Lesson 13 of 20

Stock items, units and stock groups

To keep stock in Tally you describe each thing you buy and sell once: what it is called, what it is counted in, and what kind of thing it is.

Switch inventory on

Press F11 and check that Maintain Inventory and Integrate Accounts with Inventory are set to Yes. With integration on, the value of closing stock from the stock records flows into the Balance Sheet and the Profit and Loss Account automatically.

The inventory masters

Master	What it is	Example
Unit	What the item is counted or measured in	Nos, Box, Ream, Kg, Ltr, Mtr
Stock Group	A family of similar items, for reports	Paper, Pens, Files
Stock Category	An optional second way of classifying, across groups	Premium, Economy
Stock Item	The thing itself	A4 Paper 75 gsm
Godown (Location)	Where stock is kept, if more than one place	Shop, Warehouse

Create them in this order: units, then groups, then items. All are under Gateway of Tally > Create, in the Inventory Masters section.

Create a unit

Create > Unit.
Type: Simple.
Symbol: for example Ream. Formal name: Reams.
Unit Quantity Code (UQC): choose the nearest code from the list; it is used in GST returns.
Number of decimal places: 0 for things counted whole; 2 or 3 for weights and lengths.
Ctrl+A.

A compound unit joins two simple units with a conversion, such as Box of 10 Nos, so that you can buy in boxes and sell in pieces.

Create a stock group

Create > Stock Group.
Name: Paper. Under: Primary.
"Should quantities of items be added": Yes if all items in the group use the same unit, so that the group total means something.
If every item in the group has the same GST rate and HSN code, you can set them here once instead of on each item.

Create a stock item

Create > Stock Item.
Name: specific enough to tell items apart: "A4 Paper 75 gsm", not "Paper".
Under: the stock group.
Units: Ream.
GST details: applicable; HSN code, taxability and rate. Take the HSN code and rate from the supplier's invoice or your accountant; do not guess.
Opening balance: quantity, rate and value on the books-beginning date, for an existing business.
Ctrl+A.

Items for the practice company

Stock item	Group	Unit
A4 Paper 75 gsm	Paper	Ream
Ball Pen Blue (box of 10)	Pens	Box
Box File	Files	Nos

How stock moves

A Purchase voucher in item invoice mode increases stock.
A Sales voucher decreases it.
Debit and credit notes reverse those.
A Stock Journal (Alt+F7) moves stock between godowns or records goods consumed and produced.
A Physical Stock voucher (Ctrl+F7) records the count when stock is physically verified; Tally then takes the counted quantity as the stock on that date.

Stock Summary

Gateway of Tally > Stock Summary shows, for each group and item, the closing quantity, rate and value. Press Enter on a group to see its items, and on an item to see the months and then the vouchers. With Alt+F1 (or Alt+F5) the report switches between condensed and detailed views. Alt+C adds a column, for example another period for comparison.

How Tally values stock

Each stock item has a costing method, set in the item under its behaviour options: by default the average cost. Others, such as first in first out, are available. The choice affects closing stock value and therefore profit; it is an accounting policy that the owner and accountant decide, and it should not be changed casually.

Reorder levels and other controls

TallyPrime can hold a reorder level and minimum order quantity for each item and report what needs to be ordered. Batches, expiry dates and price lists are further features that a business switches on as it needs them. A learner can leave these until the basics are secure.

Common mistakes

Creating the same item twice under slightly different names. Sales then show stock missing in one and surplus in the other.
Choosing the wrong unit, such as Nos for something bought in boxes.
Leaving out the HSN code and rate, so that invoices carry no tax details.
Not counting stock. Records drift from reality through breakage, theft and mistakes; a physical count at least once a year, compared with Stock Summary, is essential.

Next: GST set-up.

Questions learners ask

How do I create a stock item in TallyPrime?

Gateway of Tally, Create, Stock Item. Enter the name, stock group, unit, GST details and any opening balance, and save.

What must be created before a stock item?

The unit of measure, and usually the stock group.

Where can I see closing stock in Tally?

In Stock Summary on the Gateway of Tally, which shows quantity, rate and value for each item.

All lessons

What TallyPrime is Create a company Groups and ledgers Create ledgers Voucher types Contra voucher Payment voucher Receipt voucher Journal voucher Purchase voucher Sales voucher Debit and credit notes GST set-up GST entries Bank reconciliation Reports Backup and restore Common errors 30 day plan

Shortcut keys Group quiz Practice exercise Glossary

An independent learning site. Tally and TallyPrime are trademarks of Tally Solutions Private Limited. This site is not connected with, approved by or paid by Tally Solutions, and uses none of its logos, screens or course material. Keys and menu paths were checked against Tally's own help site on 12 November 2026; the software changes with each release, so if your screen differs, follow Tally's help (press Ctrl+F1). Tax treatment in the examples is for learning only: ask your accountant.