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Glossary

ERP, GST and accounting glossary

Forty terms you will meet when you bill, buy, count stock, close the books and pay people, each explained in a few lines.

In short

This glossary defines 40 ERP, GST, accounting, inventory and payroll terms in plain words for Indian small businesses. Each entry says what the term means and how SimpleERP handles it, with a link to read more.

A

Accounts payable
Accounts payable is the money a business owes its suppliers for goods and services received on credit. Each posted supplier bill adds to it and each payment reduces it. It appears as a liability on the balance sheet, and a payables ageing report shows how long each amount has been outstanding, so you can plan payments and keep supplier terms.
In SimpleERP: Posting a bill opens the payable, and payments allocated to bills settle it, with status updated by the database.
See purchase
Accounts receivable
Accounts receivable is the money customers owe a business for goods or services already invoiced. Each posted invoice adds to it and each receipt or credit note reduces it. It is an asset on the balance sheet, and watching it closely is how a small business keeps its cash flowing instead of financing its customers.
In SimpleERP: Each customer's balance is derived from posted invoices, receipts and notes, never typed.
See payments & receivables
Ageing report
An ageing report groups unpaid invoices or bills by how long they are past due, usually in buckets such as not due, 1 to 30 days, 31 to 60 days and over 90 days. It shows at a glance which customers are slow to pay and which supplier dues are pressing, and it is the starting list for every collection call.
In SimpleERP: Receivables and payables ageing, by bucket and by party, with CSV export.
See payments & receivables

B

Balance sheet
A balance sheet is a statement of what a business owns, what it owes and what belongs to its owners on a given date. Assets always equal liabilities plus equity. It differs from a profit and loss statement, which covers a period, because it is a snapshot of position at one moment, such as 31 March.
In SimpleERP: The balance sheet is built from the same ledger as every other report, for any date.
See accounting
Bill of materials (BOM)
A bill of materials is the recipe for a manufactured product: the components and quantities needed to make a set output, plus expected scrap and any extra cost such as labour or power per batch. It drives how much raw material a work order consumes and what each finished unit costs, so a wrong BOM means wrong stock and wrong margins.
In SimpleERP: Versioned BOMs with scrap percentages and a live cost roll-up at current average costs.
See manufacturing

C

CGST
CGST, Central Goods and Services Tax, is the central government's share of GST on a supply made within one state. It is charged alongside SGST, each at half the total rate, so an 18% supply carries CGST 9% and SGST 9%. On a supply between states, IGST is charged instead of CGST and SGST.
In SimpleERP: CGST and SGST are applied automatically when the place of supply is in the billing branch's state.
See gst invoice format
Chart of accounts
A chart of accounts is the organised list of every account a business records transactions in, grouped into assets, liabilities, equity, income and expenses. Every journal line posts to one of these accounts, and every financial report is built by adding them up. A clear, short chart makes the books easier to read and to audit.
In SimpleERP: A complete chart is seeded at setup and stays out of sight until you choose to open it.
See accounting
Cost of goods sold (COGS)
Cost of goods sold is the cost of the stock a business sold during a period, valued by its inventory method. It is subtracted from sales to give gross profit. A business that values its stock wrongly, or forgets to record cost when it sells, will report the wrong profit even if every sale is billed correctly.
In SimpleERP: Every invoice posts cost of goods sold at weighted average cost in the same step as the sale.
See weighted average cost
Credit note
A credit note is a document a seller issues to reduce the value of an earlier invoice, for example when goods are returned or a price or tax was charged too high. Under GST it must refer to the original invoice and reduces the seller's output tax. It is the correct way to fix an issued invoice, rather than editing it.
In SimpleERP: Credit notes can return stock and are applied to invoices or refunded.
See gst billing

D

Debit note
A debit note is a document that increases the value of an earlier invoice or, in purchasing, records goods returned to a supplier and the amount the supplier now owes back. Under GST a supplier's debit note increases output tax. In everyday practice, buyers also use debit notes to record purchase returns and claims against suppliers.
In SimpleERP: Purchase debit notes return stock to the supplier and are applied against their bills.
See purchase
Depreciation
Depreciation spreads the cost of a long-lived asset, such as a machine or a vehicle, over the years it is used, instead of charging it all as an expense when it is bought. Common methods are straight line, an equal amount each period, and declining balance, a fixed percentage of the remaining value. It lowers profit without any cash leaving.
In SimpleERP: Straight-line or declining-balance depreciation is posted monthly from each asset's schedule.
See fixed assets
Double-entry bookkeeping
Double-entry bookkeeping records every transaction in at least two accounts, with total debits equal to total credits. A cash sale, for example, increases cash and increases sales. Because both sides must balance, many errors show up immediately, and the trial balance, profit and loss statement and balance sheet can all be built from the same entries.
In SimpleERP: The database refuses any journal entry whose debits and credits do not match.
See accounting

