Question

When a customer pays off the balance on an invoice, the payment is credited to the ________ file.

A) customer master
B) sales transaction
C) cash receipts master
D) All of the above are correct.

Answer 1

The payment of an invoice is credited to the cash receipts master file, which records all cash inflows and updates the customer's balance in the customer master file accordingly. The correct option is A.

Step-by-step explanation:

When a customer pays off the balance on an invoice, the payment is credited to the cash receipts master file. This file is part of the accounting system where all cash inflows are recorded.

Invoices are elements of the sales transaction file which represent the billing for sales or services provided, and once they're paid, the outstanding balances decrease.

Meanwhile, the customer master file contains the detailed data on customers, including name, address, and account balance, but it is not where the transaction of payment is directly recorded.

Payments are recorded in the cash receipts file, and then the customer's balance in the customer master file is updated to reflect the payment. The correct option is A.