Service Revenue Debit Or Credit Normal Balance

Hence contra revenue accounts will have debit balances.

Service revenue debit or credit normal balance. Under the double entry system in accounting the revenue from a service provided to a client is a credit entry. Accounts with balances that are the opposite of the normal balance are called contra accounts. It can either be a debit balance or a credit balance. Normal balance is the side where the balance of the account is normally found.

For liability equity and revenue accounts the normal balance is a credit balance. Normal balance accounts debit or credit 1 service revenue 2 rent expense 3 from mec 104 at stony brook university. Revenue is normally a credit balance so a contra revenue account such as sales returns is normally a debit balance. Thanks for the a2a.

In accounting terminology a normal balance refers to the kind of balance that is considered normal or expected for each type of account. We don t print the money so when we receive it for services rendered it is a debit from the monetary system. When we spend it for goods or services we put it back into the monetary system. And third we define what we call normal balance.

1 company abc ltd provided accounting servic. Since the normal balance for owner s equity is a credit balance revenues must be recorded as a credit. Contra revenue normal balance. Let s illustrate revenue accounts by assuming your company performed a service and was immediately paid the full amount of 50 for the service.

Indicate whether a debit or credit decreases the normal balance of each of the following accounts. Office supplies debit repair service revenue debit interest payable debit accounts receivable creditsalaries expense debit owner capital credit prepaid insurance debit buildings debit interest revenue credit owner withdrawals debit. For asset and expense accounts the normal balance is a debit balance. Actually all types of revenue must be credited.

You could picture that as a big letter t hence the term t account. Each account has a debit and a credit side. See below 2 examples. Using the normal balance.

Again debit is on the left side and credit on the right. At the end of the accounting year the credit balances in the revenue accounts will be closed and transferred to the owner s capital account thereby increasing owner s equity. Contra asset normal balance.