Harbai Computer Education

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INTEREST CALCULATION
Interest Calculation in Tally.ERP 9:
What is Interest?
Any charge for the privilege of borrowing money and expressed as annual percentage rate
(APR) is referred to as Interest in dictionary of business. It can also refer to as the amount
of ownership a stock holder has in a company, usually expressed as a percentage.
Break Down of Interest Rate:
Interest can be broken down as: Simple and Compound Interest
Simple Interest: It is the rate set on the principal amount originally lent to the borrower
that the borrower has to pay for the ability to use the money.
Compound Interest: Compound Interest is the interest on both the principal and the
compounding interest paid on that loan.
Interest is a legitimate return on money invested and chargeable in the business world on
loans and also on delayed payments. Interest can be calculated on the basis of Simple or
Compound Interest. With Tally.ERP 9 you can obtain reports on interest calculated based
on the configurations made. Interest is calculated on outstanding receivables or payables.
When to Set Up Interest Calculation in Tally?
There are many types of interest payable or receivable by a business, like interest on loans,
mortgage, debenture, OD, deposits, payables, and more. However, these interests are
recorded on the Books of Account of any company based on the statement provided by
banks, non-banking financial institutions, and sundry creditors. Therefore, businesses
should record this interest as journal entries.
When a company has the policy to charge interest to its customers/clients on delayed
payments, it becomes necessary for accountants to set up an automated interest
calculation in Tally ERP 9.
Interest Calculation in Tally.ERP 9 used in following ways:
1) Interest to be calculated on Loan Taken / Loan – Given
2) Interest to be calculated on late payment of sundry debtors
Let’s take the example of interest to be calculation loan taken. Here we would be covering
the following:
Interest’s parameters:
1) Interest advance parameters
2) Interest style
3) Auto calculated of interest
4) Adjustment of interest to the principle
5) Repayment of loan
Create a Company Interest Calculation in Tally.ERP 9 with selecting Country as Indian and
State as Maharashtra.
Enable Interest Calculation:
Gateway of Tally ➔ Feature [F11] ➔ Active Interest Calculation – Yes ➔ Use Advance
Parameter – Yes.
Interest Style’s: In the above example we have seen that, the loan was taken for a period
of six months and at an interest rate 10% P.A. (per annum) i.e.: the interest is to be
calculated
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on annual basis. However in tally there are namely four interest styles i.e.:
❖ Calendar Year
❖ Calendar Month
❖ 365 Day A Year
❖ 30 Day A Month
Create the following ledgers:
Name of the ledger Under Additional Details
Bank of India A/c Bank Account Acc. No.: 78451274859
Interest Due A/c Indirect Expenses
Loan from Bank of India Secured Loan
On 01/05, your company took a loan from bank of India amounting to Rs. 1,00,000/- at an
interest rate of 10% per annum for a period of six month. Pass the necessary receipt entry.
Check Interest Calculation Report:
Go To Gateway Of Tally ➔ Display ➔ Statement Of Accounts ➔ Interest Calculation ➔
Interest Payable. The press F2 and select period 01/05 to 31/10 accordingly you will be
able to see the interest payable figure.
The interest figure changes as per the selection of the respective interest style which is as
follows:
Calendar 30 Days a
Particulars Calendar Year 365 Day a Year
Month Month
Calculation Amount would Interest would Amount would
would be done be calculated as be calculated on be calculated on
according to the per the month the basis of 365 30 day basis
year if it is a i.e.; 30, 31 or days, only irrespective
leap year 28, 29 irrespective of a of whichever
interest would leap year month is there
be calculated on
the basis of 366
days other wise
365 days
No. of Days 183 Days 183 Days 183 Days 183 Days
Interest Rs. 5,014.00 Rs. 59,677.00 Rs. 5,014.00 Rs. 61,000.00
Amount
As this is a Interest is Interest is Interest is
normal year the calculated as calculate done calculated as
interests per the below 365 day basis per the below
calculated on schedule schedule.
365 day Basis Calendar month Calculated
interest would be done
calculation on 30 day a
menthe only
irrespective of
whichever
calendar month
is 30 day a
month interest
calculation
Note: All the above details are with 10% interest for a period six months on an amount of Rs.
1,00,000/-

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Amount (Rs.
Total no of days of
Month No of days 1,00,000x10%=Rs.
loan is 183 Days
10,000/-
May 30 days Rs. 10,000/31 * 30 1,00,000 * 10%
= Rs. 9,677/- =Rs. 10,000/30
June 30 days Rs.10,000/30 * 30 =Rs.333.33 now
= Rs. 10,000/- =Rs. 333.33 * 183
July 31days Rs. 10,000/31 * 31 =Rs. 61,000/-
= Rs. 10,000/- (Rounded off to the
Nearest rupee)
Please Note there is a new option in Tally.ERP 9 release 5.4.8 where in the system asks you
“Include Transaction Date for Interest Calculation – for amounts added (Loan Taken). For
account deducted (Loan repaid back)” If Yes option is selected this will result into Interest
to be Calculated from the Transaction Date in Case of Loan Taken & also Interest to be
Calculated up to the Transactional Date in case of Loan Repaid back. That means in above
taken the days would be then 184 instead of 183 as 1 Day would be added if above options
of Include Transaction Day is to “Yes” Auto-Adjustment of Interest to Loan Account on
Repayment of Full Loan: On 31st Oct the Loan taken from Bank of India was full repaid
back along with the Interest amount. Pass the necessary entries for the same.
Steps to Enable Credit/Debit Note:
Press F11 ➔ Use Debit & Credit Note – Yes

Steps to Configure Credit/Debit Note:

Go to Gateway of Tally ➔ Accounts Info. ➔ Voucher Type ➔ Credit Note ➔ (In case of
Loan Taken & Debit note in case of interest adjusted for Loan Given) ➔ Interest
Adjust Class ➔ Use Class for Interest Accounting – Yes.

Amount to be treated as compound Interest (to be used in case of interest to be charged to

debtors on late payment, when this option is selected as “Yes” the debit note (Interest
Amount is Clubbed with the Invoice amount itself) - No ➔ Ctrl + A ➔ Accept All

Then, Go to Gateway of Tally ➔ Accounting Vouchers ➔ Credit Note (Ctrl + F8) ➔

Select Interest Adjusted Class ➔ Change Date (F2) – 31/10
Note: Select desired date of getting Auto Interest figure.
Cr Loan from Bank of India Rs. 61,000 (as we have taken 30 Day Month
Interest Style)
Dr Interest Due Account Rs. 61,000

Now if you Go to Gateway of Tally ➔ Balance Sheet ➔ Loan (Liability) ➔ Secured

Loans ➔ Loan from Bank of India the balance shown would be Est. Rs. 1,61,000/- (i.e.
Principle amount of Rs. 1,00,000 Plus Rs. 61,000.)

Accordingly pass the payment entry by going to Gateway of Tally ➔ Accounting Voucher
➔ Payment (F5) ➔ Change Date (F2) - 31/10

Similar, Interest can be calculated for loan given to some other person to learn in the
Interest Calculation for Loan Given or Taken. (Also Note for trying the below mentioned
different possibilities delete the Credit Note & Payment Entries if any)

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In case of periodic payment of Loan say for example (the loan of Rs. 1,00,000/- is divided
into equal installments (3 parts) the payment schedule is as under (Here we would take the
interest style as Calendar Year as the Interest would be lower figure & easy to understand)
Schedule of Payment:
Date Installment (Rs.) Interest Amount Total Amount

01/07 35,000

01/09 35,000

31/10 30,000

Interest Amount & Total Amount is not known write down while you practice the same in
Tally. For Passing the above entries you have to first pass the respectively Credit Note on
the above mentioned dates & then make the payment adding up the interest figure to the
installments.

