Meaning of Service Firm
Service firm refers to a business which earn revenues by providing intangible services instead of physical products. It is a firm that charges fee from people for making its facilities available to them. The service firm sell its non-physical goods to clients directly where charges are made on hourly basis. These is no inventory of goods in service firms unlike manufacturing firms as services are produced and consumed at a same point of time. This makes the accounting procedure easier for service companies where there is no need of tracking inventory.
The service provider needs to go through a special sort of training or hold some professional degrees and licenses before commencing their work. They need to posses’ specific skills of their field such as an accountant, doctor, engineer, teachers, architect, engineers and lawyers. For creating a journal entry in records of service company, focus is made only on the amount which was received and the amount of revenue earned. The service incomes are reported on income statement in same manner in which a retailer reports his sales.
Examples of Service Firm
Various examples of service firm are as listed below: –
- Fitness Centers: Fitness centers include personal trainers and services like dieticians.
- Telecommunication Services: It includes internet and phone services offered by telecommunication companies.
- Logistics Services: refers to transportation and storage services provided by distribution channel partners.
- Restaurants and Takeaway Food: Food vendor offering ready-to-eat food and takeaway services to clients.
- Tradespeople: Tradespeople include various types of contractors, plumbers, and electricians.
- Medical services: It is composed of dentists, doctors, nurses, hospitals, and various other medical-related services.
- Accommodation Services: includes motels, hotels, and backpacker hostels.
- Childcare Services: includes ranging from formal establishments to babysitters.
- Education sector: Comprise of corporate trainers, colleges, universities, and schools.
- Transport Services: All modes of transports including airline, railway, buses, taxis and so on.
- Hire Services: refers to one where tools, cars, storage facilities, etc. can be hired by consumers.
- Professional Services: Every sort of professional service be it legal, consulting, accounting, designer, interior decorators, and so on.