Forgetting an unpaid invoice

[Robert Locke]

On Tue, 2004-11-30 at 14:58, Bill Wisse wrote:
> On Tuesday 30 November 2004 06:10, Robert Locke wrote:
> 
> >
> > In Cash Accounting - used by most small businesses, you recognize the
> > income of the sale/invoice at the time of payment.  If you never receive
> > payment, you never recognize the income and consequently do not need to
> > "write-off" the open invoice - simple deletion(unposting) of an invoice
> > could be used to clean up reports.....
> 
> You are exactly right if you sell *services*.
> But if you sell goods , and a lot of small businesses do, you cannot use the 
> cash method , simply because if you receive no payment you still have to 
> write off the stock used.

Huh?  Actually, the inventory part is separate and can also be handled
in a cash methodology....  Inventory is handled by shipment not
invoicing or payment.  At time of delivery/shipment, the inventory is
expensed as COGS (Cost of Goods Sold).  You would not expense at time of
payment, because how do you carry an Asset/inventory of stuff you don't
have?  As I remember, this is true whether you are doing Accrual or
Cash....

--Rob