6 Inventory Accounting - Prerequisites

Open the correct company and financial year in Tally (Alt + F1 to select company).
Ensure Inventory Features are enabled:
Gateway of Tally → F11: Features → Inventory Features → Enable Inventory → Set required options (enable Batch/Expiry if needed).
Backup your company before bulk changes (Alt + F3 → Backup).

6.1 Units of Measure (UOM)

Units define how quantities are measured (Nos, Kg, Meter, Litre, Pack, Box).

When to use:
Use base UOM (e.g., Nos) for countable items; use alternate UOMs (e.g., Box = 12 Nos) for packaging/conversion.

Steps to create a UOM:

Gateway of Tally → Accounts Info / Inventory Info → Units of Measure → Create
(may appear as: Gateway → Inventory Info → Units of Measure → Create)
Unit Name: Enter e.g., Nos.
Number of Units: Leave blank for simple unit.
Choose “Unit Type”:
- Simple — Nos, Kg, etc.
- Compound — e.g., Box where 1 Box = 12 Nos.
For compound UOM, specify conversion (e.g., 1 Box = 12 Nos).
Press Ctrl + A to save.

Examples:
- Nos — simple unit for countable items
- Kg — weight unit
- Box — compound unit (1 Box = 12 Nos)

💡 Tip: Decide base units early. Changing UOM after transactions is messy.

6.2 Stock Groups (Primary & Multiple)

Stock Groups classify stock items (Raw Materials, Finished Goods, Packing Materials).

Structure example:
- Primary: Raw Materials, Finished Goods, Packaging
- Sub-group: Under Raw Materials → Chemicals, Components

Steps to create a Stock Group:

Gateway of Tally → Inventory Info → Stock Groups → Create
Name: Enter group name (e.g., Raw Materials)
Under: Choose parent (Primary for top-level)
Set “Is the group a Primary group?” as required
Save (Ctrl + A)

Creating multiple stock groups:
- Create one by one via Create screen
- For many, prepare an import file (XML/TSV/CSV) with Name and Parent fields

Example:
- Finished Goods under Primary
- Electronics under Finished Goods

💡 Tip: Keep naming consistent and avoid long names for ease of voucher selection.

6.3 Stock Categories (Multiple)

Stock Categories group items across attributes (Colour, Size, Brand).

When to use:
Manage variants (e.g., size/color) without separate items; for reporting/filtering.

Steps to create Stock Category:

Gateway of Tally → Inventory Info → Stock Categories → Create
- Name: e.g., Colour, Size, Brand
- Save (Ctrl + A)

Create Category Values:
1. After creating category (e.g., Colour), create values (Red, Blue, Green):
Inventory Info → Stock Categories → Alter (choose Colour) and define values

Multiple categories usage:
Apply categories per item (e.g., T-Shirt → Size: M, Colour: Blue, Brand: X).

💡 Tip: If stock balances needed for each variant, create separate stock items or use Godowns/Batches.

6.4 Creating Stock Items (Single & Multiple)

Stock Items represent inventory transacted.

Minimum required fields:
- Name (unique)
- Alias (optional)
- Under (Stock Group)
- Units (UOM)
- Opening Balance (Qty and Value)
- Rate/Price (optional)

Single stock item — steps:

Gateway of Tally → Inventory Info → Stock Items → Create
Name: e.g., Widget A - Blue - M
Alias: Optional short code
Under: Choose stock group
Unit: Nos, Kg, etc.
Opening Balance: Enter qty and value (100 Nos @ ₹50 = ₹5000)
Assign category values (if needed)
Enter batch details if using Batch/Expiry
Save (Ctrl + A)

Bulk creation (multiple stock items):

Option A — Tally Import (XML/TSV/CSV):
Prepare CSV with columns: Name, Parent, UOM, OpeningQty, OpeningValue, Rate, Category1, Category2
In Tally: Gateway → Import of Data → Masters → select file and import; map columns.
Option B — Excel → Save as XML / TSV:
Check Tally help for template.

Example entries:
- Bag Leather Small (Finished Goods, Nos, 50, ₹12,500, ₹250)
- Flour (Raw Materials, Kg, 200, ₹10,000, ₹50)

💡 Tip: Use clear naming (Product - Variant - Size or Categories).
Test import with 3–5 items before doing a full import.

6.5 Using Stock Categories & Batches with Items

You can associate category values and batch info with stock items for detailed inventory tracking.

Example:
Paracetamol 500mg → Batch001 Expiry 12/2026.
View quantities per batch.

6.6 Verifying Inventory After Creation

Display → Inventory Books → Stock Summary (stock balances by group and item)
Display → Inventory Books → Stock Item (ledger for opening/closing qty)
Display → Item-wise Details / Batch-wise Details
Run Reports → Movement Analysis (stock issues/receipts pattern)

6.7 Example Walkthrough (End-to-End)

6.7.1 Scenario

You sell T-shirts in sizes S, M, L and colors Red, Blue.
You want to manage using Stock Groups, Units, Categories.

6.7.2 Steps

Create UOM (Nos)
Create Stock Groups: Finished Goods (Primary), Apparel (under Finished Goods)
Create Stock Categories:
- Size (S, M, L)
- Colour (Red, Blue)
Create Stock Items:
- Option A: Single item + select categories
- Option B: Separate item per variant (“T-Shirt - S - Red”)
- Enter opening qty/value for each (e.g., 50 Nos @ ₹200)
Verify in Stock Summary and Item Ledgers

6.8 Common Pitfalls & Troubleshooting

UOM mismatch: E.g., item created with Box, used as Nos without conversion; causes errors.
Wrong Stock Group: Items under wrong group distort reports; fix via Alter.
Import errors: Incorrect column names, encoding (use UTF-8), wrong parent names. Use exact names.
Batch/Expiry not enabled: Must enable before creating items.
Duplicate item names: Tally allows duplicates with different aliases—avoid for accuracy.

6.9 Advanced: Godowns/Locations & Stock Transfer

Create Godowns via Inventory Info → Godowns (e.g., Main Warehouse, Shop1)
Use Stock Journal/Transfer Voucher to move stock between Godowns
Useful for multi-location tracking and reconciliation

6.10 Reports to Check Inventory Health

Stock Summary — quantities & values by group
Movement Analysis / Receipts & Issues — item flow
Ageing Analysis (slow-moving items, if available)
Stock Transfer Register — inter-godown transfers

6.11 Best Practices

Decide naming conventions before data entry
Use categories for variant management if supported; otherwise, create separate items per variant
Maintain consistent UOMs
Always backup before large imports or changes
Keep master data clean for accurate MIS
Run weekly stock summary and monthly reconciliation

ACCOUNTING SOFTWARE