In case interest changes over a period of time as per the schedule given below:
From Date To Date Interest Rate Interest Style

01/05 31/07 10% Calendar Year

01/08 31/08 8% Calendar Year

01/09 31/10 2% 30 day a Month

In the above situation you have to Go to Gateway of Tally ➔ Accounts Info. ➔ Ledger ➔
Alter ➔ Loan from Bank of India ➔ Active Interest Calculation – Yes

Include transaction date for Interest Calculation:

In case of Tally.ERP 9 release 5.4.8 only

For amount added – No

For amount deducted - No

Rate: 10% per Calendar Year on All Balance

Application from: 01/05 to: 31/07 Normal Rounding Limit: 1

Rate: 8% per Calendar Year on All Balance

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Application from: 01/08 to: 31/08 Normal Rounding Limit: 1

Rate: 2% per 30 Day a Month on All Balance

Application from: 01/09 to: 31/10 Normal Rounding Limit: 1

Save the Ledger

Accordingly, now Go to Gateway of Tally ➔ Display ➔ Statement of Accounts ➔ Interest

Calculation ➔ Interest Payable (you will get the desired report to see with bifurcation of
Interest figures accordingly) You Interest report should look like this:

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Balance (Cr) From To Total Days Rate (%) Interest (Cr)

1,00,000.00 02/05 31/07 91 10% 2,493.00
1,00,000.00 01/08 31/08 31 8% 679.00
1,00,000.00 01/09 31/10 61 2% 4,067.00
Total 7,239.00

Similarly, now you pass a credit note for Interest Adjustment and then a payment voucher
for paying off the loan.

Adjusting Interest as per Reducing Balance: In this situation Interest would be calculated
on a reducing principle amount. Let’s take an example of 4 payments periodically of Rs.
25,000/- each to happen on 01/07, 01/08, 01/09 and 31/10. In each instance the
principle amount is reduced by Rs. 25,000/- (Interest style: 10% for Calendar Year from
01/05 to 31/10) There can be two possibilities for the same:

Possibility No. 1

Adjusting Interest amount the end of the period i.e. 31/10. In this case simply pass the
four payment entries on dates mentioned above then finally pass the Credit Note for
Interest Adjustment and then finally the payment entry to clear off the ledger balance. Now
if you see the Interest Report you would find the following:

Balance (Cr) From To Total Rate (%) Interest (Cr)

Days

1,00,000.00 02/05 01/07 61 10% 1,671.00

1,01,671.00 02/07 01/08 31 10% 864.00

1,02,535.00 02/08 01/09 31 10% 871.00

1,03,406.00 02/09 31/10 61 10% 1,700.00

Total 5,106.00

Possibility No. 2

Before paying of the first installment adjusting amount, you can simply do this by passing
the Credit Note entry and the making the payment entry on the respective date as given

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above. But in case the payment of Rs. 25,000/- is not made and we only want to see the
effect of adjusting the interest only in the given period, then you will get following:

Balance (CR) From To Total Rate (%) Interest

days (CR)

1,00,000.00 02/05 01/07 61 10% 1,671.00

1,01,671.00 02/07 01/08 31 10% 864.00

1,02,535.00 02/08 01/09 31 10% 871.00

1,03,406.00 02/09 31/10 60 10% 1,700.00

Total 5,106.00

The above table the effect of compounding effect of interest on principle of unpaid.

According payoff the entire loan by passing a payment entry on 31/10 is Rs. 1,05,106.00/-

Hope you are now clear with the Interest Calculation part of loan given/taken. Later we
would also understand the interest calculation part for penalizing interest to debtors who
don’t pay off their bills.

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ACCOUNTING MASTERS
Company Creation
Company: Tally.ERP 9 provides you with capabilities that will simplify the way you
manage all aspects of your business, such as accounting, sales and purchase, inventory,
manufacturing, taxation, payroll, MIS reporting, and much more. To get started, you will
first need to create a company in Tally.ERP 9 and then record your day-to-day business
transactions. To create a company, fill in the company name, contact details, financial year
- and you are all set!

Create a Company with the following detail:  

Name of the Company Harbai Computer Education

Address 1st Floor, Above Maharashtra Mobile Store, Near Iyengar

Bakery & Cherish Gym, Opp. Madh Police Station, Madh
Island, Malad West, Mumbai.

State Maharashtra

Pin 400061

E-mail Address harbaicomputereducation@gmail.com

Website www.harbaicomputereducation.com

Financial Year 2021-2022  

Note: After the successful creation of the above company in Tally.ERP9, now it is time to
create the ledgers.

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Ledger Creation
Ledger: A Ledger is the actual account head to which you identify a transaction and must
be used in all accounting Voucher. Without a ledger, we cannot record any transactions. All
ledgers have to be classify into Groups. Classification of ledger to the appropriate groups is
very important.   
The ledger is a master record of all the accounts of a business unit. Separate accounts are
maintain based on their nature, so all information relating to transactions may be obtained
through ledgers, such as to whom what is payable, from whom what is receivable, what is
the position of assets and liabilities of the business.
Moreover, ledger assists us in preparing trading, profit and loss account and Balance
sheet.
There is two major ways to create a ledger in Tally.
1. One way is to create a Single Ledger
2. Another way is to create it with Multiple Ledgers
3. To create ledger from voucher screen by pressing ALT + C
Note: When we need to create 1 or 2 ledgers, we can create it with the help of the Single
Ledger option. On the other hand, when we need to create more ledgers, we can create it
easily with the help of an option called Multiple Ledgers.
Predefined Ledgers
All ledgers have to be classify into groups. These groups and ledgers are classify into profit
and loss or balance sheet.
There are two pre-defined ledgers in Tally.ERP 9:
1. Cash ledger
2. Profit and loss account
These Groups and Ledgers are classify to Profit & Loss or Balance Sheet. 
Note: There are two pre-defined ledgers available in Tally namely Cash and Profit & Loss
Account.
Groups: Groups are collection of ledgers of the same nature. Account groups are maintain
to determine the hierarchy of Ledger Accounts, which is helpful in determining and
presenting meaningful and compliant reports. Using this you can generate reports, which
are meaningful as well as compliant with laws.
At the highest level, accounts are classify into Capital or Revenue – and more specifically
into Assets, Liabilities, Income and Expenditure.
Tally.ERP 9 provides you with 28 pre-defined Groups. Of these 15 are Primary
Groups and 13 are Sub-Groups. You can also create your own groups, as either Sub-
groups or Primary groups. Groups can be sub-classify to an unlimited level to give a
virtual accounting tree. The lowest level would be the Ledger Account.  All Voucher entries
are pass-using ledgers. You can create the required chart of accounts. You can group the
Ledger accounts under the required Groups at the time of creating the chart of accounts or
you can alter them at any time.
Tally.ERP 9 has pre-defined ledgers for Cash (under Cash-in-hand group) and for the Profit
& Loss A/c (under primary group).

Pre-Defined Groups
There are twenty-eight pre-defined groups in Tally.ERP 9. These groups are a part of the
chart of accounts for most organizations. For example, Sales Accounts is a pre-defined
group. All sales ledgers can be classify under this group.
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Out of the twenty-eight pre-defined groups, fifteen are primary groups and thirteen are
sub-groups. The user can create any number of primary groups and sub-groups.
Note: Primary groups cannot be delete.

