Financial

Accounting Rules

Every posting rule the ledger applies, written out for review. The engine guarantees each entry balances — it refuses to write one that does not — but balanced is not the same as correct. The items flagged below need an accountant’s decision before these books are relied upon.

Costing method: FIFOLedger: balanced ($0.00)4 items flagged for review

Flagged for accountant review (4)

Invoice
Revenue recognition point. If performance obligations are satisfied over time, ASC 606 requires deferral rather than point-of-invoice recognition.
Payment
Application is oldest-first automatic; a user cannot yet choose which invoices to pay from the UI, and discounts (Disc. Avail. / Disc. Taken) are captured structurally but not calculated.
Credit Card Charge
Still posts to a single expense account. Card charges should pick an account per line the way bills and expense reports now do — the same accountForCategory() mapping would serve.
Item Fulfillment
If goods ship in one period and invoice in another, COGS and revenue land in different periods. Shipment-based COGS recognition may be required for cut-off accuracy.

Posting rules by transaction type

Transaction	Posts?	Debit	Credit	Notes
Invoice	Yes	1100 Accounts Receivable — gross (net + tax + shipping) 5000 Cost of Goods Sold — actual layer cost	4000 Product Revenue — net 4030 Shipping Revenue — freight 2200 Sales Tax Payable — computed tax 1200 Inventory — actual layer cost	Revenue is recognised on invoice. COGS consumes real cost layers (FIFO by default). Review: Revenue recognition point. If performance obligations are satisfied over time, ASC 606 requires deferral rather than point-of-invoice recognition.
Cash Sale	Yes	Undeposited Funds — gross Cost of Goods Sold — actual layer cost	Product Revenue Sales Tax Payable Inventory Asset	Same as invoice but cash is received immediately, so it lands in undeposited funds rather than A/R.
Credit Memo	Yes	4000 Product Revenue — net 4030 Shipping Revenue — freight 2200 Sales Tax Payable — tax reversal 1200 Inventory — goods returned to stock	1100 Accounts Receivable — gross 5000 Cost of Goods Sold — cost of sale reversed	RESOLVED — returned goods now re-enter stock at their current weighted-average cost and the original cost of sale is reversed, so inventory and COGS stay honest after a credit.
Cash Refund	Yes	4000 Product Revenue 2200 Sales Tax Payable 1200 Inventory — goods returned	1010 Checking - Wexbourne US 5000 Cost of Goods Sold — cost of sale reversed	RESOLVED — same restocking treatment as a credit memo.
Payment	Yes	1010 Checking - Wexbourne US or 1090 Undeposited Funds	1100 Accounts Receivable	RESOLVED — payments now apply against specific open invoices oldest-first through an Apply grid (lib/payment-application.ts). Applied/unapplied amounts are recorded per document and invoices flip to Paid In Full once fully settled, so aging reflects real open balances. Review: Application is oldest-first automatic; a user cannot yet choose which invoices to pay from the UI, and discounts (Disc. Avail. / Disc. Taken) are captured structurally but not calculated.
Customer Deposit	Yes	1090 Undeposited Funds	2130 Customer Deposits	RESOLVED — a deposit is unearned revenue and now credits a liability account rather than reducing A/R.
Bill	Yes	The account named on EACH LINE — rent, software, repairs, inventory … 2030 Goods Received Not Invoiced — item lines with no account 2220 VAT Receivable — input tax	2010 Accounts Payable - Trade — gross	RESOLVED — each expense line posts to its own account, so a bill can mix inventory and expense purchases correctly. Item lines still clear the GR/IR accrual raised by the receipt; freight and rounding fall to GR/IR so the entry always balances. Line-level department/class/location are carried through.
Bill Credit	Yes	Accounts Payable	Inventory Asset
Bill Payment	Yes	Accounts Payable	Checking Account
Check	Yes	Accounts Payable	Checking Account
Item Receipt	Yes	1200 Inventory	2030 Goods Received Not Invoiced	RESOLVED — receipts now credit a GR/IR clearing account which the vendor bill debits, so a receipt and its bill can no longer double-count. Also receives stock into cost layers.
Expense Report	Yes	The account for each line's expense category — Travel, Meals, Software, Office Supplies …	2010 Accounts Payable - Trade	RESOLVED — lines post by category via accountForCategory() in lib/gl.ts, so travel, meals and software land in their own accounts rather than one hard-coded expense line.
Bank Deposit	Yes	1010 Checking - Wexbourne US	1090 Undeposited Funds	RESOLVED — the chart now carries a dedicated 1090 Undeposited Funds account, matching the chart the account was modelled from.
Credit Card Charge	Yes	6300 Software and Subscriptions	2150 Credit Card Payable	Review: Still posts to a single expense account. Card charges should pick an account per line the way bills and expense reports now do — the same accountForCategory() mapping would serve.
Credit Card Refund	Yes	Credit Card Payable	Software & Subscriptions
Inventory Adjustment	Yes	1200 Inventory	5020 Inventory Shrinkage	RESOLVED — adjustments now hit a dedicated shrinkage account rather than COGS directly.
Journal Entry	Yes	Per line	Per line	Accounts come from the line grid. The engine rejects the entry if debits do not equal credits.
Sales Order	No	—	—	A commitment, not an accounting event. Posts when invoiced or fulfilled.
Purchase Order	No	—	—	A commitment. Posts on receipt or bill.
Estimate / Quote	No	—	—	No accounting effect.
Transfer Order	No	—	—	No GL effect between locations in a single subsidiary.
Item Fulfillment	No	—	—	Consumes inventory layers for costing but does not itself post; COGS is recognised on the invoice. Review: If goods ship in one period and invoice in another, COGS and revenue land in different periods. Shipment-based COGS recognition may be required for cut-off accuracy.