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Lesson 30 of 48 – Unit of Measurement
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📏 Unit of Measurement in Tally Prime

A Unit of Measurement (UoM) is used to measure the quantity of Stock Items. Every inventory item must be associated with a unit such as Numbers (Nos.), Kilograms (Kg), Litres (Ltr), Meters (Mtr), Boxes, Pieces, etc.

Lesson Objective Learn how to create Simple Units and Compound Units, assign units to Stock Items, and understand how units help in inventory management.
1. What is a Unit of Measurement?

A Unit of Measurement defines how a Stock Item is counted or measured in inventory transactions.

Stock Item Unit
Laptop Nos.
Rice Kg
Milk Litre
Wire Meter
Cement Bag
2. Why is Unit of Measurement Important?
  • Measures stock accurately.
  • Records purchase and sales quantity.
  • Calculates inventory value correctly.
  • Avoids quantity-related mistakes.
  • Generates accurate inventory reports.
  • Supports stock transfers.
  • Helps maintain consistency.
  • Improves inventory management.
Every Stock Item in Tally Prime must have a Unit of Measurement.
3. Types of Units in Tally Prime
Type Description Example
Simple Unit Single Unit Nos., Kg, Litre
Compound Unit Combination of Two Units Box of 12 Nos.
Simple Units are sufficient for most businesses, while Compound Units are useful for products sold in packs or cartons.
4. Examples of Units
Business Stock Item Unit
Computer Shop Laptop Nos.
Medical Store Medicine Bottle Bottle
Grocery Store Sugar Kg
Hardware Shop Pipe Meter
Dairy Milk Litre
Choosing the correct unit ensures accurate stock records and reports.
5. Unit of Measurement Workflow
  1. Create Unit of Measurement.
  2. Create Stock Item.
  3. Assign Unit to Stock Item.
  4. Record Purchase Voucher.
  5. Record Sales Voucher.
  6. View Stock Reports.
  7. Verify Physical Stock.
  8. Generate Inventory Reports.
Once a Unit is assigned to a Stock Item, all inventory transactions use that unit for quantity calculations.
6. How to Create a Simple Unit in Tally Prime

A Simple Unit is a single unit used to measure inventory items such as Nos., Kg, Litre, Meter, Box, Bottle, etc.

Steps
  1. Open Tally Prime.
  2. Go to Gateway of Tally → Create.
  3. Select Units.
  4. Choose Create.
  5. Select Simple Unit.
  6. Enter the Symbol (Example: Nos.).
  7. Enter the Formal Name (Example: Numbers).
  8. Specify the number of decimal places (if required).
  9. Press Ctrl + A to Save.
Example
Field Value
Type Simple Unit
Symbol Nos.
Formal Name Numbers
Decimal Places 0
Simple Units are suitable for products counted individually or measured in a single unit.
7. How to Create a Compound Unit

A Compound Unit combines two Simple Units. It is useful for products sold in packs, cartons or boxes.

Steps
  1. Create the required Simple Units first.
  2. Go to Gateway of Tally → Create → Units.
  3. Select Compound Unit.
  4. Select the First Unit.
  5. Enter the conversion value.
  6. Select the Second Unit.
  7. Save using Ctrl + A.
Example
Compound Unit Meaning
1 Box = 12 Nos. Each Box contains 12 Pieces.
1 Carton = 24 Bottles Each Carton contains 24 Bottles.
1 Pack = 10 Pens Each Pack contains 10 Pens.
Compound Units simplify inventory management when products are purchased and sold in packs or cartons.
8. Assigning Units to Stock Items

After creating Units, assign them while creating or altering Stock Items.

