How to create entries for Futures Transactions in Tally

How-to-create-entries-for-Futures-Transactions-in-Tally

Futures transactions in Tally is very much easy to create if you know the accounting entry. I always say that to know Tally, you just have to know basic accounting.

So. if you had at anytime a doubt about how to create entries for futures transactions in tally, following post is your doubt buster.

To create entries for futures transactions in Tally, you will need to create three ledgers.

  1. Futures Purchase Account
  2. Futures Sales Account
  3. Brokers Account

Futures Purchase Account is required to create purchase entries for futures contracts. In the same way Futures Sales Account is needed for sales entries in futures contracts.

The most important thing you have know about creating accounting entries for futures contracts in Tally is Margin Money you paid or you got.

For example, you bought 100 futures contracts of Tata for June. In other words, you purchased 100 contracts Tata June Futures.

You paid margin money of ₹10,000 to your broker. This is the amount you need to know every time for passing the entry in Tally.

Creating ledgers for passing the Futures Entry

If you do not know how to create ledgers, watch this video and then come back here.

Futures Purchase Account

These are the exact settings which you need to have while creating ledgers.

Futures-Purchase-Account

Futures Sales Account

Futures-Sales-Account

Brokers Account

Brokers-Account

These are the three ledgers you will need to create.

Another thing which you need to create is Stock Item named Tata because we are having that in the example for our futures transactions.

I have also created another cool video about Creating Stock Items in TallyGo and watch that video and learn how to create stock items in Tally.

Stock items are basically required to have a count on the items of stock you have. In this case we will use it to have a count on the number of contracts traded.

Entry for Short Selling Futures

You would be surprised to know that entry for short selling futures is same as selling futures.

For those who don’t know what short selling is, it is selling without having the stock and that is possible only on the exchanges. Then at a later point, you will purchase the same quantity and the position will be zero or in technical terms, it will be squared off.

In Tally, when you will create entry for selling, Tally will show you Negative Stock, because you are selling what you don’t have and Tally does not understand the concept of short selling.

Tally will give you a quick warning of negative stock while creating a short selling entry. Just ignore it.

Finally, now you are duly qualified to watch the video of creating entries for futures transactions in tally.

Create Entries for Futures transactions in Tally

At the End…

If you have any questions, comment down below and I’ll be happy to answer them.

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8 thoughts on “How to create entries for Futures Transactions in Tally

  1. Hiren Vira says:

    I’m doing shares as well as F & O transactions with the same broker and I’ve created broker’s Account already under “Sundry Creditors” as required for Share Transactions. Now how can I create the same Broker’s account under “Direct Expenses”? Please guide me.

  2. Palash Somani says:

    why brokers account created under direct expenses and why are purchase and sales entries are passed in journal instead of using purchase or sale??

    • Rishit Shah says:

      Hi, Palash!

      Broker’s account is your expense because you pay the brokerage to the broker. You can also create a brokerage account as well.

      Sales and Purchases are passed as journal entries because they are deemed as investments and not trading.
      If you trade, it is your business and then actual sales and purchases will happen.

      But, when you invest, it does not involve profit and loss account and therefore journal entries.

      By the way, good question!

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