A customer must receive a yearly invoice. The recurring service needs to be posted on the contract account at the beginning of each month, to meet company accounting requirements. Which billing plan…

Question

Options

• AMonthly, at the beginning of the period
• BYearly, at the beginning of the period
• CYearly, at the end of the period
• DMonthly, at the end of the period

• A
  53% (18)
• B
  6% (2)
• C
  12% (4)
• D
  29% (10)

Explanation

Option A is correct because this scenario has two separate requirements that must not be confused: the posting frequency (monthly, at the beginning of each period for internal accounting) and the invoicing frequency (yearly, sent to the customer). The billing plan cycle controls how often charges are posted to the contract account - and since accounting requires monthly postings at the start of each month, a monthly cycle at the beginning of the period is the right setting.

Why the distractors fail:

• B (Yearly, beginning) and C (Yearly, end) both post only once per year, which violates the monthly accounting posting requirement.
• D (Monthly, end) gets the frequency right but posts at the end of the period, not the beginning as required.

Memory tip: Separate "when the customer gets billed" from "when the system posts charges." Think: "Post early, bill late" - monthly postings at the beginning keep accounting happy, while the customer still receives just one yearly invoice.

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