Tally Prime
A solid understanding of Journal Entries and the Golden Rules is the backbone of all voucher posting in Tally Prime.
What is a Journal Entry?
A Journal is the primary book of accounts in which transactions are first recorded in a chronological order (i.e., as and when they occur).
Transactions are entered in the Journal book using an accounting voucher prepared from verified source documents such as cash memos, purchase bills, invoices, and payment receipts.
Golden Rules of Accounting
To pass any journal entry accurately, identify the types of accounts involved and apply the corresponding golden rule:
| Type of Account | Debit (Dr.) | Credit (Cr.) |
|---|---|---|
| Personal Account | The Receiver | The Giver |
| Real Account | What Comes In | What Goes Out |
| Nominal Account | Expenses and Losses | Income and Gains |
Standard Format of a Journal Entry
Transactions are recorded in a standard 5-column format:
| Date | Particulars | L/F | Dr. Amount (₹) | Cr. Amount (₹) |
|---|---|---|---|---|
| — |
Account to be Debited ................. Dr. To Account to be Credited (Brief narration of transaction) |
— | XXXX | XXXX |
Solved Journal Entries (Purchases & Sales)
| Date | Particulars | L/F | Dr. Amount | Cr. Amount |
|---|---|---|---|---|
|
Furniture A/c -------------------- Dr. To Cash A/c -------------------- Cr. |
2,000 | 2,000 |
| Date | Particulars | L/F | Dr. Amount | Cr. Amount |
|---|---|---|---|---|
|
Furniture A/c -------------------- Dr. To Bank A/c -------------------- Cr. |
2,000 | 2,000 |
| Date | Particulars | L/F | Dr. Amount | Cr. Amount |
|---|---|---|---|---|
|
Purchase A/c ------------------- Dr. To Ankit A/c ------------------- Cr. |
2,000 | 2,000 |
| Date | Particulars | L/F | Dr. Amount | Cr. Amount |
|---|---|---|---|---|
|
Purchase A/c ------------------- Dr. To Cash A/c -------------------- Cr. |
2,000 | 2,000 |
| Date | Particulars | L/F | Dr. Amount | Cr. Amount |
|---|---|---|---|---|
|
Cash A/c ------------------------ Dr. To Furniture A/c -------------- Cr. |
2,000 | 2,000 |
| Date | Particulars | L/F | Dr. Amount | Cr. Amount |
|---|---|---|---|---|
|
Bank A/c ------------------------ Dr. To Furniture A/c -------------- Cr. |
2,000 | 2,000 |
| Date | Particulars | L/F | Dr. Amount | Cr. Amount |
|---|---|---|---|---|
|
Ankit A/c ----------------------- Dr. To Sales A/c ------------------- Cr. |
2,000 | 2,000 |
| Date | Particulars | L/F | Dr. Amount | Cr. Amount |
|---|---|---|---|---|
|
Cash A/c ------------------------ Dr. To Sales A/c ------------------- Cr. |
2,000 | 2,000 |
Practice Questions: Journalise the Following Transactions
- Purchase goods from Ram on Credit — ₹15,000
- Purchase goods from Ram in cash — ₹10,000
- Cash paid to Ram — ₹5,000
- Cheque Paid to Ram — ₹10,000
- Sold goods to Shyam Credit — ₹20,000
- Sold goods to Shyam in Cash — ₹15,000
- Cash Received from Shyam — ₹8,000
- Cheque Received from Shyam — ₹12,000
- Salary Paid in Cash — ₹15,000
- Rent Received Through Cheque — ₹10,000
Solution Table for Practice Transactions
| No. | Particulars | L/F | Debit (₹) | Credit (₹) |
|---|---|---|---|---|
| (a) |
Purchase A/c ..................................... Dr. To Ram A/c (Being goods purchased on credit from Ram) |
15,000 | 15,000 |
|
| (b) |
Purchase A/c ..................................... Dr. To Cash A/c (Being goods purchased for cash) |
10,000 | 10,000 |
|
| (c) |
Ram A/c ........................................... Dr. To Cash A/c (Being cash paid to Ram) |
5,000 | 5,000 |
|
| (d) |
Ram A/c ........................................... Dr. To Bank A/c (Being payment made to Ram by cheque) |
10,000 | 10,000 |
|
| (e) |
Shyam A/c ......................................... Dr. To Sales A/c (Being goods sold to Shyam on credit) |
20,000 | 20,000 |
|
| (f) |
Cash A/c .......................................... Dr. To Sales A/c (Being goods sold for cash) |
15,000 | 15,000 |
|
| (g) |
Cash A/c .......................................... Dr. To Shyam A/c (Being cash received from Shyam) |
8,000 | 8,000 |
|
| (h) |
Bank A/c .......................................... Dr. To Shyam A/c (Being cheque received from Shyam) |
12,000 | 12,000 |
|
| (i) |
Salary A/c ........................................ Dr. To Cash A/c (Being salary paid in cash) |
15,000 | 15,000 |
|
| (j) |
Bank A/c .......................................... Dr. To Rent Received A/c (Being rent received through cheque) |
10,000 | 10,000 |
Summary: Always remember that whenever transactions happen through cheque, the Bank A/c is affected instead of the Cash A/c.
Frequently Asked Questions
Why is a Journal called the "Book of Original Entry"?
A Journal is called the book of original entry because all business transactions are first written down here directly from source documents before being posted to the respective ledgers.
When someone's name is mentioned with "in cash", how do we treat it?
If a transaction mentions a party's name but specifies "in cash" (e.g., Purchase goods from Ankit in cash), it is treated as a cash transaction. The party's personal account is not debited or credited.
What does "L/F" stand for in the Journal format?
L/F stands for Ledger Folio. It records the page number of the ledger book where the journal entry is posted.
