Most businesses receive or give advance payments from customers and to suppliers respectively. This advance appears in the accounts for a very short period of time say a week or a fortnight, after which this amount is adjusted automatically to the sales invoice or purchase invoice.
Now, when entering an advance payment to the Accounts receivable or Accounts payable account which is more than their respective total account balance outstanding, irrespective of individual customer or supplier balance, the summary page shows the Assets and Liabilities as a negative value.
the above image shows the sample summary page.
the above image shows the Accounts receivable page. Here the total outstanding due under the receivables was 34077.50 and the new advance amount 50000.
the above image shows the Accounts payable page. Here a payment of 45000 was made which adjusted with the outstanding and has a balance 31200 which is paid in advance to the supplier.
Now, my question is why cannot the excess amount be automatically adjusted to a sub-account under the Accounts payable or Accounts receivable, say To-be-billed, which would not reflect on the Assets or Liabilities total.
Or maybe a provision to manually set the same when receiving or spending money under cash accounts to not reflect on the Assets or Liabilities total.
Please note that the advance payment is not a deposit which can be recorded under a special account for the customer or supplier. Also, most business do not make a sales invoice in advance, they just make a proforma invoice or sales quote against which the payment is received. So suggestion to make a Sales invoice at the time of receiving a payment or a purchase invoice before giving out a payment is not a solution.