How does one come about treating supplier credits in their accounting? You\u2019ve already accounted for the expense or the asset and now you obtained a credit for it.<\/p>\n
The idea behind a credit invoice is usually decreasing the initial amount, hence the word \u201ccredit\u201d, however note that the treatment, whether it\u2019s a credit invoice or an additional invoice (that is to increase the expense), the treatment doesn\u2019t really change.\u00a0<\/p>\n
So let\u2019s say you initially got an invoice for say 1,000 and you debited your inventories and accordingly also credited payables. As it turns out, you sold part of those goods, say 75% of them at a subsequent date. Hence you make an entry where you debit your cost of goods sold and credit those inventories in the same amount.<\/p>\n
Later on you receive a credit invoice for a 100 so as a result your inventories should have been not 1,000, but 900 in the first place. Now however, as you\u2019ve sold 75% of them, part of this credit should be directly accounted as decrease in expenses you\u2019ve so far recognized and part, namely 25% should be a decrease in inventories. So you\u2019d debit your payables by a 100, credit invoices by 25 and credit expenses by 75.<\/p>\n
Should the invoice relate to something that\u2019s already directly expensed, the credit also goes directly to decreasing expenses.<\/p>\n","protected":false},"excerpt":{"rendered":"
How does one come about treating supplier credits in their accounting? You\u2019ve already accounted for the expense or the asset and now you obtained a credit for it. The idea behind a credit invoice is usually decreasing the initial amount, hence the word \u201ccredit\u201d, however note that the treatment, whether it\u2019s a credit invoice or […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[80],"tags":[],"class_list":["post-4930","post","type-post","status-publish","format-standard","hentry","category-2-10-purchases-and-payables"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t