Tally Prime Accounts Master
Masters are the containers or links of the Accounting Data. Masters are Accounts linking heads . These are to set first before transaction data can be recorded. Data stored in Masters are independent. Any transaction record must link to a specific Master record.
Account Masters are organised Accounting entities representing similar type of transactions ( like Account Ledgers) and of similar nature (like Account Groups). All transaction data are compiled, summarized and balanced, for Accounting Reports & Financial statement (like Profit & Loss Account & Balance sheet).
Types of Masters in Tally Prime
As per functional area, entire Tally Accounting System, Masters are classifies as:
- Accounting Masters
- Inventory Masters
- Payroll Masters and
- Statutory Masters
Accounting Masters in Tally Prime
The Account Ledger are the key Master entity linked in transactions. For organised reporting, Account Groups are created.
- Account Groups : Account Groups are just convenient & systematic grouping of Ledger Accounts of similar nature. Account Group helps to present summarised Accounting Reports in systematic manner. Account Groups may be organised in multiple Levels to get accounting figures and report for each such sub level Groups.
- Account Ledgers : Account Ledgers are entities representing similar transactions. For example, Travelling Expenses Ledger contains all transactions (vouchers) related to Travelling Expenses. The transactions of a Ledger account are summed up (Debit & Credit) and balanced (net Debit / Credit).
In this post, we discuss about Accounts Groups and Accounts Ledgers
Select GoT>Chart of Accounts to get the Accounts Masters Types List.
Account Masters List
Limitations of Reserved Chart of Accounts created by Tally
Tally auto creates Chart of Accounts (CoA) in its own structure of Primary Groups (called Reserved Groups), in conformity with General Accounting Practice. Users can only add Sub Groups to the Tally pre-created Reserved Groups. Top level new Primary Group cannot be created by User. For large organisations, it often creates rigidity.
Revenue Accounts have only a few broad groups. For example, no Reserved Primary Group for Depreciation, Interest, Provision for Taxation etc, to find key results & ratios for each stage of earnings, like after Depreciation, Interest, Taxation, etc, and so on.
Instead of one General set of Chart of Accounts (CoA), separate sets of CoA for different Organisation types, (like Proprietorship, Partnership, Public & Private Limited Companies, AoP, Charitable Instituters, etc)., would have been more convenient for users to choose from, and further restructure its own way.
Organisations are forced to align their Chart of Account into Tally created CoA, in absence of any alternate option for Reserved Accounts Groups, as provided by Tally
Reserved Account Masters in Tally Prime
During Company creation, Tally automatically creates 28 Reserved Account Groups and 2 Reserved Ledger Accounts . Select GoT>Chart of Accounts>Group to display list of all Account Groups 7.
Reserved Groups : Tally auto creates 15 Primary and 13 Reserved Sub-Groups for each Company.
Reserved Ledger Accounts : Tally also auto creates 2 Reserved Ledger accounts (Cash and Profit & Loss Account). So, do not create any new ledger for these Ledger Accounts. All other Ledger Accounts are to be created. The Reserved Groups appear in Alphabetical order and the subordinate groups appear below the respective Reserved Group in hierarchical order. Reserved Account Group appear in Bold, subordinate Account Group appear in Normal Font and Ledger Accounts appear in Italics.
Reserved Accounts Characteristics in Tally Prime
To organise the Financial statements easily and correctly, Tally pre-creates Reserved Groups for each Type of Accounts in its own way. Its structure can not be changed. Each Reserved Group possess its own characteristics. Sub Groups & Ledgers placed under a Reserved Group (irrespective of its name) inherit the properties of Parent Reserved Group. For example, if a Group Named Repairs to Machinery is placed under Fixed Asset, it would be treated like Fixed Asset, instead of Indirect Expenses,
Reserved Groups cannot be deleted, even if no sub Group or Ledgers are created under a Reserved Group. We now explain Reserved Account Groups and nature of each Reserved Account Group.
Reserved Account Groups of Liabilities of Tally Prime
Following Primary Reserved Accounts Groups are placed under Liabilities
- Loans (Liabilities)
- Current Liabilities
- Suspense Account
- Capital Account: Represents Owners Capital may be placed under Capital Group. Common example are Share (or Equity) Capital, Partners’ Capital Accounts, Proprietors Capital Account. Members Capital A/c etc. Separate Ledgers may be created for Equity Capital, Preference Capital A/c etc.
