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This page explains the core accounting ideas that everything else in the Accounting module is built on: accounts, debits and credits, ledger entries, accounting books, and accounting periods. You don’t need an accounting degree to use Hitaji — but understanding these few ideas makes every screen (invoices, expenses, payments, reports) much easier to read. Hitaji keeps a real, double-entry set of books behind the scenes. When you do something practical — “record this expense”, “mark this invoice paid” — Hitaji quietly writes the matching bookkeeping entries for you, so your financial reports are always correct and always balance. You’ll find the building blocks here:
  • Chart of Accounts — /accounting/accounts
  • Accounting Periods — /accounting/periods
  • Financial Reports — /accounting/reports
📷 Screenshot: The Chart of Accounts page showing accounts grouped by type — to be added.

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A note on multi-business

Hitaji is multi-tenant and multi-business. Each business keeps its own separate set of accounting books — its own chart of accounts, its own ledger, its own periods. When you switch the active business using the business switcher at the top of the app, the whole Accounting module re-points to that business’s book. Numbers never bleed across businesses. Throughout this module the word book (or “accounting book”) refers to one business’s set of books. Internally, an account, period, or ledger entry is stamped with a workspaceId — but that is just the technical name for “which accounting book this belongs to”. It has nothing to do with task-management workspaces.

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1. Accounts and account types

An account is a labelled bucket that money flows into and out of — for example “Cash at Bank”, “Sales Revenue”, “Rent Expense”, or “Accounts Payable”. The full list of your accounts is called the Chart of Accounts (/accounting/accounts). Every account belongs to exactly one of five account types. These five types are the foundation of all accounting: These five types are fixed — they are the backbone of your Balance Sheet (Assets, Liabilities, Equity) and your Income Statement (Income, Expenses).

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Detail types and subtypes

Beyond the five top-level types, each account can carry a finer label so Hitaji knows how to treat it. You’ll see these as a subtype on system accounts — for example cash, bank, ar (accounts receivable), ap (accounts payable), tax_payable, inventory, fixed_asset, retained_earnings, sales, cogs (cost of goods sold), staff_advances, other_receivable, and so on. You rarely set these by hand — Hitaji’s standard chart templates and automated postings use them to route money to the right place.

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Account structure and behaviour

Each account has a few practical properties you may notice:
  • Code & name — a short code (e.g. 1000) and a readable name (e.g. “Cash at Bank”). The code is unique within a book.
  • Group accounts — an account marked as a group is a heading/folder (e.g. “Current Assets”). You don’t post transactions directly to a group; you post to the real accounts nested underneath it. This gives the chart its tree/hierarchy and is what lets reports roll sub-totals up.
  • Allow direct posting — whether entries can be booked straight onto this account.
  • System accounts — some accounts are created and owned by Hitaji (is system) because automated flows depend on them (e.g. the Accounts Receivable control account). These are protected from accidental changes.
  • Active / inactive — inactive accounts are kept for history but hidden from pickers.
  • Frozen — an account can be frozen (with a reason and timestamp) to stop any further posting to it without deleting its history.
📷 Screenshot: An account’s detail showing its type, subtype, and “group” toggle — to be added.
For day-to-day setup of the chart, see Chart of Accounts.

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2. Debits and credits (in plain English)

Double-entry accounting has one golden rule:
Every transaction touches at least two accounts, and the total debits always equal the total credits.
“Debit” and “credit” are not “good” and “bad” — they simply mean left side and right side of an entry. What a debit or a credit does depends on the account type. Every account has a normal side — the side on which it naturally increases: A simple way to remember it: Assets and Expenses go up with debits; Income, Liabilities, and Equity go up with credits. Some accounts can also carry a hint that their balance must be a Debit or a Credit — a guard rail that helps catch a posting that landed on the wrong side.

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A worked example

You pay UGX 200,000 cash for office rent. Two accounts are involved:
  • Rent Expense (an Expense — normal side Debit) → debit 200,000 (the expense went up)
  • Cash at Bank (an Asset — normal side Debit) → credit 200,000 (cash went down)
Debits (200,000) equal credits (200,000). The books balance. In Hitaji you’d just record an expense paid from your bank account — Hitaji writes both lines for you.

