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Basics of Accounting

Tally is an Accounting Software that helps you in maintaining Accounts and Inventory of your office.

General Accounting

What is Accounting

“Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events, which are in part, at least, of a financial character, and interpreting the result thereof” – American Institute of certified public accountants.

Methods of Accounting

There are two types of Accounting Systems.

1. American Method or Single Entry System.

2. English Method or Double Entry System.

1. American Method or Single Entry System.

It has further five types of accounting.

I. Assets Accounts

II. Liabilities Accounts

III. Capital Accounts or Owner’s Equity A/c

IV. Revenue or Income Accounts

V. Loss or Expenses A/c

Methods of Recording

I. Debit the Increase in the Assets and Credit the Decrease in the Assets.

II. Credit the Increase in the Liabilities and Debit the Decrease in the Liabilities.

III. Credit the Increase in the Capital and Debit the Decrease in the Capital.

IV. Credit the Increase in the Income and Debit the Decrease in the Income.

V. Debit the Increase in the Expenses and Credit the Decrease in the Expenses.

2. English Method or Double Entry System.

Classification of Accounts

1. Personal Accounts: These accounts are those accounts which are opened by a name of a person, firm, company, society or organization.

Rules: “Debit the Receiver and Credit the Giver”.

Types of Personal Accounts:

I. Natural Personal Accounts:

a) MAHESH’s Accounts

b) Owner’s Capital Accounts

c) Owner’s Drawing Accounts

d) Debtors Accounts

e) Creditors Accounts

II. Artificial Personal Accounts

a) Firm’s Accounts

a) Company’s Accounts

b) Organization Accounts

c) Bank Accounts

d) Club Accounts

e) Insurance Company Accounts

f) Government Sector accounts

III. Representative Personal Accounts

a) Outstanding Salary Due to Staff account

b) Prepaid Insurance Account

c) Accrued Income Account

d) Unearned Commission Account

3. Real Accounts: Those Business assets which can be measure in the term of money

their accounts are called Real Accounts.

Rules: “Debit what comes in and Credit what goes out”.

Types of Real Accounts:

I. Tangible

Real

Accounts:

These

account which can be touched.

a) Cash Account

b) Stock Account

c) Furniture Account

d) Land Account

e) Building Account

accounts

are

those

assets

II. Intangible Real Accounts: Those accounts are those assets account which can’t touch but can be measured in the term of money.

a) Goodwill Accounts

b) Patents Accounts

c) Trade Mark Accounts

d) Copy Right Accounts

4. Nominal Accounts: Income and Expenditure accounts of a business are called nominal accounts.

Rules: “All the Expenses are debited and Incomes are

credited”.

Types of Real Accounts:

I. Expenditure Accounts:

a) Salary Paid Accounts

b) Rent Paid Accounts

c) Bed Debts Accounts

d) Commission Paid Accounts

II. Income Accounts:

a) Salary Received Accounts

b) Rent Received Accounts

c) Commission Received Accounts

d) Interest Received Accounts

e) Bed Debts Recovered Accounts

Steps for working in the Tally

1. Create Company: In Tally this is the First task or primary task to create a company. For this Purpose we have to select the Create Company option from menu Gateway of Tally. After selecting the option we have to fill up the details for the Company like Company Name, Address, Started Date, and Income Tax No etc.

2. Creates Groups: Groups are created for same type of Ledger A/cs. In Tally There are many groups which are used for making ledgers. So in the rare cases we have to create groups. These are the main groups in the tally.

I. Reserve and Surplus (Retained Earning): You can use this group heads like

Investment Allowance Reserve, Select Ledger and other such reserve accounts.

a) Current Assets: This is the primary group that has all the current assets accounts. It has Six Sub Groups under it.

b) Bank Accounts: It is used to hold all accounts of banks.

c) Cash in hand: It is used to hold ledger account of cash.

d) Deposits: It is used to hold assets like security deposits, rental deposits and all other deposits made by the company.

e) Loan and Advances: It is used to hold all advances and loans of non trading nature given by the company.

f) Stock in hand: It is used to hold certain special accounts like raw material, finished goods and work in progress.

g) Sundry Debtors: It is used to hold accounts of companies and individuals that give goods on credit to the company.

III. Current Liabilities: This is a primary group and is used to hold outstanding and statuary liabilities of the company. The group has three sub groups under it which are as follows.

a) Duties and taxes: It consists all types of taxes and duties like Excise, Local Sales tax, Central Sales Tax, VAT etc.

b) Provisions: It is used to hold other tax provisions like Income tax, depreciation in it.

c) Sundry Creditors: It is used to hold accounts trade creditors of the company.

IV. Fixed Assets: This is used to keep accounts of all the fixed assets, patents, trade tights etc.

V. Investment: This is used to hold ledger accounts of shares, bonus and other securities of the company.

VI. Loan Liabilities: This is used to keep track of loan taken by the company. This group has three sub groups which are as follows.

a) Bank OD Accounts: It is used to hold all overdraft accounts with banks.

b) Secured Loans: It is used to hold long/medium term loans taken by the company from financial companies and Banks etc.

c) Unsecured Loans: It is used to hold the loans taken unconditionally by the company.

VII. Suspense Accounts: This is used by many companies to maintain a suspense ledger which keeps track of money received or paid by the companies, whose nature of transaction is not yet known.

VIII. Miscellaneous Expenses: The loss of the company, which has not been written off but carried forward to the next year, should fall

here. However, tally treats it as a negative profit and carries it to the profit and loss account.

IX. Branches/Division: This is used to keep the names of all

companies which may be branches, divisions of the company.

X. Sales Account: It is used to all goods sales accounts of the companies.

XI. Purchase Account: It is used to all goods purchase accounts of

the companies.

XII. Direct Income: It is used to hold ledger accounts of non‐trade

income accounts that affect gross profit.

XIII. Indirect Income: This is used to hold ledger accounts of those

expenses of the company that determine its gross profit. For example interest received and commission received.

XIV. Direct Expenses: This is used to hold ledger accounts of those

expenses of the company which determine its gross profit. Expenses like salary paid to labour,

transportation, electricity bills etc.

XV. Indirect Expenses:This is used to hold ledger account of those

expenses of the company, which determine its net profit. Expenses like advertising, maintenance of vehicles, administrative expenses etc.

3. Create Ledgers: Ledgers are actual account heads to which the transactions are identified. You Make all voucher entries in these accounts. You have to classify all ledgers in to groups. 4. Voucher Entries: For Making the Voucher Entries first of all we have to set the voucher date by pressing F2 then enter the voucher date. There are various types of vouchers in tally. Those are describes as follows: ‐ I. Contra Voucher: This type of voucher is used for Cash to Bank, Bank to Cash and Bank to Bank Entries. Press F4 to select the voucher type.

II. Payment Voucher: This type of voucher is used for the Cash

Payment Entries. Press F5 to select the voucher type. III. Receipts Voucher: This type of voucher is used for the Cash

Receipts Entries. Press F6 to select the voucher type.

IV. Journal: This is used for the Journal Entries like debit of credit Entries. Press F7 to select the voucher type.

V. Sales Voucher: This is used for the Goods Sales Entries. Press F8 to select the voucher type.

VI. Purchase Voucher: This is used for Goods Purchase Entries. Press F9 to select the voucher type.

VII. Memo: This is used to create Memorandum or Reverse Journal

Voucher. Press F10 to select the voucher type.

5. Display Reports: There are several types of reports are generated by the tally like Trading and Profit and Loss Account, Balance Sheet, Inventory Reporting Ratio Analysis etc.

Introduction to Tally

Tally is a Financial and Inventory Management System. Tally is one of the acclaimed Accounting Software with large user base in India and abroad, which is continuously growing. Tally is developed in India using Tally Development Language (TDL). Tally software was developed by Mr.Bharat Goenka in the year 1988.

Features of Tally

1.

Accounting wihtout codes

 

2.

Comprehensive Accounting. Maintains complete range of books of Accounts, Final A/c’s like Balance Sheet , Profit & loss A/c, cash and fund flow , Trial Balance and others.

3.

Provides Multiple reports in Diverse formats

4.

Various options for interest Calculations

5.

Maintain multiple Godowns for stock management.

6.

Unlimited

sub-classifications

to

get multi-dimensional analysis

and comparatives.

 

7.

Allow accounts of multiple companies simultaneously.

8.

Multiple currencies in the same transaction and viewing all reports i n on e or mor e currency.

9.

Prints online.

10.

print daybook and balance sheet and ledger , trial balance and profit and loss a/c.

11.

Backup and restore option

 

12.

Tally is allow to cheque printing

 

13.

