Inventory Management in TallyPrime allows you to keep track of your inventory from placing an order for goods with your supplier to getting them delivered. You can keep track of the goods at all stages. You can send a receipt note to your supplier once you receive the goods at your location. You can record the transfer of materials from one location to another and have visibility of what goods and quantity are available with you at all times. You have features that will help you place an order for goods with your supplier when the stock is below the limit that is defined by you.
Inventory only entry in TallyPrime allows you to track the items that you have sent to your customers, send them delivery notes with the goods sent. Record job works vouchers and manufacturing journal that will give you a clear view of what quantity of items and what items were used for manufacturing. You also have the option to record the finished good, co-products, by-products, and scrap that are generated during manufacturing.
Once you know how to enter a transaction in TallyPrime, you can enter any transaction in a similar way. For faster data entry operation you can also use voucher class in TallyPrime.
Create Multiple Stock Items | Multi Create
In TallyPrime, you can create multiple stock items on a single screen.
- Gateway of Tally > Chart of Accounts > Stock Items > and press Enter.
Alternatively, press Alt+G (Go To) > type or select Chart of Accounts > Stock Items > and press Enter. - Press Alt+H (Multi-Masters) > select Multi Create.
- Select the stock group in the field Under Group.
When the feature to maintain stock item in batches is enabled in F11 (Features), the field Maintain in batches appears. If you are maintaining your stock items in batches, set this option to Yes. Set the manufacturing and expiry date options as needed.
- Select All Items – If you need to assign different stock groups for each stock item that you are creating.
- Select an existing stock group – If you are creating multiple stock items under an existing stock group.
- Select Create – If you need to create a new stock group under which you will be creating multiple stock items.
Note: You can add any number of sub-groups to an already created or selected group. The sub-groups inherit the characteristics of the parent groups.
- Accept the Multi Stock Item Creation screen. As always, press Ctrl+A to save.
You can use these stock items in transactions.
Delete Unused Stock Items
You may want to delete the unused stock items that you do not trade with anymore.
- Gateway of Tally > Chart of Accounts > type or select Stock Items > and press Enter.
Alternatively, press Alt+G (Go To) > type or select List of Accounts > Stock Items. - Press Ctrl+J (Exception Reports) > Show Unused > and press Enter. The unused stock items appear.
- Select the stock items to be deleted. To select multiple stock items, press Spacebar and select the required stock items.
- Press Alt+D > select Yes to confirm deletion.
The selected stock items will be deleted.
Stock Journal
You can keep track of all your stock adjustments using a Stock Journal in TallyPrime. When you have to transfer stock from one location to another, keep track of additional cost or expenses incurred due to transfer of goods, keep track of wastage of goods or need to update the right quantity of goods, you can do all of these using a Stock Journal voucher.
The stock adjustment may be due to the following reasons:
Inter-Location Transfer: This is useful to transfer the goods from one location to another. The quantity of stock remains the same, but the location changes.
- Additional Cost/Expenses involved in the Transfer of goods: You can also account the additional cost incurred in connection of transfer of materials from one location to another.
- Accounting for Wastage of stock or shortage of stock: There may be a shortage or wastage of stock items, the quantity may have got changes. In such cases, you have to enter a stock journal to account for the increase or decrease in the Stock Item.
Manufacturing process
If you are involved in the manufacturing process in which raw materials are consumed and finished goods are produced, then you can create a manufacturing Journal Voucher also.
- Gateway of Tally > Vouchers > press Alt+F7 (Stock Journal).
Alternatively, Alt+G (Go To) > Create Voucher > press Alt+F7 (Stock Journal).
As in case of other vouchers, if you want to change the voucher date, press F2 (Date). - Enter the reference number in Reference No. field, if any.
- If you do not see this option, press F12 (Configure) > set the option Provide Reference No. and Date as Yes.
- If you need to use this option only for the current master, press Ctrl+I (More Details) > type or select Provide Reference No. and Date > and press Enter.
- Under Source (Consumption):
- Select the Name of Item which needs to be transferred.
As in other transactions, you can create the item on the fly by pressing Alt+C. Alternatively, press Alt+G (Go To) >Create Master> type or select Stock Items> press Enter. - Select the Godown from which goods are getting transferred.Note: The Location address can be printed in a stock journal voucher.
- Enter the quantity of the items that is getting transferred, along with the rate per unit. The amount will appear automatically.
