Profit and Loss Statement in Tally prime
Profit & Loss Statement
A Profit and Loss statement (popularly referred as P and L statement), is a financial summary of Income and Expenses. It shows Net income by computing the excess of Total Income or Net loss as excess of Total Expenses over Total Income, for a specified Accounting period.
Profit & Loss Statement in Tally Prime
Profit & Loss Account shows the heads of all Nominal Accounts (Income & Expenses) and the net Profit / Loss, for the specified period, the result of performance of the enterprise.
Stock Ledger Account in Tally Prime
Profit & Loss Account includes Opening Stock Value (at Debit Side) and Closing Stock value (at Credit Side). These figures are carried from the Stock Ledger Account created under Stock-in-Hand Group.
Ledger Account creation and Opening Balance entry in Ledger Accounts has been explained earlier. Select GoT>Create>Ledger to create Stock Ledger Account. At Under field, select Stock-in-Hand Group. Enter Opening Stock value at Opening Balance of the Ledger Account.
Closing Stock Value Entry in Tally Prime
Tally prime has a strange way of entry of Closing Stock Value. No Journal entry is to be created for Closing Stock Value. Instead, enter the Closing Stock Value at Stock-in-Hand Ledger Account. This value is shown in Profit & Loss Account under Opening Stock, in Debit Side & Balance Sheet under Current Assets.
So, Closing Stock is entered off the accounts and used on the fly during creation of P L Statement and Balance Sheet, and its value may be altered any moment any number of times, without creation or modification of any voucher. So, it is very easy to manipulate Profit / Loss, by changing Closing Stock Value on the fly, as desired.
Closing Stock Value Entry in Stock Ledger Account : Select GoT>Alter>Ledger and select Stock Ledger Account to get Leger Alteration screen. Below the Opening Balance figures, enter Closing Stock Value for respective Date . This way, Closing stock Value for multiple dates can be entered and Financial Statement ( P L Statement & Balance Sheet) for any period may be instantly obtained.
Closing Stock Vaue entry in Stock Ledger Account
In traditional Accounts, a Journal Voucher is created for Closing Stock of Inventory. However, Tally provides its own novel and unique method of avoiding the Closing Stock value entry from Books of Accounts. Instead, the Stock value, even for multiple dates, may be entered in Stock Ledger Account, modified at will, without any change in Accounts Books.
Further, Tally also provides option to delink the Inventory system from Accounts (explained in Inventory Section). So, the Stock value of Inventory System is not reflected in Final Accounts generated from Tally, but the input value in Stock Ledger is considered. It enables prepare curated Final Accounts conveniently, without any change in books of Accounts. Tally captures the Stock Value for respective Date, as entered in Stock Ledger Accounts and creates a virtual Journal entry on the fly, and internally posts the Stock values in Profit & Loss Accounts & Balance Sheet, each time the Final Accounts statements are prepared. The Stock Values so entered may be altered at will, without any change in Books of Accounts. This back door method may be of delight to Management, but may raise concern of propriety of Accounts for Auditors and Statutory Authorities.
This way, you may enter several Dates and corresponding Stock Values for the respective Dates. This enables to prepare PL Statement for any period and Balance Sheet for any Date, at any point of time.
On entry of Closing Stock value for multiple dates, the figure of previous entry gets hidden in the entry screen (showing Up / Arrow Down Arrow indicator on screen indicating presence of multiple entries). To see the previous and next entry, click through the small Arrow button (only ONE entry is shown at any point of time). Stock Value is captured from the value entered for immediately earlier date of Balance Sheet.
P L Statement in Tally Prime
After entry of Closing Stock Value through Stock Ledger Alteration as explained, you may display Profit & Loss Statement . It contains 2 parts, showing details of Expenses & Income Accounts, divided by a vertical line.
- Expenses Side (or Debit Side) :The Left Part shows the top level Expenses Groups (Direct & Indirect Expenses). The figures represent the total of Net Amount of all Ledger Accounts under the respective Group.
- Incomes Side (or Credit Side): The Right Part contains the top level Income Groups (Direct & Indirect Incomes). The figures represent the total of Net Amount of all Ledger Accounts under the respective Group.
Net Profit / Loss : The Net Profit / Loss is computed as difference between Total of Income figures (Direct Income & Indirect Income) and the Total of Expenses figures (Direct Expense & Indirect Income).
- If the Total of Income figures is greater than Total of Expense figures, the difference is computed as Net Profit and is shown at left side of the Profit & Loss Statement
- If the Total of Expense figures is greater than Total of Income figures, the difference is computed as Net Loss and is shown at right side of the Profit & Loss Statement.
Profit & Loss Statement Display in Tally Prime
Having entered the Closing Stock Value, you may display / print Profit & Loss Statement .
Click F12:Configure button and set the P L Statement Configuration options to set up the contents of Profit & Loss Statement.
Profit & Loss Statement Printing in Tally Prime
At Profit & Loss Statement Display, click P:Print to get the Profit & Loss Statement Printing screen.
Click C:Configure to set the P L statement Printing Configuration 7 options. Click I:Preview to preview the Profit & Loss Statement before Printing. Click P:Print to print the P L Statement on printer, similar to P L Statement Display.
Profit and Loss Statement in Print
P L Appropriation Entry in Tally Prime
After getting the P L Statement, the management may appropriate the Profit / Loss, as per constitution of the organsiation. In Propritorship Firm, the entire Net Profit normally is transferred to Propritor’s Capital Account. In partnership firm, the net profit is transferred to Partners as per their respective Profit sharing ratio. In case of Companies, fund may be trasnfaeered to various Reserve Funds as per rules and law.
For accounting adjustment of P L Appropriation, for adjustment of Profit, create a Journal Entry by debiting the Profit & Loss Account and crediting the respective Capital Account / Reserve Account, as the case may be.