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incoming payments

Former Member
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when there is incoming payment, system does a DR posting on the Cash Account. What does this mean? What is happening in this process? Kindly explain in layman's term.

Is the Cash account : quote internet "u2022A type of account with a broker-dealer in which the customer agrees to pay the full amount due for the purchase of securities within a short period of time, usually five business days." ?

Must there be a corresponding CR account posting?



Accepted Solutions (1)

Accepted Solutions (1)

Former Member
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Hi John

To explain in layman's term

When an incoming payment is posted in the system, the following entries will be passed.

Cash or Bank will be debited based on the accouting principle of assets which says Debit what comes in and credit what goes out. Since cash is an asset this will increase our cash balance or bank balance by the amount of payment posted. The corresponding account to be credited is the customer's account or the corresponding recon account. So when posting an invoice the customer account was debited and he became a debtor for our company (our asset) and when the payment is getting posted the account is being credited thus making the balance nill. I hope this explains.



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