All 23 Cash Application questions
More in Cash Application
What is cash application in accounts receivable? What is the journal entry to record a customer payment received? What is unapplied (or unidentified) cash? What is remittance advice from the customer's side and why is it important for cash application? What does it mean to post a receipt 'on account'? What happens to the AR balance when a receipt is applied? How does automated cash application (auto-matching) work? How do you handle a short payment or overpayment during cash application? What are customer deductions (chargebacks) and how are they managed? What is a lockbox and how does it help cash application?
Advertisement
Accounts Payable & Receivable › Cash Application

What is the difference between a payment and a receipt in AR?

Beginner

Answer

In AR, a receipt is money coming in from a customer that reduces receivables. (A payment, by contrast, is money going out in AP.) Recording a customer receipt debits cash and credits AR. Keeping the direction clear avoids posting a customer receipt as if it were a supplier payment.
Real-world example A customer receipt of $3,000 is posted as cash in and AR down, not confused with any AP payment.

Common follow-ups: Which side does a customer receipt hit? | How does this differ from an AP payment?

Reconciliations Payment Runs Cash Application
All 23 Cash Application questions