Introduction
In the field of accounting, particularly in India, Tally (now mainly known as TallyPrime) remains the preferred choice for small and medium-sized businesses, professionals, and students.
It makes bookkeeping easier, supports GST compliance, and quickly generates accurate financial statements, such as the Balance Sheet and Profit & Loss (P&L) account. Whether you’re a commerce student studying for exams, a newcomer building your skills, or an accountant looking to improve your workflow, knowing how to create financial statements in Tally is important.
This guide takes you through the entire process, starting from the basics up to the final reports.
It also highlights common mistakes people make and explains how proficiency in Tally can help your career. By the end, you’ll be able to create professional financial statements in TallyPrime with confidence.
Basics of Financial Statements
Financial statements give a clear picture of how healthy a business is financially:
– Balance Sheet: This shows what a business owns (assets), what it owes (liabilities), and the owner’s share (equity) on a specific date, like March 31.
It also shows the basic rule: Assets equal Liabilities plus Owner’s Equity.
– Profit & Loss Account (P&L): This summarizes all the money the business made (revenues), all the money it spent (expenses), and whether it made a profit or a loss over a certain time period, like a financial year.
– Trial Balance: This is a list of all the ledger account balances.
It helps ensure that the total of all debit entries matches the total of all credit entries before the final financial statements are prepared.
In TallyPrime, these statements are automatically created once you enter correct transactions through vouchers and ledgers.
There’s no need to do calculations by hand the software takes care of organizing, categorizing, and adding up all the numbers for you.
How to Create Ledgers & Vouchers in Tally
Ledgers are accounts like Cash, Sales, and Purchases, and vouchers are used to record transactions.
Step-by-step to create ledgers:
- Start by opening TallyPrime and selecting your company.
- Go to Gateway of Tally, then click Create, and choose Ledger (or press Alt+G, then Create Master, and then Ledger).
- Enter the Name of the ledger, such as “Furniture & Fixtures”.
4 . Choose the Under group, like Fixed Assets for assets or Indirect Expenses for rent.
- Add other details, such as the opening balance and whether GST applies.
- Click Save. If you need to create multiple ledgers at once, use Multi Create or press **Alt+H for quicker entry.
Step-by-step for vouchers:
- From the Gateway of Tally, press F11 to turn on the features you need, like GST or Inventory.
2 . Press Alt+G then Vouchers (or go through Gateway of Tally and select Vouchers).
- Choose the type of voucher: Contra (F4), Payment (F5), Receipt (F6), Journal (F7), Sales (F8), or Purchase (F9).
- Enter the date, pick the ledgers for debit or credit, input the amounts, and add any notes.
- If a ledger is missing, use Alt+C to create it right there.
- Save the voucher using Ctrl+A.
Ensuring you enter vouchers correctly helps keep ledger balances accurate, which is important for preparing financial statements.
Generating Balance Sheet and Profit & Loss
Once the data is entered:
Generate Profit & Loss Account:
1.Go to Gateway of Tally > Profit & Loss A/c (or press Alt+G > Profit & Loss).
- Press F1 to see a detailed view or F12 to set up the report (like choosing the period and basis).
3 . You’ll see Gross Profit, Net Profit, and all the expenses and revenues automatically grouped.
4 . Click on any group or ledger to get more detailed information.
5 . To export the report, use Alt+E to save it as Excel or PDF.
Generate Balance Sheet:
1.Go to **Gateway of Tally** and select **Balance Sheet**.
- Choose the time period you want, like from 1-Apr-2025 to 31-Mar-2026.
- Press **F1** for a detailed view or **F12** to change how the report is displayed (vertical or horizontal).
- Look at the left side for Liabilities and Equity, and the right side for Assets.
- The sources of funds, such as capital, reserves, and loans, will automatically appear. Applications such as purchasing fixed or current assets will also appear.
- You can either export the report or print it.
In TallyPrime, items are grouped under specific categories.
Make sure you assign the correct groups when creating your ledgers.
Common Mistakes Students Make
Students often make these errors:
– Incorrect ledger grouping: Putting “Sales” in the Current Liabilities section messes up the Profit and Loss statement and the Balance Sheet.
– Wrong opening balances: Entering figures without checking the trial balance results in numbers not matching up.
– Missing voucher types: Using the Journal for payments or receipts instead of proper vouchers can lead to mistakes.
– No backups: Losing data during preparation can be a problem—always back up regularly, either by using Ctrl+F3 or enabling auto-backup.
– Ignoring GST setup: Setting up incorrect tax ledgers or rates can cause problems with compliance reports.
– Not reconciling: Skipping bank reconciliation can lead to differences between the actual cash and the recorded bank balance.
To avoid these, always double-check your ledger groups, use the right voucher types, and frequently use the Display > Trial Balance feature.
Why Tally Is Essential for Accounting Careers
In India (2025-2026), Tally remains a must-have tool:
– High demand: Most small and medium businesses, startups, and accounting firms rely on Tally for managing financial records and handling GST filings.
– Job opportunities: Positions like Accountant, Tally Operator, GST Executive, and Junior Auditor usually start at ₹20,000 to ₹40,000 per month.
Being skilled in Tally opens up opportunities in Bengaluru’s IT and finance sectors.
– Career progression: You can start with data entry roles and move up to becoming a full-charge bookkeeper, CA assistant, or even a freelance consultant.
– Efficiency & compliance: Tally helps with GST, TDS, payroll, and inventory management — skills that are highly valued during audits and tax preparation.
– Certifications: Official Tally certifications add value to your resume, and many colleges include Tally in their B.Com and M.Com courses.
– Future–proof: New updates like TallyPrime 7.0 bring features such as faster performance, AI suggestions, and cloud support, keeping it relevant in the evolving industry.
Learning Tally gives you a real advantage over just having general accounting knowledge employers look for practical software skills that can be applied right away.
Conclusion
Creating financial statements in Tally is easy once you get comfortable with ledgers, vouchers, and report generation.
Begin by creating a practice company, enter some sample transactions, and run reports often—this helps you gain confidence quickly.
Tally’s automated features save a lot of time compared to manual entry, reduce mistakes, and prepare you for real accounting work.
In India’s busy job market, knowing Tally can help you land a job or grow in your career. Spend time practicing, avoid typical mistakes, and watch your accounting skills improve. Your next job or internship might depend on it start learning now!
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