Wrong rounding (purchase invoice)

1

Looks like that the VAT is calculated per line and then added together.

Manager

21% VAT over 211.30 = 44.37 (44.373) = total 255.67 as it should be

and not 21% VAT over 70.74 = 14.86 (14.8554) + 21% VAT over 140.56 = 29.52 (29.5176) = total 255.68

2

That is correct and that is the proper process, as an invoice can included taxable and non-taxable items. If the tax was applied to the sub-total then the non-taxable items would also be taxed.

3

I just looked it up and you can use both ways according to tax regulations in Holland.

To avoid differences between the original invoice and how Manager calculates the VAT maybe there should be on option to chose like,

O tax per line
O tax per total

or just 1 checkbox (tax per total) to overrule the default setting (tax per line)

4

Virtually all accounting software everywhere in the world uses the same method as Manager. It is necessary to preserve the ability to invoke different tax rates, refund individual line items, copy transactions to other form types, post taxes to proper accounts, offset tax collected against tax paid, and on and on. It is not simply a matter of how to calculate one number on an invoice. The reason regulations allow both calculation methods is not to provide taxpayers a choice, but to legalize the necessary line-item approach inherent in modern accounting programs.

5

I see what you mean. But what is te correct way to handle a purchase invoice where the tax is calculated over the total amount (and has a tax difference).

6

The method i follow is as below.

  1. create a liability account for rounding under the chart of accounts.
  2. in the purchase invoice add a line selecting this newly created account and enter the difference value as a positive or negative to match the purchase invoice.
  3. then make a journal entry to offset this rounding value and the tax payable account with the proper tax code.
7

Why liability and not just directly to expenses ?

Edit: So, I was thinking about this and decided to try posting the rounding amount on the expense account. I made 5-6 purchase invoices with small difference values for rounding (a total of 1.17), and I can’t seem to find them on the Summary page expenses side. What am I missing?

Edit2: OK. I’m stupid. I forgot to change the period on the manager I’m using for testing purposes.