A ledger in Tally ERP 9 is the actual account to which you post transactions. Ledgers are very important in accounting because without them you cannot record transactions, let alone extract trial balance or prepare financial statements.
What are Ledgers?
Just for beginners, when we said ledger, it means the summary of transactions that relate to a specific account.
As an example, a bank account will summarize all transactions that involved bank account, and loan account will summarize all transactions that involved loan account. All these accounts and their likes are what is termed as ledgers.
Ledgers and Groups in Tally
In my previous tutorials, I explained everything about groups in Tally. And I mentioned very clearly that groups are used to classify ledgers of the same nature.
In tally, all ledgers must be categorized or classified under groups. This classification is very much important for reporting purposes.
How to create and use groups in Tally have been addressed here. Now you’ll learn how ledgers work.
Pre-Defined Ledgers in Tally
Tally comes with two pre-defined ledgers which include Cash account and profit and loss account.
But why did Tally made only two pre-defined ledgers? Instead, they could have made our lives easier by providing us with all the ledgers?
Well, different businesses or companies handle different transactions. Tally, therefore, expects you to create the ledgers that fit well for your company.
How to create Ledger in Tally
You can create ledgers in Tally by using either a Single ledger option or the Multiple option.
Under the single ledger creation, you can only create one ledger at a time. and under the multiple ledgers, you can create as many ledgers as you please all on one screen.
Creating Single Ledgers
To illustrate creating ledgers under single mode, we’ll create a ledger called XYZ Bank under the group called Bank Accounts.
Thus, XYZ Bank will be our company bank. When a debtor pays as via check, our XYZ bank account will be debited and when we pay a creditor via check, our XYZ bank account will be credited.
Let’s now start the ledger creation process.
To create a single ledger:
- Go to Gateway of Tally → Accounts Info. → Ledgers → Create (under single ledger)
The Ledger Creation page will appear
- Provide the details of the ledger as follows:
Name: Type the name of the ledger in this field and press Enter to move to the next field. Naming a ledger has a condition which states that there shouldn’t be any other ledger with the same name. thus, if you are creating ledger that already exists, Tally will prompt you with an error message.
Alias: In this field, type the other name of the ledger you are creating. You can also use a numerical code as an alias name. You can access the ledger using the real name or Alias name (which can be a numerical code as well). However, the alias name is completely optional.
Under: This is where you will specify the group under which your ledger falls. This field is not an option. You must specify a group for every ledger. Select a group for your ledger from the list of groups.
If the group under which you wish to put this ledger isn’t available, press Alt+C to create a new group.
The next step to take after specifying a group for the ledger depends on the group selected. For instance, if you select sundry Debtors as a group for your ledgers, Tally will bring you more options concerning sundry debtors. And that’s true for every other group.
Our ledger is XYZ Bank which falls under Bank Accounts. Thus, Tally will, therefore, provide us with options that relate to Bank such as our bank details.
Now fill or specify whatever option that Tally presents in relation to your ledger and move on to the next.
Mailing Details: Under the mailing details, specify the name and address of your Bank.
Opening Balance: If there is any opening balance for your ledger this is where to provide them. Tally uses the general accounting principles of credit balances for liabilities and debit balances for Assets. Knowing this, Tally will post the balances to where they belong automatically. Our Opening Balance for XYZ Bank is 170,000.
Revenue Accounts, however, do not normally have balances at the beginning of the year. But tally permits you to give balances even for such accounts.
After providing all the details about the ledger, press the Enter key on your keyboard to complete the ledger creation process.
Creating Multiple Ledgers
To illustrate creating multiple ledgers, let’s create seven ledgers under 4 different groups to get the concept crystal clear.
Below are the ledgers and the groups under which they fall.
|Advertising Expenses||Indirect Expenses|
|A+ Computers Ltd.||Sundry Debtors||10500|
|B Computers Ltd.||Sundry Debtors||18000|
|TechMore Computers Ltd.||Sundry Creditors||21000|
|Lyon and Sons Ltd.||Sundry Creditors||7500|
|Bank Charges||Indirect Expenses|
To create multiple ledgers:
- Navigate to Gateway of Tally → Accounts Info. → Ledgers → Create (under Multiple Ledger.
The Multiple Ledger Creation screen will appear
- Provide the details of the ledgers as follows:
Under Group: Specifying this field depends on the ledgers you are about to create. If all the ledgers you are creating fall under the same group, select the group name in this field. But if the ledgers fall under different groups, you should select All Items. The All Items Allows you the option to select different groups for different ledgers.
S.No.: This is serial number column and it is auto-generated.
Name of Ledger: Under this column, enter the names of the ledgers you wish to create. With the multiple ledger creations, you don’t have the option to specify a second (Alias) name for your ledgers. You can only do that by altering the ledger under single ledger.
Under: This column depends on what you select in the Under Group field at the initial stage. If you select All items, it means you didn’t specify any group for your ledger; Tally will now allow you the option to select a group in this column. But if you already select a group in the Under Group field, that group will be used for all the ledgers and will be entered automatically for you in the Under column.
You can also create new groups from this field by pressing Alt+C simultaneously on your keyboard.
Opening Balance: Specify the opening balances for all your ledgers in this column.
Dr/Cr: Specify whether it is a Debit balance or a Credit balance.
After successfully entering all your ledgers, press Ctrl+A to save the ledgers.
How to display ledgers in Tally
After creating your ledgers, you may want to take a careful look at your newly created ledgers to check for accuracy.
Tally gives you the option to display ledgers under Single and Multiple mode.
To display a single ledger, go to Gateway of Tally → Accounts Info. → Ledgers → Display (under Single Ledger). A list of all your ledgers will pop up for you to select the type of ledger you want to display.
To display multiple ledgers, go to Gateway of Tally → Accounts Info. → Ledgers → Display (under Multiple Ledger)
How to Alter or Edit ledger in Tally
Maybe as you were creating the ledgers, you mistakenly classified Bank accounts under fixed assets instead of current assets. This is where the Alter feature becomes indispensable.
As usual, you can Alter your ledgers under single as well as multiple mode. However, under the Multiple ledger alteration, all the fields are not available for alteration.
To Alter a ledger under the single ledger mode, Go to Gateway of Tally → Accounts Info. → Ledgers → Alter (under single Ledger)
To Alter multiple ledgers, Go to Gateway of Tally → Accounts Info. → Ledgers → Alter (under multiple Ledger)