Cash Received for Services Provided

A business can provide services in return for cash. The service is provided to the customer and payment from the customer is immediate using cash. There is no credit given to the customer for the provision of the service.

Suppose for example, the business provides services to a customer and receives immediate payment for cash for the amount of 500, then the journal entries will be as follows.

Journal Entry for Cash Received for Services Provided

The accounting records will show the following bookkeeping entries for the cash received for services provided:

Cash received for services provided journal
Account Debit Credit
Cash 500
Service revenue 500
Total 500 500

Cash Received for Services Provided Bookkeeping Explained

Debit
Cash is received from the customer for the provision of the services.

Credit
The credit entry to the service revenue account records the revenue earned as a result of providing the service.


The Accounting Equation

The Accounting Equation, Assets = Liabilities + Owners Equity means that the total assets of the business are always equal to the total liabilities of the business This is true at any time and applies to each transaction. For this transaction the Accounting equation is shown in the following table.

Cash Received for Services Provided Accounting Equation
Assets = Liabilities + Owners Equity
Cash = None + Service revenue
500 = 0 + 500

In this case one asset (cash) increases representing money received from the customer, this increase is balanced by the increase in owners equity. The credit to the income statement for the service revenue increases the net income which increases the retained earnings and therefore the owners equity in the business.

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Cash Received for Services Provided November 6th, 2016Team

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