working · Lesson 1 · 10 min
Sales invoices and accounts receivable
An invoice is a journal: debit AR, credit revenue and tax. Matching the payment is what clears AR — not a second sale.
The posting
When you approve a sales invoice, the ledger records a right to collect (asset) and the income plus any tax you collected on behalf of the state.
| Account | Debit | Credit |
|---|---|---|
| 1100 Accounts receivable | $850.80 | |
| 4000 Landscape services | $800.00 | |
| 2200 Sales tax payable | $50.80 | |
| Totals | $850.80 | $850.80 |
Payment is not income
When the client pays, you match the bank line to the invoice. Debit bank, credit AR. Revenue stays where it was. If you instead “create” a receive-money line coded to Landscape services, you double-count income and leave the invoice open. Aged receivables will still show it; the P&L will look better than the truth.
| Account | Debit | Credit |
|---|---|---|
| 1000 Checking | $850.80 | |
| 1100 Accounts receivable | $850.80 | |
| Totals | $850.80 | $850.80 |
Xero Sales
Sales → Invoices. New Invoice: contact, date, due date, line items with account code and tax rate, then Approve. Repeating invoices exist for retainers. Credit notes reverse an invoice (credit AR, debit revenue/tax) and can be allocated to the original. Quotes do not post until you convert them.
QuickBooks equivalent
Sales → Invoices, then Receive Payment or match from Banking. A Credit memo is Xero’s credit note. A Sales receipt is a cash sale: debit Undeposited Funds or Bank, credit income, no AR. Use it when there was never an invoice. Do not use it to “simplify” a customer who already has open invoices.
Check
Choices shuffle each visit. Misses send you back to the section — Look back clears the quiz so you can try again.
Choose an answer, then check.
A $1,200 invoice is paid in full. Coding the bank line straight to income will:
Practice: Raise the invoice, Match the payment