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.
Dotted words have a reminder. Hover on a computer, tap on a phone.
From earlier
- AR
- P&L
- QBO
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. Practice drills deal a new problem on try-again.
Choose an answer, then check.
This try
A $1,200 invoice is paid in full. Coding the bank line straight to income will:
Practice this
Stay in the flow — open a drill without backing out to the list.