In an accounts receivable (AR) system, which subsystem typically removes (closes) fully paid invoices from the open invoice detail file?

Introduction / Context:
Within the order-to-cash cycle, invoices are created, tracked, and eventually settled. The open invoice (invoice detail) file lists outstanding receivables. When customer payments arrive and are applied, the system must update the open items. Knowing which subsystem performs this update is key to understanding AR data flows and reconciliation.

Given Data / Assumptions:

• Payments are received by the organization and recorded against specific invoices.
• AR maintains an open-item file until settlement occurs.
• We assume standard integration between AR, GL, and reporting.

Concept / Approach:
The cash receipts subsystem records incoming cash (checks, ACH, card settlements) and applies those receipts to open invoices. When an invoice is fully paid (or otherwise settled), the subsystem marks it closed and removes it from the open invoice detail file, possibly archiving to a history table. GL receives summary postings (debits to cash, credits to AR), but it does not directly manage the open-item list. Sales analysis reports read from invoice and shipment data; inventory control is unrelated to financial settlement of receivables.

Step-by-Step Solution:

Verification / Alternative check:
AR aging reports drop the item once the cash receipts subsystem fully applies the payment and posts settlement; audit trails remain in history for reference.

Why Other Options Are Wrong:

• General ledger posting: posts summary amounts, not item-level closures.
• Sales analysis: analyzes sales, not receivable settlement.
• Inventory control: manages stock, not AR invoices.
• None: incorrect because the cash receipts subsystem is correct.

Common Pitfalls:
Assuming GL directly manipulates AR open items; in most systems, AR subledger handles item-level status and GL receives summarized entries.

Final Answer:
cash receipts subsystem