Your question goes to the core of accrual accounting. To be rigorous, you should recognize an obligation as soon as it is incurred. Since your freelancer did 500 EUR of work, and you know it happened, some accountants would tell you to enter the account payable (to the freelancer) as soon as the work is done. Some might insist that happen on a daily basis. But realistically, we often don’t know the details of an obligation until the invoice arrives, so most businesses would enter the freelancer’s invoice as soon as it is received, as a purchase invoice, creating the account payable, which is a liability. Accountants following this more realistic view of accrual accounting would tell you to enter the transaction as soon as all pertinent facts are known. Presumably, that condition is met only when the invoice arrives, because a supplier might decide to give a discount, a price might change, etc.
Back to your hypothetical example, you created a receivable when you invoiced your client for 1,000 EUR. That receivable is an asset and remains so until paid by the client, irrespective of calendar dates. If the client pays by the end of 2014, your balance sheet on the last day of the year will not show that 1,000 EUR account receivable. Instead, the asset would appear in one of your cash accounts. In 2015, when your freelancer submits an invoice, you enter a purchase invoice, and that liability partially offsets the cash asset. Net equity is reduced, even though you haven’t yet paid the freelancer. When you pay the freelancer, the liability of the account payable is cleared by the reduction of the cash asset. Note that at this point, your net equity does not change, because that already happened as soon as you received the freelancer’s invoice. But now, that equity is represented entirely by the remaining 500 EUR from the job, with no corresponding account receivable or account payable. (I am ignoring any other outstanding sales or purchase invoices.)
Accrual accounting lets you keep track of everything you owe or are owed by others, regardless of when payments actually happen. Sometimes, we wait until a client pays us before we pay our suppliers, but our true financial position is nevertheless correct. Suppose your client didn’t pay you until 2015. At the end of 2014, your balance sheet would still reflect the account receivable as an asset. And your profit and loss statement would still show the 1000 EUR as revenue, because it was earned during 2014. The fact that you hadn’t been paid yet would show up on the cash flow statement.
Another wrinkle might occur if you pay your freelancer the same day you receive the invoice. In that case, you need not enter a purchase invoice and create an account payable. Instead, you can simply spend money from a cash account. The end result is the same, but there are fewer transactions because you don’t have to keep track of who owes what while waiting for payments to be made.
As to how you link the freelancer’s invoice to the expense, that occurs when you create the purchase invoice. Manager shortcuts some of the steps, so you don’t see everything that happens behind the scenes. But if you were entering that invoice via a Journal Entry–which every action you take in Manager really is–you would debit subcontract labor (or whatever you’ve called that expense account) because of the expense and credit accounts payable because you are increasing a liability. If you pay immediately rather than enter a purchase invoice, you would credit the cash account you pay from.
All this goes back to the accounting equation. A good resource is the web site [http://www.accounting coach.com][1], which has clear explanations of which type of accounts are debited and credited under which conditions. (I admit, though, it can be hard to keep things straight. That’s why the shortcuts built into Manager can be helpful. But when we don’t see all aspects of every transaction, it can be easy to forget what is really happening.)
The bottom line is that you should not worry about the calendar when it comes to entering transactions. The calendar only comes into play for reports.
[1]: http://www.accountingcoach.com