Question 10: A company provides services to customers and collects $25,000 in advance for services to be rendered in the future. Provide a comprehensive explanation of the journal entries and subsequent adjustments to record the advance payment and recognize revenue when services are performed.

Requirements:

1. Record the journal entry to recognize the advance payment for services.
2. Post the journal entry to the Unearned Revenue account in the ledger.
3. Analyze the impact of the advance payment on the company's balance sheet and income statement.
4. Discuss the nature of unearned revenue and its treatment in financial statements.
5. Explain the concept of revenue recognition and the criteria for recognizing revenue over time or at a point in time.
6. Record the journal entry to recognize revenue when services are performed and earned.
7. Post the journal entry to the Service Revenue account in the ledger.
8. Analyze how these transactions affect the company's balance sheet and income statement.
9. Discuss the importance of matching revenues with expenses for accurate financial reporting.
10. Illustrate how the timing of revenue recognition affects a company's financial performance and profitability.