- Select the Name of Item which needs to be transferred.
- Under Destination (Production):
- Select the Name of Item that is being transferred.
As in other transactions, you can create the item on the fly by pressing Alt+C. Alternatively, press Alt+G (Go To) >Create Master> type or select Stock Items> press Enter. - Select the Godown to which goods are being transferred.
- Enter the quantity of the items that is being transferred. The rate and amount will be displayed automatically.Note: You can have a different Rate for Source (Consumption) and for Destination (Production) column for the same stock item.
- Select the Name of Item that is being transferred.
- When there are some Additional Cost/Expenses incurred, you can account the same in the Stock Journal.
After mentioning the quantity, rate and amount under Destination (Production), the Additional Cost Details screen will be displayed. Enter the additional cost/expense incurred.
If you do not see the Additional Cost Details screen:- Press Alt+G (Go To) > Alter Master > select Voucher Type > Stock Journal.
- Set Track Additional Costs for Purchases to Yes.
What you see on the screen can vary based on your choices. Press F12 (Configure) to change the options.
- Provide Narration, if any and accept the voucher. As always, you can use Ctrl+A to accept.
For F12 Configurations of Stock Journal voucher, click here.
Stock Journal voucher Class
Stock Journal classes allow you to handle transfers from one location to another, for companies having Multi-Location Inventory and at least two location. Click Stock Journal Voucher Class for more details.
Transfer of materials from one location to another
- Gateway of Tally > Vouchers > press Alt+F7 (Stock Journal).
Alternatively, Alt+G (Go To) > Create Voucher > press Alt+F7 (Stock Journal). - If you want to change the voucher date, press F2.
- In the Source (Consumption) section, select the item and the location from where you to transfer the goods.
- Specify the Quantity. The Rate and Amount field gets prefilled if you have specified it for the goods selected.
- In the Destination (Production) section, select the item and the location to where the goods should be sent.
- Provide Narration, if any, and accept the voucher. As always, you can use Ctrl+A to accept.
Delivery Note
It is important to keep track of the goods that you have sent or received from your vendors. It will be a document of proof between you and your vendor that goods are delivered as per order and accepted in good condition to avoid discrepancies during payment. You can record the order information like item details, quantity, delivery address, the location from where the item is being sent, and so on.
- Gateway of Tally > Vouchers > press F10 (Other Vouchers) > type or select Delivery Note.
Alternatively, Alt+G (Go To) > Create Voucher > press F10 (Other Vouchers) > type or select Delivery Note.
In case the voucher is inactive, you will be prompted to activate the voucher type. Select Yes or press Y to proceed. - If you want to change the voucher date, press F2.
- Select the party to whom the goods have to be delivered in the Party A/C name field. Provide the party and order details.
- Select the Sales ledger.
As in other transactions, you can create the ledger on the fly by pressing Alt+C. Alternatively, press Alt+G (Go To) > Create Master > type or select Ledger > and press Enter. - Select the items that are being sent for delivery. Include the item details like, quantity, rate, and any specific location that is used to send the item.
- Provide Narration, if any, and accept the voucher. As always, you can use Ctrl+A to accept.
For F12 configurations of Delivery Note voucher, click here.
Rejection In
A Rejection In voucher is used when goods are rejected or returned by the customer. The transaction is recorded after raising a delivery note, but before raising a sales voucher. Refer to Rejections In for more information.
Receipt Note
When you purchase goods from your supplier, and the supplier sends these goods to you, you may want to acknowledge that you have received the goods that you had requested. To account for this, you can record a receipt voucher in TallyPrime. The receipt note includes your supplier information, goods that you have received, amount, and so on. Receipt Note voucher keeps track of receipt of goods at your location.
- Gateway of Tally > Vouchers > press F10 (Other Vouchers) > type or select Receipt Note.
Alternatively, Alt+G (Go To) > Create Voucher > press F10 (Other Vouchers) > type or select Receipt Note.
In case the voucher is inactive, you will be prompted to activate the voucher type. Select Yes or press Y to proceed. - If you want to change the voucher date, press F2.
- Enter the Reference No. and Date.
- Select the party from whom you have received the goods and the respective purchase ledger.
- Select Order No(s) from the List of Orders, if a purchase order exists for that supplier.
