How classification works

Classification is deciding what each ledger is, so its balance lands on the right line. It is the only part of this module where judgement is involved — everything after it is arithmetic.

OptiVida sorts what it can and leaves the rest to you

Nothing it suggests is a decision until you make it one, and nothing it suggests is a number — the arithmetic is not the AI's.

For statements specifically: it picks one classification per ledger from a closed list, or it declines. It never touches a figure.

Five levels, and the two you are never asked

Classification 1 — which statementDerived

Balance Sheet or Profit and Loss. Follows from the Tally group.

Classification 2 — which sideDerived

Assets or liabilities, income or expenditure. Also follows from the group.

Classification 3 — the groupingYou or the AI

Which note the ledger belongs to. Borrowings, Investments, and so on.

Classification 4 — the sub-headYou or the AI

Which line within that note. Secured Term Loans from Banks.

Classification 5 — the detailYou, or the AI where required

A partner's name; the nature of an item filed under "other".

Levels 1 and 2 are never asked of the model. They follow from the grouping, so asking would only create a way for the answer to contradict itself.

The vocabulary is closed

You do not type a classification. You pick from a list the application owns — and it is the same list the AI is given.

That is what makes "you are always in control of the values" true in practice rather than in principle. There is no chain the AI can produce that you could not have picked yourself, and none that the template does not recognise.

The AI picks a candidate, or declines

Given a ledger — its name, its parent group, its nature, its balance — it chooses exactly one entry from that list, or answers that it does not know.

It is told, in as many words, that the group and the nature of the group are stronger evidence than the name. A ledger called "HDFC" under Secured Loans is a borrowing, whatever else it might sound like.

Strongest of all is Tally's own reserved group, which travels with every ledger. Your client's bespoke sub-groups are stepped over to reach it, so "Kotak CC A/c 4412" filed under a group called Working Capital still arrives labelled Bank OD A/c.

Some groups are not a matter of opinion

A few of Tally's reserved groups settle the answer on their own, and OptiVida does not ask:

Bank OD A/c, Bank OCC A/cClassified before the AI runs

An overdraft or cash credit facility is a borrowing repayable on demand, never a cash balance. Left as a current liability unless you say otherwise. Read from the group, never from the ledger's name.

Duties & Taxes, in debitProposed, for your confirmation

A tax ledger carrying a debit balance is tax your client has paid and can recover — input credit, an asset — not a tax due. It is placed under Loans and Advances as a question, because which credit it is (GST input, TDS receivable, VAT credit) is yours to say. And whatever its balance, a ledger under this group is never a deferred tax.

Deposits (Asset)Proposed, for your confirmation

Usually a security deposit — with a landlord, a utility, a principal — so it is offered as one, under Other Assets, as a question. A fixed deposit a client filed here is an investment or a bank deposit instead, and how much of a deposit is long-term is yours to enter.

Where the group settles the heading but not the detail — a fixed deposit under Investments is an investment, but which class of investment is still a judgement — the AI is asked, and an answer that contradicts the group is sent to you rather than accepted. A ledger under Sundry Debtors is not a loan and advance, however its name reads.

A ledger cannot change which statement it is on

Re-cutting an expense into any of Schedule III's expense heads is the job. Moving it off the profit and loss account altogether is not, and OptiVida refuses it.

Tally already settles this, on the group rather than on the name: a group is either a revenue group, whose balance closes to the Profit & Loss account at the year end, or it is not, and its balance carries forward. So a ledger under Indirect Expenses belongs somewhere in the profit and loss account whichever head it lands under, and a ledger under Provisions or Current Assets belongs somewhere on the balance sheet.

An answer that crosses that line is sent to you with the contradiction named, rather than accepted or quietly moved.

You may genuinely want to cross the line — writing preliminary expenses off to the profit and loss account, say. You still can: this stands between the AI and your statements, not between you and them. Classify it yourself and it is applied, as any other decision of yours is.

A balance decides which side it is on

A ledger with a credit balance belongs on the liability side; one with a debit balance belongs on the assets side. OptiVida checks every classification against the ledger's own balance, and an answer that crosses it goes to you rather than into the statements.

This is a different question from the one above, and Tally's group nature cannot answer it — a debit balance under Duties & Taxes is input credit recoverable, an asset, under a group whose nature is Liabilities. Only the balance itself says which side.

Two consequences you will see:

• An overdraft account with a debit balance is proposed as a bank balance rather than a borrowing. An overdraft in debit is money in the account, and V1.2 has a row for it — Cash Credit Account (Debit Balance).
• A classification carried forward from last year is re-checked against this year's balance. A customer who owed you money in March and has since paid an advance is the same ledger under the same group, and last year's answer is now the wrong side of the sheet. It comes back for confirmation instead of being reused.

Here too, you can cross the line deliberately. Your own classification is applied exactly as you make it; the row simply notes what it contradicts.

A declined ledger beats a confident wrong one

So the AI is instructed to decline when it is not reasonably confident, and anything it returns that was not on the list — or that contradicts the ledger's Tally group — is rejected outright rather than matched to something nearby. A plausible-looking guess is the failure that would actually reach a signed statement.

The consequence you will see: some ledgers arrive unclassified. That is the system working.

Everything below classification is arithmetic

Once a ledger is placed, no judgement remains. Bucketing, splitting, totalling, the face of the Balance Sheet, the P&L ladder, the notes — all deterministic, and no AI is involved at any point.