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Lesson 16 of 48 – Journal Voucher
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📘 Journal Voucher in Tally Prime

A Journal Voucher is used to record transactions where Cash and Bank are not involved. It is mainly used for adjustment entries, depreciation, outstanding expenses, prepaid expenses, provisions and transfer entries.

Lesson Objective Learn when to use Journal Voucher (F7), understand adjustment entries and record professional accounting transactions in Tally Prime.
1. What is a Journal Voucher?

Journal Voucher records accounting adjustments without affecting Cash or Bank accounts.

Used For Example
Depreciation Furniture Depreciation
Outstanding Expenses Salary Outstanding
Prepaid Expenses Insurance Paid in Advance
Provision Bad Debts Provision
Transfer Entry Expense Adjustment
2. Shortcut Key
Voucher Shortcut
Journal Voucher F7
Gateway of Tally → Voucher Entry → Press F7
3. When Should Journal Voucher be Used?
Transaction Use Journal?
Depreciation Entry ✔ Yes
Outstanding Salary ✔ Yes
Provision for Bad Debts ✔ Yes
Transfer between Expense Accounts ✔ Yes
Paid Salary ❌ No (Payment Voucher)
Received Cash ❌ No (Receipt Voucher)
Cash Deposit into Bank ❌ No (Contra Voucher)
If Cash or Bank is involved, normally a Journal Voucher should not be used.
4. Example – Depreciation Entry

Depreciation on Furniture ₹10,000.

Debit Credit
Depreciation A/c ₹10,000 Furniture A/c ₹10,000
Depreciation is an Expense (Debit). Furniture value decreases (Credit).
5. Example – Outstanding Salary

Salary for March ₹30,000 is due but not yet paid.

Debit Credit
Salary A/c ₹30,000 Outstanding Salary A/c ₹30,000
Salary expense belongs to the current period, so it must be recorded even if payment has not yet been made.
6. Prepaid Expenses

Sometimes a business pays an expense in advance. The benefit of that payment relates to the next accounting period, so it is treated as a Prepaid Expense (Current Asset).

Example: Paid Insurance Premium ₹24,000 for one year. At year-end, ₹6,000 is prepaid.

Debit Credit
Prepaid Insurance A/c ₹6,000 Insurance Expense A/c ₹6,000
The prepaid portion is an Asset because its benefit will be received in the future.
7. Bad Debts & Provision for Bad Debts

Businesses may not recover all outstanding amounts from customers. Such losses are called Bad Debts.

Example 1 – Bad Debts
Debit Credit
Bad Debts A/c ₹5,000 Ram A/c ₹5,000
Example 2 – Provision for Bad Debts
Debit Credit
Bad Debts A/c ₹10,000 Provision for Bad Debts A/c ₹10,000
Provision for Bad Debts is created at the end of the financial year to estimate future losses.
8. Accrued Income & Outstanding Income

Sometimes income is earned but not yet received. Such income is called Accrued (Outstanding) Income.

Example: Interest Earned ₹8,000 but not yet received.

Debit Credit
Accrued Interest A/c ₹8,000 Interest Income A/c ₹8,000
Income belongs to the current accounting period even if payment has not yet been received.
9. Steps to Record a Journal Voucher
  1. Open Tally Prime.
  2. Go to Voucher Entry.
  3. Press F7 to select Journal Voucher.
  4. Select the Debit Ledger.
  5. Select the Credit Ledger.
  6. Enter the Amount.
  7. Write a meaningful Narration.
  8. Press Ctrl + A to Save.
Journal Voucher is mainly used for adjustment entries where no Cash or Bank account is involved.
10. Important Fields & Common Mistakes
Important Fields
Field Description
Date Journal Entry Date
Voucher Type Journal (F7)
Debit Ledger Account to be Debited
Credit Ledger Account to be Credited
Amount Journal Amount
Narration Reason for Adjustment
Common Mistakes
Mistake Correct Practice
Using Journal Voucher for Cash transactions. Use Payment, Receipt or Contra Voucher instead.
Selecting the wrong Ledger. Verify Debit and Credit Ledgers carefully.
Ignoring adjustment entries. Record all year-end adjustments.
Incorrect Debit and Credit. Apply the Golden Rules of Accounting.
No Narration. Always explain the adjustment entry.
Wrong Accounting Date. Verify the financial period before saving.
Proper Journal Entries ensure accurate Profit & Loss Account and Balance Sheet at the end of the financial year.
11. Real Business Case Studies

Let's understand where Journal Voucher is used in real businesses.

