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Double-Entry Accounting, Banking & Ledgers

Innoventry ERP incorporates a comprehensive double-entry accounting engine fully compliant with Indian Accounting Standards (Ind AS). It automatically generates balancing debit and credit entries from commercial transactions while providing full voucher support for manual payments, receipts, contra transfers, journal adjustments, and multi-bank reconciliations.

1. Setting Up the Chart of Accounts & Ledgers

The Chart of Accounts organizes all financial accounts into a structured hierarchy of Ledger Groups.

  • Desktop Navigation: Accounting > Ledgers > New Ledger (or Accounting > Ledger Groups)
  • Web / Mobile Route: /main/master/allLedgers (or /main/master/newLedger/:type)

Primary Account Classifications

Every ledger belongs to one of four primary heads:

  • Assets: Current Assets (Cash-in-Hand, Bank Accounts, Sundry Debtors, Stock-in-Hand), Fixed Assets (Machinery, Computers, Furniture).
  • Liabilities: Current Liabilities (Sundry Creditors, Duties & Taxes, Outstanding Expenses), Capital Account, Loans.
  • Income: Sales Accounts, Direct Incomes, Indirect Incomes (Interest, Rent received).
  • Expenses: Purchase Accounts, Direct Expenses (Freight Inward, Factory Wages), Indirect Expenses (Office Rent, Electricity, Salaries).

Creating a Customer or Vendor Ledger

  1. Click New Ledger.
  2. Enter the Ledger Name (e.g., Sharma Traders).
  3. Select the Ledger Group:
    • For customers: Sundry Debtors
    • For suppliers: Sundry Creditors
  4. Enter GST details: GSTIN, Registration Type (Regular, Composition, Unregistered), and State.
  5. Enter banking details (Bank Account No, IFSC Code, Branch Name) and credit terms (Credit Days, Credit Limit).
  6. Enter Opening Balance if migrating from a previous accounting software.

2. Customer Receipt Collections (Bill-by-Bill Settlement)

Used when collecting payments from customers via Cash, Cheque, NEFT, RTGS, or UPI.

  • Desktop Navigation: Transactions > Receipt (or Accounting > Receipt Voucher)
  • Web / Mobile Route: /main/transaction/receipt

Step-by-Step Procedure

  1. Click New Receipt.
  2. Receiving Account: Select the paying account where money is deposited:
    • Select Cash-in-Hand for physical cash.
    • Select your Bank Account (e.g., HDFC Bank Current A/c) for electronic transfers or cheques.
  3. Customer Ledger: Select the customer under Sundry Debtors. The screen displays their current outstanding balance.
  4. Enter Amount & Mode:
    • Enter the collected amount.
    • Select the payment mode (Cash, Cheque, NEFT, RTGS, UPI, IMPS).
    • Enter the transaction reference or cheque number and date.
  5. Bill-by-Bill Allocation:
    • The pending unpaid invoices table appears.
    • Allocate the received amount against specific unpaid invoices, or click Auto-Allocate (FIFO) to settle older invoices first.
    • Any excess unallocated amount is flagged as an On-Account Advance.
  6. Click Save:
    • The customer's receivable balance reduces immediately.
    • The bank or cash ledger balance increases.
    • A receipt confirmation voucher can be printed or sent via WhatsApp/Email.

3. Vendor Payment Disbursals

Used to disburse payments to suppliers, service providers, or expense heads against outstanding bills.

  • Desktop Navigation: Transactions > Payment (or Accounting > Payment Voucher)
  • Web / Mobile Route: /main/transaction/payment

Step-by-Step Procedure

  1. Click New Payment.
  2. Paying Account: Choose the bank account or cash ledger making the payment.
  3. Payee Ledger: Select the supplier (Sundry Creditor) or expense head (e.g., Office Rent A/c).
  4. Payment Details: Enter the amount, payment mode (Cheque, NEFT, RTGS, UPI), and instrument reference number.
  5. Invoice Knock-Off:
    • Select the specific vendor purchase bills being cleared by this disbursement.
  6. Click Save:
    • Vendor payable balance decreases.
    • Bank or cash balance is credited.

