When you post transactions, journal entries are created in general ledger. The journal entries that are created vary depending on transaction type.
The following sections include information about the journal entries associated with Accounts Receivable transactions:
On the G/L Transactions report, invoices are assigned source code AR‑IN.
Posted invoices debit the customer's Receivables Control account and credit the general ledger revenue account specified with each invoice detail (either directly or by distribution code).
| G/L Account | Debit | Credit |
|---|---|---|
| Retainage Control | X | |
| Receivables Control | X | |
| Revenue and other accounts | X |
The entry for a retainage invoice (or debit note) is:
| G/L Account | Debit | Credit |
|---|---|---|
| Receivables Control | X | |
| Retainage Control | X |
On the G/L Transactions report, credit notes are assigned source code AR‑CR.
Posted credit note transactions debit the general ledger accounts you enter with the document details and credit the customer's Receivables Control account.
| G/L Account | Debit | Credit |
|---|---|---|
| Revenue and other accounts | X | |
| Receivables Control | X | |
| Retainage Control | X |
The entry for a retainage credit note is:
| G/L Account | Debit | Credit |
|---|---|---|
| Retainage Control | X | |
| Receivables Control | X |
On the G/L Transactions report, debit notes are assigned source code AR‑DB.
Posted debit note transactions debit the customer's Receivables Control account and credit the general ledger accounts you enter with the debit note details.
| G/L Account | Debit | Credit |
|---|---|---|
| Retainage Control | X | |
| Receivables Control | X | |
| Revenue and other accounts | X |
On the G/L Transactions report, interest invoices are assigned source code AR‑IT.
Posted interest invoice transactions debit the customer's Receivables Control account and credit the Interest Income account specified for the interest profile.
| G/L Account | Debit | Credit |
|---|---|---|
| Receivables control | X | |
| Interest income | X |
On the G/L Transactions report, recurring charge invoices are assigned source code AR‑IN.
Posted recurring charge invoices debit the customer's Receivables Control account and credit the general ledger accounts you enter with the invoice details.
| G/L Account | Debit | Credit |
|---|---|---|
| Receivables Control | X | |
| Revenue and other accounts | X |
On the G/L Transactions report, receipts are assigned source code AR‑PY, and discounts are assigned the source code AR‑ED.
Receipts debit the Bank account specified for the receipt batch, debit the Sales Discounts account (if a discount is taken), and credit the customer's Receivables Control account.
| G/L Account | Debit | Credit |
|---|---|---|
| Bank | X | |
| Sales Discounts | X | |
| Receivables Control | X |
On the G/L Transactions report, prepayments are assigned source code AR‑PI.
When you post a prepayment, Accounts Receivable debits the amount to the Bank account specified for the receipt batch and credits the Prepayment Liability account specified in the customer’s account set.
| G/L Account | Debit | Credit |
|---|---|---|
| Bank | X | |
| Prepayment Liability | X |
Prepayments applied to invoices debit the Prepayment Liability account and credit the customer’s Receivables Control account.
| G/L Account | Debit | Credit |
|---|---|---|
| Prepayment Liability | X | |
| Receivables Control | X |
On the G/L Transactions report, miscellaneous receipts are assigned source code AR‑PY.
Miscellaneous receipts debit the receipt batch Bank account and credit the general ledger accounts entered with distribution details in the Miscellaneous Receipt Distribution screen in Receipt Entry.
| G/L Account | Debit | Credit |
|---|---|---|
| Bank | X | |
| Revenue and other accounts | X |
On the G/L Transactions report, unapplied cash receipts are assigned source code AR‑UC.
Unapplied cash receipts debit the Bank account for the receipt batch and credit the customer’s Receivables Control account.
| G/L Account | Debit | Credit |
|---|---|---|
| Bank | X | |
| Receivables Control | X |
On the G/L Transactions report, adjustments are assigned source code AR‑AD.
On the G/L Transactions report, exchange gains or losses are assigned source code AR‑GL (for "gain/loss").
In a multicurrency system, exchange gains or losses result when you
If you settle an invoice using an exchange rate that is different from the rate currently used by the invoice, and the exchange rate on settling reduces the value of the invoice, the transaction registers a gain.
If posting changes the value of an invoice (for example, through partial payment, full payment, or credit note), Accounts Receivable calculates the gain or loss for the portion of the invoice that was changed by the posting, and creates gain or loss transactions for the general ledger accounts.
| G/L Account | Debit | Credit |
|---|---|---|
| Receivables Control | X | |
| Exchange Gain (or Realized Exchange Gain) | X |
| G/L Account | Debit | Credit |
|---|---|---|
| Exchange Loss (or Realized Exchange Loss) | X | |
| Receivables Control | X |
Note: Credit notes and debit notes do not affect gains or losses if they are issued at the exchange rate of the original invoice. However, they will generate gains or losses if they are issued at a different rate.
If you revalue an invoice in a source (non-functional) currency at an exchange rate that is different from the rate currently used by the invoice, and the changes in the exchange rate increase the value of the invoice, the transaction registers a loss. In this situation, the following journal entries are created:
| G/L Account | Debit | Credit |
|---|---|---|
| Exchange Loss (or Unrealized Exchange Loss) | X | |
| Receivables Control | X |
| G/L Account | Debit | Credit |
|---|---|---|
| Receivables Control | X | |
| Exchange Gain (or Unrealized Exchange Gain) | X |
If you use the Realized and Unrealized Gain/Loss accounting method for your company, exchange gains and losses are considered "unrealized" until the document is paid. Revaluation sends unrealized gain and loss transactions to General Ledger as reversing transactions (meaning they are automatically reversed at the beginning of the next fiscal period), as follows:
| G/L Account | Debit | Credit |
|---|---|---|
| Receivables Control | X | |
| Unrealized Exchange Loss | X |
| G/L Account | Debit | Credit |
|---|---|---|
| Unrealized Exchange Gain | X | |
| Receivables Control | X |
When you print the Customer Transactions report for the period in which you post the reversing revaluation transaction, both transactions appear for the customer. Their net effect on the account balance is zero.
If you use the Recognized Gain/Loss accounting method, revaluation exchange gains and losses are not reversed.