Year-End Process in Tally Prime
Closing FY 2025-26, splitting data, carrying forward balances, and Sunrise Retail's year-end checklist
Module 26 of 31 — Tally Prime. Close FY 2025-26 for Sunrise Retail Pvt Ltd, carry forward all balances to FY 2026-27, split the company data file, and execute the year-end closing journal entries. Duration: 45 min.
Learning Objectives
- Understand Tally's automatic year-end carry-forward (no manual closure required)
- Execute the year-end checklist for Sunrise Retail (March 31, 2026)
- Enter closing journal entries (depreciation, provisions, accruals)
- Split company data at March 31, 2026
Prerequisites: Final Accounts and Reports — tally-23
Tally's Year-End — What You Don't Need to Do
One of Tally's most important features: you do not need to manually close the financial year. Tally is a perpetual system.
| What Tally Does Automatically | How It Appears |
|---|---|
| All ledger balances carry forward | Open Balance Sheet on Apr 1, 2026 — all balances intact |
| Net Profit/Loss transfers to Reserves | P&L balance appears under "Profit & Loss A/c" in Equity |
| Closing stock on Mar 31 → Opening stock on Apr 1 | Stock value carries forward as opening stock value |
| Sundry debtors/creditors carry with bill-wise detail | Outstanding reports show the same invoices in the new year |
You simply start entering FY 2026-27 vouchers with April 1, 2026 dates.
What You Must Do Before Year-End
The human work that Tally cannot automate:
Year-End Closing Journal Entries
These entries must be passed before the final accounts are presented. Path:
1. Full-Year Depreciation
Sunrise Retail assets purchased April 1, 2025 — depreciation for 12 months:
(Furniture: ₹1,50,000 × 10% SLM = ₹15,000/year; Computer: ₹80,000 × 40% SLM = ₹32,000/year — Companies Act Schedule II rates)
2. Provision for Outstanding Salary (if March salary not yet paid)
3. Prepaid Expense Adjustment (if rent paid in advance)
4. P&L Appropriation
Tally handles this automatically in the Balance Sheet. If needed manually:
Splitting Company Data
Splitting creates two separate Tally company files: a historical archive and a fresh active file.
When to split:
- After 2–3 years of data accumulation (file grows large, Tally slows down)
- When you want a clean separation between FY archives
- Never split before all year-end adjustments and returns are finalised
How to split:
What carries forward to the new company automatically:
| Item | Carries Forward? |
|---|---|
| All ledger balances (assets, liabilities) | Yes |
| Net Profit → Profit & Loss Balance A/c | Yes (shown in Equity) |
| Closing stock → Opening stock | Yes (same value, same rate) |
| Sundry Debtors with bill-wise details | Yes |
| Sundry Creditors with bill-wise details | Yes |
| Masters (ledgers, stock items, pay heads) | Yes |
| Vouchers from old year | No (stay in the archive file) |
Year-End Q&A Flow
Sunrise Retail Year-End Financial Summary (FY 2025-26 Projection)
Based on April 2025 run-rate (₹8,90,000/month net sales):
| Metric | FY 2025-26 Estimate |
|---|---|
| Annual Revenue | ~₹1,07,00,000 |
| Annual Gross Profit (26%) | ~₹27,80,000 |
| Operating Expenses | ~₹22,00,000 |
| Annual Net Profit | ~₹5,80,000 |
| Closing Stock (Mar 31) | ~₹12,00,000 |
| Net Debtors | ~₹8,00,000 |
| Net Creditors | ~₹6,00,000 |
| Total ITC Carry Forward | ~₹2,50,000 |
Electronics trading margin: ~26% gross, ~5% net on stabilised monthly run-rate.
Practice Exercise
Exercise: Why might Sneha choose NOT to split company data immediately after March 31?
Show Solution
Reasons to delay splitting:
-
Pending year-end adjustments: The CA typically takes 1–3 months after year-end to finalise depreciation, provisions, and audit entries. Splitting before these are entered means adjustments must go into the archive file, which gets confusing.
-
GSTR-9 filing: The annual GST return is due by December 31, 2026. Any GST adjustments (ITC reconciliation, amendments) need to be in the FY 2025-26 data file. Splitting prematurely makes this harder.
-
Tax audit in progress: Auditors working on FY 2025-26 prefer the full year in a single file for easier navigation.
-
Outstanding bills: March bills being settled in April/May are cleaner to manage in the same company file.
Best practice: Split 3–4 months after year-end — July or August 2026 — once GSTR-9 adjustments are done and audit is complete.
Key Terms
| Term | Meaning |
|---|---|
| Year-End | March 31 — last day of the Indian financial year |
| Carry Forward | Tally's automatic transfer of all ledger balances to the next period |
| Split Company Data | Separates the Tally file into two at a cutoff date |
| P&L Appropriation | Transfer of net profit to Reserves — happens automatically in Tally's Balance Sheet |
| Closing Entries | Journal entries for depreciation, provisions, and accruals at year-end |
| Provisions | Estimated future liabilities set aside at year-end (gratuity, bad debts) |
Module Summary
- Tally is perpetual — just start entering April 1, 2026 vouchers; balances carry forward automatically
- Year-end checklist: all vouchers entered, bank reconciled, GST returns filed, backup taken
- Closing entries: depreciation (
F7on Mar 31), provisions, accruals — must be entered before final accounts - Split company data: optional; recommended after 2–3 years; best done 3–4 months post year-end
- Net profit of FY 2025-26 flows into "Profit & Loss Balance A/c" in Equity in the new year
Quick Quiz
1. To start FY 2026-27 in Tally, Sneha must:
- a) Run the "Year End Closing" wizard
- b) Create a new company file for FY 2026-27
- c) Simply start entering vouchers with April 1, 2026 dates
- d) Enter a closing entry: Dr P&L A/c, Cr Capital
Answer
c) Simply start entering April 1, 2026 vouchers — Tally handles year-end automatically. No closing entry, no new file, no wizard. The perpetual system carries all balances forward.
2. After splitting company data at April 1, 2026, the opening stock in the new company file is:
- a) Zero — stock must be re-entered manually
- b) Carried from March 31, 2026 closing stock automatically
- c) Entered via Physical Stock Voucher
- d) Copied from last year's purchase invoices
Answer
b) Carried automatically from March 31, 2026 — the Split function preserves all asset and liability balances at the cutoff date as opening balances in the new company, including stock at its closing value.