Re: Thoughts on Voiding Invoices

["Chris Travers" <..hidden..>]

It seems to me that there are some legitimate questions here...

On 9/22/06, Alejandro Imass <..hidden..> wrote:

> 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.

Good point.  So the chances of the corner case affecting you is pretty
slim and if it does, it would be easy to flag and adjust.  Furthermore
if you do get hit by it, chances are that you are not following any
sort of reasonable accounting practices.

so maybe we should just reverse the financial transactions and flag
the invoice as voided so that one can pull a review of voided invoices
so as to look for possible inconsistancies.

> > 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!

Looking forward to hearing her opinion and wish list :-)

Best Wishes,
Chris Travers