Question

Adjustment to Accounts Receivable for payments received from customers is based upon the ___ that accompanies payment.

Option 1: Invoice
Option 2: Purchase Order
Option 3: Packing Slip
Option 4: Receipt

Answer 1

Adjustments to Accounts Receivable for customer payments are based on the invoice that accompanies the payment, which allows for accurate recording of payments against outstanding amounts.

Step-by-step explanation:

Adjustment to Accounts Receivable for payments received from customers is based upon the invoice that accompanies payment. When a payment is received, it is applied to the specific invoice that the payment is intended to cover. This ensures that the payment is correctly recorded against the outstanding amount.

An invoice typically includes details such as the date of the sale, the products or services provided, the amounts charged, and the payment terms. It serves as a request for payment from the seller to the buyer, and it is the essential document for adjusting Accounts Receivable because it connects the payment received with the specific credit sale.

For example, if a customer pays $100 towards their outstanding balance, the receipt will show that $100 was received. The accounts receivable balance will then be reduced by $100 to reflect the payment.