Assign invoices/payments to another financial year

My accountant (who doesn’t use Manager) includes some of the invoices received in 2016 in the financial reports of 2015. They are “moved to 2015” because these are invoices for services that have been performed in 2015.

I would like my reports in Manager to match the reports made by my accountant. I have adjusted the date on these invoices (or payments) to 31/12/2015 to achieve this. However, this feels like the wrong way to handle this. Is there an alternative way to handle this?

I suspect you are not talking about invoices received, but rather payments received. Is that correct?

Your situation goes to the differences between cash and accrual accounting. As a result, what you report your accountant to have done seems questionable. If you are using accrual accounting, s/he might have moved income recognized to 2015 even though you were not paid until 2016 because that is when the income was earned. In accrual accounting, income is not dependent on when payment is received, but when earned.

If you are using cash accounting, you would certainly not move payments received to the year when work was performed, because cash accounting reports based on when payment is received.

So either your terminology is being misused, you misunderstood exactly what your accountant said, or your accountant actually got things wrong. We need more detail to know.

And yes, changing dates on either invoices or payments is wrong and may actually be illegal. A tax auditor might suspect fraud through attempted misstatement of income.

Manager can handle either cash or accrual accounting, but you have to understand which is which and which you are using.

Hi Tut,

Thanks for your quick response!

Unfortunately, I know very little about accounting (I use Manager to create my sales invoices and keep an overview of my income and expenses). With the added translation step between Dutch and English, things become even more complicated for me. I’m pretty sure I can trust my accountant :slight_smile: . Any oddities or confusion are most likely the result from my limited understanding of accounting. I’ll try my best to clarify…

My question was about expenses/purchase invoices, not about payments received. The income reported by Manager matches the income in the report provided by my accountant. Some examples of relevant invoices:

  • the amount of meal vouchers (a form of salary that is taxed less) for December 2015 depends on the number of days worked in December, so I can only order them in January 2016 (invoice and payment in Jan 2016). My accountant includes this in the report for 2015 (which makes sense, I think).
  • (opposite direction) my insurance company sent me an invoice for the period of 01/01/2016 to 31/12/2016 in December 2015 (payment due 01/01/2015). This invoice should not be included in the reports for 2015. The expense is in fact included in the report provided by my accountant (as “cost to transfer”).

I am not changing the dates on the actual purchase invoices of course, but rather on the purchase invoice entries in Manager. This was just a quick hack to make them appear in the report for 2015 (saving the actual dates in the “internal information” field). Hence my question.

Thank you for bringing up cash vs accrual accounting. It’s obvious I need accrual accounting. But how do I inform Manager in which period these expenses were actually owed? I suppose this will be the answer to my original question.

@brechtm, this is a discussion you should have with your accountant. You should know that financial accounting and tax accounting are not always the same thing. Adjusting entries are sometimes used and special liability and asset accounts may need to be created to temporarily hold payments and receipts prior to adjustment. Whatever scheme your accountant devises, Manager can accommodate. Without seeing your full chart of accounts, I don’t know what your accountant is doing with the “cost to transfer” item, but I suspect it is some sort of adjustment to move things into the right tax reporting year.

As a general principle, though, you should always enter transactions on their actual date. Faking the dates to move things into the correct reporting period is never a good idea. The potential for mistakes, misunderstanding, and trouble with the authorities is too high. Instead, develop–with your accountant–a way to handle the scenarios you encounter and follow it.

I will see my accountant this week and ask him. But I cannot expect him to figure out how to handle things with Manager. The reports provided by my accountant are the official ones submitted to the government. I simply want the reports in Manager to match these for my own use.

I’ll ask my accountant how he handles this in their accounting application. Perhaps they also make use of adjusting entries, and hopefully he can explain this to me in simple enough terms so that I can do the same in Manager. :slight_smile:

Again, changing the dates was merely a temporary hack. I am fully aware this is not a good practice. Starting this thread, I was hoping to learn how to do this in a proper way. But I understand this might not be as simple as I hoped.

Just remember that the different sets of accounts a company may have to keep for financial versus tax accounting may never match. Your accountant will understand this fact. If not, you need a new accountant. No matter which accounting software you use, the basic capabilities are the same. Only shortcuts and implementation differ. Double-entry accounting itself goes back to the Medici bank in renaissance Florence. It used to be done on paper; now we have handy software. But the underlying principles haven’t changed.

I have read about adjusting entries. Do I understand correctly that I can create a journal to achieve my goal? I’m not sure what to enter under debet and credit however. One will be the purchase invoice and the amounts will be simply the amount of the invoice. I suppose the other should be a special liability or assets account, as you mention?

I assume I should create a new journal entry for each invoice?

This will depend on what your accountant says. But in general, such adjustments would occur through journal entries in Manager.

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Thanks. I have learned a thing or two today!