- Reserves & Surplus: Represents Reserve Accounts like General Reserve, Capital Reserve, Investment Allowance Reserve, Share Premium Account etc.
Loans (Liabilities): Represents all loans taken (Borrowings) by Company. Tally further divides this Groups into following 3 reserved sub-groups for better organisation :
- Bank OD Accounts: While Current Bank A/c should be placed under Current Assets (explained later), Bank Overdraft and Cash/Credit Accounts availed under Hypothecation, Bill Discounting etc. operated on a day-to-day basis should be placed under this group.
- Secured Loans: Debentures, Term Loans (Medium/Long term), Secured Loans taken from Banks, Financial Institutes etc. against security (like mortgage/ hypothecation, pledge etc) should be placed under this group.
- Unsecured Loans: Loans from outside Parties, Directors, Friends and Relatives (without any collateral security), Deposits etc, should be placed under this group.
Current Liabilities : This Group normally constitutes a large number of Ledger Accounts and Sub Groups and is subdivided into following 3 sub-groups:
- Duties and Taxes: This sub-group is for all Indirect taxes normally charged on Goods & Services, like GST etc.
- Provisions: It is a place for all sorts of Provisions (like Provision for Bad Debts etc). However, Depreciation Provided should go under Fixed Assets (explained later).
- Sundry Creditors: Ledger accounts of all Trade Creditors / Suppliers
Suspense Account : This may contain temporary Accounts containing transactions whose nature are not yet finally known. This is uncategorised Group, placed under Liability. Finally, when the transaction is properly accounted for, the balance of Suspense Account would be zero.
Reserved Account Groups of Assets of Tally Prime
- Fixed Assets
- Current Assets
- Misc. Expenses (Asset)
Fixed Assets : All Fixed Assets used for business over long period, like Immovable Properties (Land, Building), Rights (Patents, Trade Rights), Plant & Machinery, Vehicle etc, should be placed under this Group.
Investments : All Ledger Accounts related to Investments in Shares, Bonds, Govt. Securities and Investment in other companies.
Branch Divisions : It contains accounts of other Branches of the Company.
Current Assets : It constitutes 6 Reserved Sub Groups: Stock-in-hand, Deposits (Assets), Loans & Advances (Assets), Cash-in-hand, Bank Accounts, Sundry Debtors.
- Stock-in-hand: Ledger Accounts for Closing Stock under this group.
- Deposits (Assets): Deposits made by the Company like Fixed Deposits, Security Deposits, Deposits with Electricity, Telephone dept, Deposits in other companies, Rental Deposits accounts etc. should be placed under this Group.
- Loans and Advances (Assets): All Loans & Advances of non-trading nature given, like Advances against Salary, Loans to Employees, Advances to Fixed Assets Suppliers etc.
- Sundry Debtors: All the Trade Customer Ledger Accounts.
- Cash-in-Hand: It contains all types of Cash Accounts. Tally auto creates a Cash Ledger Account (Cash-in-Hand) under this group.
- Bank Accounts: All Bank Accounts like Current Accounts, Savings Accounts etc, should be placed here.
Misc. Expenses (Asset) : For Limited Companies, Preliminary, Pre-operative and similar expenses (to the extent not written off to Profit & Loss A/cs) should fall here.
Reserved Account Groups of Profit & Loss Account in Tally Prime
- Sales : All sorts of Trade Sales (Goods as well Services). Sale of Fixed Assets should not be included in Sale.
- Direct Income : Accounts for direct Income other than those placed under Sales.
- Indirect Income : All Incomes other than placed under the above two groups (like Rent, Interest, Commission, Dividend Income etc).
- Purchase : All trade Purchases. Purchase of Fixed Assets should not be included in Purchase.
- Direct Expenses: Accounts of Direct Expenses (like Carriage Inwards, Wages etc) considered for computing Gross Profit/Loss,.
- Indirect Expenses: All expenses considered for computation of Net Profit/Loss only not included in the above Groups should be placed here
Limitations of Reserved Reserved Groups of Expenses created by Tally in Tally Prime
Classification of Direct and Indirect Expenses & income should be based on Business nature. For example, for Finance Company, Interest Income may be treated as Direct Income while for Trading/ Manufacturing Company, it may be treated as Indirect Income. Reserved Group for P & L Accounts are inadequate. Tally should provide further Reserved Groups for Major Expenses like Sales & Marketing Expenses, Employee Expenses, Interest, Depreciation etc, and key Ratio Analysis based on them.
