A Discussion On Each Of The Reserved Groups And Sub-Group In Tally

Click on link to check Classification of accounts heads and Reserved Primary Groups and Sub-Groups List

1. Capital Account: This records the Capital and Reserves of the company. The ledgers that belong to Capital Accounts are Share Capital, Partners' Capital A/c, Proprietor's Capital Account and so on.

2. Reserves and Surplus [Retained Earnings]: This contains ledgers like Reserve, General Reserve, Reserve for Depreciation so on.

3. Current Assets: Current Assets record the assets that do not belong to either Bank Accounts or Cash-in-hand sub-groups.

    A) Bank Accounts: Current Account, saving account, short term deposit accounts and so on.

   B) Cash-in-hand: Tally automatically creates Cash A/c in this group. You can open more then one cash account, if necessary.

   C) Deposits (Asset): Deposits contain Fixed Deposits, Security Deposits or any deposit made by the company (not received by the company, which is a liability).

    D) Loans & Advances (Asset): This records all loans given by the company and advance of a non-trading nature (example: advance against salaries) or even for purchase of Fixed assets. We do not recommend you to open Advances to Suppliers' account under this Group.

    E) Stock-in-hand: This group contains accounts like Raw Materials, Work-in-Progress and Finished Goods. The balance control depends on whether you have selected Integrated Account-cum Inventory option while creating  the company.

4. Current Liabilities: Accounts like Outstanding Liabilities, Liabilities and other minor liabilities can be created directly under this group. Sub-groups under Current Liabilities are Duties and Taxes, Provisions and Sundry Creditors.

    A) Duties and Taxes: Duties and Taxes contain all tax accounts like VAT, MODVAT, Excise, Sales and other trade taxes and total liability (Or asset in case of advance paid) and the break-up of indivisual items.

    B) Provisions: Accounts like Provision for Taxation, for Depreciation and so on are rocorded under provisions.

    C) Loans (Liability): Loan that a company has borrowed, typically long-terms loans.

5. Bank OD Accounts [Bank OCC Accounts]: Tally provides you with distinct types of Bank Accounts, 

    A) Bank OCC A/c: To record the company's overdraft accounts with banks. For example, Bill Discounted A/cs and Hypothecation A/cs etc.

    Note: An account under Bank OCC A/c group is printed as separate Cash Book in the traditional Cash Book format and does not from part of the Ledger.

    Secured Loans: Term loans or other long/medium term loans, which are obtained against security of some asset. Tally does not verify the existence of the security. Typical accounts are Debentures, Term Loans, and son on.

    Unsecured Loans: Loans obtained without any security. Example: Loans from Directors/partners or outside parties.

6. Suspense Account: In modern accounting, many large corporations use Suspense Ledger to track the money paid or recovered, the nature of which is not yet know. The most common example is money paid for traveling Advance whose details will be known only upon submission of the TA bill. Some companies may prefer to open such accounts under Suspense Account.

    Loans and Advances (Asset) Group: The Suspense Account is Balance Sheet item. Any expense account even if it has 'suspense' in its name, it should be opened under Revenue group like Indirect Expenses and not under Suspense Account group.

7. Miscellaneous Expenses (Asset): This group is typically used for legal disclosure requirements such as Schedule VI of the Indian Companies Act. It should hold incorporation and pre-operative expenses. Companies would write off a permissible portion of the account every year. A balance remains to an extend that cannot be written off in Profit & Loss Account. Tally does not show loss, carried forward in the Profit & Loss Account, under this group. The Profit & Loss account balance is displayed separately in the Balance Sheet.

8. Branch/Divisions: This maintains ledger accounts of all your company's branches, divisions, affiliates, sister concerns, subsidiaries and so on. Tally permits Sales and Purchase transactions to take place with accounts opened here. Remember, these are their accounts in your books and not their books of accounts.

Just treat them as any other party account. If you wish  to maintain the book of a branch/division on your computer, you must open a separate company. 

Revenue - Primary Groups: 

9. Sales Account: You can classify your sales accounts based on Tax slabs or type of sales. This also becomes a simple mechanism for preparation o Tax returns.

you can even open an account as Sales Returns under the group Domestic Sales to view  your net sales after returns.

10. Purchase Account: This is similar to sales accounts, except for the type of transactions.

11. Direct Income [Income Direct]: These are Non-trade income accounts that affect Gross Profit. All trade income accounts fail under Sales Accounts. You may also use this group for accounts like Servicing, Contact Charges that follow sales of equipment.

12. Indirect Income [ Income Indirect]: These are miscellaneous non-sale income accounts. Example: Rent Received and interest Received.

13. Direct Expenses [ Expenses Direct]: These are manufacturing or direct trading expenses. These accounts determine the Gross Profit of the company.

14. Indirect Expenses [ Expenses Indirect]: All administrative, selling or non-direct expenses.

Profit & Loss Account is a reserved primary account in Tally. You can use this account to pass adjustment entries through journal vouchers. For example, transfer of profit or loss account to Capital or Reserve account.