4. Cash & Bank Contra Transfers

Used for internal fund transfers that do not involve external parties, including cash deposits into banks, cash withdrawals from ATMs for petty cash, or fund transfers between multiple bank accounts.

  • Desktop Navigation: Transactions > Contra (or Accounting > Contra Voucher)
  • Web / Mobile Route: /main/transaction/contra

Common Contra Use Cases & Entries

  • Cash Deposited into Bank:
    • Debit: Bank Account
    • Credit: Cash-in-Hand
  • Cash Withdrawn for Office Petty Cash:
    • Debit: Petty Cash A/c (or Cash-in-Hand)
    • Credit: Bank Account
  • Inter-Bank Transfer:
    • Debit: Destination Bank A/c (e.g., SBI Current A/c)
    • Credit: Source Bank A/c (e.g., HDFC Current A/c)

5. Journal Entries (Adjustments & Depreciation)

Used for non-cash accounting adjustments, month-end expense provisions, prepaid expense amortizations, and fixed asset depreciation.

  • Desktop Navigation: Transactions > Journal (or Accounting > Journal Voucher)
  • Web / Mobile Route: /main/transaction/journal

Example: Recording Asset Depreciation

  1. Click New Journal.
  2. Debit Entry: Select Depreciation Expense A/c and enter the depreciation amount (e.g., ₹15,000).
  3. Credit Entry: Select Computer & Printers Fixed Asset A/c and enter the equal balancing credit (₹15,000).
  4. Enter the narration: "Annual straight-line depreciation for FY 2026-27".
  5. Save the voucher. Total debits must equal total credits before saving.

6. Bank Statement Reconciliation (BRS)

Used to reconcile differences between the software bank book and the actual bank passbook/statement (e.g., cheques issued but unpresented, deposits in transit, bank charges).

  • Desktop Navigation: Accounting > Bank Reconciliation
  • Web / Mobile Route: /main/transaction/bankReconciliation (or /main/accounting/bankReconciliation)

Step-by-Step Procedure

  1. Select Bank & Period: Choose the bank ledger (e.g., HDFC Current A/c) and set the reconciliation statement date (e.g., 31st October).
  2. View Unreconciled Instruments:
    • The screen lists all recorded cheques, deposits, and transfers where the bank clearing date is blank.
  3. Match with Bank Statement:
    • Check your physical or online bank statement.
    • For each cleared instrument, enter the actual Bank Clearing Date in the clearing date column.
  4. Account for Direct Bank Entries:
    • If the statement shows bank service charges or interest received that were not previously entered in software, click Add Quick Entry to post them directly.
  5. Verify Zero Variance:
    • The screen computes:
      • Balance as per Software Books
      • Add: Cheques issued but not presented
      • Less: Cheques deposited but not cleared
      • Balance as per Bank Statement
    • When the computed balance equals the statement closing balance, the variance is ₹0.00.
  6. Click Save Reconciliation.

7. Financial Reports: Day Book, Cash Book & Final Accounts

  • Day Book (Reports > Accounting Reports > Day Book): Daily chronologically ordered audit of all transactions (sales, purchases, receipts, payments, journals) posted on a specific date.
  • Ledger Statement (Reports > Accounting Reports > Ledger Statement): Complete running debit, credit, and balance statement for any customer, supplier, or general ledger over any date range.
  • Trial Balance (Reports > Accounting Reports > Trial Balance): Consolidated listing of closing balances across all ledger groups, proving that total debits equal total credits.
  • Profit & Loss (Reports > Final Accounts > Profit & Loss): Gross profit and net operational profit calculation for the accounting period.
  • Balance Sheet (Reports > Final Accounts > Balance Sheet): Complete financial health summary showing Total Assets vs Total Liabilities & Equity.