Accounting basics
Every money event in LedgerLite becomes a journal entry: debit lines on one side, credit lines on the other, and both sides always total the same. The app refuses any entry that does not balance, so your books cannot go out of balance.
Debit and credit in plain words
Section titled “Debit and credit in plain words”Each account has a normal side: the side that makes it grow.
| Debit makes it grow | Credit makes it grow |
|---|---|
| What you own: cash, bank, stock, money customers owe you | What you owe: supplier bills, VAT collected for the FTA |
| Your costs: cost of goods sold, expenses | Owner capital and your income: sales and services |
| Account | Debit (AED) | Credit (AED) | Why |
|---|---|---|---|
| The till drawer’s cash account | 105.00 | Cash came into the drawer | |
| 4000Sales Revenue | 100.00 | You earned income | |
| 2100Output Tax Payable | 5.00 | VAT you now owe the FTA | |
| 5000Cost of Goods Sold | 60.00 | What the shirt cost you | |
| 1200Inventory | 60.00 | Your stock went down | |
| Total | 165.00 | 165.00 | Balanced |
Profit on this sale: 100.00 − 60.00 = AED 40.00. The 5.00 VAT is never income: it waits in Output Tax Payable until you pay it with your VAT return. Credit lines are set in a little, the way a bookkeeper writes them.
The main accounts
Section titled “The main accounts”These are the standard accounts the app posts to. Your company may have renamed or re-numbered some of them, or added its own; the app still posts to the right one.
| Code | Account | In plain words | Grows with |
|---|---|---|---|
| 1000 | Cash on Hand | Cash kept in the shop’s safe or office. Each till drawer has its own cash account | Debit |
| 1010 | Petty Cash | Small cash kept for minor expenses | Debit |
| 1020 | Bank Accounts | Money in your bank accounts | Debit |
| 1030 | Card and Payment Clearing | Card money not yet paid out to your bank. Each card machine also has its own account, “Card clearing - ‹machine›”, and each Pay by link provider has “Pay by link - ‹provider›” | Debit |
| 1100 | Accounts Receivable | Money customers owe you | Debit |
| 1150 | Unbilled Receivables | Goods delivered to a customer but not yet invoiced | Debit |
| 1200 | Inventory | The cost value of the stock you hold | Debit |
| 1250 | Supplier Advances | Money you paid a supplier before their bill, or credit a supplier owes you | Debit |
| 1350 | Staff Advances | Money an employee took and still owes back | Debit |
| 1400 | Input Tax Recoverable | VAT you paid on purchases and can claim back | Debit |
| 2000 | Accounts Payable | Money you owe suppliers | Credit |
| 2050 | Goods Received Not Invoiced | Stock received before the supplier’s bill arrives | Credit |
| 2060 | Stock owed (estimated cost) | Stock you sold before it arrived, at its estimated cost, until the goods come in | Credit |
| 2100 | Output Tax Payable | VAT you collected and owe the FTA | Credit |
| 2110 | VAT due to/from FTA | The VAT return amount you owe the FTA, or that the FTA owes you, once a return is locked | Credit |
| 2250 | Payroll Payable | Net salaries you owe employees until you pay them | Credit |
| 2260 | Payroll Deductions Payable | Amounts deducted from pay that you must pass on | Credit |
| 2300 | Customer Deposits | Advance money customers paid before the sale | Credit |
| 2350 | Pending POS Cash | Cash that went in or out of a till drawer and has not yet been sorted by the office | Credit |
| 2400 | Loans Payable | Money you borrowed and must repay | Credit |
| 3000 | Owner Capital | Money the owner put into the business | Credit |
| 3150 | Opening Balance Equity | The other side of your opening balances | Credit |
| 3200 | Owner Drawings or Dividends | Money the owner took out of the business | Debit |
| 4000 | Sales Revenue | Income from selling goods | Credit |
| 4100 | Sales Returns and Allowances | Income given back on returns | Debit |
| 4200 | Service Revenue | Income from services | Credit |
| 5000 | Cost of Goods Sold | What the goods you sold cost you | Debit |
| 5100 | Inventory Gain or Loss | Stock found or lost in counts and adjustments | Debit |
| 6000 | Payroll Expense | Salaries and allowances your business pays | Debit |
| 6750 | Cash Over and Short | Differences found when cash is counted | Debit |
| 6760 | Rounding Difference | Small round-off on invoice totals, if your company rounds them | Debit |
The life of a document
Section titled “The life of a document”A document (an invoice, a bill, a payment) has no effect on your accounts until it is posted.
- Draft. Saved but not posted. No journal, no stock change, no VAT. You can change or remove it freely.
- Posted. The journal entry is written, stock moves, and VAT is counted for its tax date.
- Updated. A posted document can be changed in its own form. The button is called Update or Edit bill, depending on the screen. The app first shows the changed values and their accounting effect, and asks for a reason. It then works out every effect again under the same rules as the first posting.
- Deleted. Removes every ledger, stock and VAT effect. The document number stays, shown as Deleted or Cancelled, and is never reused. The history keeps the before picture.
Rules that hold for every update and delete
Section titled “Rules that hold for every update and delete”- A locked period, or a VAT return with locked figures, cannot be changed.
- Entries behind a bank reconciliation or a cash count are protected.
- Money already received against a document becomes customer advance (credit for their next purchase) when the document no longer needs it.
- A change that would break a linked return, credit note or delivery is refused, and the message names that document.
- In the standard roles, managers update and admins delete. Editing never lets anyone do more than they could when the document was first entered.