During invoicing, where does the entry go?

When an invoice is generated, the accounting system creates a journal entry that posts to the customer’s accounts receivable (A/R) account and the appropriate revenue account. The debit side of the entry increases the A/R balance, indicating money owed by the customer, while the credit side records the revenue earned. If the invoice includes taxes, an additional credit entry is made to the tax payable account. In an ERP like SAP or Oracle, this entry is automatically routed to the general ledger through the invoicing module, ensuring that the financial statements reflect the sale immediately. For example, a $1,000 invoice for a product sold on credit would debit A/R $1,000, credit Sales Revenue $950, and credit Sales Tax Payable $50.