Multi tax calculation like VAT, TDS, TCS, FBT, etc .

14.

Calculate Payroll calculation easily.

 

15.

Use Security levels for audit purpose.

To start Tally :

Start -> Programs ->Tally 9 -> Tally 9 Release 2

Or

Double click on the Tally shortcut in the desktop to open Tally

click on the Tally shortcut in the desktop to open Tally Tally Screen Components: 1) Title

Tally Screen Components:

1)

Title Bar - Displays the version number , system date and time

3)

Calculator - used for calculator functions.

4)

Buttons toolbars - displays buttons that provide quick interaction

5)

with tally. Minimize Button - Performs the standard windows function allowing us to minimize tally to work on other applications.

Creating a Company

When Tally first loads the Gateway of Tally area is available. When no companies are there , then the Select company option is not activated. The cursor is placed the create company meaning that a company should be created. Press enter in Create company option in order to create a company.

enter in Create company option in order to create a company. To create a company choose

To create a company choose create company option in the gateway of tally screen or company information menu. While creating a new company it will ask for the following inforamtion.

a)

Directory - In this if needed we have to specify the path where the company file should be stored in your computer. By default D:\Tally\Data is the path taken.

b)

Name

-

In

this

we

have

to

type

the

name

of

the

company.

 

c )

Mailing Name - In this we have to type the mailing name, which is used to all the letters used in Tally.

d)

Mailing Address - In this we have to type the mailing address, such as street , city, pincode for the company.

e )

E-mail Address - In this we have to type the E-mail id for the

company.

 

f)

Statutory compliance for - By default the statutory compliance for

India. It is used for tax calculation for country wise.

g) Currency Symbol - By default the currency symbol Rs is taken.

Since Tally is a Indian product.

h) Maintain - In this we have to choose either Accounts only or Accounts with Inventory

j

)

k)

l

)

Mar 31 of the next year. For example 1 april 2007 to 31 march 2008. Automatically tally adds 12 months with the starting date of the financial year. Book Beginning From - In this we have to specify the date in which the book should be started. The date given must lie in between the financial year starting date and ending date.

Tally Valut Password - In this we have to specify the password for the company, if so the company name will not be displayed in the Select company option. Use Security Control - While opening the company if we need to specify the user name and password for protection ( ex: other person can’t open our company) , we can make this option to yes and specify the user name and password.

m) Base Currency Symbol - This option specifies the information about currency used in the company. Such as Base Currency Symbol, Formal Name,Number of decimal places, Is symbol suffix with amount, symbol for decimal portion, show amount in Millions, Is symbol suffixed with amount etc.

Note : All the above information is not must, we can specify the important things and omit the others.

Group And Leger

Accounts Organization: Ledger accounts and groups

In manual accounting, accounts are grouped upon preparation of Trial balance to prepare final accounts, namely Profit and loss A/c and Balance Sheet. In tally at the time of creation ledger accounts, we place it under appropriate account group. Account Groups provide us the ability to classify our accounts to get all the reports instantly and properly classified. We have the liberty to re-group later to suit our requirements.

Creating

a Group

Tally provides a list of 28 pre-defined groups. Of these, 15 are primary groups and 13 are sub-groups. We may configure our groups to enable / disable advanced mode.

Press F12 -> Accts/ Inv info -> Account Masters -> Set to yes the following options

Allow Advances entries in masters

- Yes

Use Address for Ledger Accounts

- Yes

Single group - Allows us to work on one group or sub-group at a time. Gateway of Tally -> Accounts Info -> Groups -> Single -> Create

Accounts Info -> Groups -> Single -> Create Name of Group : Enter the name of

Name of Group : Enter the name of the desired group or sub-group ( eg:

Salary)

Alias : Give an alias to allow access the group using the alias in addition to its name , or leave it blank

Under: Specify under which existing (Parent) group the sub-classification is needed. We can create a new parent group by using Alt +c. In other words Alt +C is the shortcut key to create a ledger or group during creation or during voucher entry.

Alterin g Groups

Once created, groups can be altered by selecting Alter for single or multiple groups. The procedure is the same as we used to display groups except of course we may alter the data.

Deleting Groups

We can delete a group via the Group Alteration screen by pressing Alt +D. However , we cannot delete Tally pre-defined groups,or groups with sub- groups, or groups containing ledgers. The lowest level must be deleted first.

Ledgers

Once we have created necessary Masters, now it is the turn of ledger creation. Tally on its own, Creates 2 ledgers listed below all others we have to create.

Cash (under Cash- in - hand Group) Profit &

Loss Account (Primary edger)

Ledger is the actual account head to which we identify a transaction. We pass all accounting voucher entries using ledgers. All ledgers have to be classified into groups. Hence, a through understanding of account classification is important working with ledgers

List of ledgers frequently used and their related Groups

1. Capital Account

2. Name of your creditors

3. Name of your Debtors

4. Name of Expenses

Expenses according to the nature of expenses

5. Name of Income

6. Name of Bank

7. Name of Current Asset

→ Capital Account → Sundry Creditors → Sundry Debtors → Direct Expenses or Indirect

→ Indirect Income → Bank Account → Current Assets

stock in hand

deposits

show short term investment

8. Name of Fixed Asset

9. Name of Current Liabilities

10. Name of Fixed Liabilities

11. Name of Loss

12. Bad Debts

13. Provision for Bad Debts

14. Outstanding Expenses

15. Advance Income

16. Outstanding Income

17. Sale Tax / VAT

18. Excise Duty / CENVAT

19. Drawing

20. Purchase

21. Sale

→ Fixed Asset → Current Liabilities → Fixed liabilities → Direct Expenses or Indirect Exp. → Indirect Exp. → Current Liabilities → Current Liabilities → Current Liabilities → Current Assets → Duties and Taxes → Duties and Taxes → Capital → Purchase account → Sale Account

Ledgers can be created in single and multiple modes. In multiple mode you can create multiple ledgers at a time.

Go to Gateway of Tally> Accounts Info. > Ledgers> Create (under Single Ledger)

Info. > Ledgers> Create (under Single Ledger) Name Enter the Name of the account Alias Enter

Name

Enter the Name of the account

Alias

Enter an alias name if required

Under

All accounts must be classified under their appropriate Groups. Select the Group under which the Ledger is created from the List of Groups.

Go to Gateway of Tally> Accounts Info > Ledgers > Create (under Multiple Ledgers)

Info > Ledgers > Create (under Multiple Ledgers) Under Group Select the name of the group

Under Group

Select the name of the group under which you want to create the Ledgers from the List of Groups.

S.No

This is auto generated.

Name of Ledger

Enter the name of the Ledger.

Under

This field defaults to the parent group selected in Under Group

Opening Balance

This is the balance remaining when you first enter your books on Tally, i.e. the date of beginning of books

Exercise: 1

Name

: King Sons

Mailing Name

:

King

Address

State

101, 7 th Main, M.G. Road, Bangalore : Karnataka

:

PIN Code

:

588 002

Telephone No

:

6789999

E-Mail

: king@gmail.com

Currency Symbol

:

Rs.

Maintain

:

Account only

Exercise: 2

Name

:

:

:

GI Enterprises

Mailing Name

GI

Address

State

45, 3 rd Main, Rajajinagar, Chennai : Tamil Nadu

PIN Code

:

600 268

Telephone No

:

4789043

E-Mail Currency Symbol

: contactabb@yahoo.com Rs.

:

:

Maintain

Account with Inventory

Exercise: 3

Create a Ledger:

Mariya’s Capital A/C Canara Bank Purchase Sales Rent Electricity Bill Wages Stationery Discount Paid Insurance Paid Discount Received Commission Paid Paid Petty Cash Office Expenses

Exercise: 4

Ravi’s Capital A/C

SBI Bank A/C Purchase A/C Sales A/C Machinery & Furniture A/C Investment A/C Brokerage A/C Typewriter A/C Purchase from Nick Computers A/C Rent A/C Salary A/C Return Inward A/C Return Outward A/C Drawing A/C Sold to Suresh A/C Traveling Expenses A/C Discount Allowed A/C Telephone Charges A/C Sales to Raba Traders A/C

Accounting Vouchers

In manual accounting, we record transactions through Journal entries. In computerized Accounting systems we do it through Voucher entry. Normally, a transaction is supported by a Document, e.g., Supplier’s Bill, Copy of Sales Bill , Counter foil/ Record Slip entry of Cheque book , Pay -in-slip , Pay Register etc. For every transaction/ source document, we should enter a Voucher. A voucher contains details of the transaction.

