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Thoughts on Voiding Invoices

Rick's concerns about voiding invoices are very valid.  I have been
going over this quite a bit and there are still some unanswered
questions in my head.  Since IANACPA, I figured I would ask the list.
Maybe someone with more accounting knowledge can help make sure corner
cases are taken care of properly.

Most of these problems are well defined except in corner cases and are
unlikely to ever be problems unless people have very volitile prices
for some things.  In fact, I think we can break this down into two
sets of different problemsÑ

1) Voiding invoices
2)  Product returns

Part 1:  Voiding Invoices
When an invoice is voided, it seems straightforward enough to suggest
that the accounting transactions are simply reversed.  However, with
volitile prices on some goods, this poses some problems.  Exactly what
is supposed to be the value of the inventory?  What sort of
adjustments are needed?  When is the adjustment posted?  etc.  It
seems to me that with FIFO, the value of the inventory ought to be the
same as if the *latest* items sold were never sold.  This means that
an adjustment may need to be posted to the COGS and inventory accounts
to update the amount.  This is the step that SQL-Ledger kindly omits
for you :-)

However, the valid question is raised-- if an invoice is voided in a
different accounting period (say issued on Dec 30th and voided on Jan.
1st after other invoices were sent out which substnatially change the
COGS per unit), when exactly does the adjustment get posted?

I am not sure this question has a generic solution.  It may be
necessary to look at *all* surrounding transactions in order to make a
valid adjustment.  Thus voiding invoices on different days might be
quite cumbersome.  Does any accountant know of an easier way to do
this?  Or am I correct that this cumbersome process is the *correct*
way to do it and that I might need to post adjustments for every
intervening day?

Part 2:  Product Returns

I think we can all agree that product returns ought to be treated
similar to a repurchase at the last cost of goods sold value.  We can
iterate back if the price changes :-)  I think we can also agree that
this doesn't pose any serious accounting dilemmas...

Best Wishes,
Chris Travers