written by | February 22, 2022

How to Create Purchase, Sales, Freight, and Discount Ledgers in Tally ERP 9

Maintaining accounts and records is very important in a business, whether it is a big business or a small one. Maintaining such accounts is possible by making ledgers in a book of financial accounts. Making ledgers in Tally means that you are well familiar with the accounts and make fewer mistakes. At the times of sales and purchase, you can easily record the freight charges with the help of Tally ERP 9. The task of making the Balance Sheet and P&L also becomes easier. As a result, GST compliance also becomes easier and a less consuming task since you have all the records ready. Read on to know what is freight outward, freight inward, freight charges in tally, and other relevant concepts. 

Did you know?

The use of double-entry ledgers has been in use for the last 526 years!

Predefined Ledgers in Tally

In Tally ERP 9, all the ledgers are maintained in a specific group. The final balance of these ledgers is taken into the Balance Sheet and Profit and Loss account as per their nature.

1. Profit and Loss Ledger - It is known as the primary ledger where the balance of profit and loss (P&L) of the previous business year is taken into account. So, in new companies, this amount is zero. The figure is shown in the balance sheet's liability side in profit and loss account. You can modify the ledger entries but cannot delete them. It also contains the amount of profit and loss of the company's previous year.

2. Cash Ledger - This is also known as the cash-in-hand ledger. In this ledger, you enter the opening cash balance you have on the first day of maintaining the accounts. You can delete or modify the entries in this ledger. All the entries that involve cash are entered in this ledger only. It can have any type of balance - positive or negative. 

What is Freight in Accounting?

Freight in accounting is generally the recording of expenses when purchasing the goods or selling the goods from one location to another. Freight is a nominal type of account that is part of calculating net purchases or net sales. The carriage expenses that you pay at the time of purchase are known as freight inwards or freight on purchases

The fees for transporting the goods are considered as the cost of business. The carriage expenses you are required to pay at the time of selling goods are known as freight outwards or freight on sales. The freight outward expenses are generally deducted from the gross profit to reach the business's net income. Recording the freight charges in accounting helps you make more accurate financial statements and stay updated with the federal guidelines.

Also read: Shortcut Keys in Tally Prime

Creating Purchase Ledger in Tally

• What are Purchases in Accounting?

In accounting, purchases are known as the Nominal Account. As per the rules of the nominal account, all the expenses and losses are debited. Purchases are referred to as the cost of buying goods for resale in the ordinary course of business. Purchases are of two types - Cash and Credit. In both cases, the inventory of the business increases. In cash purchases, there is an outflow of cash, whereas in credit purchases, the liability of the business increases. 

• Purchase Ledger in Tally

The purchase ledger in Tally ERP 9 is used to record the value of purchases of the business irrespective of the fact that it is a credit purchase or a cash purchase. The purchase ledger summarises all the purchases of the given period. The steps for creating the Purchase ledger in Tally ERP are:

1. Open the gateway of the Tally. Go to create ledger options. A window appears with a group of ledgers. You can create your name or select the name of the ledger from the list. The alternative step is pressing the Alt + G from your keyboard. Go to create master option and select the ledger.

2. Enter the name of the ledger as Purchase

3. From the list of the groups, select the Purchase option so that the system can perform the functions of this particular ledger

4. You will get an option as - Inventory values are affected. Save this as 'Yes'

5. Now, select the rounding-off method, if required

6. An option occurs - Is Excise applicable. Set this as applicable

7. Enter the tariff details if required in the Alter Excise Details option. For recording the excise details, follow the below steps -

  • Enter tariff name
  • Enter HSN code
  • Set the reporting unit of measure
  • If the valuation field is skipped, you can modify it by pressing F12
  • You must enable the Allow Modification option
  • Enter the rate of excise duty
  • Now press enter. If you require the data of different periods, you can record its excise as per the relevant details

8. Select the required tax or duty

9. Choose the relevant method of calculation

10. To save the details, press enter.

Creating Sales Ledger in Tally

• What is sales in accounting?

Sale is a Nominal account. As per this rule, all the incomes and gains are credited. Therefore, sales are credited. In accounting, sales refer to the net foreign income from operations. It is the revenue generated by the business from selling the goods in the normal course of business. Sales are not considered until the goods are finally delivered to the customer.  Sales are of two types - Cash sales and credit sales. When the goods are sold for cash, inventory decreases, and as a result, cash increases. On the other hand, in credit sales, the business's outstanding cash increases, and the inventory decreases.

• Sales Ledger in Tally ERP

The sales ledger in Tally ERP 9 is used to record the details of all the business sales, irrespective of whether it is a credit purchase or a cash purchase. The sales ledger summarises all the sales of the given period. The steps for creating the sales ledger in Tally ERP 9 are as follows -

1. Open the gateway of the tally. Go to create ledger options. A window appears with a group of ledgers. You can create your name or select the name of the ledger from the list. The alternative step is pressing the Alt + G from your keyboard. Go to create master option and select the ledger.

