Accounting Basics
A short glossary of the terms this manual uses. You do not need an accounting background to run Lekhapal, but these eight ideas will make every other page clearer.
1. What is accounting?
Accounting is keeping track of money. Specifically, four things:
| You track | Called | Example |
|---|---|---|
| What you earn | Sales (income) | Rs. 25,000 of goods sold today |
| What you spend | Expenses | Rs. 15,000 shop rent |
| What you own | Assets | Cash, stock, equipment |
| What you owe | Liabilities | A supplier bill you have not paid |
Kept honestly, these four numbers tell you whether the business is in profit or loss.
2. Journal
A journal is the first record of any transaction. When you sell a product, the sale is written into a journal before it reaches any report. Every document you create in Lekhapal — an invoice, a payment, a stock adjustment — produces a journal entry behind the scenes.
3. Journal voucher
A journal voucher is a manual journal entry. You use it when no dedicated screen fits the transaction:
- internal adjustments,
- correcting a mistake,
- recording rent or depreciation,
- period-end adjusting entries.
Not for ordinary trading
Do not record sales or purchases through a journal voucher. Use the Sales and Purchase modules — they update stock, customer balances and VAT as well as the books.
4. Debit and credit
The two sides of every entry. The short version:
- Debit — money or value comes in. Receiving cash is a debit to cash.
- Credit — money or value goes out. Paying cash is a credit to cash.
Every entry has equal debits and credits. That is why the Trial Balance balances.
5. Balance sheet
A snapshot of the business's financial position at a point in time. It shows:
- what you own — assets,
- what you owe — liabilities,
- what is left over for the owner — equity.
Assets = Liabilities + Equity
See the Balance Sheet report.
6. Sales
Money earned from customers. In Lekhapal a sale is recorded either through the point of sale or as a sales invoice.
7. Quotation
A price estimate issued before a sale is agreed. The customer asks for a price, you send a quotation; if they accept, it converts into a sales order and then an invoice.
8. Receivable and payable
- Receivable — money customers owe you.
- Payable — money you owe suppliers.
Both are tracked automatically as you raise invoices and bills, and cleared as you record customer payments and supplier payments. The Aging Report shows how long each balance has been outstanding.
Quick reference
| Term | In one line |
|---|---|
| Journal | The first record of a transaction |
| Journal voucher | A manual entry for adjustments |
| Debit | Value in |
| Credit | Value out |
| Asset | Something the business owns |
| Liability | Something the business owes |
| Receivable | Money owed to you |
| Payable | Money owed by you |
| Quotation | A price offer before the sale |
| Invoice | The bill that records the sale |
| Credit note | Reduces a customer invoice (sales return) |
| Debit note | Reduces a supplier bill (purchase return) |
| Contra entry | Moving money between your own cash and bank |