An invoice is a document that records the sale of goods or services. It typically includes the quantity and price of the items sold, as well as the date of the transaction and the name of the customer.
In accounting, invoices are used to keep track of customer purchases and payments. They can also be used to calculate how much inventory a company has on hand, as well as to track accounts receivable (money owed to the company by customers).
While most businesses issue invoices after a purchase has been made, some businesses may require payment in advance before they will provide goods or services. In this case, the invoice serves as both a record of the purchase and a request for payment.
Invoices can be created and managed in accounting software, such as QuickBooks or FreshBooks. They can also be created using a simple spreadsheet program, such as Microsoft Excel.
When an invoice is paid, it is typically recorded as a debit to accounts receivable and a credit to cash. This transaction is then reflected on the company’s balance sheet.