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Sometimes people make mistakes. The checkout process at stores often involves manual data entry which is error prone. For example, as a customer I could be charged $49.99 for a product priced $49.49.

It's often not worth it to try to recover these tiny differences. However, they cause transactions to become unbalanced in ledger:

2021-09-07 * Store
    Expenses       $  49.49
    Credit Card    $ -49.99

I think it's important to record the fact that an error occurred. Adjusting the real value of the product to reflect the mistake would cause this information to be lost.

How do I properly account for this in ledger?

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  • 9
    Why was my question closed? It's about resolving a small accounting discrepancy after buying an item on a store. Doesn't get any more personal than that.
    – Matheus Moreira
    Sep 7, 2021 at 22:05
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    There's also the fact that "Use of software for managing one's finances." is literally listed on this site's help page as an on-topic question example.
    – Matheus Moreira
    Sep 7, 2021 at 22:14
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    Agreed, the question seems compliant with the site's topic ? "- Use of software for managing one's finances. (Not recommendations, just questions regarding specific software)". Similar questions have been on topic in the past, eg money.stackexchange.com/questions/tagged/ledger-cli
    – Simon Michael
    Sep 8, 2021 at 2:38
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    You may be qualified to work at the US Treasury Department. They prepare 'consolidated' financial statements for the US (federal) government, that is, combining all of the departments and agencies, which per accounting standards requires 'eliminating' (removing from the reported amounts) 'intragovernmental' items (between two components). These eliminations should match exactly between the components, but they don't; every year Treasury reports $billions of unmatched items. You might help fix this :-)
    – dave_thompson_085
    Sep 8, 2021 at 5:49
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    If the clerk rang up $49.99, your receipt shows $49.99, and you did not contest this then the product costed $49.99. Why call it an error, maybe it's "negotiation failure". Maybe the fifty cents was a credit card processing fee; lots of places have started adding these. There is a local pizza shop which I frequent and they'll say something like "$11.39, please" and when I take out my credit card they'll say "Oh wait, $12.67 please". Had I shown my credit card first then they would have said "$12.67" and I would have been none the wiser.
    – MonkeyZeus
    Sep 8, 2021 at 12:26

3 Answers 3

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Does it matter?

In this case you were charged $49.99. Your card record shows $49.99. Your account entries show $49.99. You really did pay $49.99 in expenses, so "expenses" should show $49.99.

If you record the expense as the price you paid, rather than what you thought it was worth, the account will never become unbalanced and you will be satisfying all normal and legal accounting practices, which are concerned only with what you actually paid. Recording errors is not necessary, and is entirely a matter of personal preference. In some cases recording the 'value' rather than the price paid could be a problem. If you were charged $5 for a $500 item, your records need to clearly show that you actually paid $5, not $500.

The fact that it was "worth" $49.49 is irrelevant. Things change their "worth" all the time as prices fluctuate. If you got it on sale for $48.99 would you record $49.49 as expenses and $0.50 as "sale discount"?

Adjusting the real value of the product to reflect the mistake isn't a viable option.

Yes it is. No accounting audit is going to care about a discrepancy like this, even a much larger one.

Unless you specifically wish to keep track of such errors for some reason, ignore them.

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    It matters to me. I like recording these details. Your sale example is also interesting to me. By recording that information, I could generate reports such as how much money I've saved by buying products on sale. Really neat.
    – Matheus Moreira
    Sep 7, 2021 at 17:28
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    If it matters to you, keep a separate record. Just have your own list of errors: "2021-09-07 * Store overcharged by $0.50"
    – DJClayworth
    Sep 7, 2021 at 19:39
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    Please. Sales are not key to the answer, so let's not argue about their nature.
    – DJClayworth
    Sep 8, 2021 at 17:52
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    "how much money I've saved" or how much (extra) overcharging you've managed to avoid
    – Caleth
    Sep 9, 2021 at 8:56
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    This answer reads as a frame challenge - I'm new to this stack, but it is a common thing to happen in some other stacks
    – Juliana Karasawa Souza
    Sep 17, 2021 at 8:57
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I created an Errors account that can be used to absorb the remainders of transactions.

2021-09-07 * Store
    Expenses       $  49.49
    Credit Card    $ -49.99
    Errors

Any remainder will be added to the Errors account and the transaction will be balanced.

Simon Michael correctly points out that this account will absorb even large values, creating opportunities for a typing mistake to go unnoticed. To avoid this pitfall, the overcharged amount should be specified explicitly:

2021-09-07 * Store
    Expenses       $  49.49
    Credit Card    $ -49.99
    Errors         $   0.50

It is now possible to track how much money has been lost due to human error:

ledger balance Errors

It is even possible to figure out where the errors are coming from:

ledger register Errors --related
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    What decision point would actually be impacted by collecting this information? This does not seem worth the time to implement.
    – Grade 'Eh' Bacon
    Sep 7, 2021 at 17:50
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    Why does it matter whether it's worth it? I never asked whether it was worth it. The fact is I wanted to do it and I figured out how. Ledger documentation is scarce enough as it is. Just thought I'd contribute some knowledge, Q&A style. I've done this many times before but this is the first time I get responses like this.
    – Matheus Moreira
    Sep 7, 2021 at 21:30
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    Fully accurate book-keeping is valued by some, for their own reasons. Why be so dismissive ?
    – Simon Michael
    Sep 8, 2021 at 2:22
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    @MatheusMoreira, that's good but quite lenient, ie it would not give an error if you made a typo like $4949. Here's a stricter version: 2021-09-07 * Store Expenses $ 49.49 Expenses:Overcharge $ 0.50 Credit Card $ -49.99 Or if the overcharge is discovered some time later and you don't like retroactively changing your entries, it could be: 2021-09-07 * Store Expenses $ 49.99 Credit Card $ -49.99 2021-09-10 * Store refund for overcharge Expenses $ -0.50 Credit Card $ 0.50
    – Simon Michael
    Sep 8, 2021 at 2:26
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    @LawnmowerMan what's wrong with an account with a few transactions in it? Especially something like "errors" that's clearly separate from every other account. (If it was "new lawnmower purchases" then you could combine it with something like "equipment" but "errors" does not seem combinable)
    – user253751
    Sep 9, 2021 at 10:32
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The way you record it depends on how you want to (or are required to) report the transaction. Here are a few possible scenarios:

  • You are paying for the item out of your own pocket and will get reimbursed by your employer. If you consider it your own fault for not noticing the error at the shop, you will be effectively reducing your own petty cash by absorbing the difference. You put in the 2 (unbalanced) entries and record the balancing 50c difference against your petty cash account. You might try to get a refund or store credit which, if successful, you’d record it as a reversal of the petty cash entry.

  • You buy the item for your own company and can’t get a refund. The company might absorb the difference as a business expense. The item cost you $49.99 because that’s what you tacitly agreed with at the till. So you record both entries as $49.99.

  • You can only claim $49.49 as an expense in your tax return. You enter both (unbalanced) entries, and record the remaining 50c against an undeductible expense. When tax time comes around, you don’t claim any of your undeductible expenses.

The principle is that you first decide what the price legally is. The bookkeeping then follows suit.

Disclaimer: I am not an accountant and this answer is not financial advice. You should consult a suitable professional regarding whichever alternative you pick, especially if the actual numbers are a lot bigger or if there are penalties for getting it wrong.

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    and of course recording them separately lets you make the decision later
    – user253751
    Sep 9, 2021 at 19:10

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