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

I disagree with this @Patch Manager shows all that qualifies to be Input tax in the purchases side and same for Output in the sales side. There is nothing wrong with the report except for the headings for the tables which could be renamed to show the columns do not contain only pure sales and purchases, but also everything that qualifies to be input or output tax.

For a credit transaction, the invoices get adjusted with credit notes/debit notes. So that is why invoices which were adjusted with credit and debit notes get withdrawn completely from the tax summary (even though it still shows in tax transactions as it should).

The tax summary shows Completed Transactions only. A completed transaction here is either a Cash Transaction or Invoice Transaction plus/minus credit/debit note adjustments. A debit note or a credit note in itself is technically used to adjust the payable or receivable of a linked/targeted original invoice, it same in Quickbooks. This is why a Debit note in your original case (assuming it was a credit transaction) would not post a sale to net off the purchase for a zero tax liability but reduce/remove the purchase. It is right because the debit note here would adjust the original invoice amount to Zero (No purchases) effectively re-completing the transaction with a zero balance.

The blood :drop_of_blood: flow of every organization is cash. Every Cash exchange is a separate completed transaction regardless of it being a reversal of an original transaction or not. Therefore, a cash reversal transaction in your first case must be treated separately.
So your output tax must go up with this separate reversal transaction (the return of the phone for your money) to offset the earlier input tax (Also a separate and completed transaction).

I still hold the view that the statement (Tax Summary) is correct but the headings could be altered to make things clearer.

The tax summary as currently produced can not be easily use generate GST submissions because Manager is forced to guess if a line item is a sale or purchase. Where GST offsetting is allowed the net GST owing is correct but in jurisdictions where sales or purchases must be reported this figure is wrong given the Tax department’s definition of a sale and the tax departments definition of a purchase. How it is entered into any account software does not change taxation law requirements.

It is possible to work around Managers accounting bug, but doing so is very inefficient, see

What you have stated is incorrect. Tax Authorities/law focus on Output and Deductible Input Tax. Tax Laws provide for the reversals, bad debts, tax credits etc which are allowed as deductible inputs when calculating tax liability. No one will require a purchase and sales report only Input tax and output tax report.

To claim a GST tax credit specific conditions and documentation is required.
Similar when GST is collected specific documentation must be provided.

When submitting a GST return the user takes responsibility for meet these requirements.
They apply to all GST transaction. The requirements are independent of how the transactions are entered into Manager or any other accounting package.

Manger makes an accounting error. For the same external event and legal requirements it produces different sales (a reported quantity in Australia) and purchase figures depending on how your book keeper apparently validly enters transactions. The sales Manger reports is wrong if any negative line items are used in a “cash” sale or “cash” purchase (ie an invoice is not used in Manager).

That is correct, but that is not what Manager does when the user enter a negative line item in a cash sale or cash purchase. The sales figure reported is not as required by GST law and the users documentation requirements.