A Ledger is an account used to record all transactions related to a particular item, person, expense, income, asset, liability, or other accounting head.
In Tally Prime, every transaction is recorded through appropriate ledgers.
A ledger provides a detailed record of transactions related to that particular account.
A Group is a classification of similar ledgers.
Groups help Tally Prime organize accounts and present them correctly in financial reports.
For example:
Therefore:
Group = Classification
Ledger = Individual Account
| Basis | Ledger | Group |
|---|---|---|
| Meaning | Individual account | Classification of similar accounts |
| Purpose | Records transactions | Organizes ledgers |
| Example | Rent A/c | Indirect Expenses |
| Used for | Recording transactions | Reporting and classification |
| Level | Detailed | Broad category |
Indirect Expenses = Group
Rent, Salary, Electricity = Ledgers under the appropriate group
Ledger creation is important because transactions cannot be properly recorded without appropriate account heads.
Ledgers help businesses:
While creating a ledger, Tally Prime generally asks for information such as:
The exact fields displayed may vary depending on the ledger type and the features enabled.
The general process is:
Gateway of Tally → Create → Ledger
Then:
Enter the name of the account.
Example:
Rent
Choose the appropriate group.
Example:
Indirect Expenses
If the ledger has an opening balance, enter the appropriate amount and debit/credit nature.
Enter GST or other relevant details if required.
Review the information and save the ledger.
A Cash ledger is generally available by default in Tally Prime.
Cash is normally classified under:
Cash-in-Hand
It is used to record transactions involving physical cash.
Business receives ₹10,000 cash from a customer.
The Cash Ledger will be affected by the receipt transaction.
A bank ledger is created to maintain transactions related to a particular bank account.
Ledger Name: HDFC Bank
Under: Bank Accounts
It can be used to record:
A Sales Ledger is used to record sales transactions.
Ledger Name: Sales
Under: Sales Accounts
Depending on the business and GST configuration, appropriate sales ledgers or tax classifications may be created according to the accounting requirements.
A Purchase Ledger is used to record purchases.
Ledger Name: Purchases
Under: Purchase Accounts
It can be used for recording purchases of goods or other applicable transactions.
Expense ledgers are created to record different business expenses.
Rent
Under: Indirect Expenses
Salary
Under: Indirect Expenses
Electricity
Under: Indirect Expenses
However, expenses directly related to production or purchase of goods may be classified under an appropriate direct expense group.
A customer ledger is created to track amounts receivable from a customer.
Ledger Name: Rahul Enterprises
Under: Sundry Debtors
The ledger can be used to record:
A supplier ledger is created to track amounts payable to a supplier.
Ledger Name: XYZ Suppliers
Under: Sundry Creditors
The ledger can be used to record:
Some commonly required ledgers may already be available in Tally Prime, depending on the company configuration.
For example, Cash and Profit & Loss A/c are commonly available automatically.
Therefore, a user should check the existing ledgers before creating duplicate accounts.
Tally Prime provides several predefined groups for classifying accounts.
Examples include:
These groups help organize accounting data.
A Primary Group is a major accounting classification in Tally Prime.
Primary groups broadly classify accounts into categories such as:
These classifications ultimately affect the presentation of financial statements.
A Sub-Group is a group created under another group to provide more detailed classification.
For example:
Current Assets
→ Sundry Debtors
→ Customer Ledgers
This structure helps businesses organize a large number of accounts.
If the predefined groups are not sufficient, a user can create a new group.
The general process is:
Gateway of Tally → Create → Group
Then:
Example:
Administrative Expenses
Select the appropriate group under which the new group should be classified.
Set the relevant options according to the accounting requirements.
Review and save the group.
Selecting the correct group is extremely important because it determines how the ledger is classified in accounting reports.
For example:
If Rent Expense is incorrectly placed under an asset group, the Profit & Loss Account and Balance Sheet may not present the information correctly.
Therefore, accountants should understand the nature of an account before selecting its group.
Suppose a business has the following accounts:
| Ledger | Appropriate Group |
|---|---|
| Cash | Cash-in-Hand |
| HDFC Bank | Bank Accounts |
| Sales | Sales Accounts |
| Purchases | Purchase Accounts |
| Rent | Indirect Expenses |
| Salary | Indirect Expenses |
| Machinery | Fixed Assets |
| Rahul Enterprises | Sundry Debtors |
| ABC Suppliers | Sundry Creditors |
| Capital | Capital Account |
This classification allows Tally Prime to organize the accounts and prepare appropriate reports.
Beginners should avoid these mistakes:
Do not create multiple ledgers for the same account without a valid reason.
Always select the group according to the nature of the account.
Enter the correct opening balance and its debit/credit nature.
Customers generally belong under Sundry Debtors, while suppliers generally belong under Sundry Creditors, subject to the nature of the transaction.
For GST-related ledgers and transactions, ensure the relevant tax configuration is correct.
Ledger and Group Creation are fundamental practical skills in Tally Prime.
Students who understand proper classification can easily learn:
The better the ledger classification, the more accurate the accounting reports will be.
Remember:
Company Creation → Group Creation → Ledger Creation → Voucher Entry → Ledger Reports → Trial Balance → Profit & Loss Account → Balance Sheet
A Voucher Entry is the process of recording a business transaction in Tally Prime using the appropriate voucher type.
Every business transaction needs to be recorded accurately so that the related ledgers, Trial Balance, Profit & Loss Account, Balance Sheet, and other reports are updated correctly.
Business Transaction → Voucher Entry → Ledger → Reports
Voucher entries are the foundation of accounting in Tally Prime.
