What Are Services Rendered in Accounting?

Services rendered are the services that a company completes for the client or customer prior to receiving payment for the services. An accountant details the rendered service, or an invoice, at the conclusion of a service agreement and presents it to the client in order to receive payment.


Examples of services rendered

Before a project starts, contractors frequently present a preliminary budget. Once the project is finished or the service is provided, they report a service rendered invoice. For instance, a homeowner may hire a painting contractor to paint their home. After inspecting the area to be painted, the painter offers a preliminary estimate of the job’s cost. The painter delivers an invoice with the total cost of the service once they’ve finished the work.

Another example of service rendering is streaming platforms. At the end of a billing cycle, clients receive the service prior to being charged. For instance, music streaming services offer their services to users and bill them at the end of a monthly, biannual, or annual billing cycle.

What are services rendered?

Before receiving payment for the services, a business completes services for a client or customer known as “services rendered.” At the end of a service agreement, an accountant generates an invoice outlining the work performed and delivers it to the client for payment. Here are some examples of companies that provide services without being paid:

What to include on an invoice

As soon as they complete their work, businesses and contractors frequently send an invoice. An invoice typically includes the following components:

What are services rendered in accounting?

When a business completes a transaction, they create a document with the transaction’s specifics. Selling services generates income, which they document in a ledger. For some businesses, services rendered is the main revenue account.

What is a journal entry?

In accounting, a journal entry records all business transactions. The transaction is eventually posted in a general ledger by accountants. It is an important first step in the accounting cycle. A ledger is an accounting document with two columns: a debit column and a credit column. In lieu of payment in cash, services rendered on account include a debit to accounts receivable.

Types of services rendered accounting

Here are different types of services rendered accounting practices:

Services rendered on credit

If a company doesn’t accept payment in advance for their services, they provide them on credit, which means that the last payment is due when the job is finished. When the company completes the work, they issue an invoice. The amount of money that a client still owes for services that the business has provided is known as accounts receivable.

Account rendered

The statement of charges that a creditor provides to a debtor is known as an “account rendered.” Even before the customer makes the final payment, if a business provides $2,000 worth of services, it is still considered to have earned money. The business records the sum as accounts receivable, which is listed as a current asset on the balance sheet.

Cash received rendering services

Receiving payment in cash for services rendered increases the company’s assets. Service revenue generates income, which increases the companys capital. Some companies demand a non-refundable deposit from their clients or customers, which increases service revenue. This is a good business practice because it ensures that they will be paid for the services they provide.

Examples of services rendered accounting

Here are two examples of services rendered in accounting:

Example: account rendered

The client receives digital strategy consulting services from Friedrich Consulting and receives a $350 bill. Using accounts receivable, an asset account, Friedrich Consulting provided their consulting services on account. The customer pays the full $350 amount two weeks later. For this transaction, an accountant records a journal entry and places it in the debit column. The credit service revenue account would also reflect the $350. The accounts receivable account decreases, and the cash account increases.

Example: service rendered on credit

An information technology (IT) firm is hired by a startup mobile banking company to help with the creation of mobile applications. The IT company then bills the start-up company $2,687. 53 once the service is complete. Despite the fact that the IT company has not yet received payment, the asset accounts receivable and overall revenue have increased. Up until the clients pay the full amount, accountants record the transaction as services rendered on credit.


Following are some pointers on accounting procedures and tactics for businesses that provide their services:

Develop an explicit payment collection policy

To ensure successful payments and customer satisfaction, a clear payment policy must be created to serve as a guide for billing staff and customers. Before using your services, customers can be sure they understand the terms of the agreement thanks to an explicit policy. By establishing a policy, you’re also giving your billing team and accountants access to a comprehensive set of rules that will help them deal with any situations that may arise when collecting payments.

Be clear about your payment terms

It’s critical for businesses to clearly communicate their credit policies to clients and customers and to include those policies in formal agreements like contracts and letters of engagement. When composing a credit policy, consider the following components:

Consider recurring invoices

It might be advantageous to use recurring invoices to charge customers for ongoing services if you offer a subscription-based service. An agreement is made between you and your client when you set up an automated billing system, whether it is for a weekly, monthly, bi-annual, or annual payment. Customers are more likely to stick to a regular payment schedule, which enables your company to get paid more quickly.

Follow best bookkeeping practices

Accurate bookkeeping procedures simplify crucial accounting department tasks. By serving as a central repository for crucial financial data about a company, it also streamlines the process of creating financial reports.


How do you record services rendered in accounting?

Debiting Cash and crediting Service Revenue constitutes the journal entry for services rendered for cash. Since cash is an asset account, debiting it causes it to grow. A revenue account called Service Revenue is increased by crediting it.

Is services rendered an asset?

No, service revenue is not an asset. Resources with economic value that a business owns are considered assets. While service revenue is the money a company makes from giving its clients goods and services. Therefore, service revenue is not an asset but rather a revenue (or income) account.

What are examples of services rendered?

A payment for services rendered is given to a person in exchange for those services. For instance, your company might employ a DJ for a gathering or a choreographer for a performance. SOAS will cut the individual a check directly.

Is services rendered an expense?

The company rendered services on account. The services have been rendered, hence, already earned. Therefore, even though the $750 for the rendered services has not yet been paid for, it is still considered income. The amount is recorded as Accounts Receivable, an asset account, as it has yet to be collected.

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