If the Order No(s) is selected, the item name, quantity, rate and amount will be displayed automatically. - Enter the required information in the Party Details screen.
- Press F12 (Configuration) and set the options Provide Supplier details and Provide Receipt, Order, and Import details to Yes to provide the supplier details.
If you need to use this option only for the current voucher, press Ctrl+I (More Details) > type or select Order details> and press Enter. - Press Ctrl+A to accept and return to the voucher screen.
- The Stock Item Allocations screen appears, Select existing Tracking No. or create a new tracking number.Note: A Receipt Note with Tracking No. marked as Not Applicable will be an inventory document, affecting only the inventory values. This will not affect the accounts.A purchase voucher with Tracking No. marked as Not Applicable will update the accounts without increasing the stock. The Purchase Bills Pending list is generated as Bills Recd. but Goods not Recd.
- Select the items and include the item details like quantity, rate, and any specific location.
- Provide Narration, if any, and accept the voucher. As always, you can use Ctrl+A to accept.
For the F12 configurations of Receipt Note voucher, click here.
Rejection Out
The Rejections Out Voucher records goods that are rejected and returned to a supplier.
Physical Verification
When there are differences in the actual stock available at your location and the stock that is displayed in your company books, you can record a Physical Stock voucher. The physical stock voucher will reflect the stock that is actually available for use or sale for your business.
- Gateway of Tally > Vouchers > press Ctrl+F7 (Physical Stock).
Alternatively, Alt+G (Go To) > Create Voucher > press Ctrl+F7 (Physical Stock). - If you want to change the voucher date, press F2 for stock taking date.
- Select the stock item and location.
As in other transactions, you can create the item or location on the fly by pressing Alt+C. Alternatively, press Alt+G (Go To) > Create Master > type or select Stock Item > and press Enter. - Select the Batch number (Batch details will appear only if, Batch wise details are activated in the Stock Item Master screen) for which the Physical Stock quantity is to be recorded.
- Enter the Physical Stock quantity. The item quantity will be updated in your company books with the details that you record in this voucher.
- Provide Narration, if any, and accept the voucher. As always, you can use Ctrl+A to accept.
For F12 configurations of Physical Stock voucher, click here.
Material In
When you receive the raw material from your customers for job works, you can keep track of the goods received using Material In voucher. Refer to Material In for more information.
Record Material In voucher
- Gateway of Tally > Vouchers > press F10 (Other Vouchers) > type or select Material In.
Alternatively, Alt+G (Go To) > Create Voucher > press F10 (Other Vouchers) > type or select Material In.
In case the voucher is inactive, you will be prompted to activate the voucher type. Select Yes or press Y to proceed. - Select the supplier’s (Job Worker)/customer’s (Principal Company) name as the Party A/c Name. The Party Details screen appears.
- Select the required Order No(s) and provide the other details.
As always, press Ctrl+A to save the Party Details screen, and return to the inventory voucher. - Select the appropriate location in Source Location field, based on the type of Job Order.
- In case the Job Worker is receiving the raw material from the principal manufacturer, the Source Location should be set to Not Applicable.
- In case the Principal Manufacturer is receiving the finished goods from the Job Worker, the Location enabled with Our Stock with Third Party should be selected for Consumption Location.
- The Source Location appears as the Consumption Location when the Principal Manufacturer receives the finished goods from the Job Worker, using the:
- Location enabled with Our Stock with Third Party
- Material in voucher type configured to Allow Consumption
- Select the stock item.
- In the Stock Item Allocations screen:
- Set the option Consider as Primary Item to Yes, if the selected item is the primary item for which the consumption has to take place.
- Select the required BoM Name.
- Set Consider as Scrap to Yes, if the selected item is a scrap item. This option will be skipped when Consider as Primary Item is set to Yes.
- Select the Location. Enter the Quantity and Rate. The Amount appears.
Note: You can set the stock item either as Primary Item or Scrap. For the location selected in the Stock Item Allocation screen, ensure the options Our Stock with Third Party and Third Party Stock with us are set to No. - As always, press Ctrl+A to accept the screen and return to the inventory voucher.
- Provide Narration, if any, and accept the voucher. As always, you can use Ctrl+A to accept.
For F12 configurations for Material In voucher, click here.
Material Out
When you send the raw material to your customers for job works, you can keep track of the goods sent using Material Out voucher.
