Re: Thoughts on Voiding Invoices

[Alejandro Imass <..hidden..>]

On Thu, 2006-09-21 at 12:50 -0700, Chris Travers wrote:
> for some things.  In fact, I think we can break this down into two
> sets of different problemsÑ
> 
> 1) Voiding invoices
> 2)  Product returns
> 

Agree.

> 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 :-)
> 

IMHO, it should be reversed to the actual COGS of that particular
invoice. In other words, a real and exact reverse of the cost at the
moment of the Invoice. The idea of voiding the invoice is because you
made a mistake and should not affect anything else.

Futhermore we should also think in practical terms. You are not going to
void an invoice that already hit the street.

> 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?
> 

Is this an actual business need? I will talk to my wife who is a Public
Accountant _and_ an Economist to get her opinion. She has been an SL
user for about 4 years now and has a rather large wish list!


> 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...
> 

Agreed.

> Best Wishes,
> Chris Travers
> 
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