Particulars

If you create Accounts voucher

In this field you should specify Dr or Cr. Type the letter D or Dr over the existing prompt to change, then select the ledger name from the pop-up list that Tally opens. There may be multiple Debit and Credit entries in one single voucher.

If you create Inventory voucher

If you are creating inventory voucher in Tally you will give information about the stock item you receive or issue and item related details like the Godown/warehouse, Batch Details, Quantity, Rate, Amount etc.

Debit / Credit Amount:

This field appears in Accounts voucher only. Enter the amount of transaction and press Enter key. Tally will update current balance of the ledger and display it. This will happen only if you gave 'Yes' to the question 'Show Ledger Current Balance?' under Accounting Voucher in Vouchers Entry under F12: configure option. The total will appear on the bottom of the Debit and Credit columns. If both credit and Debit totals are not equal Tally will prompt to enter further Credit / Debit to balance the voucher. If both are equal Tally will move the cursor to Narration field.

The Narration field

The last field of Voucher is Narration, here you enter details of the transaction entered in the voucher. It is not mendatory / compulsory to give narration. You can type anything about the transaction or just leave this field blank. You can turn off

narration by responding No to the question 'Use Common Narration?' at voucher creation/alteration screen.

Saving the Voucher:

After entering narration, when you press Enter key a confirmation prompt will appear Asking 'Accept Yes/No?'. Press Y or Enter to save the voucher or press N to return cursor to the first entry allows you to alter any data in the voucher. If you give Y Tally will save the voucher and blank screen will appear next to continue voucher entry.

Voucher Types in Tally:

Payment voucher:

The payment voucher is for all payments you make through cash or Bank. These payments can be towards expenses, purchases, to trade creditors, etc. Follow the below procedure to create a payment voucher.

All payment vouchers must have first entry a debit and at least one credit to a Cash or a Bank Account. You can have any number of debit and credit entries. However, if you do not credit one cash or bank account and still try to accept the voucher a message appears asking for a cash or bank account.

If configured, Fund Transfer entries can also be made in payment voucher.

If you have given Yes to 'Print After Saving Voucher?' in Voucher Type creation/Alteration Tally will print the voucher immediately after saving.

Receipt Voucher

The receipt voucher in Tally is for all receipts into the Cash/Bank account. The voucher is similar to the payment voucher except that you debit cash or bank A/cs and credit the ledger from which you receive. The first entry in receipt must be credit and at least one debit to a cash or bank account. There can by any number of debit and credit entries. If you do not debit one Cash or bank account, a message appears asking you to rectify the entry.

If you have given Yes to 'Print After Saving Voucher?' in Voucher Type creation/Alteration Tally will print the voucher immediately after saving.

Alternatively you can print any voucher later by going to Voucher Alteration screen using Display menu. Open the voucher and press Alt-P to display the 'Print Voucher' Screen. Give 'Y' to the Print? Prompt.

Sales Voucher

The first entry must be a debit involving any debtor, bank or cash account and second should be a credit to ledger placed under sales account group. Rest of the accounts may be any Revenue account or any account under the Group current liabilities. Thus you can include Duties & Taxes from 3rd entry onwards.

Purchase voucher

The first entry must be a credit involving any creditor, Cash or Bank account and second entry should be a debit to a ledger placed under purchase account group. Rest of the accounts may be any revenue account or any account under the Group Current Liabilities

Contra Voucher

The contra voucher is for Fund transfers between cash and Bank accounts only. The following is the rule,

For example, If you pay Rs. 10000 cash into State bank Account. Your contra entry should be like this,

Particulars Cr. Cash Dr. State bank ac

Credit Note:

Debit/credit Credit - 15000 Debit - 15000

Credit Note is raised when a buyer returns some goods that you sold him. or you give him credit due to rate difference or discount/rebate or when there is an exces debit to any party

Debit Note:

You create a Debit Note when you make purchase return or when you have short billed a customer or you are granted credit by your supplier due to rate difference, discount etc.

Memo Voucher

This is purely Non-accounting voucher. These entries will not affect your accounts nor does affect your final results. You can alter and convert a Memo Voucher into a regular voucher when you decide to bring the entry into your books.

You can use memo vouchers to make suspense payments, vouchers not verified at the time of entry, Items given on approval.

Exercise: 5

Journalize the following:

No

Date

Transaction

01

01-02-2004

Maruthi & Sons Started business with capital of Rs.

2,00,000

02 02-02-2004

03 03-02-2004 Bought goods for cash 14,700

Paid into Indian bank Rs. 50,000

04 06-02-2004 Sold good to JJ Traders on Credit 7,000

05 09-02-2004 Cash Sales 19,000

06 11-02-2004 Received Commission 400

07 13-02-2004 Received seven tables from Amirtha Stores at 500 each

08 15-02-2004 Bought goods from Vignesh 2,000

09 21-02-2004 Paid cash to Amirtha Stores

10 26-02-2004 Paid rent 1,000

11 27-02-2004 Paid Salary 2,500

Exercise : 6

Journalize the following:

No

Date

Transaction

01

03-07-2004 Peter started business with Rs. 75,000

02 05-07-2004 Goods purchased 6,000

03 10-07-2004 Good sold Rs. 8,000

04 15-07-2004 Goods purchased from Mathew Rs. 21,000

05 17-07-2004 Goods sold to Sanjay Rs. 24,000

06 18-07-2004 Goods returned to Mathew Rs. 1,300

07 20-07-2004 Goods returned by Sanjay Rs. 500

08 23-07-2004 Opened an account with HDFC Bank Rs. 15,000

09 25-07-2004 Drew from Bank Rs. 4,000

10 25-07-2004 Furniture purchased Rs. 3,500

11 27-07-2004 Sanjay settled his account

12 28-07-2004 Settled Mathew’s Account

13 29-07-2004 Insurance Premium paid Rs. 350

14 29-07-2004 Electric Charges paid Rs. 250

15 30-07-2004 Drew for Personal use Rs. 1,300

16 31-07-2004 Salary paid Rs. 1,500

Exercise: 7

Journalize the Following with invoice:

HS & Co started the business from 01/04/2004

01/04/2004

Received capital by cash 2,00,000

01/04/2004

Cash Deposited in HDFC Bank 50,000

04/04/2004

Credit purchases from Kiran Traders 20,000 (Inv.No. 122)

04/04/2004

Credit purchases from Pooja Traders 20,000 (Inv.No. 433)

11/04/2004

Credit purchases from Kiran Traders 20,000 (Inv.No. 144)

11/04/2004

Credit purchases from Pooja Traders 20,000 (Inv.No. 444)

11/04/2004

Returned Goods to Kiran Traders 5000 (Inv.No. 122)

13/04/2004

Returned Goods to Pooja Traders 5000 (Inv.No. 444)

16/04/2004

Credit Sales to Ram & Ram 50,000 (Inv.No.1)

16/04/2004

Credit sales to Kavitha & co 50,000 (Inv.No. 2)

16/04/2004

Cash Sales 20,000 (Inv.No. 3)

18/04/2004

Credit Sales to Ram & Ram 50,000 (Inv.No.4)

18/04/2004

Credit sales to Kavitha & co 50,000 (Inv.No. 5)

18/04/2004

Goods returned by Ram & Ram 5,000 (Inv.No.1)

18/04/2004

Goods returned by Kavitha & co 5000 (Inv.No. 5)

21/04/2004

Payment made by cheque to Kiran Traders 30,000 Ch. No. 161122

21/04/2004

Payment made by cheque to Pooja Traders 30,000 Ch. No. 161123

21/04/2004

Received cheques from Ram & Ram 75000 Ch. No. 320321

21/04/2004

Received cheques from Kavitha & co 75000 Ch. No. 112310

Payment Made by cash:

26/04/2004

Paid to Petty cash by cash 1,000

26/04/2004

Furniture purchased 20,000

26/04/2004

Salaries paid 10,000

26/04/2004

Rent 4,000

26/04/2004

Electricity charges 3,000

26/04/2004

Telephone charges 3,500

26/04/2004

Cash Purchases 5,000

Payments Made by Petty Cash:

30/04/2004

30/04/2004 Postage 100

Conveyance 150

30/04/2004

Stationeries 200

30/04/2004

Staff Welfare 100

30/04/2004

Stationeries purchased from Jain & Co 1500 on Credit

30/04/2004

Depreciation on Furniture 10%

Exercise: 8

Memorandum

25

Apr 2007

Paid advance in Travailing Rs.10000

27

Apr 2007

Paid salary advance Rs.3000

01

May 2007

Paid salary Rs.3000 against advance

05

May 2007

Paid Traveling exp Rs.8900 against advance

25

May 2007

Paid rent Advance Rs.5000

02

June 2007

Paid rent against advance

Voucher Types:

By default Tally 9 provides 18 types of Vouchers (with out counting payroll vouchers) for recording different natures of transactions. However, if you require further Voucher Types that function like the one of the existing type, you can create New Voucher Types and give different Voucher Numbering series.