Record Material Out voucher
- Gateway of Tally > Vouchers > press F10 (Other Vouchers) > type or select Material Out.
Alternatively, Alt+G (Go To) > Create Voucher > press F10 (Other Vouchers) > type or select Material Out.
In case the voucher is inactive, you will be prompted to activate the voucher type. Select Yes or press Y to proceed. - Select the supplier’s (Job Worker)/customer’s (Principal Company) name as the Party A/c Name. The Party Details screen appears.
- Select the required Order No(s) and provide the other details.
As always, press Ctrl+A to save the Party Details screen, and return to the inventory voucher. - Select the appropriate location in Destination Location field, based on the type of Job Order.
- In case the Job Worker is receiving the raw material from the principal manufacturer, the Destination Location should be set to Not Applicable.
- In case the Principal Manufacturer is receiving the finished goods from the Job Worker, the Location enabled with Our Stock with Third Party should be selected for Consumption Location.
In case the Job Worker is for issuing the finished goods to the principal company, the Destination Location should be set to Not Applicable.
In case the principal company is issuing the raw material to the Job Worker, the Location enabled with Our Stock with Third Party should be selected for Destination Location. - Select the stock item.
- In the Stock Item Allocations screen, select the Location. Enter the Quantity and Rate. The Amount appears.
Note: The Component of field will automatically display the Primary Item of the selected component. - Press Ctrl+A to accept the screen and return to the inventory voucher.
- Provide Narration, if any, and accept the voucher. As always, you can use Ctrl+A to accept.
For F12 configurations of Material Out voucher, click here.
Manufacturing Journal
You can keep track of all the goods used to produce the finished goods, co-products, by-products, and scrap during the manufacturing process. It provides a clear view of the items that are consumed or damaged during the process.
Manufacturing Journal Voucher Type
In Manufacturing/Assembling organisations, there are number of components that go into the manufacturing/ assembling of finished Goods. Once, the Bill of materials is created, you can use Manufacturing Journal and specify the quantity of finished goods that are to be manufactured.
You can create a manufacturing journal and enter details of the components used to produce the finished goods, or the Co-Products/By-Products/Scrap produced during the manufacture of the finished goods, and so on. Refer to Manage Inventory in Manufacturing for more information.
Stock Valuation Methods
TallyPrime allows users to value stock in different methods. Each stock item can be set up to have a different stock valuation method. There are instances where only a particular method of stock valuation is applicable, for example, to assess the replacement value or saleable value of stock.
There are two valuation methods for Inventory Items:
- Valuation based on Cost of product.
- Valuation based on Market Price of product.
Costing methods
Stock valuation can be calculated using a number of different Costing methods.
- At Zero Cost
- Avg.Cost
- FIFO
- FIFO Perpetual
- Last Purchase Cost
- LIFO Annual
- LIFO Perpetual
- Std. Cost
- Monthly Avg. Cost
Market Valuation methods
- At Zero Price
- Avg. Price
- Last Sales Price
- Std. Price
Costing Method at Zero Cost
When Zero Cost valuation is selected, inventory will be valued at zero cost irrespective of the purchasing rate and current balance at hand.
This is extremely useful in sub-contracting environments, where material quantities need to be tracked which are received from the principal, but which do not carry any monetary value with respect to our own books.
Entries are shown below:
DateVCh TypeInwardsOutwards|
|
|
Quantity |
Rate |
Value |
Quantity |
Rate |
Value |
|
01/04/20 |
Purchase |
10.00nos |
100.00 |
1000.00 |
|
|
|
|
02/04/20 |
Purchase Bill Pending |
2.00nos |
175.00 |
350.00 |
|
|
|
|
03/04/20 |
Purchase |
10.00nos |
200.00 |
2000.00 |
|
|
|
|
04/04/20 |
Purchase |
25.00nos |
225.00 |
5625.00 |
|
|
|
|
05/04/20 |
Sales |
|
|
|
10.00nos |
300.00 |
3000.00 |
|
06/04/20 |
Sales |
|
|
|
15.00nos |
400.00 |
6000.00 |
|
|
|
47.00nos |
183.50 |
8975.00 |
25.00nos |
360.00 |
9000.00 |
In the stock item master, when the costing method is selected as ‘Zero Cost’, closing value will be ‘Zero’.
