Is Service Revenue A Debit Or Credit Account
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A service revenue that is billed but not paid is an account receivable.
Is service revenue a debit or credit account. A debit is an entry made on the left side of an account. For example a company sells 5 000 of consulting services to a customer on credit. Let s illustrate how revenues are recorded when a company performs a service on credit i e the company allows the client to pay for the service at a later date such as 30 days from. For example you would debit the purchase of a new computer by entering the asset gained on the left.
When doing his bookkeeping pete will record this credit under the heading service revenues. Let s say pete does a plumbing job that he charges his client 600 00 for. It either increases an asset or expense account or decreases equity liability or revenue accounts. Account receivables are assets and therefore you would debit the account.
Debits are always entered on the left side of a journal entry. Example of revenue being credited. Actually all types of revenue must be credited. A service revenue that is billed but not paid is an account receivable.
The journal entry for services rendered for cash is to debit cash and credit service revenue. Since the service was performed at the same time as the cash was received the revenue account service revenues is credited thus increasing its account balance. Service revenues can arise from rendering services for cash or on account on credit to be collected at a later date. Pete also needs to balance this credit with a debit so he will debit his accounts receivable an asset account with 600 00.
The other side of the entry is a credit to revenue which increases the shareholders equity side of the balance sheet. Account receivables are assets and therefore you would debit the account. One side of the entry is a debit to accounts receivable which increases the asset side of the balance sheet. See below 2 examples.
Thanks for the a2a. Under the double entry system in accounting the revenue from a service provided to a client is a credit entry.
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