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Re: Cash reporting of Advances on AR

Hi, Chris,

Thanks for responding!

On 12/26/2013 07:14 PM, Chris Travers wrote:

Excellent questions.  I actually had to do a little research on them.

First, good questions.  A few basic points first meta-accounting-wise.  Virtually all of the effort to formalize accounting practices in accounting organizations address accrual accounting.   Virtually all of the effort to standardize cash-basis accounting comes from tax authorities.  So the larger questions are effectively tax accounting questions, far more than financial accounting ones.  If you aren't filing your taxes on a cash basis, then what you need on your cash-basis income statement is less rigorously specified than it is with accrual-basis.

Yeah, I think we really need to switch to accrual-based reporting, but for some reason my accountants have been reluctant to do that, so for the IRS we're still using cash-based.

I'm testing LSMB 1.4 to see how this works, and what I'm finding is that
the overpayment received does not show up anywhere on the income
statement, until it's received against an invoice. As I write through
this, I'm having a hard time seeing any other way to do it -- we need to
apply the overpayment to an invoice to know what account to put the
income into -- and when we do apply that overpayment, it will show up as
cash revenue for the date the payment is applied (I'm assuming, have not
verified this).

Yeah.  I am not sure whether it is the date the overpayment was received or the date it was applied (I am assuming the former, if the latter we need to fix that). 

Hmm. When I think about this, to me it seems the date the payment is applied is better than the date the overpayment was received -- if we use the received date, that could suddenly appear in a closed accounting period and force us to file adjusted tax returns.

If the pre-payments are not shown as income when they are received, it seems to me they must show up when they are applied.

Is it routine in cash reporting to not report deposits as income?

If so,
this should be fine for us. The biggest issue here is knowing when the
overpayment was applied -- you cannot see any indication of the
overpayment getting applied on the invoice itself, only on the general
ledger for the overpayment account.

Right.  I think there are two immediate steps for now.  The first is a note somewhere on the screen which says that for cash basis reports, deposits are not included.   The second is an overpayment report.

We really need an overpayment report, and I would like that report to be visible to users with permissions to AR -- currently the entire overpayments section requires a "cash" permission in LSMB that ends up revealing AP data...

Also still not seeing overpayments applied on individual invoices... All other reports seem to track overpayments correctly, just not the individual invoice details. This gets really confusing when sending an invoice that is partially paid by an overpayment, it won't show the customer the current balance.

John Locke
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