Create Ledgers one-by-one

1. Go to Gateway of Tally ➔ Accounts Info. ➔ Ledgers ➔ Create (Single Ledger)
2. Enter the Name of the ledger account. Duplicate names are not allowed
3. Enter the alias of the ledger account, if required. You can access the ledgers using
the original name or the alias name
4. Select a group category from the List of Groups
Note: To create a new group from this field, press Alt + C.
You can alter a ledger account to change its group classification at any time.
5. Enter the Opening Balance. The opening balance is applicable when the ledger is an
asset or a liability, and also if it has a balance in the account as on the date of
beginning of books
Note: For an existing company, debit balances for assets and credit balances for liabilities
are applicable. You can enter balances for accounts that have obverse balances such as
revenue accounts. For example, you may have transferred your books to Tally. ERP 9 in the
middle of the year and may not have closed them in your earlier system. Hence, you must
specify debit or credit for the balance.
Create: The create option is use to create new Masters/Ledgers.
Steps to Create Ledgers:
Go to Gateway of Tally ➔ Accounts Info. ➔ Ledger ➔ Create
Display: The display option is use to view the Masters/Ledger information. Master/Ledger
information cannot be modify in display mode.  
Steps to Check Ledgers:
Go to Gateway of Tally ➔ Accounts Info. ➔ Ledger ➔ Display

Alter: The Alter option allows you to view and make the necessary changes to the
Master/Ledger information. This does not allow the creation of Masters/Ledgers. You can
alter any information of the ledger master with the except for the closing balance under the
group stock-in-hand.
Modification of account ledgers is possible for single ledgers as well as multiple ledgers.
However, for multiple ledgers, not all the fields are available for alteration.
Steps to Alter Ledgers:
Go to Gateway of Tally ➔ Accounts Info. ➔ Ledger ➔ Alter

Delete: The Delete option allows you to delete the unwanted Master/Ledger information.
These will delete permanently, so you cannot recover once you have deleted the
Master/Ledger.
Steps to Delete a ledgers:
Go to Gateway of Tally ➔ Accounts Info. ➔ Ledgers ➔ Alter ➔ Press Alt + D
Note: You can delete the ledger if no vouchers have been create under it. If you want to
delete a ledger for which vouchers have been create, you have to first delete all the vouchers
from that ledger and then delete the ledger account.

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Create the following ledgers:
Name of the Ledger Group Additional Information

Anil Nokia Capital

Tina Nokia Capital

Mukesh Nokia Capital

Try Collection Debtors Maintain Balances bill-by-bill – YES

Omni Mobiles Debtors Maintain Balances bill-by-bill – YES

Nokia India Ltd. Creditors Maintain Balances bill-by-bill – YES

Samsung India Creditors Maintain Balances bill-by-bill – YES

ICICI Bank Bank A/C A/C No. – 2345678920

Loan From HDFC Loans & Liabilities

Sales A/C Sales Account

Purchase A/C Purchase Account

Sales Return A/C Sales Account

Purchase Return A/C Purchase Account

Interest Received A/C Indirect Income

Commission Paid Indirect Expenses

Commission Payable Current Liabilities

Bhailal & Co. Creditors Maintain Balances bill-by-bill – YES

Petty Cash Cash in Hand

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Inventory Creation
Inventory: Inventory is an idle stock of physical goods that contain economic value and are
held in various forms by an organization. Inventories are held in various forms, it can be a
stock awaiting packing, processing, transformation, use or sale in a future point of time.
Any organization, which is into production, trading, sales and service of a product, will
necessarily hold inventories to aid in future consumption and sale.
Inventory Information
The Inventory Info menu, lists the inventory masters like Stock Group, Stock Items, Units
of Measure of the company, using which you can create, alter and display the inventory
master details.
Note: The Inventory Info. Menu is display in the Gateway of Tally, if you set Maintain
Accounts only to No in the F11 ➔ Accounting Features [F1] screen.
By using Features [F11], you can enable the various settings under inventory features,
which determine the information to be enter during transaction entries.
By using Configure [F12], you can enable the required settings of Inventory Masters.
By default, the settings pertaining to Inventory Masters are set to No. If you set them
to Yes, the features will be enable. Typically, they are additional fields that appear during
Masters Creation which enable you to obtain more information and detailed analyses.
Note: If you press F12 anywhere in the Menu, it will take you to the configuration menu.
Stock Items
Stock Items: Stock Item refers to goods that you manufacture or trade. It is the primary
inventory entity and is the lowest level of information on your inventory. You have to create
a Stock Item in Tally. ERP 9 for each inventory item that you want to account for.
Stock items are goods that you manufacture or trade (sell and purchase). It is the
primary inventory entity. Stock Items in the Inventory transactions are similar to ledgers
being use in accounting transactions.

Steps to Create Inventory:

1. Go To Gateway of Tally ➔ Inventory Info. ➔ Stock Item ➔ Create (under Single
Stock Item).
2. Enter the Name of the Stock Item.
3. Enter the Alias name of Stock Item (if required).
4. The field Under will show the List of Groups. Here you can select the Stock Group to
which the Stock Item belongs. By default, Primary Stock Group appears in this field.
Note: You can create a new stock Group by pressing Alt + C at this field.
5. This field will show the Unit List. Here you can select the Unit of measure (UoM)
applicable for the stock item. By default, Not Applicable appears in this field.
Note: You can create a new UoM by pressing Alt + C at this field. For stock items without
UoM, the cursor will not move to the Quantity field during voucher entry.
6. If GST is, enable, set GST Applicable to Applicable and enter the GST details by
enabling the option Set/Alter GST Details.
7. Specify the Rate of Duty applicable for the stock item. This field is use for the
calculation of excise duty or if duty is based on item rate. During Invoicing,
whenever you select a Stock Item, the Rate of duty entered here is display in the
Invoice creation screen.

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Note: In Inventory features [F2], if the option Enable Invoicing is set to No then Rate

of Duty field will not be visible.
When Excise features is activate for the company, the option Tariff Classification will
appear.
8. Specify the details of Opening Balance, if any, for the Stock Item as on the date of
Beginning of Books.
a. In the Quantity Field, specify the stock item Quantity.
b. In the Rate field, specify the stock item Rate.
c. In the Value field, Tally.ERP 9 automatically calculates the value by multiplying
the Quantity and Rate. You can also edit the value; Tally.ERP 9 automatically
refreshes the Rate field accordingly.
Note: If Unit field is Not Applicable then the cursor will move
from Quantity and Rate Field.

Display Stock Items: You can display the existing Single Stock Item master and Multiple
Stock Item masters, since it is only display you are not allow to alter any information in
display mode.
1. Single Stock Item:
Go to Gateway of Tally ➔ Inventory Info. ➔ Stock Items ➔ Display (Under
Single Stock Item). 
Select the Stock Item you want to display from the List of Items.
2. Multiple Stock Items:
Go to Gateway of Tally ➔ Inventory Info ➔ Stock Items ➔ Display (Under
Multiple Stock Item).
3. Group of Stock Items:
Select a Stock Group or All Items from List of Groups to display the Stock Item
under the selected group or All Items. The Multi Stock Item display screen
appears.

Alter Stock Items: This option allows you to view and change the details for the
existing Single Stock Item master and Multiple Stock Item masters. If a transaction is
record for a stock item, it is not possible to alter the units or delete the stock item.

Alter a Single Stock Item

1. Go to Gateway of Tally ➔ Inventory Info. ➔ Stock Items ➔ Alter (Single Stock
Item)
2. Select the required Stock Item from the List of Items. The Stock Item
Alteration screen appears.
Alter Multiple Stock Items
1. Go to Gateway of Tally ➔ Inventory Info. ➔ Stock Items ➔ Alter (Multiple Stock
Items).
2. Select a stock group from the List of Groups to alter the stock item under the
selected group or under All Items. The Multi Stock Item Alteration screen
appears.
Note: In the Multi Stock Item Alteration screen, you can create an item by entering the item
name after the last item, but you cannot delete an item.

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Units of Measure
Units of Measure: Stock Items are mainly purchase and sold based on quantity. Units in
turn measure the quantity. In such cases, it is necessary to create the Unit of Measure.
The Units of Measure can be either simple or compound. Examples of simple units are
nos., meters, kilograms, pieces etc.