Business Transaction Journal Entry
Computer Institute Salary Outstanding ₹50,000 Salary Dr. → Outstanding Salary Cr.
Medical Store Depreciation on Furniture ₹8,000 Depreciation Dr. → Furniture Cr.
Retail Shop Provision for Bad Debts ₹12,000 Bad Debts Dr. → Provision Cr.
Manufacturing Company Prepaid Insurance ₹15,000 Prepaid Insurance Dr. → Insurance Expense Cr.
Consultancy Firm Interest Accrued ₹6,000 Accrued Interest Dr. → Interest Income Cr.
These entries are generally passed at the end of the month or financial year.
12. Journal Voucher vs Payment Voucher vs Receipt Voucher
Journal Voucher Payment Voucher Receipt Voucher
No Cash or Bank involved. Money Paid. Money Received.
Shortcut: F7 Shortcut: F5 Shortcut: F6
Adjustment Entries. Expenses & Supplier Payments. Customer Collections & Income.
Depreciation. Salary Payment. Course Fee Received.
Outstanding Expenses. Electricity Bill Paid. Commission Received.
Easy Trick
  • 📘 Adjustment Entry → Journal (F7)
  • 💸 Money Paid → Payment (F5)
  • 💰 Money Received → Receipt (F6)
13. Professional Tips & Year-End Adjustments
  • Record all outstanding expenses before closing accounts.
  • Pass depreciation entries for all fixed assets.
  • Create provisions wherever required.
  • Adjust prepaid expenses correctly.
  • Record accrued income before preparing final accounts.
  • Always verify Debit and Credit totals.
  • Write a meaningful narration for every Journal Entry.
  • Review adjustment entries before generating the Balance Sheet.
  • Take a backup before passing year-end entries.
Professional accountants usually pass Journal Vouchers during month-end and year-end closing.
14. Practical Exercise & Interview Questions
Practical Exercise
  1. Record Depreciation on Furniture.
  2. Create an Outstanding Salary Entry.
  3. Create a Prepaid Insurance Entry.
  4. Create a Provision for Bad Debts.
  5. Record Accrued Interest Income.
  6. Transfer an Expense using Journal Voucher.
  7. Add narration for every Journal Entry.
  8. Verify the Trial Balance after posting entries.
Interview Questions
  1. What is a Journal Voucher?
  2. Which shortcut key opens Journal Voucher?
  3. When should Journal Voucher be used?
  4. Can Cash transactions be entered in Journal Voucher?
  5. What is Depreciation?
  6. What is an Outstanding Expense?
  7. What is a Prepaid Expense?
  8. What is Accrued Income?
  9. What is Provision for Bad Debts?
  10. Difference between Journal and Payment Voucher?
  11. Difference between Journal and Receipt Voucher?
  12. Why are adjustment entries important?
  13. Why should narration be entered?
  14. How does Journal Voucher affect final accounts?
  15. Why are Journal Entries passed at year-end?
15. Lesson Summary
  • Learned the purpose of Journal Voucher.
  • Recorded non-cash transactions.
  • Learned depreciation entries.
  • Recorded outstanding and prepaid expenses.
  • Learned accrued income entries.
  • Created provisions for bad debts.
  • Compared Journal, Payment and Receipt Vouchers.
  • Learned professional accounting practices.
  • Completed practical exercises.
  • Prepared for accounting interviews.
Congratulations! You can now confidently record adjustment entries using the Journal Voucher (F7) in Tally Prime. This knowledge is essential for preparing accurate financial statements.

🧠 Quick Quiz

Which shortcut key is used to open the Journal Voucher in Tally Prime?



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