Oracle Financials Cloud: General Ledger 2017 Implementation Essentials — Question 33

You have created a sales invoice for $900 USD with an item line of $750 USD and a tax rate of 20%. The customer has made a payment of $500 USD and you are required to process the cash application to apply the $500 USD to the item line and $0 USD to tax.
How would you achieve this?

Answer options

• A. Set the credit classification revenue recognition policy to look for Line First and Tax Later.
• B. Create a Memo Line or receivable activity to have the check box selected for Apply Item Line First.
• C. Set Application Rule Set to Line First--Tax After at the transaction type level and/or a default value at system options.
• D. Set Application Rule Set to Line First--Tax After at the transaction source level and/or a default value at the receipt method.
• E. Set the payment terms revenue recognition policy to look for Line First and Tax Later.

Correct answer: C

Explanation

The correct answer is C because setting the Application Rule Set to Line First--Tax After allows the system to apply payments to the item line before considering tax, which is necessary in this scenario. Options A, B, D, and E do not directly configure the application rules at the required transaction type level needed for this specific payment allocation.