Simple Units of Measure

1. Go to Gateway of Tally ➔ Inventory Info ➔ Units of Measure ➔ Create.
2. This field will show the Type of Units.
a. Simple
b. Compound
3. Simple units are Nos, Pcs, and so on. Compound unit is a combination of two
simple units.
4. By default, Tally.ERP 9 will show the Simple unit for creating the unit of measure.
5. You can select the Compound Units by clicking on that field or by using SHIFT +
TAB, [cursor will go to the previous field].
6. Define the Symbol of the unit, for example, Nos. This symbol is use in all displays
and printouts.
7. Specify the Formal Name of the symbol, for example, Numbers. This formal name is
useful during the consolidation of data of different companies, where the symbols
might be the same but are assign to different units. The formal name will be use to
match them.
8. In this field, you can specify the Number decimal places for the Units from 0 to 4.
This field is useful for Units measured in fractions.
For example,
Kilogram unit. 1.255 Kgs, here 1 is for Kg and fraction 255 is for gram. For this unit,
number of decimal places required is 3

Compound Unit of Measure

A Compound Unit is a relation between two Simple Units. Hence, before you create a
Compound Unit, ensure that you have already created two Simple Units.
For example,
To Create Compound unit – Dz (Dozen) of 12 Nos (Numbers), you have to create two simple
units, Dz (Dozen) and Nos (Numbers) and set the conversion factor as 12.
Steps to Create Unit of Measure:
1. Go to Gateway of Tally ➔ Inventory Info ➔ Units of Measure ➔ Create
2. The Unit Creation screen is display as shown. Now Click on Type field or
Press SHIFT + TAB or Press Backspace Key
3. Select Compound from the Types of Units and press Enter. The Conversion field will
be displayed for creating Compound unit
4. Select the First unit from the Units List. In the above example, Dozen will be the
First Unit
5. Specify the Conversion Factor. In the above example, Conversion factor will be 12

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6. Specify the Second Unit from the Units List. In the above example, Number will be
the Second Unit. This unit is also called Tail Unit
7. Use CTRL + A or Accept the Screen for Saving of Compound Unit Creation
Alter Units of Measure
You can alter the units of measurement created in Tally.ERP 9.
1. Go to Gateway of Tally ➔ Inventory Info. ➔ Units of Measure ➔ Alter
2. Select the Name of Unit you want to alter from the Units list.
3. Make the necessary changes
4. Press Ctrl + A to accept
Note: You can delete a unit of measure by pressing Alt + D.
However, a unit of measure that is part of a compound measure cannot be delete without
deleting the compound measure first.
Display Units of Measure
You can display the existing Units of Measure; since it is only display, Tally.ERP 9 does not
allow you to alter any information in display mode.
1. Go to Gateway of Tally ➔ Inventory Info. ➔ Units of Measure ➔ Display

2. Select the Unit of Measure you would like to view from the Units list. You can select
a compound unit or a simple unit from the list.
Note: In display mode, it is not possible to make any changes.
Stock Categories
Stock Category: Stock Category offers a parallel classification of stock items. Like stock
Groups, classification is done based on similarity in behavior.
The advantage of Categorizing items is that you can classify the stock items (based on
functionality) together – across different stock groups, which enables you to obtain reports
on alternatives or substitutes for a stock item.
For enabling Stock Category option in the Inventory Info menu, press F11 ➔ Inventory
Features ➔ Set Yes for Maintain Stock Categories.

Create a Single Stock Categories

This option allows parallel classification of stock items. Like Stock Groups, Stock
Categories are also classify based on some similar behavior. This enables you to obtain
reports for alternatives or substitutes of a stock item.
Steps to Create Stock Category:
1. Go to Gateway of Tally ➔ Inventory Info. ➔ Stock Categories ➔ Create (under
Single Stock Category). The Stock Category Creation screen is displayed as shown
below:
2. Enter the Name of the Stock Category.
3. Specify whether it is a primary category or a sub-category of another category in the
field Under. Select Primary from the list, if you do not have a parent group.
Use Alt + C to create a parent if you do not have the required category in the list.
4. Press Enter or Ctrl + A to save.
Note: Few buttons appear only if you enabled the feature in Features [F11].

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Display a single Stock Category

You can display the existing Stock Category in Single mode and multiple mode, since it is
only display Tally.ERP 9 does not allow you to alter any information in display mode.
1. Go to Gateway of Tally ➔ Inventory Info. ➔ Stock Categories ➔ Display (under
Single Stock Category).
2. Select the Category for which you want to view the display details from the List of
Categories. The Stock Category Display screen shows the details entered in Stock
Category Master.
Note: Few buttons appear only if you enabled the feature in Features [F11].
Alter a Single Stock Category
This option allows you to view the existing Stock Category in edit mode; here you are allow
to change the various information.
1. Go to Gateway of Tally ➔ Inventory Info. ➔ Stock Categories ➔
Alter (under Single Stock Category).
2. Select the Stock Category from the List of Categories. The Stock Category
Alteration screen is display as shown.
3. Make the necessary changes and click Yes to accept.
4. Deletion is possible only in the alteration mode. For deleting the Stock Category,
Press Alt + D.
Note: You cannot delete a stock Category, if any sub Category or stock items use it. In order
to delete the Stock Category, first delete the relevant sub Category and Stock items.
Alter Multiple Stock Categories
1. Go to Gateway of Tally ➔ Inventory Info. ➔ Stock Categories ➔
Alter (under Multiple Stock Categories).
2. Select the Stock Category from the List of Stock Categories. The Multi Stock Group
Alteration screen is display as shown.
3. Make the necessary changes and click Yes to accept.
Note: You cannot delete a Stock Category in multiple mode.
Note: Few buttons appear only if you enabled the feature in Features [F11].
Stock Groups
Stock Groups: Stock Groups in Inventory are similar to Groups in Accounting Masters.
They are helpful in the classification of Stock Items. You can group Stock Items under
different Stock Groups to reflect their classification based on some common features such
as brand name, product type, quality, and so on. Grouping enables you to locate Stock
Items easily and report their details in statements.
Stock Items are classify into stock groups to reflect their classification based on some
community.

Steps to Create Stock Group:

Go To Gateway of Tally ➔ Inventory Info. ➔ Stock Group ➔ Create
1. Enter the Name of the Stock Group.
2. Enter additional name apart from primary name [if required] in the field Alias. You
can create any number of additional names.
3. Specify whether it is a primary group or a sub-group of another group in the
field Under, by selecting from the list.
4. Press Alt + C to create a parent group, if you do not have it in the list.
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5. The field should quantities of items be added pertains to information on

measuring the units of the Stock Items that you would categories under the Stock
Group. The Stock Items categorized under the group should have similar units for
them to be add up. You cannot add quantities in Kgs to quantities in Pcs.
6. Press Enter to save.
Note: You can always go back and reset this option after assessing the units of the items in
the group.
Note: Category and Godown buttons are visible only if you have opted for the same
in Features [F11].

Display Single Stock Group

You can display the existing Stock Group in Single mode and multiple mode, since it is
only display Tally.ERP 9 does not allow you to alter any information in display mode.
1. Go to Gateway of Tally ➔ Inventory Info. ➔ Stock Groups ➔
Display (under Single Stock Group).
2. Select the Stock Group whose particulars you want to display from the List of
Groups. The Stock Group Display screen appears.
Note: Category and Godown buttons are visible only if you opted for the same
in Features [F11].

Display Multiple Stock Groups

1. Go to Gateway of Tally ➔ Inventory Info. ➔ Stock Groups ➔
Display (under Multiple Stock Groups).
2. Select the Stock Group from the List of Groups.
3. If you select All Items from the List of Groups, all the Groups and sub Groups are
display.
4. If you select Grade 1 from List of Groups, the entire sub Groups related to Grade
1 will be display.
Note: Category and Godown buttons are visible only if you have opted for the same in
Features [F11].

Create the following Inventory:

Stock Item Stock Group Stock Category Units of Measures

N3315 Mobile Phones Nokia Nos

N3310 Mobile Phones Nokia Nos

N6610 Mobile Phones Nokia Nos

N6600 Mobile Phones Nokia Nos

N2600 Mobile Phones Nokia Nos

N3220 Mobile Phones Nokia Nos

K700 Mobile Phones Samsung Nos

K750 Mobile Phones Samsung Nos

K500 Mobile Phones Samsung Nos

K900 Mobile Phones Samsung Nos

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Slim Mobile Phones Samsung Nos

Strings Accessories Not Applicable Nos

Covers Accessories Not Applicable Nos

Stickers Accessories Not Applicable Nos

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Purchase Entry [F9]
Purchase Entry: Purchase Entry is pass whenever goods are purchase on Credit or Cash
basis. When a company buys goods on credit or cash, Purchase voucher is use to record all
the Purchase transactions of the company. Invoice mode is of two types, namely:
1. An Account Invoice
2. An Item Invoice

Account Invoice: You will be directly selecting/debiting the Ledger account in case you
are passing an Account Invoice.  This is useful especially when a Service Bill is enter and
does not include Inventory.

