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Dec 16, 2011
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Cash Clearing Account
by: Anonymous

At the end of the month you shouldn't have any type of balance in this account. When receiving a payment from a receivable customer this account shouldn't be used, you need to use the cash (bank) account.

A credit card customer is the perfect example of why you would use a cash clearing account. You can record the sale by debiting cash clearing and crediting revenue. Then when the deposit is made from the credit card company you can debit cash (bank) and credit the cash clearing account to offset the earlier entry to the clearing account and getting it back to a $0 balance. You don't have to touch a revenue account as it is already acccounted for.

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