Account Masters Creation in Tally Prime
We have discussed about the Properties & Classification of Reserved Accounts Groups. Now it is time to create subordinate Accounts Groups & Accounts Ledgers Masters under Tally created Reserved Groups, as per requirements. Create new Account Group or Account Ledger (in addition to the Reserved Groups or Ledgers auto-created by Tally on creation of a Company), as required. Select Gateway of Tally > Create to get Master Type list. Now create new Account Group or Account Ledger
Accounts Groups and Ledgers are normally created from the respective entry screen (explained next), called as Direct master creation.
However, Masters can also be created in Indirect way from other entry screens (like create a new parent Account Group while creating a Sub Group or Ledger Account, create a Ledger Account while creating a Voucher, from within the current entry screen). In Direct entry, you can enter all data relevant to the Master, while in Indirect Entry, often you can enter only key Important data just to create the master. Additional data to be entered later on through Alteration Mode. So, you should first create all Account Group and Ledgers Accounts as per previous year accounts, through Direct Entry, so that you can work faster. You may create new Master records from within Voucher, as and when needed, without leaving the current Voucher Entry screen.
Accounts Group in Tally Prime
Account Group Creation
Select GoT>Create>Group. At Account Groups creation screen, enter as follows :
- Account Group Name : At Name, enter unique Account Group Name.
- Parent Group: At Under, select the Parent Group from List of Groups. The new Group would be placed under the selected Parent Group.
At other options, select No / Not Applicable. This way you can create a new Account Group under a Reserved Group or new created Group. This way, create new Accounts Groups one by one (One Group at a time)
Account Group Creation Configuration: At Account Group Creation, Click F12:Configure and set the Configuration Options
For a small organisation, the Tally created Reserved account groups may be adequate, and you may not need to create new Account Groups. However, for better organization of larger number of accounts, new Account Groups need to be created under the Reserved Groups. The Groups and Ledger Accounts placed under these Groups inherit the properties of the respective Reserve Group.
Account Ledger in Tally Prime
Accounts Ledger Creation
- Account Ledger Name : At Name, enter the unique Name of the Ledger. This name will be printed in all internal records (like Ledger, Trial Balance etc) and will be available in drop down list for selection of Ledger.
- Parent Group : At Under, select the Parent Group of the Ledger from List of Groups.
Ledger Account Opening Balance : As per Traditional Book keeping, Closing balances of previous year accounts are carried as Opening Balances, and entered through a Journal entry, at the beginning. However, Tally provides option to enter Opening Balance in Ledger Account itslef, during Lefger Account creation (at Ledger Configuration, set Yes at Provide Opening Balances to get Opening Balance field in Ledger Account creation screen), instead of Opening Balance entry in Journal Book. However, Opening Balance entry in Journal has some advantage. At the time of start of accounts from Financial Year (normally 1st April), the closing Blances of pervious year is not ready. So, the Opeing Balances amy be skipped during Ledger Cretaion, which may be entered later on throigj Ledger Alteration. Separate entry of Opening balnce through Journal is more secured and foolproof, as a Journal Entry is cretaed as record. At Opening Balance field, the appropriate Dr / Cr would be carried as default for convenience. The cumulative Opening Balance (Debit & Credit) of all ledgers created are shown at the upper right corner, for information. After the Opening balance of all ledger Accounts are entered, the cumulative of all Ledger Accounts Opening Totals should be equal. Otherwise, Difference in Opening Balance would be shown in Trial Balance and Balance Sheet reports. So, make sure that Ledger Account Opening Balance totals are equal.
Creation of new Account Group during Account Ledger Entry in Tally Prime
During Account Group or Ledger Account entry if you find that the parent group is not existing, press Alt+C at ‘Under’ field to get Account Group Creation (Secondary) screen and create the parent Account Group from within the current Account Group creation screen. Now Select the parent group at Under field in Group Entry Ledger Entry as usual. Though Normally new Parent Account Group is created from Group / Ledger creation screen, technically, any Group (under any Parent) may be indirectly created.
Reserved Ledger Opening Balance Entry in Tally Prime
Tally auto creates a Reserved Ledger Account Cash (under Group Cash-in-hand) & P L Ledger Account. So, do not create these two pre created Reserved Ledger Accounts. To enter Opening Balance of these Reserved Ledger Accounts, select GoT>Alter>Ledgers and then select the Ledger Account to get Ledger Alteration screen. Now enter the Opening Balance at Opening Balance field, as explained.
