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Accounting guide
Plain-language definitions used throughout Consolish Accounting App.
Worked example
Website development revenue₦300,000.00
Direct labor₦70,000.00
Hosting cost₦20,000.00
Gateway fee₦4,500.00
COGS₦94,500.00
Gross profit / margin₦205,500.00 / 68.5%
General office and internal software overhead belongs below gross profit as OPEX.
Management thresholds
Gross margin50%+ healthy; 40–49.99% watch; below 40% risk
Net margin15%+ healthy; 5–14.99% watch; below 5% risk
LER2.5x–3.5x healthy; 2.0x–2.49x watch
Runway6+ months healthy; 3–5.99 watch; below 3 risk
Revenue and cash
Invoice valueThe amount billed for services before cash collection. It is not automatically recognized revenue.
Cash receivedMoney actually received from a client. Cash can be early, late, partial, or unrelated to the period the work was earned.
Recognized revenueIncome earned under the selected recognition rule. This is the revenue used in profit reports.
Accounts receivableInvoiced service value still due, after cash received and WHT credit.
Deferred / unearned revenueCash received before the related service has been earned. It stays out of recognized revenue until the recognition schedule says it is earned.
Development, hosting, domain, subscription and consultancy revenueSeparate service lines retained in records and reports so one project total does not hide its commercial components.
Recurring revenue
Expected retainerA forecast opportunity automatically created for a project. It is never historical P&L revenue.
Active retainerA retainer that has been accepted or activated. It is recognized over its chosen schedule, such as monthly over 12 months.
ARR / MRRAnnual recurring revenue and monthly recurring revenue represent the current recurring value of active services, not cash collected.
Retainer pipelineExpected and offered retainer value. It is shown separately so future opportunity is not mistaken for current revenue.
Costs and profit
COGSDirect project costs: billable labor, client hosting and domains, contractors, client-specific AI or API costs, and gateway fees.
OPEXCompany overhead: overhead labor, internal technology, SaaS, marketing, office, power, legal, accounting, and internal agency domains.
Gross profit / gross marginRecognized revenue less COGS. Gross margin is gross profit divided by recognized revenue.
Operating net profit / net marginGross profit less OPEX. Net margin is operating net profit divided by recognized revenue.
Direct labor / overhead laborPayroll is split once: total compensation equals direct labor plus overhead labor. Direct labor is COGS and overhead labor is OPEX.
LERLabor efficiency ratio: recognized revenue divided by direct staff labor. It is not calculated when direct labor is zero.
Breakeven / runwayBreakeven is fixed monthly OPEX divided by gross-margin decimal. Runway is available cash divided by average monthly cash operating cost.
Tax and accounting basis
VATTax collected for remittance. VAT is excluded from operating revenue.
WHTTax withheld by a client. It is tracked as a tax credit or receivable, not an ordinary expense.
CIT / development levyFor 2026 management estimates, a confirmed eligible small company is tested against N100 million gross turnover and N250 million total fixed assets. Other companies use the configured model rates. Confirm the legal result with an accountant or tax adviser.
Individual reliefsRent relief applies to an individual, not a company: the lower of 20% of actual annual rent paid and N500,000, with evidence. Pension, NHF, NHIS, owner-occupied mortgage interest, and qualifying life assurance may also be relevant when properly supported.
Tax CentreA separate management estimate of VAT, income tax, development levy, confirmed WHT credits, and recorded tax payments. It does not post a tax expense or alter P&L.
Accrual accountingReports show when revenue is earned and costs are incurred, separately from when cash moves.