How is an incoming payment matched to a customer invoice displayed in the customer line items report?

An incoming payment matched to a customer invoice is displayed as a cleared item in the customer line items report. This reflects that the payment has been successfully processed and has settled the outstanding invoice, indicating that the transaction is complete from an accounting perspective.

When an invoice is paid, the system marks it as cleared, which means there are no longer any open balances related to that particular transaction. This cleared status is essential for effective accounts management, as it simplifies tracking of receivables and ensures accuracy in financial reporting. Cleared items help to provide clarity on which invoices have been paid and thus improve the visibility of a company’s cash flow and financial position.

In contrast, options like open item and manual journal entry do not accurately represent the state of the invoice after payment, as an open item indicates that there is still an outstanding balance, while a manual journal entry pertains to different types of accounting adjustments rather than the direct payment against an invoice. Bank transfer is a term used to describe the method of payment, but it does not indicate the status of the corresponding invoice in the accounts receivable ledger. Therefore, cleared item is the most appropriate choice to describe a matched payment in this context.