Also having a rounding issue

I have read several times in this forum about rounding issues. I am having one myself now. As you can see in the attached picture there is a rounding issue of € 0,01, which has nothing to do with Manager rounding the figures one-by-one. In my invoice the billable items are:

179,93 (21% of 179,93 = 37,7853)
+76,37 (21% of 76,37 = 16,0377)

256,30 = subtotal
53,83 = percentage (21%) Manager calculates

This percentage of 21% of 256,30 should be 53,823 which is rounded on 2 figures: 53,82

If you round the figures one-by-one and then add them, it will result in:
37,7853 + 16,0377 = 53,823 which is rounded on 2 figures: 53,82

Can you please explain this to me?

No, if you round the figures one-by-one and then add them, you get €53.83:
€37.7853 rounds to 37.79
+16.0377 rounds to 16.04
SUM.............. €53.83

That’s how Manager does it.


Alright. But it is a basic mathematical rule not to round figures one-by-one before making further calculations like adding or subtracting and so on. I read somewhere on this forum it is an accounting rule to do it as you describe it.
The primary reason I have the difference is that these invoices were made outside Manager and with the basic mathematical rules. I understand that when I make the invoice with Manager, it will never happen again?

I don’t know what you mean by a “basic mathematical rule.” The fact is, you can perform arithmetic operations in any order you desire. Sometimes, of course, the order in which you perform them affects the result. This merely reinforces the need to understand how your tools function before using them. Manager does exactly what it was designed to do when it comes to rounding.

Just what are you asking? What is the “it” that will never happen again if you use Manager?

‘it’ obviously is ‘not having trouble with rounding issues’ as Manager performs calculations with VAT one-by-one, and I intend to make my invoices with Manager.
I already learned on school the order of arithmetic operations: Parentheses, Exponentiation, Multiplication/Division, Addition/Subtraction, so what do you mean by “The fact is, you can perform arithmetic operations in any order you desire”?

Based on your explanation of what you meant by “it,” Manager will behave consistently.

What you describe is a convention in evaluation of mathematical equations. It has nothing to do with the order of arithmetic operations in accounting. When I said you could perform operations in any order you desire, I meant that Manager does not violate any rules. It follows a standard approach to rounding groups of numbers that is used by many accounting programs. One could also follow other approaches, but this program does not. That doesn’t mean either approach is wrong. In fact, some tax authorities give specific examples showing that either approach is acceptable. Rounding after the fact was more common when things were done by hand because it allowed things like tax calculations to be done only once. Rounding line by line has become the accepted norm because it is more logical in databases used for modern accounting programs.

Every double-entry accounting software needs to round tax amounts on line items, especially if you enter invoices with amounts which are tax-inclusive. Why? Because once you deduct tax amount from each line item, you need to end up with nice round figure which can be posted to general ledger.

On your invoice, you enter amounts as tax-exclusive so it’s not as important to round figures on line item level but Manager still does it. There are a few marginal advantages to it.

Before I made that decision, I checked basically all double-entry accounting systems for small businesses and every single one was doing rounding of tax amounts on line item level regardless whether your invoice was tax-inclusive or tax-exclusive.

All these complains about rounding are coming from people for who Manager is the first double-entry accounting system. Nothing wrong with that. All I’m saying, this is immutable characteristic of double-entry accounting systems and it will never change.

1 Like