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For owners and accountants who check the numbers

Inventory and accounting software where one entry updates the stock and the books

Most businesses keep a stock register in one place and their accounts in another, enter the same bill into both, and then spend the last week of every quarter arguing about which one is wrong. KhataZone makes the document the single entry: what you raise to record the trade is also what moves the quantity and posts the ledgers.

  • One document updates stock and books together — no second entry to keep in step
  • Stock valued ex-GST, so a tax-inclusive purchase rate never becomes your cost
  • A running stock register with quantity and value, per item and per warehouse
  • Cost of goods sold and margin, bill by bill and party by party
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Why the two halves stop agreeing

You are entering the same bill twice

One person maintains stock, another writes vouchers, and month-end becomes a reconciliation ritual with tea and a calculator. Here the document does both jobs at once. Finalising a purchase bill raises the stock and posts the supplier and the input tax in the same action; finalising a sales invoice takes the goods out and posts the revenue, the tax and the party. There is no second book to type into, so there is nothing for the two to drift out of.

A GST-inclusive purchase rate invents a loss

Your supplier quotes one all-in rate per piece. If that whole figure becomes your cost, the tax you are going to claim back is sitting inside your inventory value, cost of goods sold comes out too high, and a perfectly healthy line reads as a loss. KhataZone costs inbound stock from the taxable amount on the bill divided by the quantity received, net of discount, so the tax lands in the input tax account and the stock is valued at what the goods actually cost you.

Nobody can say what a sold item actually cost

Gross profit for the whole month tells you nothing about where it came from, and a trial balance will never tell you either — a sales journal has no cost line in it. KhataZone works the cost out from the movements that took the goods off the shelf and reports profit bill by bill and party by party: which customer you discounted into the ground, which consignment came in dearer than the last, with item price history when you need to prove it.

Closing stock is a number somebody typed in

In most small businesses the closing stock figure that decides the year's profit is a single line handed over in March, arrived at from a count and an assumed rate. KhataZone keeps a perpetual register instead: opening, inward, outward and closing, in quantity and in value, per item for any period you ask for. The closing figure is the sum of movements you can open and read rather than an estimate you have to defend.

Stock walks out and nothing records why

A carton is crushed in the godown, two pieces go out as samples, the count comes up short. Written on a slip, that quantity simply disappears. A KhataZone stock adjustment carries a reason and a value and stays in the item's register, so the shortfall is a recorded event with a name on it. Be clear about what it is not: an adjustment is a stock event, so if you also want the loss written off in the books that stays a decision you take, as a journal voucher.

Two godowns, one number, no idea which

Goods leave the main store for the branch and get counted in both places, or in neither. A KhataZone transfer moves quantity between warehouses without inventing a sale or a purchase — and correctly leaves the ledgers alone, because nothing has been bought or sold. Each location keeps its own running quantity and value, with low-stock alerts per warehouse instead of one company-wide figure that hides an empty shelf.

How to get the books to match the shelf

  1. 1

    Open with real numbers

    Enter opening stock as quantity and cost per item, so the register starts from what is actually on the shelf rather than from zero. Record what each customer owes you and what you owe each supplier, and you begin knowing your position instead of reconstructing it nine months later.

  2. 2

    Book purchases as purchase bills

    Record the bill with its taxable value, tax and quantity. Stock comes in at the ex-GST cost per unit, the supplier's ledger and the input tax post in the same step, and your purchase register has something the returns can be checked against.

  3. 3

    Let the invoice do both jobs

    Finalising a sales invoice moves the goods out of the register and posts the sale, the output tax and the party together. Credit and debit notes reverse both sides the same way, so corrections do not become manual patching.

  4. 4

    Count, adjust, then read the margin

    Compare the physical count against the stock register and post the difference as an adjustment with a reason. Then read the numbers that decide things: profit bill-wise and party-wise, stock valuation, trial balance, P&L and balance sheet — with a Tally XML export or the twelve-file CA pack for your accountant on the 14-day trial and on Business or Pro.

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Where the two sides meet

One document, both sides

Sales invoices, purchase bills, credit and debit notes, receipts and payments each move what they should and post their own balanced voucher. Journal vouchers stay there for the entries that genuinely need one.