The Voucher Type facility is great as you can make several alternates of each pre-fixed Voucher Type. For example, for Sales Voucher, it may be convenient to have several Voucher Types like Cash Sales, Credit Sales, Sales To Registered Dealers, Sales to Unregistered Dealers, Export Sales, etc. By creating separate voucher types for them, you can independently configure their numbering scheme, layout, etc.

Voucher Number:

To identify a voucher uniquely, normally every voucher is given unique number. The number may be allotted by the user, or can be automatically generated by Tally, according to options set in voucher Types under Accounts Info.

Tally provides three options for voucher numbering

1)

Automatic 2) Manual 3) None

If Automatic is opted for the selected Voucher Types, Tally allots incremental number and cursor would not move here. And we cannot change the voucher number.

If Manual is specified for the selected voucher type, cursor would blink at the voucher number field to input from keyboard. We can modify the voucher Number

If none is opted for the selected Voucher Type, voucher number field would not appear.

Features

Tally controls operational Features through F11: Features button. F11:Features button appear almost in every screen upon selecting a company. We get same option irrespective of screen where we launch it. Feature settings are company specific. We can activate an option for one company and deactivate the same for another company.

Accounting Features - 11

1. Integrate Accounts and Inventory: This option basically affects accounts. If we set this option to Yes, the value of stock is automatically computed on the basis of Inventory and posted in Balance sheet, Profit & loss a/c and we are not allowed to input the stock value on our own as the accounts are integrated with the Inventory Part.

If we set No, our Accounts & Inventory remains separate and we

have to input the value of closing stock in the ledger under Stock- in-hand group which is posted in the Balance Sheet & Profit & Loss A/c.

is posted in the Balance Sheet & Profit & Loss A/c. 2. Income /Expense Statement Instead

2. Income /Expense Statement Instead of P & L: We change Profit and Loss A/c to Income and Expenditure statement. By default, Profit & Loss A/C

3. Allow Multi Currency: If we wish to record transaction in foreign

currency, we should set this option to yes. On setting this feature to yes, Currency option would be available at Accounts Info menu and in ledger creation we can specify currency for the ledger. In case we do not need foriegn currency option, we should respond No, that would keep, Accounts Info menu and ledger creation screen tidly.

4. Maintain Billwise Details: By default, Tally would maintain ledger wise

balance and display net debit or credit balance for a ledger. If we receive or grant credit on purchase or sales, mere ledger balance may not reflect the true

state of affairs-as a ledger may show an amount due which may not be over due on that date. By maintaining Bill wise details, we can get bill wise outstanding ,compute bill wise overdue interest , In case we need these features, respond Yes to this option that would allow to selectively option to maintain Bill Wise Details for ledgers. In case mere ledger balances is sufficient to meet our requirement. Respond No to keep the ledger creation screen more sleek.

5. Maintain Cost Centres: If we wish to make cost centre wise allocation,

respond Yes that would activate Cost Centres option which we would get in Accounts inof menu

the

6. More than One cost Category:

above option, we are asked this question. If we wish to allocate a transaction to more than one set of cost centres simultaneously, respond Yes that would activate Cost Category option under accounts info menu and we would be able to allocate to multiple set of cost centres.

7. Interest Calculations:Interest is re-calculated with every change in

balance outstanding. The Cr in the interest amount should not be confused to

mean an Income. It only means that it is payable and is a liability.

If

we

respond

Yes

to

8.

Maintain Payroll: If we set this option to yes, we can create a employee pay

slip.

9.

Allow Invoicing: If we set this option to yes, we can enter sales

transactions in Invoice mode also if we respond No, we will ne restricted to enter sales transactions in voucher mode only.

10. Maintain Budgets and Controls: If we wish to use Budget to compare with

actual or other budgets and get variance or set Credit Limit for party,set this feature to yes. When we set this feature to yes, Budget option would be avaliable at Accounts info and Credit Limits under Accounts Info-Ledger menu. In case we do not need to use Budgets or credit limits, set to No.

11.

Use Reversing Journals & Optional Vouchers:If we set this option

to yes, It would be enable to voucher entry.

12. Allow Zero valued entries: If we need to make Voucher entires

whose monetary transaction value is 0, respond yes (For example, to

prepare an Invoice for sample of zero value), otherwise respond No.

13. Enable Cheque printing : You can choose to write cheques

directly from Tally. Cheques will be printed when printing a Payment Voucher. However, first activate the capability and set dimensions

Multi-Currency

Organizations who transact in multiple currencies need to record transaction in the currencies they transact with. We can create and transact in any currency. We can also enter selling and buying rate of different currencies.

F11- Features

Allow Multi currency Yes

Once this option is said to yes we get currencies under accounts info.

option is said to yes we get currencies under accounts info. Select currencies press enter The

Select currencies

press enter

The currencies menu has the usual create, display and alter options.

Symbol

:

Enter currency symbol

Formal Name

:

Enter the name of currency, must

 

be different from the symbol.

Number of Decimal places

:

Enter the number of decimal places for the Currency.

Rate of Exchange:

Thee screen always comes up in Alter mode.

for the Currency. Rate of Exchange: Thee screen always comes up in Alter mode. Rate of

Rate of Exchange:

It operate on day-to-day

Standard Rate

:

The standard rate is used to calculate variances from

 

The actual transaction rates

Selling Rate

:

Enter the rate at which we are selling the currency

 

to our money exchange.

Buying Rate

:

Enter the rate at which we are buying the currency

from our Banker or Money Exchanger.

Come to voucher entry

Traders in Dollars that is 50 dollars. The entry is passed as shown below :

Press F5

Payment

Payment is made to Krishna

as shown below : Press F5 Payment Payment is made to Krishna Once enter is pressed

Once enter is pressed in the amount column the Dollar gets converted to Rupee as on the date of voucher Entry as shown below and the amount is displayed based on Rupee currency.

below and the amount is displayed based on Rupee currency. Exercise: 9 Mr. Laxman started a

Exercise: 9

Mr. Laxman started a business in the name of Laxmana Traders on 1/5/2005

02/5/2005 Received capital from Murali 1000 Dollars. 02/5/2005 Standard rate Dollars 67,68,65

03/5/2008 Purchased items from Vimal & co for 150 Dollars 03/5/2008 Standard rate Dollars 61, 63, 60

06/5/2008 Sold goods to Raja & Raja for 75 Dollars 06/5/2008 Standard rate Dollars 46, 48, 47

08/5/2008 Received 70 Dollars from Raja & Raja 08/5/2008 Standard rate Dollars 58, 59, 57

Exercise: 10

Create currencies for the following:

Standard

Rate

Selling

Rate

Buying

Rate

$ (Dollar)

62

63

60

# (Frank)

45

47

46

£ (Pound)

72

73

72

¥ (Yen)

58

60

59

€ (Euro)

82

83

82

1.2.2004 Sathesh Started business with Rs. 5,00,000

01-02-2004 Opened Current Account in HDFC Rs. 25,000 03-02-2004 Bought goods from Levi Traders $200

06-02-2004 Sold good to Jagan Traders on Credit £150 09-02-2004 Goods Purchased from Mahila & Co ¥100 11-02-2004 Furniture purchased £500 13-02-2004 Goods returned to Mahila & Co ¥15

15.2.2004 Bought goods from Vinita & Sons €100

21-02-2004 Settled Mahila & Co Account 26-02-2004 Paid rent 1,000

27.2.2004

Paid Salary 2,500

27.2.2004

Sold to Peter Steel Enterprises € 200

28-02-2004 Peter Steel Enterprises settled his account.

28-02-2004 Drew from Bank Rs.10, 000

Cost Categories and Cost Centres

By providing cost centre, a transaction can be allocated to it which would then enable extraction of all transactions for a cost centre. Hence, a cost centre can be said to be any unit of an organization to which transactions can be allocated when only costs or expenses are allocated to these units; they are referred to as cost canters.

F11-Featrues

Set yes to two options

Maintain Cost centre

yes

More than one Cost Category

yes

Steps Involved:

Cost Categories

Single

create

Name: Department

Allocated Revenue Items: yes

Accept

yes

Single create Name: Department Allocated Revenue Items: yes Accept yes Cost Centre Multiple Cost Centre Create

Cost Centre Multiple Cost Centre Create

Under Cost Centre: All items.