E

E-invoice (IRN)
An e-invoice under GST is a B2B invoice reported to the government's invoice registration portal, which returns an invoice reference number, the IRN, and a signed QR code to print on the invoice. It is mandatory for businesses above a turnover threshold notified by the government. It does not change the invoice's content, only how it is validated.
In SimpleERP: Not included yet: generate the IRN on the government portal and keep the invoice in SimpleERP.
See gst invoice format
E-way bill
An e-way bill is an electronic document generated on the government's e-way bill system before goods above a set value are moved by road, rail, air or ship. It records the supplier, recipient, goods, value and vehicle. It is separate from the tax invoice, though it is built from the same details and usually travels with it.
In SimpleERP: Not included yet: generate e-way bills on the government portal.
See gst compliance
ERP
ERP, enterprise resource planning, is software that runs a business's sales, stock, purchases, accounts, people and reports on one shared set of records. Each job is entered once and every module and report reads the same data. For a small business it replaces separate billing, stock, accounting and payroll tools that each keep their own copy of the truth.
In SimpleERP: SimpleERP is ERP software for Indian small businesses, simple by default and complete underneath.
See what is erp software?

F

Financial year
The financial year in India runs from 1 April to 31 March and is the period for income tax, GST annual returns and statutory accounts. Businesses usually label it by both calendar years, such as 2026-27. Many also restart invoice numbering each financial year, because a GST invoice number must be unique within the year.
In SimpleERP: Document numbers follow the April to March year, for example INV-2026-27-0012.
See team, roles & settings

G

GST
GST, the Goods and Services Tax, is India's tax on the supply of goods and services, charged at each stage with credit for tax already paid on inputs. Within a state it is split into CGST and SGST; between states it is IGST. Rates are set per HSN or SAC code, and registered businesses file returns monthly or quarterly.
In SimpleERP: GST is applied on every document from your tax rates and the place of supply.
See gst billing
GSTIN
A GSTIN is the 15-character GST identification number given to every registered business. The first two digits are the state code, the next ten are the business's PAN, then an entity number, a default letter and a check digit. A business registered in more than one state has a separate GSTIN in each, all sharing the same PAN.
In SimpleERP: GSTINs are validated as you type, and the state is read from the first two digits.
See gst invoice format
GSTR-1
GSTR-1 is the GST return in which a registered business reports its outward supplies: invoices, credit and debit notes, and an HSN-wise summary, filed monthly or quarterly. The details flow to buyers' GSTR-2B statements, so mistakes in GSTR-1 affect your customers' input tax credit. Accurate invoices are the foundation of an accurate GSTR-1.
In SimpleERP: The sales register and HSN summary give your accountant the figures to file it; SimpleERP does not file returns.
See gst compliance
GSTR-2B
GSTR-2B is a monthly statement generated by the GST portal that lists the input tax credit available to a business, built from its suppliers' filed returns. It does not change once generated for the period. Businesses compare it with their own purchase register to find bills a supplier has not reported, before claiming credit in GSTR-3B.
In SimpleERP: The purchase register lists every posted bill with GSTINs and tax, ready to check against GSTR-2B.
See gst compliance
GSTR-3B
GSTR-3B is the summary GST return in which a business declares its total outward supplies, the input tax credit it claims and the net tax it pays, filed monthly or quarterly. It is where tax is actually paid. Its figures should agree with GSTR-1 for sales and with GSTR-2B for credit, or questions follow.
In SimpleERP: The GST summary shows output tax, input tax and the net for any period.
See gst compliance

H

HSN code
An HSN code, from the Harmonised System of Nomenclature, is the number that classifies goods for GST and customs, such as 9403 for many kinds of furniture. The code decides the GST rate and appears on tax invoices. How many digits a business must show depends on its annual turnover under the current notification.
In SimpleERP: HSN codes sit on each product, print on every line and feed the HSN summary.
See gst invoice format

I

IGST
IGST, Integrated Goods and Services Tax, is charged on supplies between two states and on imports, at the full GST rate, and is collected by the central government, which then settles the destination state's share. An 18% supply from Tamil Nadu to Kerala carries IGST 18% instead of CGST 9% and SGST 9%.
In SimpleERP: IGST is applied automatically when the place of supply is in another state.
See gst invoice format
Input tax credit (ITC)
Input tax credit is the GST a business has paid on its purchases, which it can set off against the GST it collects on sales, so tax is paid only on the value it adds. Credit is generally available only with a valid tax invoice, goods or services received, and the supplier having reported the invoice so it appears in GSTR-2B.
In SimpleERP: Input tax on posted bills and expenses is recorded in its own accounts and shown in the GST summary.
See purchase

J

Journal entry
A journal entry is the basic record in double-entry accounting: a dated set of debit and credit lines to accounts, with debits equal to credits and a note of why. Most entries are created by business documents such as invoices and bills. Manual entries cover the rest, such as loan instalments, bank charges or year-end adjustments.
In SimpleERP: Documents post their own journals; manual journals can be reversed but never edited once posted.
See accounting

L

Lock date
A lock date is the date on or before which no transaction can be added, changed or cancelled in the books. Accountants set it after closing a month or filing a return, so figures already reported cannot shift because of a late correction. Anything that needs changing is then recorded in an open period instead.
In SimpleERP: The database itself refuses any posting dated on or before the lock date.
See accounting

