invoicing irregularities covered by GAAP?

Sep 24, 2006 4 Replies

Hi,



I am not an accountant but a programmer, I am in a situation where I am was wondering if the following situation would be covered by GAAP:



We have invoices being exchanged electronically between trading partners with a particular calculation model, let us say



price of item * amount of item purchased = cost of purchase line



but someone else wants to do



price of item * (amount of item purchased / cost of unit) = cost of purchase line.



The person who wants to do this change wants to allow people to choose which method they use to calculate out their invoices without specifying which it is.



The suggested solution is when receiving an invoice, calculate using method 1, if method returns correct amount process else calculate using method 2.



The obvious problem here is that (theoretically) someone could have calculated incorrectly with method 1 and return an amount incorrect by method 1 but an amount correct by method



  1. Or that someone could calculate using a third method and have a higher chance of returning a correct result by one of the approved methods.

This seems to me to be too low level and atomic a process to be covered by GAAP rules but I could be wrong. Are there any generally accepted accounting principles about this kind of thing that says don't allow vagueness as to how an individual amount was arrived at into global amounts?



Are you sure that is correct? The difference between the two is the division of the cost of unit.

Yes it is correct that the difference between the two is the cost of the unit.

The problem I have is a programmatic > >

I'm sorry I don't understand. Something can't have two different answers. At least one must be wrong.

You need to decide which is correct and use that.

No, the situation is not covered by "GAAP" but yes, you can figure invoices in a different manner for the same (or different) customers. And if the amount remitted is not equal to the accounts receivable balance then that would "prove the likelihood" of a difference" !

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