Item Invoice: You will be first selecting the Inventory and then allocating the same to the
relevant Ledger account.  This is useful to record all the Inventory movements in books of
account.
Purchase voucher is use to record all the purchase transactions of the company. The entry
can be pass using two different modes one is the Invoice Mode where the calculations can
be done automatically which makes the purchase entry to be passed easily & other that is
in the Voucher Mode where the user itself after calculating the Total Purchase Value can
do the calculations.

Steps to Pass A Purchase Voucher:

Go to Gateway of Tally ➔ Accounting Vouchers ➔ Click on F9: Purchase on the Right-
Hand Side or Press F9.
Configuring an Invoice: Before creating the Purchase Invoice, you can set your Invoice
Configurations from F12 configure.
Then Press F12: Configure ➔ Use Common Ledger A/C for Item Allocation – No.
Note: If you would like to allocate all the Items to a single Purchase Ledger in the Invoice,
you need to set this option to yes for faster data entry.

Use Default’s for Bill Allocations – No.

Note: Setting this option will not allocate the Bill Numbers automatically as defined in
Voucher type master in ascending order.
Note: Press "Ctrl+ V" to change or convert the Invoice Mode into Voucher mode & vice versa.

Instructions: - 
1. In Purchase entry, Create Party's ‘A/c. Name’ Under Sundry Creditors.
2. Always Select Main Location as Godown in the Item Allocation Screen.
3. Always Select New Reference as Type of Reference in the Bill-Wise-Details Screen.
Note: To create any new Ledgers or any new details in the Purchase entry Press “Alt + C”
Note: To make changes or alter any already created Ledger or any details while passing an
entry or viewing an entry in a report Press "Ctrl + Enter"

Special Keys on the Button Bar

When you are passing an Item Invoice in Invoice mode, the following options will be
available in the Button Bar.
1. Alt + I (Accounting Invoice) - You can toggle between Item Invoice and Account
Invoice, by clicking on this option on the Button Bar or pressing Alt + I or vice-
versa.
2. Ctrl + V (As Voucher) - You can toggle between Invoice mode and Voucher mode, by
clicking on this option on the Button Bar or pressing Ctrl + V or vice-versa.

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Special Keys for Voucher Narration Field

1. Alt + R: Recalls the Last narration saved for the first ledger in the voucher,
irrespective of the voucher type.
2. Ctrl + R: Recalls the Last narration saved for a specific voucher type, irrespective of
the ledger.
Purchase Entries:
Qty Rate
Date Party Name Invoice No. Stock Item
(Nos.) (Rs. / Nos.)

01/04 Nokia India Ltd. NI/9345/21-22 N3315 10 3,000.00

N3310 3 2,750.00
N6600 1 12,500.00
N6610 4 5,700.00

01/04 Samsung India SAM/IND/6500 Covers 1,000 250.00

K700 10 10,000.00

02/04 Nokia India Ltd. NI/10245/21-22 N3220 10 15,000.00

N3310 3 2,750.00
N6600 5 11,700.00
N6610 4 5,500.00

01/05 Benq 7859 B1234 12 1,500.00

B9000 10 12,500.00

02/05 Nokia India Ltd. NI/12345/21-22 Strings 2,500 2.00

Covers 2,500 10.00
Stickers 10,000 1.35

02/06 Sagem India Ltd. SIL/20-21/1236 Sagem Handy 25 5,000.00

Sagem Pocket 15 3,895.00

02/09 Nokia India Ltd. NI/19800/21-22 N6681 15 22,500.00

N6681i 10 30,000.00

02/10 Sagem India Ltd. SIL/20-21/1585 Sagem Handy 25 4,200.00

Sagem Pocket 15 3,395.00

02/11 Nokia India Ltd. NI/25000/21-22 N3315 25 2,650.00

N3310 25 2,000.00
N6610 10 5,000.00
N6600 10 10,000.00

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N2600 10 3,500.00
N3220 10 12,500.00
N1100i 25 2,765.00

02/12 Samsung India SAM/IND/12500 K700 100 9,000.00

K750 150 18,000.00
K500 100 7,000.00
K900 10 22,500.00
Slim 250 859.00

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Sales Entries [F8]
Sales Entry: Sales entry is pass whenever goods are sold on credit or cash basis.
Sales Voucher is use to record all the sales transactions of the company. The entry can
have passed using two different modes one is the Invoice Mode where the calculations can
be done automatically which makes the sales entry to be passed easily & other that is the
Voucher Mode where the user itself after calculating the total sales value can do the
calculations.

Steps to Pass A Sales Voucher:

Go to Gateway of Tally ➔ Accounting Vouchers ➔ Click on F8: Sales on the Right-Hand
side or Press F8.

Then Press F12 [Configure] ➔ Use Common Ledger A/C for Item Allocation - Yes.
Note: If you would like to allocate all the items to a single sales ledger in the invoice, you
need to set this option to Yes for faster data entry.

Use Defaults for Bills Allocations – No.

Note: Setting this option will not allocate the bill number automatically defined in voucher
type master in ascending order.
Note: Press Ctrl + V to change or convert the invoice mode into voucher mode & vice versa.

Instructions: -
1. In Sales Entry, Create Party A/c. Name under Sundry Debtors.
2. At end of every Sales Entry, Put Bill Numbers Manually in the Bill-Wise-Details
screen.
3. Always select New Reference as Type of Reference in the Bill-Wise-Details screen.
Note: To create any new Ledger or any new details in the Sales entry. Press “Alt + C”
Note: To make changes of alter any already created Ledger or any details while passing an
entry or viewing an entry in a report Press “Ctrl + Enter”

Auto Invoice Numbering:

Auto voucher invoice numbering is set when you need invoice number in series and change
auto after once entry is pass successfully.

Methods of Voucher Numbering:

You can select the required Method of voucher numbering from the voucher type
creation/alteration screen.
The Methods of Numbering list appears as shown below:
The following methods of voucher numbering are available in Tally.ERP 9:
1. Automatic
2. Automatic (Manual Override)
3. Manual
4. Multi-user Auto
5. None

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1. Automatic
Select Automatic if you want to auto-number the vouchers. Enable Use Advance
Configuration to allow advanced configuration for automatic numbering vouchers.
To know more, see Use Advance Configuration.

2. Automatic (Manual Override)
Select Automatic (Manual Override) if you want to auto-number the vouchers and
manually override the auto-numbering, if required. For example, if the voucher number
is 10, you can manually override the voucher number as required, say 21. The next
voucher number will be 22.
Set Prevent Duplicated to Yes to avoid duplicate voucher numbers during entry. You
can enable this option only if there are no transactions of this voucher type.
Enable Use Advance Configuration to allow advanced configuration for automatic
numbering vouchers. To know more, see Use Advance Configuration.
3. Manual
Select Manual for numbering vouchers manually. Set Prevent Duplicated to Yes to
avoid duplicate voucher numbers during entry. You can enable this option only if there
are no transactions of this voucher type.
4. Multi-user Auto
Select Multi-user Auto to enable allotment of subsequent voucher number in a multi-
user environment.
The Multi-User Auto Voucher Numbering feature in Tally.ERP 9 works effectively in a
multi user environment where multiple users are working on the company data and
recording vouchers.
Multi-user auto voucher numbering helps:
 When multiple users are attempting to pass a sales voucher simultaneously, the
process may be hindered due to the voucher number allocation.
 When a specific voucher number is used by one of the user the other user will have
to re-accept the voucher so that the next available voucher number is allotted to his
voucher.
 To ensure that the vouchers are numbered sequentially.
 To ensure that the bill-wise details do not have to be re-entered manually as it
will get updated with the new voucher number on acceptance of the voucher entry.
Let us consider three users: Mr. Mohan, Mr. Ram and Mr. Shyam. All the three users are
trying to record a sales voucher. The voucher on each of their system is numbered as 25.
Mr. Mohan saves the voucher first and his voucher will be saved as 25. But when Ram
and Shyam attempt to save the voucher, the error message "Voucher Number 25
already used! New number will be xx!" appears.
In order to eliminate this error message and avoid the re-acceptance of the voucher,
Tally.ERP 9 provides the option of Multi-User Auto Voucher Numbering.
5. None
Select None to disable voucher numbering.

