Hello Everyone
Has anyone else noticed a major issue that occurs when Delivery note is raised in a different month from the associated Sales Invoice?
The Revenue is recognized by ERPNext when the sales invoice is submitted, but the cost of goods is recognized when the delivery note is submitted.
This causes a major distortion in the Profit and Loss Statement if the two documents are submitted in different months.
For you to encounter this problem you must make use of delivery notes AND you must experience a sizable time difference (at least a month) between when the Sales invoice is completed and when the delivery of the product is done.
This is totally against the matching concept in accounting which requires that revenues and any related expenses be recognized together in the same reporting period. This is one of the most important concepts in accounting and it appears that ERPNext is violating it in drawing up its P&L Statement.
Interestingly enough this is not affecting the standalone Gross Profit Report, the distortion is only in the P&L report.
In my opinion this is a major issue that requires the attention of the entire ERPNext team, hence am tagging everyone. I apologise in advance. @rmehta @Chude_Osiegbu @tundebabzy @wale @Fred1
Or am I missing something ?