Why is everything recorded twice?
Every transaction changes two accounts by the same amount. This is called double entry.
A freight supplier sends a $1,000 invoice:
Account | Change |
Freight outwards (expense) | Up $1,000: you used a service |
Trade creditors (liability) | Up $1,000: you owe the supplier |
A month later you pay it:
Account | Change |
Trade creditors (liability) | Down $1,000: you no longer owe it |
Cash at bank (asset) | Down $1,000: the money left |
The purchase happened once, in Freight outwards. The other three entries record owing it and paying for it.
What are debits and credits?
They are the names of the two sides of every entry. They do not mean good or bad.
Account type | Grows with a | Usually shows in an export as |
Asset, Expense | Debit | Positive |
Liability, Equity, Revenue | Credit | Negative |
So in a typical export, an expense account is full of positive numbers, and a negative number in it means something reduced the cost.
Why are some numbers in an expense account negative?
Negative line | What it is | Count it? |
Credit note | The supplier reduced or refunded an invoice | Yes. It corrects a purchase you counted. |
Accrual reversal | Undoes last month's estimate | No. Leave it out with the estimate it reverses. |
Reclassification | Moves a cost to another account | Depends. See Which ledger lines are not purchases. |
Depreciation, in an asset account | Spreads a past purchase over time | No |
Why does including both sides cancel out?
If you include Freight outwards and Trade creditors, Avarni reads +$1,000 and −$1,000. The purchase disappears. Include the account where the purchase is recorded, not the account that records owing or paying for it.
This is why cash, bank and creditor accounts are excluded.
Why does my Capital goods total show a negative number?
An asset account can hold both new purchases and depreciation. Depreciation entries are credits, so they reduce the total. If depreciation is large enough, the total turns negative. Leave the depreciation out with a classification rule, and count only the purchases.
What this means in Avarni
Avarni needs one amount per row. If your finance system exports separate debit and credit columns, ask your finance team for one signed amount column, with credits as negative numbers.
Keep credit notes in. They make your spend correct.
Leave out accrual reversals together with the accruals they reverse. Use a classification rule. See Build classification rules and set their order.
A category with a negative or unexpectedly small total usually holds something other than purchases.