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To Set Auto Invoice Numbering:
Go to Gateway of Tally ➔ Accounts Info ➔ Voucher Type ➔ Alter ➔ Sales ➔
Method of Voucher Numbering – Automatic
Use advance Configuration – Yes
Note: By default in Tally.ERP 9 come with invoice or voucher number that starts from 1.
Note: We will also learn how to set invoice numbering with prefix & suffix details.
For Example, there is invoice number may be it can be short tailed or long tailed or maybe
it can be custom invoice number.
Eg. There is an invoice number HCE/20-21/001/MDH1
 First Part - Prefix Details - HCE/20-21/
 Second Part - Invoice Number - 001
 Third Part - Suffix Details - /MDH1

Starting Number:
Some companies starts invoice number from 1 and some prefer 101 or 1001 or maybe
some according to their choice

Width of Numeric Part:

This option ask for maximum number of digits in your invoice number up to end of the
period. You should have rough estimate of how many invoice numbers in a period will you
have. For example, you can estimate 10,000 invoices will be generate, that means this
much invoice have 5 digits of invoice number. So the width of numeric part is 5.

Prefill with zero:

If you set this option yes, then 1 will become 00001. That means you invoice number will
always keep 5 digit of invoice number.

Restart Number:
 Applicable from: This part ask for date from when starting new style of invoice
numbering, lets enter “01/April/2020.”
 Starting Number: Should be the same as above 1.
 Particulars: In particulars Tally asking you when this invoice numbers will restarts.
Some restarts invoice number on monthly basis, some on daily, so some on weekly or
yearly basis and rarely some don’t restart the invoice numbering.

Prefix Details:
 Applicable from: This part ask for date from when starting prefix details, lets enter
“01/April/2020” or you can override by choosing different date.
 Particulars: In particulars, write the prefix details you want in our case “HCE/20-21/”
in our case “HCE” is abbreviation of Harbai Computer Education & “20-21” is
financial year.

Suffix Details:
 Applicable from: This part ask for date from when starting suffix details, lets enter
“01/April/2020” or you can override by choosing different date. Even you can skip this
if there is no suffix details in your invoice number.
 Particulars: In particulars, write the prefix details you want in our case “/MDH1”. You
can choose your own suffix details according to requirement.

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Sale Entries:
Qty Rate
Date Party Name Invoice No. Stock Item
(Nos.) (Rs. / Nos.)

02/04 Try Collection NOK/001/21-22 N3315 3 5,000.00

N3310 2 3,000.00
N6600 1 15,000.00
N6610 3 6,100.00

02/04 Omni Mobiles NOK/002/21-22 Covers 900 300.00

K700 3 12,500.00
N3220 3 17,500.00
N3310 2 3,250.00
N6600 3 12,500.00
N6610 2 6,500.00

02/05 Sambhav NOK/003/21-22 N3220 2 17,000.00

Telecomm
N3310 1 3,250.00
N6600 1 13,500.00
N6610 1 5,250.00

01/06 Try Collection NOK/004/21-22 B1234 9 1,650.00

B9000 8 15,000.00

02/06 Pappu Bhai & Co. NOK/005/21-22 Strings 1,500 2.80

Covers 1,500 12.00
Stickers 8,000 2.00

02/07 Omni Mobiles NOK/006/21-22 Sagem Handy 20 7,500.00

Sagem Pocket 15 4,505.00

01/10 Suleman NOK/007/21-22 N6681 15 28,000.00

Brothers
N6681i 10 33,000.00

02/12 Suleman NOK/008/21-22 Sagem Handy 25 5,000.00

Brothers

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Sagem Pocket 15 4,595.00
N3315 25 3,050.00
N3310 25 2,200.00
N6610 10 5,600.00
N6600 10 12,000.00
N2600 10 3,900.00
N3220 10 12,900.00
N1100i 25 3,065.00

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Debit Note [Ctrl + F9]
Debit Note: Debit Note is a statement indicate the value of goods returned by the buyer to
the supplier. The buyer sends it to the seller along with the goods, which are to return. It
states that the party to whom it sent is debit in the book. It is the source of the document
from where the purchase return book is prepared.
Debit Note is also known as a Purchase Return. Debit Note Entry is pass whenever
purchased goods are return. Debit Note can be enter in voucher or Invoice mode.

Steps to pass a Debit Note Voucher Entries:

Go to Gateway of Tally ➔ Features [F11] ➔ Accounting Features [F1] or Inventory
Features [F2] ➔
1. To use it in Voucher mode you need to enable the feature Press F11 [Features] ➔ F1
[Accounting Features] ➔ Use Debit/Credit Notes – Yes
2. To make the entry in Invoice mode enable the option F11 [Features] ➔ F1
[Accounting Features] ➔ Use Invoice mode for Debit Notes – Yes

To go to Debit Note Entry Screen,

1. Go to Gateway of Tally ➔ Accounting Vouchers.
2. Click on Ctrl + F9 [Debit Note] on the Button Bar or press Ctrl + F9.
Note: You can toggle between voucher and Invoice mode by clicking Ctrl + V.
Debit Note Entries:
Rate
Debit Note Against Invoice Stock Qty
Date Party Name (Rs. /
No. No. Item (Nos.)
Nos.)

02/05 Nokia India NI/DN/001 NI/9345/21-22 N3315 1 3,000.00

Ltd.
N3310 1 2,750.00
N6610 1 5,700.00

02/05 Samsung NI/DN/002 SAM/IND/6500 Covers 100 250.00

India
K700 1 10,000.00

02/05 Nokia India NI/DN/003 NI/10245/21-22 N3220 2 15,000.00

Ltd.
N3310 1 2,750.00
N6600 1 11,700.00
N6610 1 5,500.00

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Credit Note [Ctrl+F8]
Credit Note: Credit note is prepare by the creditors on receiving the goods returned by the
customers/debtors.
The seller issues this note to the buyer. This note states the value of the goods returns and
the party to whom it is send is credit in our book. It is a source of the document from
where Sales return books is prepared.
Credit Note Entry is pass whenever sold goods are return. Credit Note has also known as
Sales Return.

Steps to pass a Credit Note Voucher Entries:

Go To Gateway of Tally ➔ Features [F11] ➔ Accounting Features [F1] or Inventory
Features [F2] ➔
1. Use Debit/Credit Notes – Yes
2. Use Invoice mode for Credit Notes – Yes

Credit Note Entries:

Credit Note Against Invoice Stock Qty Rate (Rs. /
Date Party Name
No. No. Item (Nos.) Nos.)

01/05 Try NI/CN/001 NOK/001/21-22 N3315 1 5,000.00

Collection
N3310 1 3,000.00

02/05 Omni NI/CN/002 NOK/002/21-22 Covers 100 300.00

Mobile
K700 1 12,500.00
N3220 1 17,500.00
N6600 1 12,000.00

02/05 Sambhav NI/CN/003 NOK/003/21-22 N3220 2 17,000.00

Telecom

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Receipt Entry [F6]
Receipt Entry: Receipt entry is pass whenever we receive money through any income or
any Sundry Debtors.
Any money received from debtors against sales Invoice or on Account and for all
transactions where money is receive, are accounted or entered into Tally using the Receipt
Voucher.

