Account Credits are used when a homeowner has not made an actual payment, but you want to mark a payment on their unit regardless to clear an invoice and/or alter the outstanding balance. For example, account credits are often used when assigning a starting prepaid balance on a unit or reimbursing a homeowner for an association purchase where the owner would just like the funds to go toward their account.
When you create an account credit, it will affect at least two accounts depending on your accounting basis (cash vs accrual).
For cash: if there is an invoice due, the income category tied to the invoice will be increased and Account Credits expense will be increased. If the Account Credit would create a credit balance on the unit, then the amount exceeding the invoiced amount will increase Prepayments.
For accrual: if there is an invoice due, Accounts receivable will be reduced and Account Credits expense will be increased. If the Account Credit would create a credit balance on the unit, then the amount exceeding the invoiced amount will increase Accounts Receivable - Prepaids.
Accounting V2: What are Account Credits (Accrual Accounting)
Defining Account Credits, when to use them, and how they show on your expenses
Written by Mitzi Rivera
Updated this week