Level 15

Reports and accounting

Accepting a Payment for no open charges means you have Unapplied Income on Cash Basis and it should be Applied to something that still makes it Income. Or, you should have used a Prepayment item on an invoice. Leaving negative AR is never a good accounting scenario. If you are accrual basis, the date of the invoices is used; on cash basis, the date of the payment is used. If you are an accrual reporting entity, and you left an overpayment, you left Negative AR; the opposite of AR makes it a Liability. You can clear that for the Prior period from negative AR to positive Liability. It is time to ask your own CPA about how you should be properly handling Negative AR.