PROJECT REPORT

ON
COMPUTERIZED ACCOUNTING SOFTWARE
ON
TALLY.ERP 9
DEGREE OF BACHELOR OF COMMERCE (HONS.)
2020-2023

UNDER THE GUIDANCE OF

DR. ASHU LAMBA

ASSISTANT PROFESSOR, VIPS

SUBMITTED BY:-
AKSHAY YADAV
ROLL NO:- 01417788820
B.COM (H) SECTION C

Vivekananda School of Business Studies (VSBS)

Vivekananda Institute Of Professional Studies
AU Block (Outer Ring Road) Pitampura
Delhi - 110034

UNIT 1
1.1 INTRODUCTION TO TALLY

Q- Who Founded it ? Who are the company owners ? Where is the head office located ?
Tally Solutions, then known as Peutronics, was co-founded in 1986 by  Shyam Sunder
Goenka  and his son  Bharat Goenka  and incorporated in 1991.

The Company Owners Are:-

Ms. Sheela Goenka- Chairperson
Mr. Bharat Goenka- Vice Chairperson
Mr. Tejas Goenka- Managing Director
Ms. Nupur Goenka- Executive Director
The Head Office is located at Bangalore, Karnataka, India.

HISTORICAL VERSION OF TALLY

Shyam Sundar Goenka was running a company that supplied raw materials and machine
parts to plants and textile mills in southern and eastern India. Unable to find software that
could manage his books of accounts, he asked his son, Bharat Goenka, 23, a Maths
graduate to create a software application that would handle financial accounts for his
business. The first version of the accounting software was launched as an MS-DOS
application. It had only basic accounting functions, and was named Peutronics Financial
Accountant.

 In 1999, the company formally changed its name to Tally Solutions.

 In 2006, Tally launched Tally 8.1, a concurrent multi-lingual version, and also
Tally 9.
 In 2009, the company released Tally.ERP 9, a business management solution.
 In 2015, the company launched a program called Vriddhi to certify and classify its
business partners. Also in 2015, Tally Solutions announced the launch of
Tally.ERP 9 Release 5.0 with taxation and compliance features.
  As of 2016, the company had 1 million customers.
 In 2016, Tally Solutions was shortlisted as a GST Suvidha Provider to provide
interface between the new Goods and Services Tax (GST) server and taxpayers,
and in 2017, the company launched its updated GST compliance software.
 In 2020, the company released TallyPrime.

1.2 Evolution of Book Keeping To Accounting

It is said that the practice of bookkeeping began with the invention of money in Lydia,
Greece during 700 B.C. Clearly, bookkeeping in its true sense, first, arose in classical
Greece. However, the practice of the well-known system of double-entry book-keeping
evolved in Italy during the 13th and 14th centuries.
Accounting is a language that dates back thousands of years and has been used in many
parts of the world. The earliest evidence of this language comes from Mesopotamian
civilizations more than 7,000 years ago.  The Mesopotamians kept the earliest records
of goods traded and received, and these activities are related to the early record-
keeping of the ancient Egyptians and Babylonians. The Mesopotamians used primitive
accounting methods, keeping records that detailed transactions involving animals,
livestock, and crops.

In India, philosopher and economist Chanakya wrote “Arthashastra” during the

Mauryan Empire around the second century B.C. The book contained advice and details
on how to maintain record books for accounts.

The Bookkeepers
Bookkeepers most likely emerged while society was still using the barter system to
trade (before 2000 B.C.) rather than a cash-and-commerce economy. Ledgers from
these times read like narratives, with dates and descriptions of trades made or terms
for services rendered.
 Below are two examples of what these ledger entries may have looked like:

 Monday, May 12: In exchange for three chickens, which I provided today, William
Smallwood (labourer) promised a satchel of seed when the harvest is completed in the
fall.
 Wednesday, May 14: Samuel Thomson (craftsman) agreed to make one chest of
drawers in exchange for a year’s worth of eggs. The eggs are to be delivered daily once
the chest is finished.

All of these transactions were kept in individual ledgers. If a dispute arose, they
provided proof when matters were brought before magistrates. Although tiresome, this
system of detailing every agreement was ideal, because long periods could pass before
transactions were completed.

New and Improved Ledgers

As currencies became available and tradesmen and merchants began to build material
wealth, bookkeeping evolved. Then, as now, business sense and ability with numbers
were not always found in one person, so math-phobic merchants would employ
bookkeepers to maintain a record of what they owed and who owed debts to them.

Until the late 1400s, this information was arranged in a narrative style with all the
numbers in a single column—whether an amount was paid, owed, or otherwise. This is
called “single-entry” bookkeeping.

