Service Revenue

Definition: Revenue from services

Scope:ModerateDifficulty:Easy

Revenue from services

Common Journal Entries
AccountDebitCredit
1. Earn service revenue on account
Complete $5,000 of consulting services.
Accounts ReceivableAsset+$5,000
Service RevenueRevenue+$5,000
Revenue recognized when service is performed.
2. Earn from advance payment
Deliver services prepaid by customer.
Unearned RevenueLiability−$2,000
Service RevenueRevenue+$2,000
Liability converts to revenue as obligation is fulfilled.

T-AccountsA visual representation of a ledger account shaped like the letter T. Left side shows debits, right side shows credits.

Accounts ReceivableAsset account — amounts owed by customers. Debits increase the balance. Credits decrease the balance.AssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$5,000.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$5,000.00
Service RevenueService RevenueRevenueIncome earned from business operations. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$5,000.00
$2,000.00
Normal bal. ▶
$7,000.00
Unearned RevenueUnearned RevenueLiabilityAn obligation the business owes to others. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$2,000.00
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
Normal bal. ▶
$2,000.00
DurationN/A

External Links