Inventory means the goods, products, raw materials, or stock that a business keeps for production or sale.
For example, a clothing shop may have shirts, trousers, and jackets as inventory.
In Tally Prime, Inventory Management helps businesses record, track, and manage stock quantities and values along with their accounting transactions.
Inventory management helps a business know:
Proper inventory management reduces the chances of overstocking, understocking, and incorrect stock records.
A Stock Item is an individual product or material that a business purchases, sells, manufactures, or keeps in inventory.
For example, if a business sells mobile phones, Samsung Galaxy A-series can be maintained as a stock item according to the business’s inventory structure.
A Stock Group is a classification of similar stock items.
Stock Group: Mobile Phones
Under this group:
Stock groups help businesses organize a large number of stock items.
A Unit of Measurement (UOM) is used to measure the quantity of an inventory item.
Common units include:
If a shop sells notebooks:
Unit = Nos.
If a business sells rice:
Unit = Kg
A Godown is a location where inventory is stored.
It can represent:
A business has two warehouses:
Godown 1 → Delhi Warehouse
Godown 2 → Rohini Warehouse
Tally Prime can help track stock at different locations when inventory features are configured accordingly.
Opening Stock is the quantity and/or value of inventory available at the beginning of an accounting period.
A business starts the year with:
100 units of Product A
This is the opening stock for that period.
Opening stock is important because it affects stock reports and the calculation of cost of goods sold and closing stock.
Closing Stock is the inventory remaining with the business at the end of a particular accounting period.
Opening Stock = 100 units
Purchases = 500 units
Sales = 450 units
Closing Stock:
100 + 500 − 450 = 150 units
Therefore:
Closing Stock = 150 units
The actual stock calculation can be more detailed where returns, stock transfers, manufacturing, or other movements are involved.
Stock Group Creation means creating categories for organizing similar stock items.
Create:
Stock Group → Electronics
Under this group:
This makes inventory management more organized.
The general process is:
Gateway of Tally → Create → Stock Group
Then:
Enter the Stock Group Name.
Example:
Electronics
Select the appropriate parent group, if required.
Configure relevant options.
Save the stock group.
After creating the group, stock items can be classified under it.
Stock Item Creation means creating an individual product in Tally Prime so that its purchase, sale, quantity, and stock value can be tracked.
Stock Item: Laptop
Stock Group: Electronics
Unit: Nos.
GST/Tax Details: As applicable
Once created, the item can be used in purchase and sales transactions.
The general process is:
Gateway of Tally → Create → Stock Item
Then enter:
Finally, review and save the stock item.
A Stock Category can be used as an additional classification for stock items.
For example:
Stock Group: Mobile Phones
Stock Category: Android
Stock categories can provide another way to classify and analyze inventory.
The use of stock categories depends on the business’s inventory requirements.
The Stock Summary is a report that provides an overview of inventory.
It can help show:
This report helps management understand the current inventory position.
Stock Inward means inventory coming into the business.
Examples include:
Business purchases:
100 laptops
The stock quantity increases by 100 units.
Stock Outward means inventory leaving the business.
Examples include:
Business sells:
20 laptops
The available stock decreases by 20 units.
A Stock Transfer is the movement of inventory from one storage location to another.
Delhi Warehouse:
100 units
20 units are transferred to Rohini Warehouse.
After transfer:
Delhi Warehouse = 80 units
Rohini Warehouse = 20 units
The total stock of the business remains 100 units.
Reorder Level is the stock level at which a business should consider placing a new purchase order to maintain sufficient inventory.
A business sets the reorder level for a product at:
20 units
When available stock reaches approximately 20 units, the business can review the requirement and reorder stock.
The appropriate reorder level depends on factors such as sales speed, supplier lead time, and business requirements.
Inventory Valuation means determining the monetary value of stock held by the business.
Inventory valuation is important for:
Different valuation methods may be applicable depending on the accounting framework and business requirements.
The valuation method should be selected and applied consistently according to applicable accounting principles.
Batch-wise Inventory allows businesses to track stock according to different batches.
This can be useful for businesses dealing with products where batch information is important.
Examples include:
A batch may contain information such as:
Where required, businesses can configure batch tracking in Tally Prime.
Serial Number Tracking is used when individual products need to be identified using unique serial numbers.
Examples:
Laptop 1 → Serial No. ABC001
Laptop 2 → Serial No. ABC002
This helps businesses track individual units.
Suppose a business purchases:
50 units of Product A
Rate:
₹1,000 per unit
Purchase value:
50 × ₹1,000 = ₹50,000
When the purchase voucher is recorded with inventory details, the stock quantity increases by 50 units.
The purchase and inventory records are updated together when the appropriate configuration is used.
Suppose the business sells:
10 units of Product A
Available stock before sale:
50 units
After sale:
50 − 10 = 40 units
The sales transaction reduces the available stock by the quantity sold.
Suppose:
Opening Stock = 100 units
Purchases = 500 units
Sales = 450 units
Opening Stock + Purchases − Sales
100 + 500 − 450 = 150 units
Therefore:
Closing Stock = 150 units
This is a simplified example. Actual inventory records may also include purchase returns, sales returns, stock transfers, manufacturing, wastage, and other adjustments.
Inventory and GST can work together when the relevant features are properly configured.
For a GST transaction, Tally Prime can maintain information such as:
Product Quantity = 10 units
Rate = ₹2,000
Taxable Value:
10 × ₹2,000 = ₹20,000
Applicable GST is then calculated according to the configured tax rate and transaction details.
Inventory Accounting means recording and tracking both the quantity and financial value of inventory.
For example:
A business purchases 100 units at ₹500 each.
Inventory cost:
100 × ₹500 = ₹50,000
If 20 units are sold, the accounting and inventory system tracks the reduction in stock and the related financial effect according to the configured accounting method.
Tally Prime’s inventory features can help businesses:
Beginners should avoid:
For example, using Kg instead of Nos.
Avoid creating multiple stock items for the same product unnecessarily.
Always verify opening quantity and value.
Select the correct storage location.
Verify tax-related information according to the applicable requirements.
Always check the quantity entered in the sales voucher.
Regularly review the Stock Summary and other relevant reports.
Inventory management is an important practical skill for students who want to work in:
Students should understand both accounting entries and inventory movement because a business transaction can affect financial accounts as well as stock quantities.
Remember:
Create Stock Group → Create Unit → Create Stock Item → Create Godown → Enter Opening Stock → Record Purchases → Record Sales → Track Stock Movement → Check Stock Summary → Inventory Valuation → Generate Reports
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