Introduction to Tally.

ERP 9
Tally.ERP 9 is the worlds fastest and most powerful concurrent Multi-lingual business Accounting and Inventory
Management software. Tally, designed exclusively to meet the needs of small and medium businesses, is a fully
integrated, affordable and highly reliable software. Tally.ERP 9 is designed to automate and integrate all the business
operations, such as sales, finance, purchasing, inventory, and manufacturing. With Tally, accurate, up-to-date
business information is at your fingertips anywhere in the globe. The powerful new features and blazing speed and
power of Tally combined with enhanced MIS, Multi-lingual, Data Synchronization and Remote capabilities help you
simplify all your business processes easily and cost-effectively
The process of gathering and storing Financial Transaction data in the Accounting System is accomplished through the use of both:

Ledgers: which maintain Account Balances

Journals: which maintain the line by line detail of each Transaction.

Ledgers:
Im starting with Ledgers because weve gone through the basic organization of the Accounting System from Double Entry (debit/credit)
Transaction Posting, to the Chart of Accounts and finally the General Ledger. Ill stay on the topic of the General Ledger first and then back
up to the Journals where each transaction is originally posted.
In Accounting, there are two types of Ledgers, the General Ledger (Book of final entry) and Subsidiary (Sub) Ledgers. The Accounts for the
General Ledger come from the Chart of Accounts. The Accounts for the Subledgers depend on the specific purpose of the Subledger.
If you remember in the Chart of Accounts - Basics, I said that Accounts should only be created to describe types of things not individual
things themselves. Well, in some cases especially in the case of cash substitutes like Accounts Payable and Accounts Receivable more
detail is required. So, to maintain the summary nature of the Chart of Accounts/General Ledger and to provide more detail, Subsidiary (Sub)
Ledgers were developed.
Everything that is posted into Subledgers is also posted into the General Ledger and they act together to provide progressive levels of
detail/summary.
The two most common Subledgers are:

The Accounts Payable Subledger: which maintains a list of Vendors (or creditors) and their individual Account Balances. Each
individual Vendor represents a Subledger (Accounts Payable - Vendor) Account.

The Accounts Receivable Subledger: which maintains a list of Customers and their individual Account Balances. Each
individual Customer represents a Subledger (Accounts Receivable - Customer) Account.

Each Subledger relates directly to a General Ledger Account that requires more detail than the General Ledger can offer. These GL
Accounts are often referred to as control accounts. The Balance of a Control Account should always be equal to the total of its related
Subledger Account Balances. As you can see, the total of the Accounts Payable Subledger below equals the Balance of the related General
Ledger Accounts Payable Account.

General Ledger
Accounts Payable Subledger
Account Description
Debits CreditsAccountDescription
Balance
1000
1200
1500
1520
2000

Checking Account
$44,350
Accounts Receivable
$0
Office Equipment
$1,300
Office Furniture
$1,650
Accounts Payable

Ace Credit Card

Corp.
Johnson
JOHN
Management
$1,700 SHEL Shelton Oil
ACEC

$1,700
$0
$0

4000
7000
7020
7040
7060
7100

Sales
Rent
Office Supplies
Subscriptions
Utilities
Fuel
Repairs and
7200
Maintenance
Credit Card Interest
7300
and Fees
Totals

$50,000
$3,000
$150
$300
$125
$275

Totals

(see GL Account
2000)

$1,700

$500
$50
$51,700 $51,700

The listings above are Ledger Account summaries. Both the General Ledger and the Subledgers actually have a more detailed section for
each Account. Those sections include summarized entries and balances along with references indicating which journals those entries
originated in.
The tables below show an example of a Subledger Account and an example of the corresponding General Ledger Account.
Account:
ACEC

Accounts Payable Subledger

Transaction
Jrnl Ref Description
Date

Debit

Credit

Balance

$2,500

$2,500

$1,700

$1,700

Beginning Balance
8/01/08

AP 23 123_0808 (invoice)

8/31/08

CD 37 123_0808 (payment)

9/01/08

AP 55 123_0908 (invoice)

$0
$2,500

$0
Account:
2000

General Ledger
Transaction
Jrnl Ref Description
Date

Debit

Credit

Balance

$2,500

$2,500

$1,700

$1,700

Beginning Balance
8/01/08

AP 23 Accounts Payable Invoices

8/31/08

CD 37 Cash Disbursements

9/01/08

AP 55 Accounts Payable Invoices

$0
$2,500

$0

Because there can be multiple Subledgers, there are also multiple Journals. The Jrnl field indicates which journal the entry came from. The
APs in the jrnl field mean that those entries came from the Accounts Payable Journal and the CD entry came from the Cash Disbursements
Journal which is the journal that maintains detail for Cash Outflows. The Jrnl and Ref field together give a cross reference that enable the
user to access more detail about each entry.
Journals:
All financial transactions are recorded in Journals. The Journal maintains each individual transaction line by line. Just as there are two types
of Ledgers, there are also two types of Journals: The General Journal and the Subsidiary Journals. Most entries will originate in Subsidiary
Journals, however, if none of the GL Accounts affected by an entry have a related subsidiary journal, the entry will originate in the General
Journal.
Everything that is posted into Subsidiary Journals is also posted into the General Journal. Journals act together with Ledgers to provide
progressive levels of detail/summary.
Subsidiary Journal:

The format for Transactions in the the Subledger Journals is similar to the format for the General Journal that Ive used in previous posts
except they require at least three more columns in the grid. One for the Subledger Account, one for an Invoice Number and one for a
Reference Number. This entry in the Accounts Payable Journal shows the detail for the both of the Ledger entries above that indicate Jrnl =
AP and Ref = 55.
This entry records A Credit Card Statement into Accounts Payable, which includes the purchase of a Chair and a Desk along with Credit
Card charges.

