Is service revenue an asset, liability, or equity?
Understand the Problem
The question is asking to classify service revenue in terms of accounting categories, specifically whether it is considered an asset, liability, or equity within financial statements.
Answer
Equity
Service revenue is part of equity.
Answer for screen readers
Service revenue is part of equity.
More Information
Service revenue is not recorded directly as equity but indirectly contributes to equity through net income, which is added to retained earnings.
Tips
A common mistake is to assume service revenue as an asset or liability. It is essential to recognize it as equity due to its contribution to net income.
Sources
- Is service revenue an asset, liability, stockholders equity or net income? - homework.study.com
- FAQs: What Is Service Revenue? (With Definition and Types) - indeed.com
- Is Service Revenue an Asset? - skynova.com
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