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Re: deleting an invoice

On 31/08/2012 13:35, Chris Travers wrote:
Just so everyone understands the accounting problems here.

Suppose I buy 10 widgets for $1 each and then 1 more widget for $10 each. My FIFO cost queue looks like this:

$1 $1 $1 $1 $1 $1 $1 $1 $1 $1 $10

My inventory account shows $20 in debits and I have credited my AP account to compensate.

I then sell the 11 parts to 11 different people.

The first 10 invoice show a $1 credit against inventory and a $1 debit against COGS

The 11th invoice shows a $10 credit against inventory and a $10 credit against COGS

and now inventory is down to 0.

Now the 5th customer invoice turns out to be in error. We never shipped this one. The customer never ordered it. it was a data entry error. Translation, we now have one in stock.

If we void the invoice properly, we will reverse the last sale, and put $10 back in inventory.

If we delete the invoice, we will just remove the $1 removed. But we don't really know which one was sold and so we de-allocate the $10 sale.

So now our books are $9 off of what they should be. They show a balance of $1 in inventory, and $19 in cogs. They should show $10 in each. The worse is still to come however.

Now we sell the item we had in stock. This brings our (empty!) inventory value to -$9 and our COGS value to $29. Our books are still $9 off and we now have impossible, nonsensical values. Delete and re-enter a few more invoices and you can inflate the COGS as far as you'd like. This doesn't work.

Worse, this can't be fixed. You can't make a deletion behave just like a reversal and still keep your books transparent auditability-wise. Even if it could be fixed mathematically (which it can't), there isn't any agreement as to what the proper behavior should be (except 'don't do that'). So it isn't possible to support the workflow "properly" because "properly" can't be defined.

So unless someone can show that the above issues are incorrect, I don't see how we can support deleting invoices after they are posted to the books.

This was amazingly helpful and explains a lot of what is wrong with our books. We started using lsmb about 4 years ago and being complete accounting newbies made lots of mistakes including a lot of deleted invoices. We now understand things a *lot* better and haven't deleted invoices in a long time. The books are in a complete mess and we are planning to close them at year end and completely start from scratch, hopefully with 1.4.

Many thanks