Accounts Payable Journal

Subledger
Account

Invoice #

ACEC

123_908

Transaction
Ref GL Account Description
Date
9/01/08

55

Debit

2000

Ace Credit Card Corp.

1520

Chair

$750

1520

Desk

$900

7300

Credit Card Interest & Fees

Credit
$1,700

$50

Note that the Vendor Account, the Invoice #, Transaction Date and Ref# are not re-entered for each line. It is assumed that those three items
remain the same for each of their balancing entries.
** Important: Individual transactions for each Subledger Account must have a unique identifying number, in this case, its an Invoice Number.
That number combined with the Subledger Account creates a unique pair that prevents duplicate payments and provide a way for each party
to reference the transaction for payments or if disputes or questions arise.
General Journal:
Since the system requires that all financial transactions have an entry in the General Ledger, they must also have an entry in the General
Journal. This requires some duplication of effort but it is necessary. So, once the entries are posted to the Subledger Journals, they are then
summarized and posted to the General Journal after which the Balances in the General Ledger are updated.

General Journal
Transaction
Date

Jrn
Ref
l

Account

9/01/08

AP 55

1520

Furniture & Fixtures

9/01/08

AP 55

7300

Credit Card Interest & Fees

9/01/08

AP 55

2000

Accounts Payable

Description

Debit

Credit

$1,650
$50
$1,700

The Path of entries for Financial Entries:

Transactions containing a GL Account that is related to a subsidiary journal start with the Subsidiary Journal otherwise they start with the
General Journal
Subsidiary Journal > Post to Subsidiary Ledger by its Account > Post to General Journal -> Summarize and post to General Ledger by
GL Account.

2008 -2010 Erin Lawlor

Show
F11: Accounting Features

This feature enables you to set the various Accounting Features required for transaction entries.

Go to Gateway of Tally > F11: Features > F1: Accounting Features

General

Integrate Accounts and Inventory

This option has a significant effect on the Balance Sheet and Profit & Loss Account. If set to Yes, it extracts the stock/inventory
balance figures from the inventory records and provides a drill down to the Stock registers from the Balance Sheet.
If set to No, it ignores the inventory books figures and picks up manually entered closing stock balances from the ledger account
created. This facilitates the maintaining of accounts and inventory separately.
Stock records often contain compensating errors caused by wrong allocation to items. This feature enables finalisation of financial
books without waiting for the reconciliation of stocks.

Income/Expense Statement Instead of P & L

By Default, this option is set to No.
If set to Yes Tally.ERP 9 displays Income & Expenses A/c instead of Profit & Loss A/c in the Gateway of Tally.ERP 9 Menu. Income
and Expenditure statement generally used for Non-Trading accounts and Profit & Loss a/c are used for trading accounts.

Allow Multi-Currency
By Default, this option is No.
Set this option to Yes, if you want to create multiple currencies and the Menu Currencies is displayed in Gateway of Tally >
Accounts Info. menu.

Outstandings Management

Maintain Bill wise Details

The Bill-wise facility is made functional by setting this option to Yes. By activating the Billwise feature, the ledger masters under
Sundry Debtors and Sundry Creditors automatically displays an additional option called Maintain balances bill-by-bill. On setting this
option to Yes, an additional option Default Credit Period is displayed.
When you enter details of sales and purchases with the Bill-wise option activated, Tally.ERP 9 prompts you to identify the invoice
with an appropriate reference number. The reference can then be used to allocate payments to the correct invoice to maintain an
accurate account of outstanding.
(For Non-Trading A/cs also)
If you want to maintain bill wise details for Non-Trading Accounts also, set this option to Yes. Bill wise Details for NonTrading Accounts is useful in those cases where one needs to track either an installment to be paid or a loan amount to be received
over a certain period of time.

Activate Interest calculation

Set this option to Yes to enable Tally.ERP 9 to calculate interest automatically based on the interest rate and style of calculation
specified. Enabling this option allows interest calculation on outstanding balances for any ledger account or on each invoice for the
period it is outstanding completely or partly.
Use advanced parameters
The advanced parameters are useful when interest rates change from time to time. Set this option to Yes to enable this function.

Cost/Profit Centres Management

Maintain Payroll
Set this option to Yes if you want to maintain Payroll information on Tally.ERP 9 for the selected company .