Stock Item Assigned Unit
Dell Laptop Nos.
Sugar Kg
Milk Litre
Paint Litre
Notebook Pack Box (12 Nos.)
Steps
  1. Create or Alter a Stock Item.
  2. Select the required Unit of Measurement.
  3. Save the Stock Item.
Every purchase, sale and stock report will use the assigned Unit automatically.
9. Display, Alter & Delete Units
Action Purpose
Create Add a new Unit.
Display View Unit details.
Alter Edit an existing Unit.
Delete Remove an unused Unit.
Navigation
  1. Gateway of Tally → Alter
  2. Select Units.
  3. Choose the required Unit.
  4. Modify details if required.
  5. Press Ctrl + A to Save.
A Unit generally cannot be deleted if it is already assigned to one or more Stock Items.
10. Common Mistakes While Creating Units
Common Mistake Correct Practice
Creating duplicate Units. Create only one Unit for each measurement.
Selecting the wrong Unit. Verify the Unit before assigning it.
Incorrect Compound Unit conversion. Check the conversion ratio carefully.
Using too many unnecessary Units. Keep Units simple and standardized.
Incorrect decimal places. Use appropriate decimal precision.
Changing Units after transactions. Finalize Units before starting inventory.
Using different Units for identical products. Maintain consistency throughout the inventory.
Ignoring physical measurement standards. Use industry-standard Units whenever possible.
Incorrect Units can cause wrong inventory quantities, valuation errors and inaccurate stock reports.
11. Real Business Case Studies

Let's understand how Units of Measurement are used in different types of businesses.

Business Stock Item Unit Used
Computer Shop Laptop Nos.
Medical Store Cough Syrup Bottle
Grocery Store Rice Kg
Hardware Shop PVC Pipe Meter
Dairy Farm Milk Litre
Manufacturing Company Nut & Bolt Pack Box (100 Nos.)
Choosing the correct Unit of Measurement ensures accurate purchasing, selling, stock verification and inventory reports.
12. Simple Unit vs Compound Unit
Simple Unit Compound Unit
Single measurement. Combination of two Simple Units.
Nos., Kg, Litre, Meter Box of 12 Nos., Carton of 24 Bottles
Easy to create. Requires conversion ratio.
Suitable for individual products. Suitable for packed products.
Used in most businesses. Common in wholesale and manufacturing.
Easy Trick
  • 📏 Simple Unit = Single Measurement
  • 📦 Compound Unit = Pack or Combination of Units
13. Professional Unit Management Tips
  • Create standard Units before creating Stock Items.
  • Use meaningful symbols such as Nos., Kg and Ltr.
  • Avoid duplicate Units.
  • Use Compound Units only when necessary.
  • Verify conversion ratios carefully.
  • Maintain the same Unit for identical products.
  • Review inventory reports regularly.
  • Avoid changing Units after transactions have started.
  • Use decimal places only when required.
  • Back up company data before major inventory changes.
Professional organizations standardize Units across all departments to eliminate inventory errors.
14. Practical Exercise & Interview Questions
Practical Exercise
  1. Create a Simple Unit named Nos..
  2. Create another Simple Unit named Kg.
  3. Create a Compound Unit: 1 Box = 12 Nos..
  4. Create a Stock Item using Nos..
  5. Create another Stock Item using Kg.
  6. Create a Stock Item using the Compound Unit.
  7. Record a Purchase Voucher.
  8. View the Stock Summary Report.
Interview Questions
  1. What is a Unit of Measurement?
  2. Why is a Unit required in Tally Prime?
  3. What is a Simple Unit?
  4. What is a Compound Unit?
  5. When should Compound Units be used?
  6. Can a Stock Item exist without a Unit?
  7. How do you create a Simple Unit?
  8. How do you create a Compound Unit?
  9. What is a conversion ratio?
  10. Why are decimal places important?
  11. Can a Unit be altered?
  12. Can a Unit be deleted?
  13. What happens if the wrong Unit is selected?
  14. How do Units affect inventory reports?
  15. Which businesses commonly use Compound Units?
  16. Why should duplicate Units be avoided?
  17. Can one Unit be used for multiple Stock Items?
  18. What precautions should be taken while creating Units?
  19. How do Units improve inventory management?
  20. Why are Units important in Tally Prime?
15. Lesson Summary
  • Learned the purpose of Units of Measurement.
  • Created Simple and Compound Units.
  • Assigned Units to Stock Items.
  • Understood conversion ratios.
  • Learned inventory measurement techniques.
  • Compared Simple Units and Compound Units.
  • Studied real business examples.
  • Completed practical exercises.
  • Prepared for accounting interviews.
  • Improved inventory management skills.
Congratulations! You can now confidently create and manage Units of Measurement in Tally Prime, ensuring accurate inventory quantities, purchases, sales and stock reports.

🧠 Quick Quiz

Which type of Unit is used for products sold in packs such as "1 Box = 12 Nos."?



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