Understanding Depreciation in Tally Prime
- Depreciation is a non-cash expense that reflects the decline in value of an asset over time.
- In Tally Prime, making an entry for depreciation ensures accurate financial records.
- This guide provides a step-by-step process to help you record depreciation using a journal voucher.
Step 1: Enable Accounting Features
- First, open Tally Prime and press F11 to access the accounting features.
- It’s crucial to ensure that the options for “use debit/credit notes” and “use journal voucher” are enabled.
- Remember to press Ctrl + A to save the changes.
Step 2: Create Ledger Accounts
- If you haven’t already done so, create the necessary ledger accounts.
- Go to the Gateway of Tally, and under the creation menu, set up the following ledgers:
- Depreciation Account: Name it as ‘Depreciation’ under indirect expenses with the type set to general.
- Asset Ledger: Choose a specific asset like ‘Furniture’ or ‘Machinery,’ labeled under fixed assets.
Step 3: Record the Journal Voucher Entry
- To make the actual entry, navigate to the Gateway of Tally and select vouchers.
- Press F7 to open the journal voucher screen. Enter the details as follows:
- Depreciation A/c…….Dr ₹15,000
- To Furniture A/c……….Cr ₹15,000
- For narration, write: ‘Being depreciation charged on furniture for the year.’ Press Ctrl + A to save the entry.
Understanding the Impact
- By charging depreciation, the Depreciation A/c (under indirect expenses) increases, which in turn affects the overall profit for the year.
- For instance, if you charge ₹15,000 on furniture, the reflective journal would show:
Depreciation A/c Dr ₹15,000 to Furniture A/c Cr ₹15,000.
By following these steps, you can efficiently record depreciation in Tally Prime, ensuring your accounting records remain precise!