Unapplied Funds

If you apply a check or receipt to an invoice item, the offset to the bank is the receivable or payable. If however you post the check or receipt on account, the offset is the customer or provider unapplied funds account, and the the original receivable or payable is offset when you apply in Adjust Accounts. For example:

$1000 RITR sale

Cash receipt applied to it in Post Deposit

1510
2020
4020

+1000
-900
-100

 

1510
1010

-1000
+1000

  

 

 

 

Cash receipt posted on account

 

 

 

2040
1010

-1000
+1000

  

 

 

 

And applied in Adjust

 

 

 

2040
1510

+1000
-1000

  

The default unapplied funds charts are 2040 (customer) and 2045 (provider). These are liability charts because a cash credit to an account receivable is a liability (not an offset against an asset).