Goods return (Cash sale/purchase) causes Gross Sales error

Interesting
As to why Manger users would consider this important

  1. Manager reports Purchases separate to Sales by tax code. If you really believe no jurisdiction requires this then, Manager should just report the difference.

  2. The tax summary report is the principle report used to submit VAT/GST reports to the taxation department. Almost all have significant penalties for submitting false information.

  3. Manager is principally and accounting program. It can help in other areas as well, but accounting is it’s foundation. If it can not produce accurate accounting records for submission to local tax authorities, it has a core requirement defect.

  4. The behavior identified is not new. As a consequence it implies many Manager users have been submitting false records to their tax departments for a long time. A challenging thought and not good for Manger sales.

As to is there an issue at all.
Even before we address what effect individual physical transactions should have on reported sales or purchase, consider the process at a more abstract level.

  1. A physical business purchases & sells, goods & services

  2. An accounting system is used to record the business transactions. The accounting system uses accounting conventions consistent with local legislation.

  3. Taxation data is submitted to local tax authorities based on the physical trade the business has done and the accounting conventions adopted.

The critical point of the above description is for a given physical trade and accounting conventions the reported taxation information is fixed number not a range of values. There is a right answer and other numbers are false.

Now consider all 4 examples listed above

  1. Each involves a fixed activity on the shop floor, with fixed goods and services changing hands, and fixed physical documentation from each of my suppliers.

  2. In each my book keeper could enter, apparently validly in Manager as shown in the “Payments” edit screens above (and generate reportable sales in Manger).

  3. In each my book keeper could enter, apparently validly via invoices in Manger and generate no reportable sales in Manager.

  4. In each case Manger is reporting a different reportable tax for the same physical transaction and adopted accounting convention.

If accounting conventions really dictate that the sales generated when entered these transactions as a Manager “Payment” is correct then Manger has a bug in how it calculates sales when entering these transactions via an invoice (which I don’t think anyone really believes). My point is for a given physical trade and adopted accounting conventions there is a right answer, other numbers generated by my book keeper and software are false.

Finally we can look at the details of all 4 physical transactions described.

Goods return: Some suppliers have a sales policy which includes a goods return option. The return option requires a valid sales receipt (which is edited when the goods are returned), is valid for a limited duration, is priced at the prior sale price (some with a restock deduction) not the suppliers normal wholesale purchase cost, and when I return (?sell) the goods I do so without providing a warranty. In summary the goods return process is contractually not the same as a sale. It is processed correctly in Manager if a Manager invoice (or Manager Debit note) is used and incorrectly if entered directly in Manager via the “Receipts & Payment” tab (without an invoice or debit note).

Deposit deduction: When final payment is entered without an invoice Manger treats deduction of the prior deposit as an additional sale. Clearly no goods or services are delivered for the “sale”, it is purely a correction to the current “Payment” for a prior payment towards the documented goods & services. It is processed correctly in Manager if an invoice is entered first in Manager and incorrectly if entered directly in Manager via the “Receipts & Payment” tab (without an invoice).

Bulk purchase discounts: Some suppliers offer a discount if a particular threshold amount is purchase at one time. Deducting the cost of the last item or some other dollar amount. In no case is the purchaser providing any goods or service, they are only receiving a deduction in cost on the current purchase. It is processed correctly in Manager if an invoice is entered first in Manager and incorrectly if entered directly in Manager via the “Receipts & Payment” tab (without an invoice).

Some financing adjustments: depending on the details of the payment used an adjustment some times negative maybe required for exchange rate variations or credit card fees. Typically they are an integral part of the financial transaction (zero without the underlying transaction occurring). When negative they do not suddenly become a new income for the business instead they remain and adjustment to the underlying (in the illustrated case) purchase. It is processed correctly in Manager if an invoice is entered first in Manager and incorrectly if entered directly in Manager via the “Receipts & Payment” tab (without an invoice).

In Summary

  • Manager has a serious bug in how it records taxable goods and services when a Manager invoice is not created which results it corruption of the amount shown in the “Tax summary” report

  • It can be masked by not relying on Managers “Tax summary” or any of the “VAT/GST calculation worksheet” localisation (as they all use the same data). Doing so involves also using 2 custom reports and external calculation. Journal entries need to be individually examined.

  • It can be fixed within Manager but as it has been known about but not fixes for many months, correcting it is not trivial

  • An accounting program which makes accounting errors in tax reports may well be a Marketing problem for the software and difficult to accept for the users who have submitted incorrect taxation data for years, but the solution is to fix it not deny it is a problem.

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