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# Why are Customer/Vendor Payments recorded against Unearned Revenue instead of Accounts Payable/Receivable?

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While receiving excess payments from customers, or while recording a single payment to multiple invoices, the payment will fall under **Unearned Revenue**.

Let’s say you receive $1000 from a customer. This amount is now applied to 4 invoices, worth $250 each. The transaction flow will appear like,

**Payment**

Unearned Revenue - $1000 (Credit)

Cash/Bank - $1000 (Debit)

**Invoice 1**

Accounts Receivable - $250 (Credit)

Unearned Revenue - $250 (Debit)

**Invoice 2**

Accounts Receivable - $250 (Credit)

Unearned Revenue - $250 (Debit)

**Invoice 3**

Accounts Receivable - $250 (Credit)

Unearned Revenue - $250 (Debit)

**Invoice 4**

Accounts Receivable - $250 (Credit)

Unearned Revenue - $250 (Debit)

The single payment for multiple invoices would be tracked between the Cash/Bank account and the intermediary account, which is the Unearned Revenue. For each of the individual invoices in that particular payment, transactions would be recorded between Accounts Receivable and Unearned Revenue so that they balance out against each other.

Vendor Payments in excess or a single payment towards multiple bills functions in a similar fashion.

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