Service revenue in and of itself is not an asset. This can be confusing, since service revenues technically contribute to the asset account in the general ledger when the double-entry accounting method is used. However, for financial accounting purposes, service revenue is not considered an asset. In accounting definitions, a current asset (such as accounts receivable) is any asset that provides economic value during or within a year.
Service revenue is neither an asset nor a liability. It's quite confusing because service revenues technically contribute to a company's asset account in the general ledger using the double entry principle. However, service revenues are not considered an asset for accounting purposes, but are recorded in the income statement. We have seen that a balance sheet describes the assets, liabilities, and equity of a company's shareholders.
An income statement provides an overview of all of a company's expenses and revenues in an accounting period. Ultimately, the income statement is where a company will record its net revenues, which include service revenues. After reviewing the items on the balance sheet and those on the income statement, service income is neither an asset nor a liability. In general, service companies have to employ a different strategy than product-based companies to get good returns.
However, it does not reveal the amount of revenue they earn, as this requires more calculations, since to determine profits and revenues it is necessary to understand how much of the revenue from services is reinvested in the company along with other business costs.