2. Enter the name of the ledger as sales

3. From the list of the groups, select the sales option so that the system can perform the functions of this particular ledger

4. Save yes to the option - inventory values are affected

5. If required, select the rounding-off method

6. Set excise applicable option as - applicable

7. Enter the required tariff details in the altered excise option. Follow the below steps -

  • Enter tariff and HSN code
  • Set the reporting unit of measure
  • Enter the rate of excise duty
  • Select required tax or duty
  • Choose the relevant method of valuation

If you have checked all the details, press enter to save it.

Also read: How to Create A Ledger in Tally.ERP 9?

Creating freight Ledger in Tally

Freight comes in the trading account. It is a direct expense to the business as it is incurred while bringing the goods to the godown or selling them to the customer. Freight charges in the tally are recorded in the Direct Expenses head. Whereas packing and forwarding charges in the tally are recorded in the indirect expenses head.

Steps to create the freight ledger in Tally ERP are:

1. Go to the gateway of the tally. Go to the accounts info section. A window appears with the group of ledgers. Either enter the name of the ledger or find the name of your ledger from the list of groups.

2. Enter the name of the ledger as Freight

3. From the list of the groups, select the Direct expenses group

4. Set the option of inventory values are affected to NO

5. Select the rounding-off method if required

6. If you are satisfied with all the details entered, press Enter.

Creating Discount Ledger in Tally ERP

• What is Discount in Accounting

Discount refers to the reduction in price. Discount is a type of Nominal Account. Discounts are of two types - Discount Received and Discount given. If the business receives a discount on buying goods or assets, it is a profit. Hence it is credited. But, if the business gives a discount to the customer while selling the goods or an asset, it is a loss to the business. Hence, it is debited. 

• Discount ledger in Tally

The discount ledger in Tally ERP is used to enter all the details of the discount received and given by the business. There are two categories of discounts in tally software - Trade Discount and Cash Discount. A trade discount is offered to the customers when they buy the stock in bulk. It is directly deducted from the gross selling price. It doesn't require any separate journal entries. On the other hand, a cash discount is given to the customers to promote immediate payment.

Following are the steps for creating the discount ledger in tally -

1. Open the tally gateway. The groups of ledger appear. Find the group of ledger or type the name itself

2. Enter the name of the ledger as Discount

3. From the list of the groups, select the indirect expenses group

4. Set the inventory value affected option as NO

5. Select the rounding-off method if required

6. Press enter key to save the details

What is rounding off in Tally?

Some values need to be rounded off to better present the financial records. If, by default, the rounded off method is set to a blank value, then rounded off can be done upwards or downwards.

Steps to create a ledger entry

1. Create the group of ledgers as per your requirement of the transaction

2. Alter/display the ledgers as per your requirement

3. Enter the amount in the ledger created

4. Pass the entry keeping in mind the dual accounting system

5. Save the entry

Creating multiple ledgers at a Single Time

  1. To create multiple ledgers simultaneously, you need to open the gateway of the tally. Find the group of ledgers in the create option.
  2. You must now select all the items you need in your journal entry using the under option. Type the names of all the ledgers you want to create.
  3. Enter their opening balance and credit/debit balance also
  4. Now save all the multi ledgers you have created.

Also read: All About Banking Entry In Tally ERP 9

Conclusion

A business needs to understand the concepts of ledgers and P&L charges. Understanding freight treatment on sales and purchases can prove even more successful to get better financial records. We hope this article has helped you understand the ledgers of sales and purchases and freight charges in tally. Tally users can also use the Biz Analyst application to manage the business more effectively. You can manage the accounts, make ledgers, and even do data entry to keep the business on the right track.

FAQs

Q: How many types of discounts are there in tally software?

Ans:

There are two types of discounts - Trade Discount and Cash Discount.

Q: What records are required to maintain the purchase ledger?

Ans:

You must keep track of all your suppliers' foreign exchange transactions maintain the transactions' invoices and credit notes.

Q: How do you delete a ledger in Tally?

Ans:

The shortcut to deleting a new ledger in Tally is - Go to Gateway of Tally > Accounts.

Info. > Ledgers > Alter > Press Alt D

Q: Can you give an example of the rounding-off method?

Ans:

For example, a value of the duty tax is 456.53, and your rounding limit is set to 1, then upward rounding will display 457, downwards 457, and normal as 456.

Q: What is the group of freight and packing and forwarding charges in tally?

Ans:

Freight comes under the Direct Expenses group, whereas packing and forwarding charges come under the indirect expenses.

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