In Category Column

Select Department

Under Name of Cost Centre

Type the different types of Cost Centres

Accept

yes

Centre Type the different types of Cost Centres Accept yes Come to voucher Entry Press F5

Come to voucher Entry

Press F5

Payment and enter the following entry

By Salaries Rs. 45,600

Once we press enter we get the following screen, select Cost Category, then select cost centres and type the salary amount incurred for the different departments as shown below:

incurred for the different departments as shown below: Type to cash Type the Narration Accept Yes

Type to cash

Type the Narration

Accept Yes

as shown below: Type to cash Type the Narration Accept Yes COST CENTRE CLASS Cost Centre

COST CENTRE CLASS

Cost Centre Classes affect all voucher types. In voucher entry, the allocation screen would not appear, but allocation would be made automatically.

Steps Involved:

1. Press F11 -> Features -> Maintain Cost Centres and more

than one cost category options should be set to Yes.

2.

press

F11

->

Features

allocation during entry

3. The following screen appears.

set Yes.

->

Pre-defined cost centre

screen appears. set Yes. -> Pre-defined cost centre 4. Type a Class name, say Expenses Allocation

4. Type a Class name, say Expenses Allocation . Press Enter the following screen appears.

Allocation . Press Enter the following screen appears. 5. Select the name of the cost category

5. Select the name of the cost category as Department , select Cost Centres and type the Percentage of allocation for each department. The percentage should be typed by us. Press Enter Accept Yes.

6. Come to

Voucher

Entry.

Press

F5

->

payment ->

Under

Cost

Centre Class

->

Select

the

name

of

the

class

as

Expenses

allocation. Then pass the entry.

class as Expenses allocation. Then pass the entry. To view the Allocation of Expenses under different

To view the Allocation of Expenses under different Cost Centre: Display -> Statements of Accouts -> C ost centres

Exercise No: 11

Cost Category: Chennai

Cost Centre: Marketing, Finance, Administration

01/4/2005

Paid Salary Rs.28, 000 (M-10, 000, F-10, 000, A- 8,000)

03/4/2005

Paid Rent Rs. 8, 000 (M-2, 300, F- 2,200, A- 3, 500)

17/4/2005

Paid Stationeries Rs. 3,000 for all departments

24/4/2005

Paid Electricity charges Rs. 12,000 (M-4, 000, F- 3,500, A- 4,500)

30/4/2005

Paid Sales Tax Rs. 1,650 for all departments

01/4/2005

Paid Income Tax Rs. 1,800 for all departments

Exercise No: 12

Cost Category: Department

Cost Centre: Account, Purchase, Sales, Computer

Date

Expenses

Accoun

Purchas

Sale

Compute

Total

t

e

s

r

03/5/05

Electric Bill

2000

2000

1400

5000

1040

0

05/5/05

Rent

1500

1500

300

3000

630

0

07/5/05

Interest

500

200

150

 

85

0

05/5/05

Wages

 

500

200

 

70

0

09/5/05

Stationery

250

50

12

100

52

0

0

13/5/05

Salary

4500

2000

3000

4000

1350

0

25/5/05

Postal

400

   

150

55

Charge

0

27/4/05

Telepone

1300

300

200

1500

330

Bill

0

Bill-Wise Details

By activating the Bill wise feature in F11: Features, 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, you get an additional option Default Credit Period.

When you enter details of sales and purchases with Bill-wise turned on, Tally 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.

Bill-Wise Types:

New Ref:

To enter new credit purchase or new credit sales value

Advance

To settle payment or receipt before purchase or sales

Against Ref:

To settle payment or receipt against purchase or sales

On Account

To settle an opening balance to study party

Creation of Bill_Wise_Details:

F11: Accounting Feature:

Maintain Bill-wise Details? (for Non-trading A/c s also)

Maintain Bill-wise Details? (for Non-trading A/c s also)

Yes

No

Ledger creation:

Purchase Ram & Co

Purchase A/c Sundry Creditor

creation: Purchase Ram & Co Purchase A/c Sundry Creditor Voucher Creation: Gateway of Tally Accounting Voucher

Voucher Creation:

Gateway of Tally Accounting Voucher

Report: Go to Gateway of Tally > Display > Statements of Accounts > Receivables/Payables. Exercise

Report:

Go to Gateway of Tally > Display > Statements of Accounts > Receivables/Payables.

Exercise No: 13

Outstanding>

Capital

2, 50,000

Sundry debtors

 

Milky (P)Ltd

5160

Bill No

Date

Amount

Due days

S/01-02/301

27/01/02

1430

30

S/01-02/304

26/02/02

1730

30

S/01-02/309

27/03/02

2000

45

Sundry

Creditors

Praveen & Sons

7050

Bill No

Date

Amount

Due days

C/01-02/1248

26/01/2002

1500

30

C/01-02/1252

21/02/2002

4050

30

C/01-02/1282

25/03/2002

1500

45

Fixed

Assets

Furniture Computer Opening Stock Cash in hand SBI

 

30,000

40,000

10,000

70,000

1, 01,890

Voucher Entry:

Sales bill

 

Milky (P)Ltds

Bill No

Date

Amount

Due days

202

30/04/02

1430

30

214

15/05/02

1500

30

256

31/07/02

3640

15

301

28/10/02

2750

351

25/10/03

5050

45

392

15/03/03

11000

45

Kamal & Co

 

Bill No

Date

Amount

Due days

417

12/04/02

2230

15

431

16/05/02

2650

15

452

17/08/02

5630

30

515

15/11/03

10780

45

659

21/01/03

1530

815

30/03/03

2130

30

Purchase bills

 

Praveen & Sons

Bill No

Date

Amount

Due days

0001

03/04/02

455

-

0002

05/05/02

1000

15

0003

16/08/02

1675

30

0004

22/11/02

4050

30

0005

31/03/03

12350

45

Malar & Co

0006

02/02/03

11450

30

0007

15/02/03

5540

15

0008

24/02/03

875

15

0009

31/03/03

1234

30

Received cash

Milky (P) Ltd

Bill No

Date

Amount

304

02/05/02

1730

214

17/06/02

1500

301

01/11/02

2750

351

31/03/03

4000

Kamal & co

417

30/4/02

2230

452

20/8/02

5000

515

31/1/03

10000

659

25/1/03

1530

Payments Made

Praveen & Sons

1282

15/5/02

1500

0001

4/4/02

455

0004

20/9/02

4050

0005

30/3/03

12000

Malar & Sons

0006 5/3/03

10,000

0007 15/3/03

5,540

Interest Calculations

The Activate Interest Calculation field is displayed in the Ledger Creation screen only if Activate Interest Calculations is set to Yes in F11: Features.

Set this field to Yes for each specific ledger account for which interest is to be calculated.

Simple Mode (Where advanced parameters are not applicable)

To calculate Interest in the Simple Mode:

1.

Go to Gateway of Tally> F11: Features > Set Activate Interest Calculation to Yes. > Set Use Advanced Parameters to No.

2. In the Ledger Creation screen set Activate Interest Calculation to Yes.

3. The Interest Parameters sub screen is displayed. Enter the Rate and select the interest style from the list.

Interest calculation transaction by transaction

Interest calculated on Outstanding Balances.

1. Go to Gateway of Tally> Accounts Info.> Ledgers> Alter (Single)> Bank Ltd (bank account)

2. Set Activate interest Calculation to Yes.

3. Rate: 15%.

4. Interest Style:. Of the four options, select 365-Day Year.

5. Accept the screen.

The Interest Calculations Report can be displayed and printed.

Go to Gateway of Tally> Display> Statements of Accounts> Interest Calculations> Ledger> Bank Account

Interest calculation transaction by transaction

1. Alter a Customer account

2. Set Activate Interest Calculation to Yes.

3. Set Calculate Interest Transaction-by-transaction to Yes.

4. Set Over-ride Parameters for each transaction to No.

To view the Interest calculated

Go to Gateway of Tally> Display> Statements of Accounts> Interest Calculations> Ledger>

Advanced Mode (Where advanced parameters are applicable)

The advanced parameters are particularly useful where interest rates change from time to time.

1. Go to Gateway of Tally> F11: Features > Accounting Features > Set Activate Interest Calculation to Yes. > Set Use Advanced Parameters to Yes.

2. The Interest Parameters sub-screen is displayed

For Ledgers created under the Group Sundry Debtors/Sundry Creditors, the Interest Parameters sub-screen is displayed as shown below:

Interest Parameters sub-screen is displayed as shown below: ∑ For Ledgers created under the Group Bank

For Ledgers created under the Group Bank Accounts, or if the option Calculate Interest Transaction by Transaction is set to No, then the Interest Parameters sub-screen is displayed as shown below

To view the report on Outstanding balances: Go to Gateway of Tally> Display> Statements of

To view the report on Outstanding balances:

Go to Gateway of Tally> Display> Statements of Accounts.> Interest Calculations> Ledgers> Bank Ltd.

