I sometimes have students who overpay their account so that they have a credit for the next semester. Whenever they pay more than their outstanding invoice balance, QB Online is creating a fictitious exchange gain for the amount of the credit.
Example: Student owed 12,600, student paid 13,000. QB Online shows the entry as DR Cash 13,000, CR Accounts receivable 12,600, CR Exchange gain 400. The student's account correctly shows a credit balance of 400, but if I run a financial report, I have this fictitious exchange gain. It is NOT an exchange gain, it is a credit balance in A/R.
Anyone know why it does this or how to stop QB from doing this? It is very annoying and it is incorrect!
By accepting this as Negative AR (overpayment) you just created Uncategorized Income.
Per your own accounting requirements, this is an Other Charge linked either to Liability (if you are allowed to carry liability) or to Income. Use that on an Invoice when they overpay, so that you can apply the Rest of the funds to something.
Later, you use that same Prepay/Overpay Product/Service Charge on a Credit Memo for the same date you have an invoice and need to show these funds are Applied to reduce the total owed on this new invoice.