Basic Accounting Terms with Practical Example
Account:
A category used to track money in your business.
Example: “Rent”, “Sales”, or “Electricity” are accounts used to record where money is going or coming from.
Debit (Dr)
An entry that increases assets or expenses.
Example: Buying office supplies increases expenses — so you debit the “Office Supplies” account
Credit (Cr)
An entry that increases income or liabilities.
Example: When a customer pays you ₹5000, you credit the “Sales” account.
Chart of Accounts
A complete list of all accounts (Assets, Liabilities, Income, Expenses) in your system.
Example: Think of it as your business’s financial directory.
Journal Entry
A manual record of a transaction showing which accounts are debited and credited.
Example: Paying rent: Debit “Rent Expense”, Credit “Bank”.
Invoice
A bill you send to a customer after selling a product or service.
Example: After delivering a project, you send an invoice of ₹10,000 to the client.
Bills
A bill is what you receive from a vendor for something you purchased.
Example: You buy raw materials, and the supplier gives you a bill of ₹8,000.
Payment
When money is exchanged — either received or paid.
Example: You receive ₹10,000 for an invoice or pay ₹5,000 for a vendor bill.
Customer / Accounts Receivable
A customer is someone who buys from you. If they haven’t paid yet, it’s recorded as Accounts Receivable.
Example: You issue an invoice to a client — that ₹2,000 becomes receivable.
Vendor / Accounts Payable
A vendor is someone you buy from. If you haven’t paid them yet, it’s an Account Payable.
Example: You get a bill of ₹3,000 from a supplier — until paid, it’s payable
Asset
Anything the business owns with value.
Example: Cash, laptop, office furniture — all are business assets.
Liability
Money the business owes to others.
Example: A loan or unpaid vendor bill is a liability.
Equity
The owner’s share in the business after subtracting all debts.
Example: If your business has ₹5 lakhs in assets and ₹2 lakhs in liabilities, equity is ₹3 lakhs.
Profit and loss Statement (p&l)
A report showing income minus expenses over a period.
Example: If you earned ₹50,000 and spent ₹30,000 this month, your profit is ₹20,000.
Balance Sheet
A financial snapshot showing Assets = Liabilities + Equity at a point in time.
Example: As of March 31st, your assets are ₹1,00,000, liabilities ₹40,000, and equity ₹60,000
Cash Flow
Tracks actual money moving in and out.
Example: You made ₹10,000 in sales, paid ₹4,000 in bills — cash flow = ₹6,000.
Reconciliation
Matching your Odoo records with actual bank statements.
Example: Your bank says ₹20,000, but Odoo shows ₹18,000 — find and fix the ₹2,000 gap.
Fiscal Year
A 12-month period used for accounting and taxes.
Example: April 1 to March 31 in India is a common fiscal year.
GST / VAT (Tax)
Tax added on sales and purchases.
Example: You sell a product for ₹1,000 with 18% GST — total invoice = ₹1,180.
Journal
A group of similar transactions.
Example: Sales Journal = all customer invoices; Bank Journal = all bank payments.
Navigating Odoo ERP
When you open Odoo, you will see a dashboard with app icons for different modules like Sales, Inventory, Accounting, and CRM. Click on any icon to open that module. Inside each module, you can switch between views such as list view, form view, kanban view, and dashboard charts. Use the search bar, filters, and grouping options at the top to quickly find information. The menu bar lets you move between sections inside the module, and the Settings area allows you to customize users, permissions, and system features. Overall, navigation is simple—just click, search, and switch views to manage your business smoothly.
