Which day does a refund belong to?

A refund belongs to the day it happened, not to the day of the order. That goes for the money you paid back. It also goes for the product cost you get back.

This is why a refund never changes a month that is already over. Say a customer orders in December and gets a refund in March. If that refund went back to December, December would suddenly look worse in March. Every report you already made about December would be wrong. That is the most common reason homemade profit reports cannot be trusted. The full story is in which day a refund belongs to.

Here is an example at 19% VAT. A customer orders for €119,00 on 28 March and gets a refund on 3 April. March keeps its sale, its €19,00 of VAT and its product cost, just as they were. April gets the €119,00 return. It takes the €19,00 of VAT back off the Taxes line and gets the product cost back. All of that lands on 3 April.

The product cost you get back uses the cost from the day the item was sold. So it cancels the first cost exactly. A supplier price change in between makes no fake profit or loss. Return processing, the label and handling for a parcel that comes back, also lands on the refund day. The payment fee from the order stays, because payment providers keep it.

Partial refunds work the same way: each refund lands on its own day. An order counts as fully refunded on the day its last item is refunded. It then leaves Net Orders. Refunding a gift card sold with the goods never counts toward that.

A return fee you keep, like a restocking fee or a return shipping fee charged in Shopify's return flow, makes the return smaller on the same day: a €119,00 item sent back with €16,90 of fees kept counts as a €102,10 return, the money that actually went back.