Accounts Payable Certification Practice Test

If you enable credits to apply up to zero amount payment, how will an invoice and a credit memo be processed when the credit amount exceeds the invoice amount?

1. Both the invoice and the credit memo are selected for payment requiring attention.

2. Both the invoice and the credit memo are paid, creating a refund.

3. Neither the invoice nor the credit memo are included in payment processing.

4. Both are included for a payment amount of $0, with the credit memo partially paid.

The correct answer is: Both are included for a payment amount of $0, with the credit memo partially paid.

When credits are enabled to apply up to a zero amount payment, processing an invoice alongside a credit memo becomes a specific case. If the credit amount exceeds the invoice amount, the total payment result is effectively neutralized. In this scenario, both the invoice and the credit memo are included in the payment processing, allowing the system to recognize that while there is an invoice to pay, there is also a credit memo that can be applied against it. This results in a payment amount of $0. Since the credit memo amount is greater than the invoice amount, it essentially offsets the invoice entirely, but since the payment needs to reflect the existence of both the invoice and the credit, the system records their interaction appropriately. This process ensures accurate accounting and reporting practices, indicating that while the invoice is satisfied through the credit memo, both documents remain in the system for record-keeping, but the net financial outflow is zero. Thus, the correct handling maintains the integrity of financial records while accurately processing accounts payable transactions.