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Share market

SONIYA (ACCOUNTANT) (28 Points)

04 April 2018

Plz tell me in details of accounting of shares in tally & how to seperate long term & short term gain/loss transaction in tally & speculation loss/gain plz help me i this

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CA Shree Jain (Chartered Accountant) (1572 Points)
Replied 04 April 2018

You may invest your money in share market. This investment may be for short period and for long period. To record shares as long term investment is very easy. You just pass the entry of payment. But when you deem shares investment as your short period investment, at that time, you have to follow its complete procedure. For this record, I am using Tally.ERP 9 software. I will teach you to record of shares transactions with following example:

You have bought Shares of following companies on 1st Dec. 2011.

Shares of Reliance Company = 1000 shares at Rs. 100 each.

Shares of Tata Company = 200 shares at Rs. 50 each

Shares of Vepro Company = 2000 shares at Rs. 2 each

{ Note: These are the imaginary figures}

You have sold shares of following companies on 3rd Dec. 2011

Shares of Reliance Company = 500 shares at Rs. 100 each.

Now, in tally, we follow following steps :

1st Step : To Create Unit of Measures

We are measuring these shares in nos., so we will have to create unit of measures by going to inventory info.

2nd Step : To Create Stock items

You are dealing with three companies. So, you will create three stock items in inventory info. If you will deal with more companies, you can create more stock items. You can easily create short stock items for reliance shares, you can create R Shares etc.

3rd Step : To Create Group of Investment in Shares

Just go to group from accounting info and then create investment in shares group. under investment.

4th Step : To Create Ledger Purchase of Shares Account

In 4th step, you have to create ledger of purchase of shares account by going to account info and then ledger and then creation. This account will be under investment in shares group which we already have made in third step.

5th Step : To Create Ledger of Sales of Shares Account

This ledger account is also created under investment in shares.

5th Step : To Create Ledger Account of Broker

This ledger account will be created under sundry creditor.

6th Step : To Create Ledger Account of Your Bank

This ledger account will be created under bank account.

7th Step : To Pass the Voucher Entry of Purchase of Shares of Companies

Just choose journal voucher and pass the following voucher entry

Shares in Companies Account Dr.

Broker Account

8th Step : To pass the Voucher Entry of Sales of Shares of Companies

9th Step : See Balance Sheet

In this balance sheet, you will see investment of shares and also it will be shown in current asset as closing stock which will be adjusted with the profit and loss account in liability side of balance sheet. So, don't worry about this.

{Important : 50 CAs took a meeting on this point. They decided that this way of showing the balance sheet is best because they are all devotees of Income Tax Department and if you deal in shares, it means it is just like product for you. If you will get any profit or loss on the sales of any company's share it will automatically be shown in profit and loss account. }

Liability side, we are opening balance in profit and loss account as Rs. 114000. This is just like opening stock of shares like any other product. But because we sell some reliance shares, so closing stock is showing Rs. 64000.

10th Step : See Stock of Shares Summary

This share stock summary will give you idea what shares stock have in your business. So, you can make better planning for future buying or selling of shares.

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CA Naveen Chand (Chartered Accountant) (12729 Points)
Replied 04 April 2018

FIRSTLY

OPEN LEDGERS NAMELY

SHARE PURCHASE UNDER PURCHASE A/C
SHARE SALE UNDER SALE A/C
AND SHARE BROKRAGE UNDER SUNDRY CREDITORS

AND MAKE ENTRY IN TALLY AS PER TRANSACTIONS

CA Naveen Chand (Chartered Accountant) (12729 Points)
Replied 04 April 2018

Stock Broker under Sundry Creditors (You can also create it under Sundry Debtors).

Create Stock Broker Ledger with the below configurations as shown in the picture.

Creating a Stock Broker Ledger in Tally

Reason why we can create Stock Broker Ledger under Sundry Creditors or Sundry Debtors:

Let’s say, you have purchased Reliance shares and your total bill including brokerage and other expenses is of ₹10,000. It means you have to pay your broker ₹10,000.

That means for YOU, Stock Broker is currently your Creditor because you have to pay him for the shares that it has purchased on behalf of you.

Now, let’s say, you sold Reliance shares for ₹15,000 which you have bought in the above transaction.

That means for you, the same Stock Broker is now your Debtor for ₹15,000 because Stock Broker has to pay money to you for selling the Reliance Shares for ₹15,000.

As there are hundreds of transactions through out the year, the situation of your Stock Broker as a Creditor or a Debtor constantly changes in your accounts.

Therefore, at the time of creating Stock Broker ledger, it does not matter whether you create it under Sundry Creditor or Sundry Debtor.

At the end of the year, when you are closing your books, you can check out your Balance Sheet and see what is the position of your Stock Broker.

Whether you have to pay money to your Stock Broker or vice versa you can easily alter the ledger to Sundry Creditor or Sundry Debtor.

Don’t worry, I have even explained this in the above video.

Share Purchases under Purchase Accounts

Create Share Purchases ledger with below configurations as shown in the picture.

Make sure you have set Inventory Values are affected to YES because we will be entering Stock Items while creating journal entry for purchasing shares.

Creating Share Purchases Ledger in Tally

Share Sales under the Sales Accounts

Create Share Sales Ledger with below configurations as shown in the picture.

Again, make sure you have set Inventory Values are affected to YES because we will be entering Stock Items while creating journal entry for selling shares.