Advanced Parameters - Interest calculation transaction by transaction:

Activate and specify interest calculations in ledger masters.

and specify interest calculations in ledger masters. Advanced Parameters - Interest calculation transaction by

Advanced Parameters - Interest calculation transaction by transaction

Go to Gateway of Tally> Display> Statements of Accounts> Interest Calculation > Ledger>X a/c

Exercise: 14

1.6.2004

Capital Rs. 1,50,000

2.6.2004

Purchased goods from Raabiya Traders for a sum of Rs.75,000 [Credit period is 45 days, Bill no.24] Interest Rate 12% and 15%

6.6.2004

Sold goods to Kamalam & Co for a sum of Rs. 1,25,000 [Credit period is 45 days] Interest rate 13% and 18%

2.12.2004

Amount paid to Raabiya Traders plus the interest rate.

3.3.2005

Amount received from Kamalam plus the interest rate.

Display the interest calculations from 1-06-2004 to 31-03-2005

Budgets

Budgets are used to set targets and compare against actual and get variances. We can create multiple budgets for different purpose.

Press F11-Accounting Features

Creation of Budgets:

Gateway of Tally

Accounts Info

Maintain Budgets and Controls- set yes

Budgets

create

On selection of create option, we get a screen as shown below

On selection of create option, we get a screen as shown below Name Under Period of

Name Under Period of Budget

: Enter a name of the Budget for identification : Primary : Given the period range of the Budget in the Columns From and To

Press Enter

the contents as shown below:

Under Ledgers

Type yes, the next screen appears and type

Under Ledgers Type yes, the next screen appears and type Account Name : Name of the

Account Name

:

Name of the Group or Ledger for which the

Cost Centre

:

budget is created. Not applicable

Type of Budget

:

We get 2 options to select the type of Budget, namely

1.

On Nett Transactions

2.

On Closing Balance

On Nett Transactions: This option is suitable for accounts where nett transactions are to be monitored (eg. Revenue A/C)

On Closing Transactions: This option is suitable for accounts where closing balance is to be monitored (eg. Personal A/C)

Press Enter

Enter

Accept yes. Budget has been created.

To view the Budget,

Go to Gateway of Tally

Variance

Display

Trial Balance

Press Alt + B

select the name of the Budget

Press Enter

Budget

Alt + B select the name of the Budget Press Enter Budget Exercise: 15 Expenses Budget

Exercise: 15

Expenses

Budget

Conveyance

5,400

Wages

50,000

Carriage Outwards

500

Electricity Expenses

3,000

Advertising

2,000

Selling and Distribution

1,500

Enter the following entries for Budget and Controls

May 2005 Paid Conveyance

200

Paid Wages

500

Paid Carriage Outwards

2,500

Paid Electricity Expenses

3,000

Paid Advertising

2,000

Paid Selling and Distribution

1,100

June 2005 Paid Conveyance

500

Paid Wages

250

Paid Carriage Outwards

1,500

Paid Electricity Expenses

2,000

Paid Advertising

2,000

Paid Selling and Distribution

1,220

Bank Reconciliation

Bank Reconciliation means that the accounts maintained by the banker tallies with the bank ledger account in our Books. Even if both the accounts are in sync, the balances may not be equal for various reasons. Bank Reconciliation is the process to ensure that even if these two balances apparently differ, the bank Pass Book is in sync with the Bank Book in the books of accounts.

Steps Involved:

1. Our current account statement has been sent to us by our Bank for the

month ended may 2005

2. Bring up the monthly summary of Current Account (Display Account

Books Bank Books and select the bank Account)

3. Bring the cursor to May and Press Enter. This brings up the vouchers for the

month of May 2005

Enter. This brings up the vouchers for the month of May 2005 4. It is helpful

4. It is helpful to see the Narration as that contains cheque numbers and other

details. So Press F12: Configure and activate Show Narration.

5. Since this is a Bank Account, an additional button F5 Reconcile will be visible

on the right. Press F5

6. The display now becomes an Edit screen in reconciliation mode. The primary

components are:

A Column for the Banker’s Date

The Reconciliation at the bottom of the screen, Showing:

Balance as per Company Books, Amounts not

Reflected In Bank and Balance as per bank

7.

Enter the bank date for the payment voucher and contra voucher.

8.

The next time we come for reconciliation, we will be presented with

only those vouchers, which remain unreconciled.

with only those vouchers, which remain unreconciled. Exercise: 16 01/4/2005 Received Capital by Cash 1,00,000

Exercise: 16

01/4/2005 Received Capital by Cash 1,00,000 02/4/2005 Cash deposited in SBI 50000

Deposit Slips

05/4/2005

Kiran

45000

07/4/2005

Sanjaj

25000

10/4/2005

Kavi

20000

11/4/2005

Kiran

20000

15/4/2005

Kavi

15000

Counter Foils

08/4/2005

Kavitha

15000

09/4/2005

Sachin

5000

11/4/2005

Amutha

7500

12/4/2005

Sachin

10000

15/4/2005

Amutha

4500

17/4/2005

Kavitha

12000

30/4/2005

Bank Charges

250

Pass Book of SBI as on 30/4/2005

Date

Name

Deposits (Dr) Withdrawal (Cr)

Balance

02/4/05

Cash

50000

50000 Cr

06/4/05

Kiran

45000

95000 Cr

09/4/05

Sanjay

25000

120000 Cr

10/4/05

Kavitha

105000 Cr

13/4/05

Amutha

7500

97500 Cr

14/4/05

Sachin

10000

87500 Cr

17/4/05

Kavi

15000

102500 Cr

30/4/05

Bank

250

102250 Cr

Jeevan & Co Started business on 1/4/2004

1/4/2004 Received capital by Cash Rs. 50,0000 1/4/2004 Cash deposited in Canara Bank Rs. 20,000

Following is the details of Deposit Slip (Sundry Debtors)

10/4/2004 Kabir 40,000

25,000

14/4/2004 Syam 20,000

12/4/2004 Usha

25/4/2004 Usha

15,000

29/4/2004 Kabir

10,000

Following is the details of counter Foil of Cheque Book (Sundry Creditors)

11/4/2004 Ashima Textiles 12,500 13/4/2004 Fashion Textiles 3,350 15/4/2004 Silky 5,000 17/4/2004 Ashima Textiles 10,000 19/4/2004 Fashion Textiles 5,000 28/4/2004 Silky 3,000 30/4/2004 Bank Charges 100

Date

Name

Deposits (Dr)

Withdrawal (Cr)

Balance

01/4/2004

Cash

20,000

20,000 Cr

12/4/2004

Kabir

40,000

60,000 Cr

13/4/2004

Ashima Textiles

12,500

47,500 Cr

14/4/2004

Usha

25,000

72,500 Cr

15/4/2004

Fashion Textiles

3,350

69,150 Cr

17/4/2004

Silky

5,000

64,150 Cr

18/4/2004

Ashima Textiles

10,000

26/4/2004

Usha

15,000

69,150 Cr

30/4/2004

Cheque Book

100

Optional and Post-Dated Voucher

This is another non-accounting voucher. Unlike a Memo voucher, this is not a separate voucher type. You can mark an existing voucher (for example, a payment voucher or a receipt voucher) as Optional. Press CTRL + L or click on Optional from the Button Bar. This button toggles with Regular. By marking a voucher Optional, the voucher does not get posted anywhere but remains in the Optional Register.

You can make a voucher type default to Optional if you need to create a new voucher type or alter an existing voucher type.

Go to Gateway of Tally > Accounts Info > Voucher Types> select a Voucher Type> Set Make Optional as default to Yes.

Enabling Optional Vouchers

1. Go to Gateway of Tally

2. Select F11:Features > Accounting Features to display Company

Operations Alteration screen

3. Set Use Rev. Journals & Optional Vouchers? to Yes.

4. Accept the screen to save.

Use of Optional Vouchers

• If you do not want a transaction that is incomplete to affect the accounts, you can mark this as an Optional Voucher. Once the transaction is complete, modify the voucher and post it as Regular Voucher. For example, Performa sales invoice. In fact, an optional sales invoice prints as a Performa Invoice.

• Optional Vouchers allow you to see the impact of transactions without actually posting them.

• Optional Vouchers can be used to forecast future sales. For example, create a

New Voucher Type - Sales Forecast. Record future sales projections using this voucher type.

