Understanding Scenario in Tally Prime: A Comprehensive Guide with Examples

Introduction to Tally Prime

Tally Prime is one of the most widely used accounting and ERP software in India and several other countries. With its intuitive design and powerful features, businesses—from small startups to large enterprises—use it for accounting, inventory management, tax compliance (GST), payroll, and financial reporting.

Among its powerful features, Scenarios in Tally Prime stand out as a unique tool to help users view provisional reports without affecting the actual books of accounts. This is particularly useful for forecasting, decision-making, and what-if analysis.

What is a Scenario in Tally Prime?

A Scenario in Tally Prime is a reporting tool that allows users to include or exclude certain types of vouchers (like optional, reversing, or memorandum vouchers) to generate provisional financial reports.

Essentially, Scenarios help you simulate different financial situations without permanently affecting the company’s books. This is helpful for tasks like:

Budget planning
Cash flow analysis
Estimating future profits/losses
Preparing draft reports
Auditor analysis

Scenarios are useful when you want to:

Include optional vouchers like sales orders, expense projections.
Exclude certain vouchers like reversing journals that are temporary.
Include Memorandum vouchers, which are incomplete or tentative entries.

Scenarios are mostly used with:

Optional Vouchers
Reversing Journals
Memorandum Vouchers

These voucher types are not reflected in regular books unless specifically included via a scenario. Hence, scenarios allow businesses to:

Forecast revenues and expenses
Simulate "what-if" financial conditions
View draft reports before finalizing transactions

Purpose and Benefits of Scenarios

Purpose:

To project financial statements without affecting real data
To make informed business decisions based on simulations
To handle provisional data efficiently
To support budgeting and future planning

Benefits:

No impact on real-time books: The real accounting data stays unchanged.
Flexible decision-making: Use what-if scenarios to compare different financial strategies.
Efficient reporting: Generate balance sheets, P&L, and other statements for internal use.
Prevents clutter: Temporary or forecast entries don’t flood the actual ledger

Types of Scenarios in Tally Prime

There are three main types of vouchers used in Scenarios:

1. Optional Vouchers

These are non-posting vouchers that don't affect books until converted to regular vouchers. Used for sales, purchases, journal entries, etc.

2. Reversing Journals

These are temporary vouchers used to adjust values for a specific period and automatically reverse after that date. Used for month-end or year-end adjustments.

3. Memorandum Vouchers

These are provisional entries. They don't affect accounts unless made regular. Often used for internal notes or uncertain entries.

How to Create a Scenario

– Step-by-Step

Here’s how to create and use scenarios in Tally Prime:

Step 1: Enable Scenario Management

Go to Gateway of Tally > F11 (Features) > Accounting Features
Set Use Reversing Journals and Optional Vouchers to Yes
Enable Use Scenario Management to Yes

Step 2: Create a Scenario

Go to Gateway of Tally > Accounts Info > Scenarios > Create
Enter a name for the scenario (e.g., Projected Sales Scenario)

Set:

Include Optional Vouchers = Yes
Include Memorandum Vouchers = Yes/No (as needed)
Include Reversing Journals = Yes/No (as needed)
Exclude Actuals = Yes (if you don’t want to include finalized data)

Step 3: Create Vouchers

Create various optional, memo, or reversing vouchers as per your needs.

Step 4: View Reports

Go to Display > Profit & Loss A/c / Balance Sheet
Press F7: Scenario, choose your created scenario
View provisional report with scenario-specific vouchers included

Example 1: Creating a Scenario for Provisional Reports

Situation: A company wants to analyze how future sales will affect profit but does not want to include these transactions in actual books yet.

Step-by-step:

Create an Optional Sales Voucher for the expected sales.
Create a Scenario and include Optional Vouchers.
In Profit & Loss A/c, choose this scenario using F7.

The report now includes expected sales, helping management plan accordingly.

Example 2: Excluding Reversing Journals from Financial

Reports

Situation: At year-end, the company adds provisions via Reversing Journal that should reverse automatically the next month.

Steps:

Create a Reversing Journal for provision (e.g., Salary Provision).
Create a Scenario excluding Reversing Journals.

Compare:

Financial report with the provision (during the current period).
Financial report without it (after reversal date).
This helps manage compliance and temporary adjustments.

Example 3: Including Optional Vouchers for Forecasting

Scenario: The company plans a big marketing campaign. Costs are not yet incurred, but need to be forecasted.

Steps:

Create Optional Purchase/Expense Vouchers for expected costs.
Create a Scenario including these vouchers.
View provisional Profit & Loss or Cash Flow report to forecast outcomes.
This helps in budgeting and planning cash outflow.

Advanced Uses of Scenarios

a. Monthly Forecasting

Create monthly optional vouchers for expected income/expenses, view monthly projected reports.

b. Auditor Reports

Auditors can create provisional vouchers and scenarios to validate balances before finalizing books.

c. Comparing Multiple Scenarios

Create multiple scenarios:
Optimistic Scenario
Realistic Scenario
Pessimistic Scenario

Each scenario can use different sets of vouchers for comparison.

Scenario vs Actual Books – Key Differences

Feature	Scenario	Actual Books
Data Storage	Temporary	Permanent
Financial Impact	None	Affects accounts
Used For	Forecasting, Planning	Real business transactions
Editable Without Risk	Yes	No
Reporting	Provisional	Final

Best Practices for Using Scenarios

Always name scenarios clearly to reflect their purpose.

Use optional vouchers for forecasts to avoid errors in actual books.

Use reversing journals for month-end entries that need automatic reversal.
Keep auditor-specific scenarios separate.
Regularly review and clean old or unused scenarios.

Common Mistakes and Troubleshooting

Mistakes:

Using regular vouchers instead of optional/reversing ones.
Forgetting to exclude actuals in a scenario meant only for projections.
Confusing Memo vouchers with Optional ones.

Troubleshooting:

If a scenario isn’t reflecting, check if:

Voucher type is correct
Date of voucher falls within report period
Scenario includes/excludes right voucher types

Scenario in Tally for Auditors and Accountants

Auditors can:

Use memo/reversing vouchers for year-end adjustments.
View scenarios to prepare draft reports.
Compare actual vs scenario reports for reconciliation.

Accountants can:

Plan entries before finalizing them
Use scenarios for internal reporting to management
Avoid cluttering final books with temporary entries

Integration with GST, Inventory, and Payroll

Scenarios don’t affect GST reports unless actual vouchers are used.
You can simulate stock movements using optional inventory vouchers.
For payroll projections, use optional salary journal entries.

This enables forecasting and planning without affecting actual compliance reports

Conclusion

Scenarios in Tally Prime are a powerful tool that lets users simulate different financial outcomes by including or excluding specific vouchers. This allows businesses to plan, forecast, and make decisions based on accurate provisional data without impacting their actual accounting records.

Whether you're an accountant, auditor, manager, or business owner, understanding how to use scenarios effectively can significantly enhance your financial planning and reporting capabilities. With practical examples like forecasting sales, managing provisional expenses, and creating adjusting entries, Scenarios help unlock the true power of Tally Prime.

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