Why is service revenue considered to be a credit in the journal?

Accounting Dec 16, 2020

Expert Solution

Remember that all revenue accounts are in essence equity accounts and equity accounts all increase on the credit side and decrease on the debit side. (Expense accounts are "negative" equity accounts and therefore they work the other way around.)
It is also easy to work out that revenue should be credited when revenue is recorded because earning revenue leads to an increase in an asset account (normally cash or accounts receivable) and asset accounts are debited when they increase. The other leg of the entry must then be the credit leg to the revenue account.

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