Is Service Revenue A Current Asset? How It Is Treated In Accounting
Is Service Revenue A Current Asset?
Service revenue is an income for a business that is paid by the customers in exchange for services such as tax or auditing consultation.
Service revenue is not considered a current asset because it is treated as a revenue account and recorded in the income statement rather than in the balance sheet with other assets.
Normally, revenue is used to pay the business obligations, operational expenses, and dividends to the shareholders, and the remaining amount is added to the retained earnings that are later used for investments and purchasing necessary assets for the business operations.
When the service is performed but the company has not yet been paid by the customer then it is recorded as accounts receivable in the balance sheet which is a current asset for a business but once it is received it is removed from the balance sheet and recorded in the income statement as service revenue.
How service revenue is recorded in the accounting records?
Services revenue is recorded in the balance sheet as an income.
What is a service revenue in accounting terms?
Service revenue is an income for a business that is received in exchange for services.
What type of account is service revenue?
Service revenue is a revenue account that is reported on the income statement.
Is service revenue accounted for in the balance sheet?
Service revenue is not directly recorded in the balance sheet but it is recorded as accounts receivable if the customer does not pay on time for its services. The second condition is when a company subtracts its all expenses, taxes, and dividends from its revenue for the year (Service revenue is also included in it) then the remaining profit is added to the retained earnings which is a very important component of a company’s balance sheet.
Is service revenue recorded as debit or credit?
Service revenue shows the income of a business and income increases with the credit entry.
Is service revenue a current asset or a current liability?
Service revenue is neither a current asset nor a current liability, it is a revenue account that is reported on the income statement rather than on the balance sheet.