P

Payslip
A payslip is the statement an employee receives for each pay period, showing paid days, each earning, each deduction and the net pay. It is the employee's proof of income for loans, rent and tax, and the employer's record of what was deducted for provident fund, professional tax and income tax on the employee's behalf.
In SimpleERP: Payslips are generated from salary structures and attendance and are visible to employees on their phones.
See salary structure in india
Place of supply
Place of supply is the location GST law treats as where a supply happens, and it decides which tax applies. If it is in the supplier's own state, CGST and SGST apply; if it is in another state, IGST applies. For goods it is generally where delivery ends; for services the rules look mainly at the buyer's location.
In SimpleERP: The place of supply is set from the customer and compared with the branch's state on every invoice.
See gst invoice format
Professional tax (PT)
Professional tax is a tax on employment, trades and professions levied by some Indian states and, in some, by local bodies. Employers deduct it from salaries and pay it to the state. Slabs, amounts and whether it is deducted monthly or half-yearly differ by state, and the Constitution caps it at ₹2,500 a year per person.
In SimpleERP: PT is a payslip deduction you set per employee, posted as a liability on approval.
See salary structure in india
Profit and loss statement
A profit and loss statement, or P&L, shows a business's income and expenses over a period, such as a month or a financial year, and the profit or loss that results. It typically runs from sales, through cost of goods sold to gross profit, then operating expenses to net profit. It is the first report most owners read.
In SimpleERP: The P&L covers a period you choose and can be compared with the previous period.
See reports & dashboard
Provident fund (PF)
Provident fund is a retirement savings scheme run by the Employees' Provident Fund Organisation, funded by monthly contributions from employee and employer. The commonly cited employee contribution is 12% of basic pay and dearness allowance, matched by the employer, subject to wage ceilings and current rules. Employers deduct the employee's share and deposit both every month.
In SimpleERP: PF at 12% of Basic, for both employee and employer, is seeded as payroll components you can edit.
See salary structure in india

R

Reorder level
A reorder level is the stock quantity at which a product should be bought or made again, set so that new stock arrives before the shelf runs empty. It is usually based on how fast the product sells and how long the supplier takes to deliver. Products at or below their reorder level form the daily buying list.
In SimpleERP: Products below their reorder level are flagged, and a purchase order can be raised from the list.
See inventory
Row-level security (RLS)
Row-level security is a database feature that decides, for every row of every table, which user or tenant may see or change it. In business software that serves many companies, it means one company's data cannot be read by another even if application code has a bug, because the database itself enforces the boundary on every query.
In SimpleERP: Every business's data is isolated by PostgreSQL row-level security.
See security

S

SAC code
A SAC code, Services Accounting Code, classifies services for GST in the way HSN codes classify goods. Each code identifies a type of service, such as consulting, repair or transport, and links to its GST rate. Service businesses print the SAC on every invoice line, and the codes are reported in the HSN summary of the GST return.
In SimpleERP: Service products carry a SAC code that prints on every invoice line.
See professional services
SGST and UTGST
SGST, State Goods and Services Tax, is the state's share of GST on a supply within that state, charged together with CGST at half the total rate each. In union territories without their own legislature, UTGST is charged instead of SGST. SGST collected in one state cannot be used to pay tax owed in another.
In SimpleERP: SGST is applied with CGST on every supply where the place of supply is the branch's own state.
See gst invoice format

T

Tax invoice
A tax invoice is the document a GST-registered business issues for a taxable supply. It must show both parties' details and GSTINs, a unique serial number, date, HSN or SAC codes, taxable value, the tax rate and amount for each tax and the place of supply. A buyer needs a valid tax invoice to claim input tax credit.
In SimpleERP: Every invoice carries the mandatory GST fields and prints as a clean A4 page.
See gst invoice format
TDS on salary
TDS, tax deducted at source, on salary is income tax an employer deducts from each month's pay based on the employee's estimated tax for the year under the regime they choose. The employer deposits it with the government and issues an annual certificate. TDS also applies to many other payments, such as rent, professional fees and contract work.
In SimpleERP: TDS is a payslip deduction you set per employee; SimpleERP does not compute income tax.
See salary structure in india
Trial balance
A trial balance lists every account with its debit or credit balance on a date. Because every journal entry balances, total debits must equal total credits. Accountants use it as the check before preparing the profit and loss statement and balance sheet, and as the starting point when moving to new accounting software.
In SimpleERP: The trial balance is available for any date and always balances, because the database refuses unbalanced journals.
See accounting

W

Weighted average cost
Weighted average cost is a stock valuation method that gives every unit of a product the same cost: total stock value divided by quantity. Each receipt recalculates the average; each sale leaves at the current average. It smooths price changes and needs only quantity and value per product, which makes it practical for businesses that buy often.
In SimpleERP: Stock is valued at weighted average cost per product, applied by the database on every movement.
See weighted average cost
Work order
A work order is an instruction to make a quantity of a product from its bill of materials. It moves from planned to in progress to completed. On completion it consumes the components from stock and adds the finished goods, with their actual cost, so stock and the books show what production really used.
In SimpleERP: Work orders run plan, start and complete, and post consumption, output and overhead.
See manufacturing

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