Average Cost valuation
Average Cost Valuation [Periodic]
Define ‘Average Cost’
Average Cost or Weighted Average Cost = Total Cost [Inward Value] / Total Qty [Inward qty] {Annual}
Flow of Average Cost Calculation in Tally
The example provided below shows the Flow of the Average Cost in Tally.
Entries:
DateParticularsTracking NumberQtyRateAmount|
02-04-2020 |
Receipt Note |
No.1 |
100 |
120 |
12000 |
|
04-04-2020 |
Purchase |
Against No.1 |
50 |
125 |
6250 |
|
05-04-2020 |
Sales |
|
15 |
150 |
2250 |
|
10-04-2020 |
Rejection Out |
Against No.1 |
-5 |
120 |
-600 |
|
11-04-2020 |
Debit Note |
Against No.1 |
2 |
120 |
240 |
|
24-04-2020 |
Purchase |
Against No.1 |
47 |
135 |
6345 |
Let us see how the Average Cost is valuated in TallyPrime for the entries mentioned above:
InwardTracking SystemAverage Cost|
Date |
|
Qty |
Rate |
Amount |
No. |
Qty |
Rate |
Amount |
Qty |
Rate |
Amount |
|
02-04-2020 |
Receipt Note |
|
|
|
1 |
100 |
120 |
12000 |
100 |
120.00 |
12000 |
|
04-04-2020 |
Purchase |
50 |
125 |
6250 |
1 |
-50 |
120 |
-6000 |
100 |
122.50 |
12250 |
|
05-04-2020 |
Sales |
|
|
|
|
|
|
|
100 |
122.50 |
12250 |
|
10-04-2020 |
Rejection Out |
|
|
|
1 |
-5 |
120 |
-600 |
95 |
122.63 |
11650 |
|
24-04-2020 |
Purchase |
47 |
135 |
6345 |
1 |
-47 |
120 |
-5640 |
95 |
130.05 |
12355 |
OutwardConsumptionClosing (Daily)Closing (Stock Voucher)
|
Date |
|
Qty |
Rate |
Amount |
Rate |
Amount |
Qty |
Rate |
Amount |
Qty |
Rate |
Amount |
|
02-04-2020 |
Receipt Note |
|
|
|
|
|
100 |
120.00 |
12,000.00 |
|
|
|
|
04-04-2020 |
Purchase |
|
|
|
|
|
100 |
122.50 |
12,250.00 |
50 |
245.00 |
12,250.00 |
|
05-04-2020 |
Sales |
15 |
150 |
2250 |
122.50 |
1837.5 |
85 |
122.50 |
10,412.50 |
35 |
297.50 |
10,412.50 |
|
10-04-2020 |
Rejection Out |
|
|
|
|
|
80 |
122.63 |
9,810.53 |
35 |
280.30 |
9,810.53 |
|
11-04-2020 |
Debit note |
|
|
|
|
|
80 |
122.63 |
9,810.53 |
33 |
297.29 |
9,810.53 |
|
24-04-2020 |
Purchase |
|
|
|
|
|
80 |
130.05 |
10,404.21 |
80 |
130.05 |
10,404.21 |
A detailed explanation for the calculation shown above is as follows:
On 2nd April 2020
A Receipt Note entry was passed with a tracking number No.1. So the Average Cost on 2nd April 2020 is 12000/100 = Rs.120.
In the Stock Voucher details, the Receipt Note show the closing value as Rs. 12000 under the Purchase Bills pending [collection].
In a daily balance, press F6. The Closing Value of stock is displayed as Rs.12000.
On 4th April 2020
The Purchase Entry is passed against Receipt Note no.1. Already the Receipt Note cost is added to the Inward Cost on 2nd April 2020. The difference between the Receipt Note value and Purchase value will be added from the Inward Cost.
The Purchase value is Rs. 6250 and the Receipt Note value is 6,000 so the difference, which is Rs.250 will get added to the Inward Cost.
As on 4th April 2020, the Average Cost = (12000+250) / 100 = 122.50. The Closing Value is Rs.12,250 for 100 nos.
Closing Qty > Opening Quantity + Inward Quantity – Outward Quantity
Closing Rate > Closing Value / Closing Qty
Closing Value > System determined value as per valuation method selected in the Item Master
On purchasing a line item, the closing rate is shown as Rs.245 [12250 / 50 ] since the closing value on that day is Rs.12,250 and the closing quantity as per Stock Voucher is 50. This is because the Receipt Note will show it under the collection of Purchase Bills pending.
