In accounting, accrual basis, what happens once the client pays to Accounts Receivable and Revenue
From what I understand, in accrual based accounting, when an invoice is issued (not paid yet), two entries are made:
Accounts Receivable (Debit Entry)
Revenue (Credit Entry)
But my question is, what happens to above two books when the client actually pays? Does anything change in the above two books? Do other books get affected?
Basically I want to know if Accounts Receivable just grows and grows.
(1)1 Comments
Sorted by latest first Latest Oldest Best
A payment means the money is no longer receivable, because it has been received, so you'd typically have a pair of entries that moves it from Accounts Recievable (AR) to Cash:
Debit to Cash
Credit to Accounts Receivable
Similarly if someone never paid you wouldn't want the balance lingering in AR forever so eventually you might write it off directly as a bad debt:
Debit to Bad Debts Expense
Credit to Accounts Receivable
Terms of Use Privacy policy Contact About Cancellation policy © freshhoot.com2025 All Rights reserved.