Valued ex-GST, deliberately

Inbound stock is costed from the taxable amount on the bill, not the all-in rate, so recoverable tax never gets buried inside inventory value or cost of goods sold.

A register with two columns

Quantity and value side by side, per item and per warehouse — opening, inward, outward, closing — so a closing figure can always be traced back to the movements that made it.

Margin you can trace

Bill-wise and party-wise profit worked out against real cost of goods sold, plus stock valuation and item price history. Enough to answer where the money went, not just how much of it there was.

Warehouses that stay honest

Multi-warehouse stock, transfers that move goods without faking a transaction, adjustments that carry a reason, and low-stock alerts for each location.

Books that actually close

Trial balance, profit and loss, balance sheet, day book, ledger statements and party ageing — built from the documents you already raised, not re-keyed from them.

What “stock and books together” actually means here

It is worth being precise, because the usual pitch is not true of any accounting system worth trusting. Stock movements do not each fire off a ledger entry in KhataZone. What is joined is the document: finalising a sales invoice moves the stock and posts the revenue, the tax and the party in one action, and a purchase bill raises the stock and posts the payable in one action. You enter the trade once and both sides of it are recorded. A transfer between your own godowns, by contrast, moves stock and correctly touches nothing in the books, because nothing has been bought or sold.

The same honesty applies to cost. There is no cost-of-goods line inside the sales journal, so the trial balance will not tell you your margin and no amount of staring at it will help. The profit reports do that job: they take the cost from the movements that took the goods out and give you profit per bill and per party. Knowing which report holds which answer is most of the difference between numbers you trust and numbers you re-check.

Which leaves the rule that quietly decides whether any of it is worth reading — what a piece cost. Ask ten small businesses and most will read out the rate on the supplier's bill. That rate usually includes GST, because it is the number that was quoted and the number that left the bank. Treated as cost, it overstates the value of everything on the shelf and overstates the cost of every sale of that item.

The damage is not obvious, which is what makes it dangerous. Margins look thin instead of impossible; a line that earns a modest profit reports a small loss, so the owner cuts the price to move it or stops stocking it — a business decision taken on a number that was never real. KhataZone values inbound stock at the taxable amount divided by the quantity received and sends the tax to the input tax account, where it is a receivable and not an expense. Cost then means goods, and the profit report becomes something you can act on rather than something you have to mentally correct.

Frequently asked questions

Does every stock movement post an accounting entry?
No, and it should not. The documents do the posting: a purchase bill, sales invoice, credit or debit note, receipt or payment moves what it should and writes its own balanced voucher when you save it. A warehouse transfer or a manual stock adjustment is a stock event — it changes the register and leaves the ledgers alone, which is the correct treatment, since nothing has been bought or sold.
Is closing stock valued with GST or without?
Without. Inbound stock is costed from the taxable amount on the purchase bill divided by the quantity received, net of discount, so the tax you can claim back stays out of your stock value and out of cost of goods sold.
Why does my profit look wrong when I buy at an all-in rate?
Because the tax inside that rate is being treated as cost. If cost of goods sold carries tax that the sale does not, margin is understated on every unit you move. KhataZone splits the taxable amount from the tax on the purchase bill so this cannot happen quietly.
Where do I see cost of goods sold and margin?
In the profit reports, not the trial balance. Profit is reported bill-wise and party-wise, with cost taken from the movements that took each item out of stock, so you can see which invoice or which customer carried the margin and which one did not.
What do I do when the physical count does not match the system?
Post a stock adjustment for the difference with a reason attached. The quantity corrects and the adjustment stays in that item's register as a recorded event you can go back to. If the loss should also be written off in the books, pass a journal voucher for it — deliberately, rather than having stock quietly rewrite your accounts.
Can I start mid-year with the stock and balances I already have?
Yes. Enter opening stock with quantity and cost per item so the register opens at the real figure, and record what each customer and supplier already owes. One thing to know: those party opening balances sit on the customer and supplier records as your outstanding position — the ledgers themselves start from zero and build from the documents you raise, so every balance in the books has a document behind it.

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