In the Daily breakup, the difference of the Receipt Note and Purchase is added to the Closing Value.
On 5th April 2020
Sales made for 15 nos. of Quantity.
The Cost of Sale is determined based on the Average Cost on 5th April 2020. The Average Cost continues to be Rs.122.50 since there is no change in the Inward Cost. So the consumption or cost of sale = 15 nos. x Rs.122.50 = 1837.50
Likewise the Closing Value of an item = [100-15] x [122.50] = 85 x 122.50 = 10412.50
Transactional Consumption –> System determined value based on valuation method
Total Consumption –> Opening Value + Inward Value – Closing Value
Transactional Gross Profit –> Outward Value – Transactional Consumption value
Total Gross Profit –> Total Outward Value – Total Consumption value
On 10th April 2020
The Rejection Out entry was passed against Tracking number 1 for 5 Nos.
Since the item is sent out of the company, the valuation gets affected. So the Rejection Out value automatically gets reduced from the Inward Cost.
Average Cost = [12250 – 600] / [100-5] = 11650/95 = Rs.122.63
Closing Quantity = 85 – 5 = 80 Nos.
Closing Value = 80 Nos. x Rs.122.63 = 9810.53
On 11th April 2020
The Debit Note entry is passed against the Rejection Out Tracking number 1. Already a Rejection Out cost is included in the Inward Cost and only the difference of the Debit Note Cost and Rejection Out cost gets included in the Inward Cost.
The difference between a Debit Note and Rejection out = [2 x 240] – [2 x 240] = Zero.
The Average Cost continues to be Rs.122.63 since there is no change in the Inward Cost.
Closing value = 80 x 122.63 = 9810.53
On 24th April 2020
A Purchase Note is raised against a balance Receipt Note tracking Number 1. Since the Receipt Note Cost is already included in the Inward Cost, only the difference between a Receipt Note Cost and Purchase Cost can be included in the Inward Cost.
The difference between a Purchase and Receipt Note = [47 x 135] – [47 x 120] = Rs. 705 is added to the Inward Cost.
Total Inward Cost = Rs.11650+ 705 = 12355
Total Inward Qty = 95
Average Cost = 12355 / 95 = 130.05
Closing Quantity = 80
Closing Value = 80 x 130.05 = 10,404.21
Rs.955 is the difference between the Purchase and Receipt Note cost. [250+705=955]
First In First Out – FIFO
First In First Out is the traditional method of valuation.
The value of the current closing stock is treated as a collection of the ‘residual’ stock working back from the last purchase, until the Financial Year opening stock. It is assumed that the goods issued or sold currently are those which represent the earliest purchased amongst the goods sold in inventory. This would mean that the goods which remain in stock after the sales/issues are those which represent the most recent purchases.
Entries are shown below:
DateVch TypeLocationBatchInwardsOutwards|
|
|
|
|
Quantity |
Rate |
Value |
Quantity |
Rate |
Value |
|
01/04/20 |
Opening Bal |
Chennai Location |
B2 |
6.00 nos |
95.00 |
600.00 |
|
|
|
|
01/04/20 |
Opening Bal |
Main Location |
B1 |
10.00 nos |
100.00 |
1000.00 |
|
|
|
|
01/04/20 |
Purchase |
Main Location |
B1 |
10.00 nos |
100.00 |
1000.00 |
|
|
|
|
02/04/20 |
Purchase Bills Pending |
Chennai Location |
B2 |
2.00 nos |
175.00 |
350.00 |
|
|
|
|
02/04/20 |
Sales |
Main Location |
B1 |
|
|
|
5.00 nos |
400.00 |
2000.00 |
|
02/04/20 |
Purchase |
Chennai Location |
B2 |
10.00 nos |
200.00 |
2000.00 |
|
|
|
|
|
|
|
|
32.00 nos |
122.81 |
3930.00 |
5.00 nos |
400.00 |
2000.00 |
FIFO method will consider the ‘First In First Out’. When ‘Location’ and ‘Batches’ exists, it will walk through the ‘Location’ and ‘Batches’.
Let us now analyze how the closing value has arrived for the above entries.
