Groups, ledgers and inventory masters in Tally Prime

Every voucher posts to ledgers, and every ledger sits under a group. The group decides where the balance appears in the Balance Sheet or Profit and Loss account. A ledger under the wrong group can make a profit look right while the Balance Sheet is wrong.

Where common ledgers go

• Customers: Sundry Debtors.
• Suppliers: Sundry Creditors.
• Bank accounts: Bank Accounts.
• Rent, electricity, office salaries: Indirect Expenses.
• Freight inward, factory wages: Direct Expenses.
• Computers, furniture, vehicles: Fixed Assets.
• Owner's investment: Capital Account.
• Tax ledgers such as GST output and input: Duties & Taxes.

Tally creates two ledgers on its own, Cash and Profit & Loss A/c. You create everything else, and you can enter an opening balance in the ledger master when you start mid-year.

Direct or indirect

A simple test: if the cost would disappear when you stop making or buying goods, it is usually direct. If you would still pay it with no production, such as office rent, it is indirect. This choice affects gross profit, so screenings ask about it.

Cost centres

Cost centres let you split income and expenses by department, project or branch. For example, travel expenses can be allocated to Sales, Admin and Projects. Each cost centre belongs to a cost category, and you allocate amounts while entering the voucher. You then read cost centre reports to see what each one spent.

Inventory masters

• Stock groups organise items, such as Raw Material and Finished Goods.
• Stock categories classify items another way, such as by brand or size.
• Units of measure such as Nos, Kg or Mtr. A stock item needs one.
• Godowns are storage locations.
• Stock items are the actual products you buy and sell.

Habit to keep

Before creating a ledger, ask where its balance should appear in the final accounts. If you cannot answer, check with a senior before saving it.