Learn Accounting with TB Rod & Cement Suppliers

You don't need to know any accounting to read this. This guide teaches every accounting idea in Stockora using a sample business - a rod and cement shop in Butwal.

💡 Follow along live: ask Tech Bato to enable the free practice shop on your Stockora account. Every number in this guide is really in it - open the screens as you read and check them yourself. (You can also just read; the guide works on its own.)

Table of Contents

1. Meet the Shop
2. The Month's Story - Every Transaction
3. Lesson 1: Buying on Credit - "Payable"
4. Lesson 2: Selling on Credit - "Receivable"
5. Lesson 3: Reading a Ledger (Ram's Account)
6. Lesson 4: The Cash Book - Why Cash ≠ Profit
7. Lesson 5: Stock and Stock Value
8. Lesson 6: Returns
9. Lesson 7: Profit - the Most Important Lesson
10. Lesson 8: The Income Statement
11. Lesson 9: The Balance Sheet
12. Lesson 10: Trial Balance and Debit/Credit
13. Screen Map - Where to See Everything
14. Dictionary of Accounting Words
15. Practice Exercises

1. Meet the Shop

TB Rod & Cement Suppliers sells construction materials:

Suppliers (people we buy from):

• Shivam Cement Distributor - we started fresh with them (opening balance 0)
• Jagdamba Steel Dealer - we already owed them Rs 50,000 from before we started using this software (that's their "opening balance")

Customers (people we sell to):

• Ram Construction - already owed us Rs 20,000 from before (opening balance)
• Sita Builders - new customer
• Hari Hardware - new customer

2. The Month's Story - Every Transaction

Here is everything that happened in the last ~25 days. This is the whole "diary" of the business:

Everything below is just different ways of looking at this same diary. That is really all accounting is.

3. Lesson 1: Buying on Credit - "Payable"

When you take goods now and pay later, the unpaid money is called Accounts Payable (or just "payable" / "due to supplier").

Let's calculate what we owe Shivam:

  Bought TBP-0001 (cement)        +375,000
  Bought TBP-0003 (PPC)           +204,000
  Paid with TBP-0001               −50,000
  Paid voucher VCH-0001            −50,000
  Paid with TBP-0003              −100,000
  Returned damaged bags            −13,600
  ─────────────────────────────────────────
  We still owe Shivam            = 365,400

And Jagdamba:

  Old debt (opening balance)      +50,000
  Bought TBP-0002 (rods)         +281,500
  Paid voucher VCH-0002           −40,000
  ─────────────────────────────────────────
  We still owe Jagdamba         = 291,500

Total payable = 656,900. This is a liability - money that will leave the business one day.

👀 See it yourself: Suppliers page (the "Due" column), or Reports → Supplier Dues.

4. Lesson 2: Selling on Credit - "Receivable"

The mirror image: when a customer takes goods and pays later, the unpaid money is Accounts Receivable - money that will come to the business. It is an asset.

Notice on each invoice the system marks a payment status:

• paid - nothing left (TBI-0002)
• partial - some paid (TBI-0001, TBI-0004, TBI-0006)
• unpaid - nothing paid yet (TBI-0003 was unpaid until Hari's receipt made it partial)

👀 See it yourself: Customers page ("Outstanding" column), or Reports → Customer Dues.

5. Lesson 3: Reading a Ledger (Ram's Account)

A ledger is one person's complete money history, line by line, with a running balance. Open Customers → Ram Construction → Ledger and you will see exactly this:

How to read it:

• Debit = the balance goes UP (he took goods, owes more)
• Credit = the balance goes DOWN (he gave money, or gave goods back)
• The last number (89,100) always equals the "Outstanding" on the Customers page. If you gave Ram a printed copy of this, that's called a statement of account - press the Print button.

Supplier ledgers work the same way but reversed - there, purchases increase what we owe.

6. Lesson 4: The Cash Book - Why Cash ≠ Profit

The Cash Book records only real money moving in or out. Goods on credit do NOT appear here until money actually moves.

Money IN (Rs 333,000 total):

Money OUT (Rs 270,000 total):

Cash balance = 333,000 − 270,000 = Rs 63,000.

⚠️ The big lesson: the shop's profit this month is only ~8,100 (Lesson 8), but cash is 63,000. And we owe suppliers 656,900! Cash in the drawer is NOT profit. Many shops die because they feel rich seeing cash while their supplier debts grow. The cash book, dues reports, and profit report each answer a different question.

👀 See it yourself: Finance → Cash Book - notice rows created automatically by sales/purchases/receipts, and manual rows (rent, salary, transport, commission) you could delete.

7. Lesson 5: Stock and Stock Value

Stock is never typed in by hand - the system counts every movement:

Two ideas here:

• Stock valuation - your shelves hold Rs 422,500 of money in the form of goods. This is an asset, just like cash.
• Low stock alert - Rod 16mm has 200 kg left but its reorder level is 300 kg, so it shows a red Low stock warning on the Dashboard and Stock Report. Time to order more.

👀 See it yourself: Reports → Stock Report, and the low-stock card on the Dashboard.