Opening Balance : Chennai location=> B2=6.00 nos Rs. 95.00/-
Main Location=> B1=4.00 nos, Rs. 90.00/-
Purchase :Main Location=> B1=10.00nosRs.100.00/-
Hence, On 1st April 2020:
4 nos (Opening Bal =>Main location=> B1) x 90 =360
6 nos (Purchase=> Chennai Location => B2) x 95=570
10 nos (Purchase=> Main location => B1) x 100 =1000
1930/-
On 2nd April 2020:
Receipt Note was raised for 2.00 nos and sales (Main Location=> B1) was raised for 5 nos.
Hence Closing Quantity = 17 nos
Let see how Closing Value is getting calculated:
A sale was done from ‘Main Location’- ‘B1’ Batch. and Receipt Note was raised from ‘Chennai Location’- ‘B2’ location.
Let us arrive at the cost of 2.00 nos of the ‘Receipt Note’.
Closing Value of ‘Chennai Location’ as on 02.04.2020 is Rs. 95/- i.e., Opening Balance for Chennai Location is570/6 = 95/- (Total Inward Quantity/Total Inward Value) . After this there are no transactions for ‘Chennai Location’ – B2. Hence closing rate is Rs. 95/-
Receipt Note 2 nos x 95 = 190
Purchase (10 nos – 1 nos (for sales))9 nos x 100=900
Opening bal ( Chennai Location) 6 nos x 95= 570
1660/-
On 3rd April 2020:
Closing Quantity = 27 nos
Let us see how Closing Value is getting calculated:
Purchase has been raised from ‘Chennai Location’ – ‘B2’ Batch. As on 3rd April 2020, Closing value for ‘Chennai Location’–> B2 batch is Rs. 2861.25/-
Remaining from ‘Main Location’–> B1 batch is Rs.900.00/-
Rs. 3791.25/-
FIFO Perpetual
Stock Items purchased FIRST are sold FIRST across the Financial Year (i.e. First LOT could be from any previous Financial Year entry).
FIFO Perpetual
FIFO Perpetual is one of the stock valuation methods used for calculating closing balance of inventory in TallyPrime. The inventory reports use valuation methods in case of intra-year reporting.
In this intra-year reporting, when books are closed at the end of a financial year, closing balance is carried forward to next financial year. Thus inventory reports use the values from closing balance for reporting in the new financial year.
FIFO Perpetual valuation method helps in carrying forward balances based on actual purchase costs and it displays the cost/consumption values in inventory reports of the new financial year accordingly.
For example
Scenario 1: Valuation method – FIFO
The closing balance for the stock item at the time of closing of books:
TransactionItemQuantityRateValue|
Purchase |
00001 |
100 |
100 |
10000 |
|
Purchase |
00001 |
100 |
120 |
12000 |
Item: 00001
Quantity: 200
Value: 22000
When stock item 00001 is used in the new financial year, the inventory reports will display the cost /consumption value of these items at the rate -100 (Rate= 22000 (Value)/200 (Quantity).
Scenario 2: Valuation Method – FIFO Perpetual
TransactionItemQuantityRateValue|
Purchase |
00002 |
100 |
100 |
10000 |
|
Purchase |
00002 |
100 |
120 |
12000 |
The closing balance for the stock item at the time of closing of books:
Item: 00002
Quantity: 200
Value: 22000
When stock item 00002 is used in the next financial year, the inventory reports will display the cost/consumption value at the rate – 100 for the first batch of stock and 120 for the second batch i.e. based on the actual purchase price.
Last Purchase Cost costing method
In the Last Purchase Cost costing method, the closing value of the stock item is calculated based on the rate of the last purchase
Consider an example below:
DateVCh TypeInwardsOutwards|
|
|
Quantity |
Rate |
Value |
Quantity |
Rate |
Value |
|
01/04/21 |
Purchase |
10.00nos |
100.00 |
1000.00 |
|
|
|
|
02/04/21 |
Purchase |
12.00nos |
150.00 |
1800.00 |
|
|
|
|
03/04/21 |
Purchase |
10.00nos |
200.00 |
2000.00 |
|
|
|
|
04/04/21 |
Purchase |
25.00nos |
225.00 |
5625.00 |
|
|
|
|
05/04/21 |
Sales |
|
|
|
10.00nos |
300.00 |
3000.00 |
|
06/04/21 |
Sales |
|
|
|
15.00nos |
400.00 |
6000.00 |
|
|
|
59 |
183.47 |
10825.00 |
25.00nos |
360.00 |
9000.00 |
As on 1st April 2021 = closing rate will be taken Rs. 100/-.
