I have used a credit note recently and I think I may have found a bug…
The timeline of events:
Sales invoice #18 issued for CHF 750
Customer accidentally pays CHF 743.68 due to exchange rate issue
Credit note #2 issued to cancel the remaining CHF 6.32
The sale is recorded against Services income account.
The problem:
On Summary tab I click on the total next to Services account and I get what you see on the screenshot.
Sales invoice #18 (just below the green highlight) now shows CHF 743.68.
Credit note #2 (just above the green highlight) shows the amount cancelled CHF 6.32
And the line highlighted in green is what does not look correct to me - the part of the sales invoice which has been cancelled suggests that it relates to invoice #2, rather than invoice #18.
Am I right in thinking this is a bug?
I am using Manager v. 18.5.8 on macOS.
P.S. Sorry, replacing the screen shot, the first one was illegible after pasting it in!
What you see is the result of using cash basis accounting rather than accrual basis accounting. The income for the sales invoice did not appear until you received 743.68 under cash basis accounting. But the 750.00 sales invoice is still in the system and must be properly handled. So when you enter the credit note for 6.32, Manager has to add the missing 6.32 to the income account before it can be subtracted by the credit note.
To try to illustrate this, I’ve duplicated your numbers in a test business with no other invoices or credit notes. Here is the drill-down on the income account from the Summary with the business set up for cash basis accounting:
Notice that the sales invoice number and description are not listed for the 743.68 credit. That is because the income came from the receipt for 743.68, which did not have a reference number or description, not the sales invoice, as it would have under accrual accounting. Both the 6.32 credit to the invoice and the debit from the credit note refer to the credit note number.
Now here is the identical drill-down after switching to accrual basis accounting:
You see the sales invoice number and description, because that is where the income is from. And the adjustment to the sales invoice from the credit note is not present, because it isn’t needed.
End result: there is no bug and the reference numbers correctly refer to the sources of both debits and credits.
Thanks for the prompt reply. I see what is going on now though I have some comments on the detail and related questions.
In my case the income from the receipt of 743.68 does have a reference number and a description, both of which come from the cash transaction record, so I am not sure why it does not in your test business (or at least why there is no reference number, which is generated automatically for each cash transaction). I record the payments by going to the invoice and clicking Receive money → New Cash Transaction.
I did interpret the number in # column as the reference number of the item mentioned in Transaction column which seemed logical enough to me, especially since where I have 3 lines on an invoice and one cash receipt transaction linked to that invoice, the income appears as 3 lines in this table saying Sales Invoice and a reference number. Additionally, in my case lots of sales invoices happen to have the same reference number as the corresponding cash transactions, which seemed to confirm my interpretation.
Perhaps this is just my lack of accounting experience and apologies if these are daft questions but isn’t the presentation of the information in this table slightly confusing then? The 3 lines on my screenshot (starting from the bottom) mean:
Income from a cash transaction but the table says Sales Invoice. Fair enough, the cash transaction is related to an invoice - yet the reference number in the following column is for the cash transaction.
Correction of the sales invoice information, so Transaction says Sales Invoice, but then the reference number is for the credit note.
Then the top one is what I would expect - Transaction says Credit Note and then the credit note reference number is given.
If the number in # column does not necessarily relate to the item in Transaction column, then perhaps there could be some extra info in # column to make it clear what the number refers to?
It would also help with working things out if there were View buttons next to each item in the table (and where they do appear, do they link to the item from the # column or from the Transaction column? Or do they appear only if both columns refer to the same item?).
My example used a bank transaction, not a cash transaction. Cash transactions are numbered automatically by Manager. Bank transactions are not, because you are intended to put the bank’s number there. Since this was just a fake example, I did not put one in. Nor did I bother with a description. I explained in this in my previous post.
All three of your numbered points relate to this. The problem with your interpretation is that the 6.32 did not originate with the sales invoice. It came from a credit note and was “artificially” applied to the sales invoice because of your accounting basis. This is perhaps somewhat confusing, but it would also be confusing if a sales invoice number were referenced and a user went to that sales invoice and did not see the adjustment. Understand that this is one of the drawbacks of cash basis accounting. The issue stems from entering sales invoices (for credit sales) when your accounting system allows no credits. Manager is, at heart, an accrual basis system with adjustments for cash basis displays. If you had a purely cash basis accounting system, you would not have sales invoices, only receipts (as both of those are termed in Manager).
Actually, the more relevant feature is the absence of Edit buttons. Neither Edit nor View are available because these are not real transactions you entered. These are just automatic adjustments made by Manager so it can display results on a cash basis. What probably confuses you the most is that the 743.68 entry looks like it originates from a sales invoice, but it really doesn’t. The sales invoice was for 750. It comes from the cash transaction, yet references the sales invoice, because that was your particular method for inputting it. My method of input did not result in those confusing bits of information, but the result is identical.
Once again, all such sources of misunderstanding disappear if you use accrual basis accounting. That method gives a more complete picture of position and performance, and all these adjustments go away.