Maintain Cost Centres

A Cost Centre can be defined as a unit of an organization to which transactions can be posted. When only costs or expenses are
allocated to these units, they are referred to as Cost Centres. The Cost Centre feature is activated by setting this option to Yes.
Use Cost Center for Job Costing
Set this option to Yes to track all income and expenses for a Job/Project.
More than ONE Payroll/Cost category
Set this option to Yes to create more than one Payroll or Cost Category.
Use Pre-defined Cost Centre Allocations during Entry
Set this option to Yes to define Cost Centre Allocations. Refer Cost Centres and Cost Categories for details.
Show Opening Balance for Revenue Items in Reports
Set this option to Yes to display the opening balance in Cost Centre Report for the cost centres which are allocated to the
Ledgers, grouped under Income and Expenses Group.

Invoicing

Allow Invoicing

Set this option to Yes, to create Sales and Purchase vouchers in the invoice format. The advantage of using the invoice format for
sales invoice entry is that it enables automatic calculations of Duties and Taxes accounts.
Enter Purchases in Invoice Format
Set this option to Yes, to enable voucher class option in purchase voucher type.

Use Debit/Credit Notes

The Debit Note and Credit Note voucher types are made available only if this feature is set to Yes.
Use Invoice Mode for Credit Notes
Set this option to Yes to create Credit Notes in Invoice Mode.
Use Invoice Mode for Debit Notes
Set this option to Yes to create Debit Notes in Invoice Mode.

Budgets & Scenario Management

Maintain Budgets and Controls
Set this option to Yes, to create multiple budgets. The Budgets menu option is displayed in Gateway of Tally > Masters Info. >
Accounts Info. menu.

Use Reversing Journals & Optional Vouchers

Setting this option to Yes displays the Scenario option in Accounts Info menu. You will now be able to create and alter
Scenarios. You can enter the Reversing Journal and make it Optional, so that the entries do not to affect the books.

Other Features

Enable Cheque Printing

Set this option to Yes, to enable Cheque Printing. Refer Cheque Printing for details.

Allow Zero Valued Entries in Vouchers

Set this option to Yes, to allow Zero valued entries in vouchers.

Maintain Multiple Mailing Details for Company & Ledgers

Set this option to Yes, to maintain multiple mailing details for your company and ledgers. Refer Multi Address for details.
Set/Alter Company Mailing Details
If this option is set to Yes, Tally.ERP 9 will allow you to alter the Create/Alter Address Types.

Enable Company Logo

This option allows to print the company's logo on the selected vouchers, reports and invoices.

Set this option to Yes, the Company Logo screen appears. Specify the path of the logo image file under Location
of Logo (E.g. C:\Tally.ERP9\CompLogo.bmp). The Company's logo is printed on the top left of the respective
voucher, report or an invoice.

To view the invoice and reports with logo click the respective links below:

Sales Invoice

Outstanding Report
Note : I t is es sen tia l t hat th e l ogo is saved as a Bitm a p o r JP EG i mage fil e and res ides in th e pa th spec ified
by you . E ns ur e t hat th e e xt en sio ns . bm p /.j pg is al so spe cifi ed wh ile pro vidi ng the l oc atio n o f log o.
Th e reco m me nd ed si ze fo r lo go i ma ge is 9 6 x 8 0 ( Width x Heigh t) pi xe ls .
You ca n togg le betwe en th e A cc ou n ts , Inv e nt or y , S ta tut or y , T a l ly .N E T a nd the T a x Au di t feat ur es scre en
usi ng F 1 , F 2 , F 3 , F 4 a nd F5 key s o r by usi ng the o ptio ns on the Butt on Bar respe cti vely.

In double entry bookkeeping, debits and credits (abbreviated Dr and Cr, respectively) are entries made inaccount ledgers to record
changes in value due to business transactions. Generally speaking, the source account for the transaction is credited (an entry is
made on the right side of the account's ledger) and the destination account is debited (an entry is made on the left). Each
transaction's debit entries must equal its credit entries.[1][2]
The difference between the total debits and total credits in a single account is the account's balance. If debits exceed credits, the
account has a debit balance; if credits exceed debits, the account has a credit balance.[3] For the company as a whole, the totals of
debit balances and credit balances must be equal as shown in the trial balance report, otherwise an error has occurred.
Accountants use the trial balance to prepare financial statements (such as the balance sheet and income statement) which
communicate information about the company's financial activities in a generally acceptedstandardized format.

Debit
Asset

Credit
Increase

Decrease

Liability

Decrease

Increase

Income/Revenue

Decrease

Increase

Increase

Decrease

Decrease

Increase

Expense
Equity/Capital

Multi-currency pricing (MCP) is a financial service which allows businesses to price goods and services in a variety of foreign
currencies, while continuing to receive settlement and reporting in their home currency. With MCP, merchants can sell the same item
to British customers in pounds sterling, French and German customers in Euros, and Japanese customers in Yen. A sales tool that
helps merchants expand into other sectors of the global marketplace, MCP allows cardholders to shop, view prices and pay in the
currency of their choice. Currently this feature is available for Visa andMasterCard networks only.

Maintaining Bill-wise Details in Tally 9.0