How are payments applied to invoices in QuickBooks?

In QuickBooks, payments are applied to invoices primarily using the "Receive Payments" feature. This process allows users to record incoming payments from customers in relation to specific invoices they have issued. When a payment is received, the user can access this feature, select the appropriate customer, and then specify which invoice the payment corresponds to. This ensures that the payment is accurately linked to the outstanding invoice, updating both the customer's balance and the income records appropriately.

Using the "Receive Payments" feature also provides a clear record of cash flow and helps in maintaining accurate accounts receivable ledgers, as it documents the details of the transaction, including the date, amount, and method of payment. By utilizing this feature, users can easily manage their accounts receivable and track payment histories for each customer.

This method is distinctly different from editing the invoice directly, which does not properly reflect the payment status. Creating a refund transaction is unrelated to applying payments to existing invoices, as refunds are typically used for returns or overpayments rather than receiving payments. Lastly, adjusting the invoice amount does not represent how payments are applied; instead, it alters the financial obligation without accurately documenting the payment received. Therefore, the "Receive Payments" feature is the appropriate and standard procedure for applying payments to