- What is a Ledger and why is it defined as principle book of accounts?
- Utility of a ledger
- Creating ledger in Tally.ERP 9
- Which is the best method to create ledger in Tally.ERP 9?
- Why is grouping so important at ledger creation in Tally.ERP 9?
What is a Ledger and Why is it Defined as Principle Book of Accounts?
Journal is a memorandum book to record transactions date wise. On a particular date, what are total purchases, total sales, debtors, creditors, incomes, expenses may not be known as journal. And to get information about the above, the entries passed in the journal are classified on the basis of their nature in another book which is known as ledger.
An account represents a detailed record of changes that have occurred in a particular asset, liability, expense, loss, gain or capital during the accounting period. All these separate accounts are kept in a loose leaf binder, and the entire group of accounts is called a ledger.
Utility of a Ledger
- The ledger is a master record of all the accounts of a business unit
- It is a principal book of double entry system of accounting which provides all important information
- Separate accounts are maintained based on their nature, so all information relating to transactions may be obtained through ledgers, such as to whom what is payable, from whom what is receivable, what is the position of assets and liabilities of the business
- Ledger helps us preparing the trial balance to ensure the arithmetical accuracy of the account
- Moreover, ledger assists us in preparing trading, profit and loss account and Balance sheet
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Creating Ledger in Tally.ERP 9
Watch video on How to create ledgers in TallyPrime
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How many ways to create? |
There is a total of 2 major ways to create a ledger in Tally.
Explanation: When we need to create 1 or 2 ledgers, we can create it with the help of the Single Ledger option. On the other hand, when we need to create more ledgers, we can create it easily with the help of an option called Multiple Ledgers. |
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Method 1: Single Ledger Creation in Tally |
Step 1: From Gateway of Tally, go to Accounts Info Step 2: Go to Ledger Step 3: Under single ledger, Select the option Create Step 4: Fill the particulars in the Ledger Creation screen displayed: Name: The first box is the Name of the ledger. Enter the name of the ledger, for example, Furniture A/c; Party ledger account (sales)
[Rule: The rule is very simple we just have to select the group that is required as per the nature of the ledger.]
PAN/IT No. : ________
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Method 2: Multiple Ledger Creation in Tally |
The process is almost the same as the single ledger method. Only one step is different. Step 1: From Gateway of Tally, go to Accounts Info. Step 2: Go to Ledger Step 3: Under Multiple ledgers, Select the option Create Step 4: Fill the particulars in the Ledger Creation Screen:
Under Group: This option is similar to the Under option under the Single Ledger Method. For example, Furniture A/c, Electrical and Fittings will be under Fixed Assets group, Investment in shares, Investment in Fixed deposit account under Investment group etc., This works well if we create ledgers under only one group. This type of ledger creation is also not useful for creating Sundry debtors ledger and sundry creditors ledger as we have to also fill up GST details of individual creditors and debtors while creating ledger account for them. |
Watch Video on How to Create Ledgers in Tally.ERP 9
Which is the Best Method to Create Ledger in Tally.ERP 9?
It is totally up to the decision of users to create ledgers using single ledger or multiple ledger method because that totally depends on the requirements.
Only one important thing to note is that we get more details while creating ledgers under the Single Ledger Method as compared to Multiple Ledger Method. Because in Multiple Ledger Method, there are no options such as:
- Inventory values are affected
- Mailing Details
- Tax Registration Details
For this, we have to edit the ledger individually while passing the accounting entries or we can go to each ledger and edit them. In short, choose the method wisely to save your time and money.
Why is Grouping so Important at Ledger Creation in Tally.ERP 9?
Groups or heading in Tally helps Tally determine the type of ledger (whether the ledger account is affecting the income side or is its nature that of an expense or is it an item which will give benefits or returns to business such as Assets or is it an item which creates a liability for business which has to be settled using company’s current assets.
So, it becomes necessary to put the ledger incorrect head or group so that Tally can account it properly.
For Example: To pass entry for expense says machinery repair expense.
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Step 1: Creating ledger |
We have to create two ledgers here:
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Step 2: Deciding on the Grouping |
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Step 3: Passing a Journal entry |
From Gateway of Tally we need to navigate to Accounting vouchers and select “F – 7” Journal to pass the entry. Entry will be like :
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