8. Lesson 6: Returns

Purchase return (goods back TO supplier): 20 PPC bags were damp, so we returned them to Shivam (PRET-0001, worth 13,600). Since we still owed Shivam for that invoice, the 13,600 was simply cut from our due - no cash moved. Stock went down 20 bags automatically. In business language this is a debit note.

Sales return (goods back FROM customer): Ram returned 10 extra PPC bags (SRET-0001, worth 7,300). His invoice still had 42,400 due, so the 7,300 was cut from his due (now 35,100) - again no cash moved. Stock went up 10 bags. This is a credit note.

If the invoice were already fully paid, you would enter a Cash Refund amount instead - then real money moves and the cash book gets a row.

👀 See it yourself: Finance → Sales Returns and Purchase Returns; the return lines also appear in Ram's and Shivam's ledgers.

9. Lesson 7: Profit - the Most Important Lesson

Profit = selling price − what the goods cost you. The cost part is called COGS (Cost of Goods Sold). The system remembers the cost of every item at the moment of sale, so profit is exact:

Example, one line of TBI-0001: 100 bags OPC sold @800 but bought @750 → 100 × 50 = Rs 5,000 profit on that line.

Ram's return takes back 7,300 of sales whose goods cost 6,800 - so profit drops by 500. Gross profit = 33,100.

⚠️ Notice: Hari hasn't fully paid, but his profit already counts - profit is earned when you sell, not when you collect. Collecting is the receivable's job (Lesson 2).

👀 See it yourself: Reports → Datewise Sales & Profit, and the profit line on the Dashboard chart.

10. Lesson 8: The Income Statement

The Income Statement (also called Profit & Loss or P&L) is the formal way to present Lesson 7 plus the shop's running costs, for a chosen period:

  Gross Sales                       464,800
  − Sales Returns                    (7,300)
  ─────────────────────────────────────────
  Net Sales                         457,500
  − Cost of Goods Sold             (424,400)
  ─────────────────────────────────────────
  GROSS PROFIT                       33,100
  − Rent                            (10,000)
  − Salary                          (15,000)
  − Transport                        (5,000)
  + Other Income (commission)         5,000
  ─────────────────────────────────────────
  NET PROFIT                          8,100

• Gross profit = profit from trading goods only.
• Net profit = what's truly left after rent, salary, transport, etc. This is the number that tells you if the business is actually working.

Our shop earned Rs 8,100 this month. Small - the expenses ate most of the trading profit. That's a real insight the owner needs!

👀 See it yourself: Finance → Accounting → Income Statement (set From = 30 days ago).

11. Lesson 9: The Balance Sheet

The Income Statement shows a period (a movie). The Balance Sheet shows one moment (a photo): what the business has and owes, today.

  WHAT WE HAVE (Assets)              WHERE IT CAME FROM (Liabilities + Equity)
  ────────────────────────           ─────────────────────────────────────────
  Cash               63,000          Owed to suppliers        656,900
  Receivables       149,500          Retained earnings          8,100
  Inventory         422,500          Capital & adjustments    (30,000)
  ────────────────────────           ─────────────────────────────────────────
  TOTAL             635,000          TOTAL                    635,000

The golden rule: the two sides are ALWAYS equal. Everything the business has was financed by someone - suppliers (liability) or the owner (equity).

Honest reading of our photo: we hold 635,000 of assets but owe 656,900. The shop is running on supplier credit - normal for a new materials shop, but it means paying suppliers on time is life-or-death.

(The "Capital & adjustments −30,000" line balances the opening amounts that existed before the software: Ram already owed us 20,000 and we already owed Jagdamba 50,000 - net −30,000. It is not a mistake.)

👀 See it yourself: Finance → Accounting → Balance Sheet.

12. Lesson 10: Trial Balance and Debit/Credit

Accountants classify every account as debit-side or credit-side:

The Trial Balance lists all of these and proves that total debits = total credits (with an equity balancing line). If the two totals match - shown in green - the books are mathematically consistent. In this system they always match, because every screen reads from the same single diary of transactions.

👀 See it yourself: Finance → Accounting → Trial Balance.

13. Screen Map - Where to See Everything

14. Dictionary of Accounting Words

15. Practice Exercises

Try these in the practice shop, then check the numbers:

1. Receive money: Ram pays another 39,100 cash. Record a receipt against TBI-0004. → His outstanding should become exactly 50,000, and Cash Book gains a row.
2. Sell on credit: Sell Hari 100 bags OPC @800, paid 0. → His due jumps to 104,600 and OPC stock drops to 90 bags (watch it go below reorder 50? not yet - 90 > 50).
3. Pay a supplier: Pay Jagdamba 91,500 by bank voucher. → Their payable becomes a round 200,000.
4. Return goods: Return 50 kg of Rod 8mm from Hari's invoice TBI-0003. → Stock rises to 750 kg, Hari's due falls by 4,500.
5. Month check: After all that, open the Trial Balance - is it still green (balanced)? It always will be. Now you understand why. 🎓