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3. Ledger entries — the permanent record

Every debit or credit Hitaji posts is stored as a ledger entry (an “Accounting Ledger Entry”). The ledger is the complete, permanent, line-by-line history of your money. You can browse it through the General Ledger and Account Ledger financial reports. Each ledger entry records:
  • Account — which account it hit.
  • Entry date — the accounting date of the line.
  • Debit and credit amounts — one of these is the value, the other is zero.
  • Source type & source ID — where the entry came from: a sales invoice, a bill, a payment, a payroll run, a manual journal, and so on. This is how Hitaji links every ledger line back to the document that created it.
  • Reference number and description — for searching and reconciliation.
  • Contact — the customer, vendor, or employee involved (when relevant).
  • Posting batch — entries created together by one action share a batch, so they can be viewed or reversed as a unit.
  • Reversal flags — if a line reverses an earlier one (e.g. a cancelled payment), it is marked as a reversal and points back to the original entry. Hitaji reverses rather than deletes, so the audit trail is never broken.
  • Opening flag — entries that set a starting balance (see below) are flagged as opening entries.
  • Dimensions — optional tags (such as a cost centre, fund, or project) used for analysis and filtered reporting.
📷 Screenshot: An account’s ledger showing dated debit/credit lines with running balance — to be added.
You normally never type ledger entries by hand. You record business documents — an invoice, an expense, a payment — and Hitaji generates the balanced ledger entries automatically. Manual journal entries exist for the rare cases that need them (corrections, opening balances, adjustments).

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Opening balances

When you start using Hitaji partway through your business’s life, you’ll usually need to tell it what each account’s balance already is. Those are recorded as opening entries and are balanced against an Opening Balance Equity account so the books still balance on day one.

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4. Accounting books

An accounting book is one complete set of books for one business. It defines:
  • Code & name — how the book is identified.
  • Currency — the book’s reporting currency (default UGX).
  • Fiscal year start month — which month your financial year begins (e.g. January = 1, July = 7).
  • Chart template — the standard chart of accounts the book was built from.
  • Key control accounts — the book remembers its Retained Earnings and Opening Balance Equity accounts (and a default expense-claim payable account), which Hitaji uses automatically during year-end close and opening balances.
  • Status — Active, Inactive, or Closed.
Hitaji also supports more than one kind of book so larger organisations can keep parallel views: For most businesses there is a single statutory book and you never think about this — but the structure is there when you need it.

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5. Accounting periods at a glance

An accounting period is a slice of time (usually a month) that your transactions fall into. Periods let you “close the books” for a stretch of time so that finalised numbers can’t be quietly changed afterwards. Each period has:
  • A name and a start/end date.
  • A fiscal year it belongs to.
  • A status: Open, Closed, or Locked.
What the statuses mean in practice:
  • Open — you can post, edit, and reverse transactions dated in this period.
  • Closed — the period has been finalised. Hitaji will block new postings dated into a closed period and tell you the period is closed. (When a transaction must land in a finalised stretch, Hitaji routes it to the next open period instead.)
  • Locked — a stronger form of the same protection.
When a period is closed, Hitaji records when it was closed and who closed it, so there’s a clear audit trail.
📷 Screenshot: The Accounting Periods page showing months with Open/Closed status — to be added.
This protection is why your finalised monthly and yearly reports stay trustworthy: once a month is closed, its totals are settled. See Accounting Periods for how to open and close them.

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Putting it together

Here’s the whole flow in one breath:
  1. You set up a chart of accounts (your buckets) inside your business’s accounting book.
  2. Day to day, you record real documents — invoices, expenses, payments.
  3. Behind the scenes Hitaji posts balanced ledger entries (equal debits and credits) to the right accounts, tagged with where they came from.
  4. Those entries live inside dated accounting periods.
  5. When a period is done, you close it so its numbers are locked.
  6. Your financial reports read straight off the ledger — and because every entry balanced, every report balances too.