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Banking
"This method seems to cancel off the outstanding amount on the expense account,"
If you never entered a Vendor Credit, then your deposit is against that original expense account.
If you entered a vendor credit/return, you have an open negative AP; that's why the deposit of the refund is as AP. It isn't against the original expense account. You already took care of that in the vendor return entry.
If you never entered a Vendor Credit, then your deposit is against that original expense account.
If you entered a vendor credit/return, you have an open negative AP; that's why the deposit of the refund is as AP. It isn't against the original expense account. You already took care of that in the vendor return entry.