Dear @lubos
It would be very important to consider adding to all modules (sales, purchases, payroll, etc) a field to choose from or write down the accounting record date of the economic event.
This in order to comply with the accrual accounting principle for those who do use it.
Thank you!
why not create and use a custom field of date type?
That is what the Date field is for, regardless of when you actually enter the transaction.
but the “date type” custom field does not actually function as a date type - one can enter anything. It should restrict the entry to the date format only.
not sure what you mean by this. if you set it as date type it shows as expected.
I don’t understand why there even needs to be custom field to capture “accounting record date”. To me, invoice date is “accounting record date” on accrual basis.
I have my custom field in the line item - don;t know if I set it up correctly but I can enter anything in the custom date field.
form custom fields and line item custom fields are different.
the line item custom fields do not yet support all the types even though it is available to select when creating them. this is something which is yet to be implemented.
OkeyDokey - thanks for clarification.
The idea is that an option can be implemented in the generation of reports that allows them to be viewed by accounting date or invoice date. Remember that the invoice date may contradict the accrual accounting principle.
For example, how can I obtain a financial statement with an accounting record date to comply with the accrual principle? Currently they can only generate only with the invoice date. And I insist, the invoice date may completely differ from the accrual basis.
The accrual principle is the concept that you should record accounting transactions in the period in which they actually occur, rather than the period in which the cash flows related to them occur. The accrual principle is a fundamental requirement of all [accounting frameworks, such as Generally Accepted Accounting Principles and International Financial Reporting Standards. When properly implemented, the accrual principle allows you to aggregate all revenue and expense information for an accounting period, without the distortions and delays caused by the cash flows arising from that accounting period.
Examples of the proper usage of the accrual principle are:
Record revenue when you invoice the customer, rather than when the customer pays you.
Record an expense when you incur it, rather than when you pay for it.
Record the estimated amount of bad debt when you invoice a customer, rather than when it becomes apparent that the customer will not pay you.
Record depreciation for a fixed asset over its useful life, rather than charging it to expense in the period purchased.
Record a commission in the period when the salesperson earns it, rather than the period in which he or she is paid it.
Record wages in the period earned, rather than in the period paid.
It should not. If you are using accrual basis accounting, you should enter invoices with issue dates matching the accrual dates.
Why do you say this? The invoice date should be the accrual date.
That is a somewhat crude and potentially erroneous description. Under accrual basis accounting, income is recorded in the period during which it is earned. Expenses are recorded in the period during which the income they are associated with is accrued. And some of your examples are incorrect.
As the developer already wrote, the invoice date you enter should be the accrual date. This is true regardless of whether you are using accrual or cash basis reporting. Manager’s internal protocols will handle necessary delays in reporting under cash basis, but the program is—at its foundation—an accrual basis system.
The invoice date has a fiscal purpose and the accounting date a financial purpose (accrual basis).
maybe all you need to do is change the Accounting method in your P&L report.
also, set your Summary accordingly.
You are correct, I do not, because I do not know what you mean by “the accrual” or “the tax base.” Please explain. And while you are at it, so we can continue this discussion productively, please explain what the “fiscal purpose” of the invoice date is to which you referred. Also explain what the “financial purpose (accrual basis)” of what you are calling the accounting date is.
I will try to explain myself as explicitly as possible: it turns out that in some jurisdictions the tax administrations take the economic event on a certain date as the generating event (tax base), however, this may differ from the accounting principles (financial base). I am going to use an example to explain myself better: some services (water distribution in some countries, for example), first offer water distribution and then bill, that is, the user consumes water for a month, and the supplier generates the bill in the following month. By accrual principle (accounting basis) the correct thing is to record the economic event in the month that occurs, that is, in the same month of water consumption, however, for tax purposes the tax administrations take as a basis the month in which the invoice was generated.
When I use manager to generate reports, it turns out that I do not have that possibility of differentiating the basis to use, that is, if it is a report for tax purposes (range of invoices dates) or for accounting purposes (range of dates according to the principle accrual).
Please explain the difference. As far as I know the difference between accrual and cash basis accounting is timing. So if you raise for example a Sales Invoice on accrual basis then the value gets recorded in an income account on the date of the Invoice. If you raise it on cash basis the income only gets recorded in the income account on the date the invoice was paid by the customer.
Depending on the tax authorities and type of business for fiscal purposes you either choose accrual or cash accounting basis. If you decided accrual accounting then the fiscal basis is related to that and the example shows that the Invoice date and not the Receipt date is to be used. Alternatively on cash basis the Invoice date is not that important as long as it precedes the Receipt date because the income is recorded by the receipt.
Note that in both instances the actual receipt of payment will clear the invoices. But for fiscal purposes accrual basis accounting would already record revenue and expenses even when not yet received or paid and this will be reflected in the Balance Sheet (accrual) report while cash basis only would record them when received or paid and will reflect in the Balance Sheet (cash) and in the Cash Flow Statement (see reports).
I do not share what you assert. In some jurisdictions it differs from what you say. I can give you an example to Costa Rica. It turns out that in that country they use electronic invoicing (not digital). Let’s suppose that you sell a good on December 31 at 23:58, but it turns out that when you generate the invoice, it is sealed by the electronic invoicing system on January 1, 2022 at 00:02. For purposes of the accounting base, the income should be recorded on December 31, but it turns out that the invoice comes with a different date. What date do you place in manager? Now, that in a transaction. What would happen if there are more than a thousand at the same time and on the same date; a supermarket chain located in different sectors of a country, for example.
Now, for tax purposes, in Costa Rica the date that the invoice brings with it is taken as a reference. So what would you do in that case? I don’t think all the economic events that have that particularity are going to be memorized in his head. The most obvious thing is to have a field in the system (invoice date and accounting record date) that makes that distinction and that in turn has reports that make that differentiation between the tax base and the accounting one.
@gxtsoft, I think you have again over-simplied your explanation. Let us use your water bill example, assuming the bill comes every month:
You seem to be trying to follow the second scenario above, but with only one entry. In my opinion, that is incorrect accounting practice. It also seems like overkill for a monthly water bill, since the exact price will be determined shortly after the service period is over. This is not like a situation where a service is provided through several accounting periods before an invoice is issued (such as an annual water bill). In that case, accrual entries with monthly estimates would be justified. But, as noted above, the entered date in Manager would still serve all purposes.
@gxtsoft that’s a bit too much don’t you think? Tut knows what he’s talking about but what he’s trying to do is to test your case as a mod. It may seem frustrating at times but that’s what’s needed to screen ideas.
Personally I don’t see two date fields are a bad idea, it’s just what to do with them next:
If both dates are to be further processed by the software then does this mean that everybody will have to enter two dates for each and every entry?
If not, then this built-in field behaves just like a custom field – which is already available.
And …
This only occurs at cut-off dates, personally I believe that a custom field and a single adjustment entry once every year and a reversal of that entry the next day would do the trick for me
Please review this. For invoice there are 2 options: 1 Invoice date in accrual accounting is fiscal date for same and 2 Invoice date in cash accounting which does matter that much as long as it predates the payment against it as the latter is the fiscal evidence. I am not sure why this is being made more complicated than this.