Steps to Pass a Receipt Voucher:

Go to Gateway of Tally ➔ Accounting Vouchers ➔ Click on F6: Receipt on the Right-
Hand Side or Press F6.
Then Press F12: Configure ➔ Use Single Entry Mode for Payment/Receipt/Contra ➔
Click on F6: Receipt on the Right-Hand Side.
Use Cr/Dr instead of To/By during Entry ➔ Yes
Note: By enabling this option, you can change To/By to Cr/Dr in the Voucher Entry screen &
opposite of it.

Show Table of Bill details for Selection ➔ Yes

Note: By default, Tally display pending bills list of ledger account in the voucher entry
screen. If you set it to No, the pending bills list will not be display.

Instructions:
1. In Receipt Entry,
Always Credit Party’s A/C Name or Any Income A/C
Debit Cash [If Cash or Nothing is Mentioned in the Entry] or
Bank Name [If Cheque Number is mention].
2. In the Bill-Wise Screen Below Type Reference
Do Not Select New Reference
But Always select Against Reference: If the bill no is mentioned,
Select on Account: If the bill no is not mentioned,
Select Advance: If advance is mention in the entry.
Note: After understanding, Purchase / Sales / Purchase Returns / Sales Returns now let us
do some Receipt & Payment Entries.

Receipt Entries:
Date Party Name Amount Against Receipt Mode

02/05 Try Collection 46,300.00 Bill No. NOK/001/21-22 By Cash

02/07 Omni Mobiles 5,62,075.00 Bill No. NOK/002/21-22 By Cheque No.

& 895671 Of UTI
Bank, Mazgoan
Bill No. NOK/006/21-22

01/08 Try Collection 1,34,850.00 Bill No. NOK/004/21-22 By Cash

02/08 Pappu Bhai & Co. 1,00,000.00 Bill No. NOK/005/21-22 By Cash
& Balance as Advance

31/12 Suleman Brothers 14,75,000.0 Full & Final By Cash

0
Settlement Against

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Bill No. NOK/007/21-22
& NOK/008/21-22

31/12 Sambhav Telecom 22,000.00 Bill No. NOK/003/21-22 By Cash

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Payment Entry [F5]
Payment Entry: Payment entry is pass whenever we pay money for any expenses or to any
Sundry Creditors. Payment voucher is use to account all the payments made by the
company by way of Cash/Bank.
Any money Paid from creditors against Purchase Invoices or on Account and for all
transactions where money is paid are accounted or entered into Tally using the payment
Voucher.

Steps to Pass a Payment Voucher:  

Go to Gateway of Tally ➔ Accounting Vouchers ➔ Click on F5: Payment on the Right-
Hand Side or Press F5.
Payment voucher can be passed using Single Entry or Double Entry mode by configuring
the setting Use Single Entry mode for Payment/Receipt/Contra in F12 [Configuration].

Steps to Enable Single Entry Mode:

Then Press F12: Configure ➔ Use Single Entry Mode for Payment/Receipt/Contra ➔
Yes.
Note: If you want to display it in single entry mode. By default, Tally displays Single Entry
Mode for Payment/Receipt/Contra entry.

Steps to Enable Double Entry Mode:

Then Press F12: Configure ➔ Use Single Entry Mode for Payment/Receipt/Contra ➔
No.
Note: If you want to display it in double entry mode. By default, Tally displays Single Entry
Mode for Payment/Receipt/Contra entry.

Use Cr/Dr instead of To/By during Entry – Yes.

Note: By enabling this option, you can change To/By to Cr/Dr in the Voucher Entry screen
& opposite of it.

Show Table of Bill Details for Selection – Yes

Note: By default, Pending Bills list of a ledger account in the voucher entry screen. If you set
it to No the pending bills list will not be display.
Note: By default, single entry mode is use.

Instructions: -
1. In Payment Entry,
Always Debit Party’s A/C Name or Any Expense A/C.
Credit Cash [If Cash or Nothing is Mentioned in the Entry] or
Bank Name [If Cheque Number is mention].
2. In the Bill-wise-Details Screen Below Type of Reference
Do Not Select New Reference but Always
Select Against Reference: If the Bill No Is Mention,
Select on Account: If the Bill No Is Not Mention,
Select Advance: If Advance Is Mention in The Entry.

Pre-allocate Bills for Payment or Receipt

By enabling this option in F12 [Configure], you can pre-allocate the bills before specifying
the Ledger amount. This Configuration enables the user to select the bills first before the
total amount can be update in the amount field.
For example, the company pays against the Purchase bills.

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● Set Pre-Allocate Bills for Payment/Receipt - Yes.
Now while making the entry immediately after selecting the party the Bill wise
details screen for the party appears.
Here, on selecting Against Reference the List of Pending Bills for the party are display.
Note: For the Pending Bills table to be displayed the F12 option Show Table of Bill Details for
Selection should be set to Yes. If it is set to No then the list of pending bills are not display.
After selecting, the Bills press Enter to obtain the voucher entry screen
In the above screen, it can be see that the Bill wise details are also appearing in the
voucher entry screen.
1. To obtain this Bill wise details, the F12 [Configure] option Show Bill-wise
Details should be set to Yes.
2. To obtain the Credit period, the F12 [Configure] option Expand into multiple
lines should be set to Yes.
Payment Entries:
Date Party Name Amount Against Receipt Mode

02/06 Nokia India 2,94,400.00 Bill No. NI/9345/21-22, By Cash

Ltd.
NI/10245/21-22,
NI/12345/21-22

02/07 Samsung 1,50,000.00 Bill No. SAM/IND/6500 By ICICI Bank,

India Cheque No.
456891

01/08 Benq 1,43,000.00 Bill No. 7859 By Cash

02/08 Pappu Bhai & 61,800.00 Against Advance Received By Cash

Co. but unable to deliver the
material therefore returned

31/01 Sagem India 3,39,350.00 Cash Paid Against the Bill By Cash
No. SIL/21-22/1236,
SIL/21-22/1585

Note: Similarly, the transactions can be record in single-entry mode even in Receipt and
Contra vouchers.

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Additional Entry
Pass the Following Sale Entry:
Qty Rate
Date Part Name Invoice No. Stock Item
(Nos.) (Rs. / Nos.)

01/03 Reliance Infocom NOK/009/21-22 Covers 1,100 125.00

Stickers 2,000 2.00
Strings 1,000 3.30
B1234 3 2,000.00
B9000 2 12,500.00
N3220 7 15,000.00
N3310 1 2,500.00
N3315 6 3,000.00
N6600 1 11,000.00
Sagem Handy 5 5,000.00
K500 100 5,000.00
K700 107 7,000.00
K750 150 12,500.00
K900 10 23,000.00
Slim 250 325.00

Pass the Following Receipt Entry:

Date Party Name Amount Against Receipt Mode

02/03 Reliance Infocom 37,72,550.0 NOK/009/21-22 By Cheque No. 485591

0 drawn on ICICI Bank
Ltd.

