When revenue is earned but cash has not yet been received, the adjusting entry typically includes:

• A. Debit Accounts Receivable; Credit Revenue
• B. Debit Revenue; Credit Accounts Receivable
• C. Debit Cash; Credit Revenue
• D. Debit Revenue; Credit Cash

Answer: (A)

Accrual accounting records revenue when it is earned, not when cash is received. If revenue is earned but cash hasn’t come in, you set up a receivable and recognize the income. So you debit Accounts Receivable (an asset that represents amounts owed) and credit Revenue (income recognized). This increases both assets and revenue, aligning with the idea that the company has earned income and expects to collect cash later. When the cash is finally received, you’d later debit Cash and credit Accounts Receivable. The other options would either misstate which account increases or imply cash was received already; they don’t reflect revenue earned on account.