About Cancellation Posting for Single-Entry Accounting

For businesses that use single-entry accounting, cancellation posting allows for cancellation or reversal adjustment transactions using a negative entry on the same side, debit or credit, as the original entry. A negative sign (-) is displayed to identify the adjustment. Cancellation posting is available for accounts payable adjustments and accounts receivable credit memos.

Setup and Application

You enable cancellation posting functionality by selecting a setting on the General Parameters form. You can then apply this functionality to individual adjustment entries on the Invoices, Debit and Credit Memos and A/P Vouchers and Adjustments forms.

When you apply cancellation posting to a transaction record, these indications are visible on subsequent posted transactions, journal entries, and ledger reports for the transaction:

  • On related forms and reports, a negative sign (-) is displayed with the adjustment amount.
  • On these forms, a display-only Cancellation check box is selected:
  • A/P Posted Transactions Detail
  • A/R Posted Transactions Detail
  • G/L Posted Transactions
  • Journal Entries
  • On these reports, an X is displayed next to the transaction:
  • A/P Voucher Posting Report
  • Invoice Transaction Report
  • Journal Transaction Report

Processing Rules

These processing rules exist for cancellation posting:

  • Accounts Payable:

    On the A/P Vouchers and Adjustments form, a cancellation posting adjustment references the original voucher number and reverses the entire amount of the original voucher. Partial adjustments cannot be made. Also, amounts and discount and due dates from the original voucher cannot be changed.

    Posted vouchers can be canceled only one time. Posted vouchers referenced by posted adjustments or payments cannot be canceled.

  • Accounts Receivable:

On the Invoices, Debit and Credit Memos form, a cancellation posting credit memo references the original invoice number and reverses the entire amount of the original invoice. Partial credit memos cannot be made. Also, amounts from the original invoice cannot be changed. The due date follows existing rules based on credit terms.

Posted invoices can be canceled only one time. Posted invoices referenced by posted credit memos, debit memos, or payments cannot be canceled.

  • Journal Entries and G/L Posted Transactions:

On the Journal Entries and G/L Posted Transactions forms, negative-signed debit and credit amounts are displayed for cancellation adjustments in the AP Dist journal and for cancellation credit memos in the AR Dist journal. Debit amount totals are tallied using the sum of positive and negative-signed debits. Credit amount totals are tallied using the sum of positive and negative-signed credits. All other entries are displayed using traditional double-entry accounting notation.

The application of cancellation posting does not alter transaction entry. It affects only the display of the debit and credit amounts and totals, as shown in this example:

Original A/R Invoice Double-Entry Credit Memo for Original Invoice Single-Entry Cancellation Posting Credit Memo for Original Invoice
Dr Accounts Receivable 119

Cr  Revenue 100

Cr VAT 19

 Dr Revenue 100

Dr VAT 19

Cr  Accounts Receivable 119

 Dr  Accounts Receivable - 119

Cr Revenue - 100

Cr VAT -19

Reporting

Reports related to voucher adjustments and credit memos display transactions using negative-signed debit and credit amounts. This applies to reporting that occurs during the transaction-to-journal-to-ledger cycle. Again, debit amount totals are tallied using the sum of positive and negative-signed debits. Credit amount totals are tallied using the sum of positive and negative-signed credits.

Certain reporting rules apply when the Separate Debit and Credit Totals option is also applied to reports.

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