Assignment No. 1
You have to solve this question with yourself only. All the entries are depending on that you
have already learned topics.
Date Particulars

01/04 Anil Nokia bought Cash into the Business of Rs. 50,00,000.00/-

01/04 Mukesh Nokia bought into Business Cash of Rs. 50,00,000.00/-

01/04 Tina Nokia bought into Business Cash of Rs. 25,00,000.00/-

31/07 Purchased a well-built office at BKC at Rs. 25,00,000.00/- for operations

31/01 Settled Nokia India Ltd. A/c by paying the balance Rs. 11,32,875/- by
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Cheque No. 101123 of ICICI Bank

31/01 Settled A/c of Samsung India by paying Rs. 49,00,000/- in Cash

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Contra Entry [F4]
Contra Entry: Contra Entry is pass whenever the transaction is between Cash bank.
As per the Accounting Principles, a Contra entry is a transaction involving transfer of cash
between one Cash A/c to another or one Cash A/c to another Bank A/c i.e., is a
transaction indicating transfer of funds from:
1. Cash account to Cash account
2. Cash account to Bank account
3. Bank account to Cash account
4. Bank account to Bank account
Recording Contra Entry in Single Entry Mode
The Contra Voucher can be recorded using Single entry mode or Double Entry mode.
To toggle between Single Entry and Double Entry mode, we need to change the setting Use
Single Entry mode for Payment/Receipt/Contra to Yes/No in F12 [Configure].
Steps to pass a Contra Voucher:
Go to Gateway of Tally ➔ Accounting Vouchers ➔ Click on F4 [Contra] on the Right-
Hand Side or Press F4.
Then Press F12 (Configure) ➔ Use Single Entry Mode for Payment/Receipt/Contra -
Yes.
Note: If you want to display it in single entry mode. By default, Tally displays single entry
mode for Payment/Receipt/Contra entry. If you want to display it in double entry mode, then
set this option to No.
1. Go to Gateway of Tally ➔ Accounting Vouchers ➔ F4 [Contra]
2. For example, to transfer funds from Cash Account to Bank Account:
a. Debit the Bank Account.
b. Credit the Cash Account.
3. In the Bank Allocation screen, users can select the mode of transaction from the List
of Transaction Type
4. When Cash is selected as a Transaction Type , you can specify the cash
denominations for the transaction in the voucher entry screen, if the option Show Cash
Denomination Details set to Yes in F12 [Configuration]
Note: By default, Cash Denomination Details is enable.
5. During Bank Allocation, a new screen – Cash Denominations will appear for Cash
Transaction Type
6. The cash denominations entered here will be capture in the Cash Denomination
details while printing a Cash Deposit Slip for this transaction.
7. The Difference field will give the difference between the total and the sum of amounts
specified for the Denominations.
8. Advantages of Single Entry Mode
a. Faster data entry.
b. When there is a Single Debit and Multiple Credits in the entry.
Recording Contra Entry in Double Entry Mode
The Contra voucher can be recorded using Double Entry mode where we have the option to
select multiple Debits and multiple Credits.

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To select multiple Debit and Credit ledgers in the Double entry mode, set Use Single Entry
Mode for Payment/Receipt/Contra to No in F12 [Configure].
To enter in Double Entry Mode,
Go to Gateway of Tally ➔ Accounting Vouchers ➔ Press F4 [Contra] from the Button
Bar or press F4.
Then Press F12 [Configure] ➔ Use Single Entry Mode for Payment/Receipt/Contra -
No.
Note: If you want to display it in double entry mode. By default, Tally displays single entry
mode for Payment/Receipt/Contra entry.

Use Cr/Dr instead of To/By during Entry ➔ Yes

Note: By enabling this option, you can change To/By to Cr/Dr in the Voucher Entry screen &
opposite of it.

If you record the same entry (passed in single entry mode) in Double Entry Mode, Similar
to the Contra entry in Single Entry Mode.
In the Bank Allocation screen, users can select the mode of transaction from the List of
Transaction Type. By default, Cheque/DD will be select.
When Cash is select as the Transaction Type, a new screen – Cash Denominations.
The cash denominations entered here will be capture in the Cash Denomination details
while printing a Cash Deposit Slip for this transaction.
Note: Cash denomination of 2000 is support from Release 5.4.8.
The Difference field will give the difference between the total and the sum of amounts
specified for the Denominations.
Note: If the cash is transfer to more than one bank, then for each bank a separate Cash
Denominations screen will appear.
Contra Entries:
Date Particulars

31/05 Transferred Cash of Rs.50,00,000/- To ICICI Bank.

02/07 Opened a new A/C with HDFC by Depositing Cash 10,00,000/-

31/01 Transferred Rs.25,00,000/- from ICICI to HDFC.

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Journal Entry [F7]
Journal Entry: Journal entry is pass whenever any adjustment is to be done.
Journal entries are use for finalization of accounts. Journal Vouchers are use to adjust the
debit and credit amounts without involving the cash or bank account. Hence, they are refer
to as adjustment entries.

Six Types of Journal Entries:

There are six types of journal entries, they are:
1. Opening entries
These entries carry over the ending balance from the previous accounting period as the
beginning balance for the current accounting period.
For example: The ending balance of the Cash account on the balance sheet from the
previous accounting period was ₹ 11,000 after all liabilities were paid for the period.
That balance of ₹ 11,000 is now the opening entry for the current accounting period.
2. Transfer entries
Transfer entries move, or allocate, an expense or income from one account to another.
For example, My Toys Manufacturing transfers cash from its main account to a
subsidiary. A transfer journal entry accounts for the transfer of the money from one
account to another. No third party is involved in these entries, and transfers must
always net zero.
3. Closing entries
These entries mark the end of an accounting period at a balance that can then be
transfer from a temporary account to a permanent one or from one accounting period to
the next. In the case of temporary accounts, the closing entry zeros out the account,
and any balance above that is transfer to another, more permanent account. The
temporary account is then closed.
Examples of temporary accounts include expense and loss accounts; revenue, income
and gain accounts; income summary accounts, and dividend or withdrawal accounts. In
the case of accounting periods, the closing entry reflects the ending balance for that
account at the end of that accounting period. That value is then transfer as the opening
entry for the next accounting period. In that case, it is the accounting period for that
account, which is closed.
4. Adjusting entries
Adjusting entries are entries that record changes to accounts that are not otherwise
account for in the journal, in compliance with the accrual method of accounting. These
entries are enter in the general ledger at the end of an accounting period as per
matching and revenue recognition principles. Common examples are accruals, deferrals
and estimates.
An expense accrual refers to an expense reported in an accounting period before it is
actually paid. An example is electricity used by a plant in the month before the utility
issues a bill for the company to pay.
A revenue accrual relates to work that has been perform or products that have been
deliver but for which the customer has not been invoice.
An expense deferral occurs when a payment is made in an accounting period prior to
when the expense is actually incurred. An example is a payment made now for
insurance that covers the following six-month period. Deferred revenue applies when a
company receives payments in advance for services or products that are to be deliver in
the future.

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5. Compound entries
These entries record more than one account to be debit or more than one account to be
credit. The rule of journal entry requires the total of debits and credits to be equal, but
the number of credits and debits do not have to be equal.
For example, there may be one debit but two or more credits, or one credit and two or
more debits, or even two or more credits and debits.
For example, Payroll may entail a large number of journal entries, which can be
simplify into compounded form as a summary.
6. Reversing entries
Reversing entries are made at the beginning of a new accounting period and serve to
reverse, or undo, an adjusting entry made at the end of the previous accounting period.
This option provides a significant reduction in accounting errors due to double-counting
expenses or income and increases efficiency in processing actual invoices in the new
accounting period. In other words, they are use to simplify bookkeeping.
For example, an accrued expense reported in the previous accounting period can be
revers so the expense can be account for in the accounting period in which it was paid,
without worrying about reporting the expense twice.
Examples of Journal Entries
T-accounts are a visual representation of the general ledger account. Here are some
examples, as well as additional journal entry types.

Cash (Asset Account)

DEBIT CREDIT
Increases an asset / money received Decreases an asset / money paid

Notes Payable (Liability Account)

DEBIT CREDIT
Decreases a liability / Loan paid Increases an asset / Borrowed additional
funds

Steps To pass Journal Voucher:

Go to Gateway of Tally ➔ Accounting Vouchers ➔ Press F7

Journal Entries:
Date Particular

31/03 Passed entry for Depreciation on Office Premises @ 20%

31/03 Adjusted the Balance of Rs. 4,750/- from Samsung India as Trade Discount
received.

31/03 Transfer the Loss from the P&L A/C to Capital A/C in the ratio of their
investments.

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Changing Period
In this part, let us know how to Transfer the Balance to next year. This very simple once
you have finished entering vouchers for on period you can very well shift to next period as
per the following steps:
Go to Gateway of Tally ➔ Press Alt + F2 ➔ Specify the next period in our case
01/04/2021 as start date and 31/03/2022 as end date and press enter automatically all
balances would be transferred to the next period.

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