Service revenue is a type of revenue that is recorded in a company's income statements. It reflects the money earned by providing services to customers within a defined accounting period. According to accrual accounting, the service revenue account reports the commissions accrued by a company during the period of time indicated in the heading of the income statement. Service revenue includes work done, whether or not it was billed.
It is an operating income account and will appear at the top of the company's income statement. When you successfully provide or perform a service, the revenue you earn from it is what we call service revenue. Service revenue does not include any income from shipping goods, nor does it include any interest income. It can be a single consultation appointment or a service that the company completes for a customer once.
This means that all charges for services provided to date can be included in an income statement, even if all invoices have not yet been sent to customers. Revenue from services is recorded in your books every time it is earned, regardless of whether the payment is received or not. Receivables are generally created when buyers pay a company for its products or services with credit. Revenue from services may be presented in a separate item, which appears near the top of the income statement.
Service revenue plus product revenue equals your company's total revenue for a defined accounting period. Revenue from services appears on a balance sheet as accounts receivable for services provided, which are also known as accounts payable. This amount is usually indicated separately from other accounts receivable because it is not considered cash. To manage the termination of an unpaid service, you submit it in the accounts receivable category.
For example, when you provide a service, you earn cash or promise to be paid at a later date (accounts receivable). While service revenue is not an asset in accrued securities accounting, accounts receivable or cash payments that come from services are balance sheet assets. Prepaid expenses are funds that have been spent preemptively on goods or services that will be received in the future. However, service revenues contribute to your asset account on your general ledger if you use the double-entry accounting system.