They help businesses:
Common accounting voucher types include:
Each voucher is used for a particular type of transaction.
A Payment Voucher is used to record money paid by the business.
Business pays ₹10,000 rent in cash.
Rent A/c Dr. ₹10,000
To Cash A/c ₹10,000
In Tally Prime, this transaction is recorded through a Payment Voucher.
A Receipt Voucher is used to record money received by the business.
Business receives ₹20,000 from a customer through bank.
Bank A/c Dr. ₹20,000
To Customer A/c ₹20,000
This is recorded using a Receipt Voucher.
A Contra Voucher is generally used for transactions involving the transfer of funds between the business’s own cash and bank accounts or between its bank accounts.
Cash of ₹15,000 is deposited into the bank.
Bank A/c Dr. ₹15,000
To Cash A/c ₹15,000
This is recorded using a Contra Voucher.
A Journal Voucher is generally used for adjustment entries and transactions that do not fit naturally into specialized vouchers.
Depreciation on machinery = ₹5,000
Depreciation A/c Dr. ₹5,000
To Machinery A/c ₹5,000
This can be recorded using a Journal Voucher.
A Sales Voucher is used to record the sale of goods or services.
Goods sold for ₹50,000 plus applicable GST.
The Sales Voucher records:
For a properly configured GST transaction, Tally Prime can calculate the applicable tax based on the details entered.
A Purchase Voucher is used to record purchases of goods or services.
Goods purchased for ₹30,000 plus applicable GST.
The Purchase Voucher records:
A Credit Note is generally used when the business needs to reduce the amount previously charged to a customer or record a sales return or other eligible adjustment.
A customer returns goods worth ₹5,000.
A Credit Note may be used to record the sales return, with the appropriate tax adjustment where applicable.
A Debit Note is generally used for certain purchase-related adjustments, including purchase returns or additional amounts recoverable from a supplier, depending on the transaction.
Goods worth ₹3,000 are returned to a supplier.
A Debit Note may be used to record the purchase return, with the appropriate tax adjustment where applicable.
A Voucher Number is an identification number assigned to a voucher.
It helps users:
Voucher numbering can be configured according to the business’s requirements.
The Voucher Date is the date on which the transaction is recorded for accounting purposes.
For example:
If rent is paid on 15 August 2026, the appropriate voucher date should reflect the actual transaction date, subject to the business’s accounting practices.
Correct dates are important for:
Narration is a short description explaining the purpose or details of a transaction.
For a rent payment:
“Being office rent paid for August 2026.”
Narrations make transactions easier to understand during future verification.
Tally Prime follows the double-entry accounting system.
This means every accounting transaction has at least:
Cash purchase of goods for ₹10,000:
Purchases A/c Dr. ₹10,000
To Cash A/c ₹10,000
Debit = ₹10,000
Credit = ₹10,000
Therefore, the accounting entry remains balanced.
Paid salary of ₹25,000 by bank.
Salary A/c Dr. ₹25,000
To Bank A/c ₹25,000
Payment Voucher
Received ₹15,000 from a customer through bank.
Bank A/c Dr. ₹15,000
To Customer A/c ₹15,000
Receipt Voucher
₹20,000 cash deposited into bank.
Bank A/c Dr. ₹20,000
To Cash A/c ₹20,000
Contra Voucher
Depreciation charged on machinery = ₹10,000.
Depreciation A/c Dr. ₹10,000
To Machinery/Accumulated Depreciation A/c ₹10,000
Journal Voucher
Suppose goods are sold for:
Taxable Value = ₹1,00,000
GST @ 18%:
GST = ₹18,000
Total Invoice Value:
₹1,18,000
For an intra-state transaction, the GST may generally consist of:
CGST = ₹9,000
SGST = ₹9,000
The Sales Voucher records the sales value and applicable tax components.
Suppose goods are purchased for:
Taxable Value = ₹50,000
GST @ 18%:
GST = ₹9,000
Total:
₹59,000
For an intra-state transaction:
CGST = ₹4,500
SGST = ₹4,500
The Purchase Voucher records the purchase and applicable GST details. Eligibility for ITC depends on the applicable GST conditions.
The general process is:
Open or select the required company.
Go to the Vouchers section.
Choose the appropriate voucher:
Enter the correct transaction date.
Select the appropriate debit and credit accounts.
Enter the transaction amount.
Enter GST, inventory, invoice, party, or other required details.
Enter a short explanation of the transaction.
Review the entry and save the voucher.
A simple rule is:
| Transaction | Voucher |
|---|---|
| Money paid | Payment |
| Money received | Receipt |
| Cash ↔ Bank transfer | Contra |
| Adjustment entry | Journal |
| Sale of goods/services | Sales |
| Purchase of goods/services | Purchase |
| Sales return/eligible sales adjustment | Credit Note |
| Purchase return/eligible purchase adjustment | Debit Note |
Beginners should be careful about:
Always select the voucher that matches the nature of the transaction.
Select the correct customer, supplier, expense, income, asset, or liability ledger.
Verify the transaction amount before saving.
Use the correct transaction date.
Check GST classification, GSTIN, tax rate, and other relevant details where applicable.
A clear narration can make future verification easier.
Avoid recording the same transaction twice.
Voucher entry is one of the most important practical skills in Tally Prime.
Once students understand voucher entries, they can practically perform accounting tasks such as:
Remember:
Company Creation → Group Creation → Ledger Creation → Voucher Entry → Ledger Posting → Trial Balance → Final Accounts → Reports
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