Let us consider the following example.

On 30th June you want to view the Balance Sheet as of today but June rent is not due for payment until the first week of July. This liability is not reflected in the Balance Sheet. To overcome this, enter an Optional Voucher dated 30th June. The above entry is made as shown below

1. Enter Date

2. Select Optional from the button bar

3. Debit Rent account

2. Select Optional from the button bar 3. Debit Rent account When you view the Balance

When you view the Balance Sheet, generate a report with the Optional Voucher included. The Optional Voucher should be already defined as a Scenario (Refer section on Scenario Management for more details). The voucher affects the report temporarily. Once you quit the report, Tally does not retain the Scenario details. The next time you view the balance sheet, it will not include the effect of the Optional Voucher unless you include it.

Post-Dated Vouchers

While entering vouchers, you can mark them as post dated. Tally will not update the vouchers in ledgers until the specified date is approached. This is useful to enter transactions that take place on a regular basis. For example, if you pay for something by installments, you can set up the payments in advance, and Tally will only enter them in the ledgers as they fall due.

Mark vouchers Post Dated by using CTRL + T or click on Post dated button from the Button Bar. This button toggles with Current .

Accounting with Inventory

Inventory accounting includes recording stock details, the purchase of stock, the sale of stock, stock movement between storage locations/ godowns and providing information on stock availability. With Tally it is possible to integrate the inventory and accounting systems so that financial statements reflect the closing stock value from the Inventory system. The Inventory system operates in much the same way as the accounting system. First we set up the inventory details, which is a similar operation to creating the chart of accouts although , in this case there is no pre-defined set of stock groups. Second, we create the individual stock items. which is similar to setting up the ledgers. Finally, We are ready to use vouchers to record the various stock transactions.

Stock items:

Stock items are the actual items in stock, and we account for the issued and receipts of stock at this level.

Stock Groups:

any

common feature.

Stock Categories:

This is a useful Tally feature, Which allows us to classify similar stock items together across different stock groups, enabling us to obtain reports on alternatives or substitutes for a stock item.

We

classify

stock

items

into

stock

group

based

on

Locations/Godowns:

We can specify where the stock items are held, e.g., which warehouse shelf or rack, obtain stock reports for each Godown, and account for movement of stock between locations/Godowns.

Units of measure:

We will need to create units of measure for stock items. These can be simple units such as nos, metres, kilograms, pieces, or compound units, e.g., box of 10 pieces or 1 dozen is 12 nos.

Maintain Accounts with Inventory

Tally displays a pop-up list called Type of Company – this is how your books of accounts will be maintained.

Accounts only

Select this only if you do not have any inventory transactions (suitable for professionals and corporate offices). Tally would not permit intrusion ofInventory related information that are not required.

However, at a later date (if required) you can alter the information as Maintain Accounts-with-Inventory – Tally accordingly now provides all the inventory-related information.

Accounts-with-Inventory

This obviously allows you to maintain both financial accounts and inventory. You may choose not to use one or the other until the need arises.

Stock Groups Stock items can be grouped together under Stock Groups to reflect their classification

Stock Groups

Stock items can be grouped together under Stock Groups to reflect their classification based on of some commonality. Grouping would enable easy location and reporting of stock items in statements. Hence, items of a particular brand can be grouped together so that you can extract stock of all items of that brand.

For example, create Stock Groups like Sony. Your stock items could then be Sony 3.5" disks, Sony tapes, etc. Classify the Sony products under the Stock Group Sony.

Creating Single Stock Group:

Gateway of Tally Inventory Info Stock Group Single Stock Group

In the Name field

Enter Sony

In the under field

Select Primary

Can Quantities of Items be Added? Set yes

Select Primary Can Quantities of Items be Added? Set yes Check the data is correct and

Check the data is correct and press enter and Accept – Yes

Name

Give the name of the stock group. Here we wish to create a group Sony.

Under

Specify whether it is a primary group or a sub-group of another group.

Can quantities of items be ADDED?

Field allows us to specify if it is logical for totals of stock-in-hand to be displayed for this group heading in Stock Summary.

Creating Multiple Stock Group:

Select Create in multiple Stock groups to bring up the multi

stock group creation screen.

Select group name from the Pop-up list of Groups for the Under

Group field.

In Name of Stock Group type and enter sub group name.

In the next line type another group name and Accept -> yes.

the next line type another group name and Accept -> yes. Displaying and Altering Stock Groups

Displaying and Altering Stock Groups

Once created, stock groups can be displayed and altered in single and multiple mode. We can delete a stock group via single Stock group alter by pressing <Alt>+<D>. However. we cannot delete a stock group with sub- groups or stock items.The lower levels must be deleted first

Delete a Stock Group

Note:You can delete a stock group only if it does not have any children under it. The children could be stock group or stock item or both. Gateway of Tally—>Inventory Info—>Stock Groups—>Single Alter Press [ALT]+[D]to delete the stock group

You cannot delete a stock group from multiple mode.

Stock Categories:

Stock Categories offers parallel classification of items. You may create Stock Categories like Floppy Disks and Floppy Drives.

Require information like total stock of floppy disks or alternative items that could be used, these would be best available through Stock Categories.

F11 Features: Maintain Stock Categories – Yes

Creating Single Stock Category:

Gateway of Tally > Inventory Info > Stock Categories

In the Name field

In the under field

Enter Floppy Disks

Select Primary

field In the under field Enter Floppy Disks Select Primary Creating Multiple S tock Categories ∑

Creating Multiple S tock Categories

Select create in multiple mode to bring up the multi stock category

creation screen.

Select any one stock categories from the list of categories. Type and

enter sub stock categories.

Press Enter twise to accept the data and return to the stock

categories menu.

Display or Alter a Stock Category

Gateway of Tally—>Inventory Info—>Stock Categories—>Single/Multiple Display

Or

Gateway of Tally—>Inventory Info—>Stock Categories—>Single/Multiple Alter

Select the stock category whose particulars you wish to display. When you display or alter a stock category, the information entered while creating it is displayed.

Display from this mode is for master information only. You will not obtain any balances for a stock category here. Use the Display option from the Gateway of Tally for display of balances and transactions.

In earlier days of computing, one would look at the master information for balances. Tally believes that balances are a logical consequence of the transactions; hence, they should be available with the transaction summaries. You would find all summaries and details through the Display option in the main Gateway of Tally.

Delete a Stock Category

You can delete a stock category only if it does not have any children under it. The children could be stock category or stock item or both.

Gateway of Tally—>Inventory Info—>Stock Categories—>Single Alter

Press [ALT]+[D]to delete the stock category

Units of Measure

You will need to create units of measure for stock items. These can be simple units such as numbers., metres, kilograms, pieces, or compound units, e.g. box, where, say, one box equals ten pieces.

units, e.g. box, where, say, one box equals ten pieces. Create a Unit of Measure There

Create a Unit of Measure

There are two types of Unit of measure:

1. S imple

2. Compound

Select Units of measure from the Inventory info menu and select create the Units menu to bring up the unit creation screen.

In symbol type and enter nos. in formal name type and enter Number of press Enter twice to accept the data without quitting from the unit creation screen.

Gateway of Tally—>Inventory Info.—> Units of Measure—> Create

In Symbol type ad enter doz. In Formal Name type and enter Dozen.

Press Enter twice to accept the data.

Use the up arrow or backspace key to position the highlight in the Type field.

Use the up arrow or backspace key to position the highlight in the Type field. Select Compound form the types of units Pop-up menu. Select doz as the First Unit. Type and enter 12 as the conversion factor. Select nos as the Second Unit and accept the data. Press enter to return to the units menu.

Displaying and altering units of measure

Gateway of Tally > Inventory Info. > Units of Measure > Display/Alter

Once created, units of measure can be displayed and altered. You can delete a unit of measure in the alteration screen by pressing [Alt]+[D]. However, you cannot delete a unit of measure that is part of a compound measure. The compound measure must be deleted first.

Godown

Godown is the place to store goods. Tally allows us to create any number of Godown and nest into any number of levels.

F11 Features: Maintain Multiple Godowns? Yes

Creating single Godown:

Gateway of Tally > Inventory Info. > Locations > Create

Maintain Multiple Godowns? Yes Creating single Godown: Gateway of Tally > Inventory Info. > Locations >

Name

In the Name field, give the name of the location.

Address

Give a address of the godown, if required.

Under

Give the location under which this location is to be sub-grouped. Use [alt]+[C] to

create the parent location. Select primary if it is not a child of

any location.

Allow Storage of Materials?