Play the Video for detailed steps of Account Master creation Tally prime
Alteration / Deletion of Account Master in Tally Prime
To Alter or Delete any of the existing Account Group / Ledger , at Gateway of Tally :
- Account Group : Select GoT>Alter>Group and select the desired Account Group
- Account Ledger : Select GoT>Alter>Ledger, and select the desired Account Ledger
The selected Master record appears in Alteration Mode (similar to creation screen).
- Alteration : Now you may Alter Data of any field of the master record (Group or Ledger). Press Alt+A to save the changes made.
- Deletion : To Delete the Master Record, Press Alt+D and press Y at ‘Delete? Yes or No.’ to confirm Deletion.
Reserved Group Name and other properties can be altered, but its Parent Group cannot be Altered
Restriction on Deletion of Master : An Account Master (Group or Ledger) cannot be deleted in following cases:
- Deletion of Account Group: An Account Group can not be Deleted, if there is any child ledger of the Group. The Tally created Reserved Group also cannot be deleted.
- Deletion of Account Ledger : An Account Ledger can not be Deleted if it is transacted in a Voucher. The Tally created Reserved Ledger Accounts (Cash and P& L A/c) also cannot be deleted.
The 28 Reserved Account Groups and 2 Reserved Ledger Accounts cannot be Deleted.
Chart of Accounts in Tally Prime
Chart of Accounts is hierarchical structure of Accounts Master according to nature of Accounts. It shows a clear view of organisation of structure to Accountants.
Select GoT>Chart of Accounts showing List of Master Types. To get List of Masters, at Chart of Accounts, select:
- Groups : List of Primary Groups in alphabetical Order, followed by subordinate Groups in alphabetical order.
- Ledger : Primary Accounts Groups in 4 major sections (Liabilities, Assets, Income & Expenses), Within each sections, Reserved Groups are sorted in alphabetical Order of Primary Groups with followed by subordinate Groups & Ledgers in alphabetical order.
Multiple Accounts Master Creation & Alteration : To quickly Create / Alter data of Accounts Groups / Ledger Accounts of Multiple Masters in one screen, select GoT>Chart of Accounts and then select Group / Ledger and click H:Multi Master button (or press Alt+H) to get respective Multi Account creation / alteration screen.
At List of Multi Masters select Multi Create to get Multi Group/ Ledger Creation screen. At under Group, select All Items from List of Group (to create Masters under any Account Group) in columnar format (enter Name, Parent Group (Under). For Ledger Accounts, you may enter / alter Opening Balance with Dr/Cr sign. Click Quit button to save data and exit from Multi Ledger screen. In Multi Accounts reports screen, you cannot print the list of Masters.
Multiple Ledger Account Alteration
In Chart of Accounts (CoA), Tally sorts the Heads giving preference to alphabetical order, rather than accepted Accounting practice. Accountants do not prepare Chart of Accounts the way Tally does. Rather, the Account Groupwise Trial Balance provides a better organised hierarchical view of CoA structure. At CoA, there should be provision to arrange Groups / Ledgers as per nature, rather than alphabetical order of names. From CoA, you can perform all operations on Account Master, like creation, duplication, alteration, deletion, etc, from a centralised place. Through Groupwise/ Ledger View toggle option, you may only display few additional info of Ledger Account Master (but cannot Print).
Multi Masters selection
Click B:Zero Opening Balance button to make Opening balance of all Ledger as zero. Useful when you import Ledgers from another account and then enter Opening Balance afresh. Click H:Change Parent Group to select another Parent Group
Some Common Ledger Accounts Creation in Tally Prime
The entry of Account Group and Account Ledger are shown above. List of Accounts shows the List of Groups and Ledger Accounts. Examples of some Important Ledger Accounts creation screen with the Parent Account Group (Under) and other info are shown , like Capital Ledger Account, Customer Ledger Account, Income Ledger Account, Bank Ledger Account, Sales Ledger Account, Expenses Ledger Account, Supplier Ledger Account and Purchase Ledger Account, are shown for guidance and understanding. To set the Ledger Account Configuration, click F12:Configure button at the right side Button Bar of Ledger creation screen and set the options as desired. To keep the things simple, set Yes at Provide Opening Balance in Ledger Accounts and set No at all other options.
Play the Video for detailed steps of Account Master Printing in Tally prime
Account Master – Key Points (Accounts Masters Key points – Hindi Audio)
Account Master – Frequently Asked Questions (Accounts Masters FAQ & Interview Questions -Blog Posts)