As on 4th April 2021, a purchase is made for 25 numbers at Rs.225/-, hence the closing rate will be taken as Rs.225.
Note: In the absence of a purchase transaction, the closing value of the stock item will be calculated as the average rate of all inward transactions such as stock journal, material in, material out (with destination location details), Debit note and Rejections out.The closing value of stock item is calculated irrespective of locations and batches.
Last In First Out (LIFO) costing method
LIFO is one of the stock valuation methods used for calculating closing balance of inventory in TallyPrime. It is further classified into two methods, LIFO annual and LIFO perpetual, which are detailed in this topic.
LIFO ANNUAL
The stock items ‘last’ lot ‘input’ becomes the ‘first’ to get consumed, while the earlier/earliest lots remain unused under the current Financial Year. LIFO Annual restricts the LIFO behavior to the present Financial Year and treats the Opening Stock as the ‘First Lot’.
LIFO PERPETUAL
The stock items purchased in Last LOT are sold FIRST.In Perpetual LIFO, the very first input into the system, even if it was 10 years ago (!) gets treated as the ‘First Lot’.
When these entries are passed in TallyPrime, closing value will appear as below:
As on 1st April 2020:
Purchase of 10.00 nos for Rs.100/- = 1000/- (Main Location= B1 – Batch)
As on 2nd April 2020:
Purchase of 10.00 nos for Rs. 150/- = 1500/- , hence the ‘Closing Value’ will be 1000 + 1500 = 2500/- (Main Location= B1- Batch)
As on 3nd April 2020:
Sale has been done from ‘Main Location-> B1- Batch’ for 5 nos. Now Last Purchase is First Out i.e., purchase as on 2nd April is the last purchase.
Closing Value will be calculated as below:
Remaining stock item from 2nd April purchase is5.00 nos x 150= 750
Stock item from 1st April purchase is10.00 nos x 100 = 1000
1750/-
As on 4th April 2020:
Purchase of 10.00 nos for Rs. 200/- = 2000/- ( Chennai Location-> B2- Batch) , hence the ‘Closing Value’ will be:
Purchase as on 4th April =2000 (10 x 200)
Purchase as on 2nd April =750 (5 x 150)
Purchase as on 1st April= 1000 (10 x 100)
3750/-
As on 5th April 2020:
Sale has been done from ‘Chennai Location- B2- Batch’ for 5 nos. Now Last Purchase is First Out i.e., purchase as on 4th is the last purchase.
Closing Value will be calculated as below:
Remaining stock item from 4th April purchase is5.00 nos x 200=1000
Stock item from 2nd April purchase is5.00 nos x150 =750
Stock item from 1st April purchase is 10.00 nos x 100 =1000
2750/-
Standard Cost costing method
Standard Cost can also be called as User Specified Rate. Once when Std Cost is specified (Std rate to be specified in the Inventory Master screen), this rate is applicable for the current date irrespective of the price/cost of purchase/input.
This type of valuation is used where the daily variances of purchase are not expected to effect the value inventory. For example: Gold.
When Standard Cost is chosen, the Batches and Locations become irrelevant, and the entire inventory for this item is valued at Std rate.
In the stock item master screen, set Yes to Allow Std. Rates for Stock Items.
In the stock item master screen, set Set Standard Rates to Yes.
Press F12 (Configure) > set Provide Standard Selling and Buying Rates as Yes.
If you do not see the option:
- Set Show more configurations to Yes.
- Set Show all configurations to Yes.
Give the Std rate for the stock item from the date of applicable, this rate will be considered for the stock valuation.
Under Costing Method, select Std Cost.
Once when Std rates are defined, while raising the purchase invoice (when cost price is defined) or sales invoice (when selling price is defined) rates will be automatically picked up.
In our above example as on 3rd April 2020, Std rate is defined Rs. 500/-. Let us raise the purchase invoice on 3rd April 2020.
In case, if the data already exists, and from certain date if user would like to change the cost price and selling, user can define the same in Std rate. Let us see how the std rates will get affected for the given data.
DateVCh TypeLocationBatchInwardsOutwards
|
|
|
|
|
Quantity |
Rate |
Value |
Quantity |
Rate |
Value |
|
01/04/09 |
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