Tally permits you to create a location/godown where you may not store materials at all but treat it as a virtual location. Virtual location are useful in case like Head Office which may have many different stock points under it that store materials. Hence, Head Office acts like a primary group location. Or , for example, designate London as a virtual location with Wimbledon Warehouse, Harrow Warehouse, Brixton Warehouse as sublocations/ godowns. These sub-locations or godowns will allow storage of materials.

Displaying and altering stock godowns

Once created, stock locations can be displayed and altered in single and multiple mode. You can delete a stock location via Single Location Alter by pressing [Alt]+[D]. However, you cannot delete a stock location with sub- locations. The lower levels must be deleted first.

Stock Item

Stock items are the actual items in stock, and we account for the issued and receipts of stock at this level.

Stock items are the actual items in stock, and we account for the issued and receipts of stock at this level.

Creating Stock Item:

Gateway of Tally Inventory Info Single Stock Item

In the Name field

In the under field

In the unit field

Enter Sony Disks 3.5”

Select Sony

Box of 100 Nos.

field Enter Sony Disks 3.5” Select Sony Box of 100 Nos. Delete a stock item You

Delete a stock item

You can delete a stock item only if it has not been used form transaction entry.

Gateway of Tally > Inventory Info > Stock Items > Single Alter Press [ALT]+[D] to delete the Stock Item

Exercise No: 18

Stock Group

a) Journalize the following Transaction in the Book of Anandha Stores

2007

Aug

01 Anand Started the business Rs.7,00,000

08

Anand Deposit into the Indian Bank Rs.25,000

10

Purchase 100 kg Ponni Rice per kg Rs.20.50

19

Purchase from Rasi Stores 200 kg Ambai 18 per kg Rs.17

Sep

02 Salary for staff Rs.4,500

05

Paid Rent for Rs.5,000

15

Purchase 50 lit Gingilly Oil per lit Rs.98

17

Purchase 300 Hamam soap (100g) per soap Rs.13

 

Paid Stationery Rs. 450

 

20

Paid to Rasi Store for Rs.3,400

 

Purchase from Milky & Co 125 Lax Soap per soap Rs.12

Oct

01 Purchase 75 Lit VVD Coconut Oil per lit Rs.78

05

Paid Salary Rs.4,500

15

Purchase 200 Sandal Soap per soap Rs.21

18

Sales 125 Hamam Soap (100g) per soap Rs. 15

24

Purchase 100 Hamam Soap (150g) per soap Rs.18 from Haji Store

29

Sold to Jeya Traders,

 

50 kg Ponni Rice Rs.22

45 kg Hamam Soap (150g) Rs.20

Nov

03 Sales Ambai 18, 50kg per Rs.18 and 75 Lax Soap per soap Rs.13

 

to Laxmi Store

 

5

Sales 10 lit VVD Coconut Oil per lit 80

6

Paid Salary Rs.4,500

12

Purchase Weight Machine Rs. 8,000

18

Sales 35 lit Gingilly Oil per lit Rs.99.50

23

Paid Telephone Bill Rs. 1,200

24

Return by Jeya Traders14 kg Ponni Rice

28

Sales 15 Hamam Soap(100g) for cash per soap Rs.15

Dec

05 Amount Settled by Jeya Traders

8

Paid Salary Rs. 4,500

15 Purchase 20 lit Gingilly Oil Rs. 98

Stock Group: Rice, Soap, Oil

b)

Journalize the following Transaction in the Book of Rahuman & Sons

2006

Oct

01 Started business with Capital Rs. 10, 00,000

2

Opened a Bank account in HDFC Rs. 1,00,000

5

Purchased Stationery item for Rs.5,500

6

Purchased Furniture for Rs. 23,000

 

7

Credit Purchased from Guru Store Inv. No. 123

 

Television

Rs. 6,000

10 nos

Fridge

Rs. 8,800

15 nos

Audio System

Rs. 4,500

5 nos

 

10

Credit Purchased from ALM Traders Inv. No. 124

 

Television

Rs. 6,500

3 nos

Fridge

Rs. 7,900

5 nos

 

11

Withdraw from Bank Rs. 5,600 for Personal use Ch.no. 098765

14

Bought a Computer for Rs.17,000 from Sai System

17

Guru Store amount settled through a cheque

18

Sold Goods for Cash

 

Television

Rs. 6,000

5 nos

Audio System

Rs. 4,500

3 nos

 

19

Paid into Bank Rs. 15,000

20

Sold Goods to Varun & Co on Credit

 

Television

Rs. 7,000

10 nos

Fridge

Rs. 9,000

15 nos

Audio System

Rs. 5,500

5 nos

 

22

Paid Telephone Charges Rs. 1000

23

Received cash Rs. 16,000 from Varun & Co

24

Paid made by Cash

 

Paid to Petty Cash

Rs. 2,000

Salaries

Rs.10,000

Wages

Rs. 7,000

Carriage Inward

Rs. 1,500

 

26

Payment Made by Petty Cash

 
 

Conveyance

Rs. 200

Postage

Rs. 150

Stationeries

Rs. 120

Staff Welfare

Rs. 200

Exercise No: 19

Stock Categories

1.4.2007 Kishore Trading Company Started business with cash 80,000

4.4.2007

Paid into Bank Rs. 10,000

 

6.4.2007

Purchase from Uthira & Co (Inv.no. 111)

 

Television

BPL Color TV

Rs.

7,000

10 nos

BPL Black & White

Rs.

9,000

12 nos

Sony

Rs. 12,500

10 nos

Samsung

Rs. 11,200

15 nos

9.4.2007

Purchase from Ruba & Sons (Inv. No. 122)

Computer

HCL

Rs. 12,000

15 nos

LG

Rs. 10,000

10 nos

11.4.2007Credit Sales Hamsa Traders (Inv.No. 1) Television

BPL Black & White

Rs.

9,500

2 nos

Sony

Rs. 13,500

5 nos

16.4.2007Credit Purchase from Santhosh Electricals (Inv.No. 133) Fan

Usha

Rs. 1,000

5 nos

Philips

Rs. 1,200

8 nos

20.4.2007Cash Sales (Inv.No.2) Computer

HCL

Rs. 12,000

4 nos

LG

Rs. 10,000

4 nos

Fan

Usha

Rs. 1,000

2 nos

Philips

Rs. 1,200

4 nos

22.4.2004Paid into Telephone Charges Rs. 1,000 24.4.2004Cash Purchase Mixci

Kanchan

Rs. 1,200

5 nos

Preethi

Rs. 1,500

5 nos

Butterfly

Rs. 1,000

5 nos

26.4.2004Payments Made by cash Paid to Petty Cash

Rs.20, 000

Furniture

Rs.

1,500

Salaries

Rs.10, 000

Wages

Rs.

7,000

Carriage Inward

Rs.

1,500

27-4-2004

Payment Made by Petty Cash

Conveyance

Rs. 200

Postage

Rs. 150

Stationeries

Rs. 120

Staff Welfare

Rs. 200

Exercise No: 20

Godown

Journalize the following Transaction in the Book of Reethu Stores

01-9-2007

Started Business with cash Rs. 20,00,000

02-9-2007

Stationery Items Rs. 5,000

03-9-2007

Cash Purchases

 

Godown

 

Item

 

Rate

Pettai

Town

(Rs.)

(kg)

(kg)

I.R. 20

 

18

1500

2000

Ponni

 

20

1000

1300

Basm

 

22

1000

1000

ati

 

I.R. 8

 

17

2000

500

5.9.2007

Purchase from Samir Stores (Invoice No. 44)

 

Godown

Item

Rate(

Junction

Palay

Rs.)

(kg)

(kg)

Black

35

1000

1000

Gram

Green

25

2500

1400

Gram

Wheat

18

1800

1500

8.9.2007 Credit Sales Laxman Traders (Invoice No. 1)   Godown Item Rate( Junction Palay Rs.)
8.9.2007 Credit Sales Laxman Traders (Invoice No. 1)   Godown Item Rate( Junction Palay Rs.)
8.9.2007 Credit Sales Laxman Traders (Invoice No. 1)   Godown Item Rate( Junction Palay Rs.)
8.9.2007 Credit Sales Laxman Traders (Invoice No. 1)   Godown Item Rate( Junction Palay Rs.)

8.9.2007

Credit Sales Laxman Traders (Invoice No. 1)

 

Godown

Item

Rate(

Junction

Palay

Rs.)

(kg)

(kg)

Black

38.50

500

450

Gram

Green

26.50

2000

750

Gram

Wheat

20.25

1000

250

10.9.2007Purchase from Kalyan Store (Invoice No. 54)

 

Godown

Item

Rate(

Junction

Palay

Rs.)

(lit)