What are the Three Types of AR Transactions?

Three types of accounts receivable transactions include invoice creation, payment application, and credit memos. Invoice creation involves generating bills for goods or services provided to customers. Payment application refers to the process of recording and applying payments received from customers against their outstanding invoices. Credit memos are issued to customers for adjustments such as refunds, discounts, or returned goods, effectively reducing the amount owed by the customer. These transactions are fundamental in managing accounts receivable and maintaining accurate financial records within a business.

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