Sales entry vs Journal entry

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A service-based company using Tally is entering sales and purchases as journal entries, as inventory isn't relevant. The core question is whether this method complies with UK Company Law and Income Tax Act, and if it risks revenue disallowance by the tax authorities. The expert confirms these entries are acceptable under both acts, noting that payments are handled via debtors and creditors.

Sanjay Sharma

Sanjay Sharma (Querist)
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02 July 2022 Dear Experts, one of our company dealing in service sector. Accountant uses Tally as accounting software. He entered all the sale / purchase bill in journal entries in Tally as there is no need to maintain inventory. Are these entries okay or not as per Company's Act or Income Tax Act.
will income tax department disallow all the revenue just because of this (sales entry in journal in Tally).
Thanks in Advance