Given the following journal entry:\[\begin{align*}\text{Cash} \quad & \text{Debit} \quad \$5,000 \\\text{Service Revenue} \quad & \text{Credit} \quad \$5,000 \end{align*}\]What does this journal entry describe?

• A. Borrowing cash from a bank
• B. Paying cash for office supplies
• C. Receiving cash for services performed
• D. Paying salaries to employees

Answer: (C)

Verified step by step guidance

1. Step 1: Begin by analyzing the journal entry provided. A journal entry records the financial transactions of a business, showing the accounts affected and whether they are debited or credited.
2. Step 2: Observe the accounts involved in the journal entry. In this case, 'Cash' is debited for \$5,000, and 'Service Revenue' is credited for \$5,000.
3. Step 3: Understand the meaning of debits and credits. A debit to 'Cash' indicates an increase in the cash account, while a credit to 'Service Revenue' indicates an increase in revenue earned by the business.
4. Step 4: Consider the context of the transaction. The increase in 'Cash' suggests that the business received money, and the increase in 'Service Revenue' implies that the money was earned from providing services.
5. Step 5: Conclude that this journal entry describes the receipt of cash for services performed, as it aligns with the increase in both cash and revenue accounts.