Earlier I created a video on passing stock market entries in Tally but that was from the point of view of business.
If you are trading in stock markets or securities markets, that was the video for you from which you can learn to pass entries in Tally.
But this video is for those who invest in stock markets.
There is core difference between investment and trading.
In this post I will let you know to pass entries in Tally, if you invest in stock or securities markets.
This will also include basics for all kinds of transactions in stock markets such as futures, options as well as commodities.
You need to know…
Before you go any further, here are some of the important things you need to keep in mind.
I have checked the option Integrate Account and Inventory to NO.
The reason for checking this option to No is simple.
If we integrate accounts and inventory, the closing stock will appear in Profit and Loss account.
But since it is our investment, it must be shown in the Balance Sheet and not in Profit and Loss account.
Try by checking the option to YES and you will know what I am talking about.
I have also created a group, three ledgers and a stock item.
Group – Investment in Shares under Investments.
Creating a Group in Tally
Here is how you can create a group in Tally:
- Go to Gateway of Tally.
- Then go to Accounts Info.
- You will option of Groups, press enter.
- You will see two options i.e. Single Group and Multiple Groups.
- Now, if you want to create only one group, you can select Create under Single Group or else select Create under Multiple Groups if you want to create multiple groups. For example, you may invest in mutual funds, you can create a group of named Mutual Funds.
Creating ledgers in Tally is pretty simple and easy.
I have already explained about how to create ledgers in Tally in another post with a video.
- Share Broker under Sundry Creditor or Sundry Debtor
It acts as your stock broker whatever it may be like Zerodha, Jainam and so on.
- Share Brokerage under Capital Account because it is your investment it will be reflected under capital account and not in profit and loss account.
It is the brokerage you will pay to your broker for investing in shares.
I have kept it differently because at the end of the year, you need to know how much brokerage you have paid.
You can also include all other charges as well as taxes that your broker charges you in the brokerage.
But if you want to account for it separately, you create the ledgers for taxes as well charges in the same way as Share Brokerage under the Capital Account in Tally.
- Reliance under Investment in Shares which we earlier created.
This is the share in which we are investing in this example.
It can be any share or option or future or commodity you have or want to invest.
Stock Item named Reliance
I have also created a stock item named Reliance so I can have a record of how many shares I have, at what price I purchased those shares and what is the value per share.
There is a big difference between Stock Item named Reliance and a ledger named Reliance.
I have created Stock Item because I want to track the inwards and outwards of the stock.
Also, by creating a stock item, you have the reports of profit margins and many other insights useful for taking business decisions.
It is also very much easy to calculate capital gains once you have created stock item because Stock Summary shows you a particular date on which you bought and sold it.
If you want to know how to create a Stock Item, please go and do read the earlier article I wrote for stock market entries in Tally.
Now we will pass the main entry which I am talking about in this post.
Passing the Stock Market Investment Entry in Tally
We will pass the Journal Entry because this entry neither involves cash or bank account.
For passing a journal entry for stock investment in Tally, follow the steps.
- From Gateway of Tally, go to Accounting Vouchers.
- Then select Journal or just press F7.
- Now we will purchase Reliance share as we are making an investment in it. Select the Reliance ledger and you will the following in your Tally.
- Enter the stock item named Reliance which we have created and enter the other details like Quantity and Amount. Tally will automatically calculate the rate.
- Now, let’s assume the brokerage is ₹100 for the above transaction of ₹10,000 so we have to pay in total ₹10,100 to the broker.
- We will select the Share Broker account and enter the amount of ₹10,100.
- And lastly we will select the Share Brokerage account and enter the amount of ₹100.
Here is what the entry looks like in Tally.
Save this entry by pressing Enter once again and you are good to go.
Now let us have a look at the Balance Sheet and the effects of passing the entries.
You can clearly see the Investment in Shares of ₹10,000.
Now if you further go in, you will see the Reliance Share.
Let’s look at the Stock Summary and see the details.
You can go into the Stock Summary from the Gateway of Tally.
Here is what it looks like.
You can easily have a look at the Inwards, Outwards as well as the Closing Balance of the stock.
By studying this, you can also calculate the capital gains as I have said earlier.
This is how you pass the entries for stock market investment in Tally.
There are a few advantages of this technique also which I have listed down below.
Advantages of this Technique
Most basic advantage of this technique is you can pass stock market entries in Tally as an investment also.
Another advantage in Tally is that you can also compute capital gains in Tally year from year as per Income Tax Law.
The advantage which I found useful is you can have all the details of stocks right from number of shares to cost per share you bought. This is amazing and it saves time too.
The biggest advantage is that now you do not need to find another software or add-in to pass stock market entries if you are an investor. So that saves money too.
In total this technique saves money and time both.
Here is the video tutorial you are waiting for.
Stock Market Entries in Tally as an Investment
Did you thought any other way of passing stock market entries in Tally as an investment? Which was it?
Please share it in comments! 🙂