When utility customers are billed during the year, the enterprise fund journal entry will include which of the following?

• A. A Debit to Customer Accounts Receivable
• B. A Credit to Revenue - Service
• C. A Debit to Cash
• D. A Credit to Customer Deposits

Answer: (A)

When utility services are billed in an enterprise fund, accounting on an accrual basis records the amount owed by customers as an asset and recognizes the revenue earned. The first and essential step is to debit Customer Accounts Receivable, which shows that customers now owe money to the utility. The corresponding credit would normally go to Revenue - Service to reflect that the service has been provided and revenue earned. Cash isn’t affected at billing time since payment may come later, and customer deposits aren’t involved unless deposits are specifically being tracked. So, the entry includes a debit to Customer Accounts Receivable to establish the receivable from billing.