instead of accounts receivable. Option B incorrectly reverses the unbilled receivables instead of recording the revenue properly, and Option D is incomplete as it does not account for the corresponding accounts receivable.