Difference between Book Keeping And Accounting

Bookkeeping Accounting

Definition

Bookkeeping deals with identifying Accounting refers to the process of summarising,

and recording financial interpreting and communicating the financial data
transactions only of an organisation.
 Decision making

Data provided by bookkeeping is Management can take important decisions based

not sufficient for decision making on the data obtained from accounting

Preparation of Financial Statement

Not done in the case of Financial statements are a part of the accounting
bookkeeping process

Analysis

No analysis is required in the Accounting analyses the data and creates insights
bookkeeping for the business

Persons Involved

The person concerned with The person concerned with accounting is known as
bookkeeping is known as a an accountant
bookkeeper

Determining Financial Position

Bookkeeping does not show the Accounting helps in showing a clear picture of the
financial position of a business financial position of a business

Level of Learning

No high-level learning required High-level learning required for understanding and

analysing accounting concepts

1.3 Accounting Principles - GAAP

GAAP is a combination of authoritative standards (set by policy boards) and the commonly
accepted ways of recording and reporting accounting information. GAAP aims to improve
the clarity, consistency, and comparability of the communication of financial information.
GAAP may be contrasted with pro forma accounting, which is a non-GAAP financial
reporting method. Internationally, the equivalent to GAAP in the U.S. is referred to
as International Financial Reporting Standards (IFRS). IFRS is currently used in 166
jurisdictions.2

GAAP helps govern the world of accounting according to general rules and guidelines. It
attempts to standardize and regulate the definitions, assumptions, and methods used in
accounting across all industries. GAAP covers such topics as revenue recognition, balance
sheet classification, and materiality.

The ultimate goal of GAAP is to ensure a company's financial statements are complete,

consistent, and comparable. This makes it easier for investors to analyze and extract useful
information from the company's financial statements, including trend data over a period of
time. It also facilitates the comparison of financial information across different companies.

10 Principles of GAAP
There are 10 general concepts that lay out the main mission of GAAP.

1. Principle of Regularity
The accountant has adhered to GAAP rules and regulations as a standard.

2. Principle of Consistency
Accountants commit to applying the same standards throughout the reporting process,
from one period to the next, to ensure financial comparability between periods.
Accountants are expected to fully disclose and explain the reasons behind any changed or
updated standards in the footnotes to the financial statements.

3. Principle of Sincerity
The accountant strives to provide an accurate and impartial depiction of a company’s
financial situation.

4. Principle of Permanence of Methods

The procedures used in financial reporting should be consistent, allowing a comparison of
the company's financial information.
5. Principle of Non-Compensation
Both negatives and positives should be reported with full transparency and without the
expectation of debt compensation.

6. Principle of Prudence
This refers to emphasizing fact-based financial data representation that is not clouded by
speculation.

7. Principle of Continuity
While valuing assets, it should be assumed the business will continue to operate.

8. Principle of Periodicity
Entries should be distributed across the appropriate periods of time. For example, revenue
should be reported in its relevant accounting period.

9. Principle of Materiality
Accountants must strive to fully disclose all financial data and accounting information in
financial reports.

10. Principle of Utmost Good Faith

Derived from the Latin phrase uberrimae fidei used within the insurance industry. It
presupposes that parties remain honest in all transactions.

Accounting Concepts

There are a number of conceptual issues that one must understand in order to develop
a firm foundation of how accounting works. These basic accounting concepts are as
follows:

 Accruals concept . Revenue is recognized when earned, and expenses are

recognized when assets are consumed. This concept means that a business may
 recognize revenue, profits and losses in amounts that vary from what would be
recognized based on the cash received from customers or when cash is paid to
suppliers and employees. Auditors will only certify the financial statements of a
business that have been prepared under the accruals concept.

 Conservatism concept . Revenue is only recognized when there is a reasonable

certainty that it will be realized, whereas expenses are recognized sooner, when
there is a reasonable possibility that they will be incurred. This concept tends to
result in more conservative financial statements.

 Consistency concept . Once a business chooses to use a specific accounting

method, it should continue using it on a go-forward basis. By doing so, financial
statements prepared in multiple periods can be reliably compared.

 Economic entity concept . The transactions of a business are to be kept separate

from those of its owners. By doing so, there is no intermingling of personal and
business transactions in a company's financial statements.

 Going concern concept . Financial statements are prepared on the assumption

that the business will remain in operation in future periods. Under this
assumption, revenue and expense recognition may be deferred to a future
period, when the company is still operating. Otherwise, all expense recognition
in particular would be accelerated into the current period.

 Matching concept . The expenses related to revenue should be recognized in the

same period in which the revenue was recognized. By doing this, there is no
deferral of expense recognition into later reporting periods, so that someone
viewing a company's financial statements can be assured that all aspects of a
transaction have been recorded at the same time.

 Materiality concept . Transactions should be recorded when not doing so might

alter the decisions made by a reader of a company's financial statements. This
tends to result in relatively small-size transactions being recorded, so that the
financial statements comprehensively represent the financial results, financial
position, and cash flows of a business.
 Accounting Conventions

The scope and detail of accounting standards continue to widen, meaning that there are
now fewer accounting conventions that can be used. Accounting conventions are not set in
stone, either. Instead, they can evolve over time to reflect new ideas and opinions on the
best way to record transactions.

Accounting conventions are important because they ensure that multiple different
companies record transactions in the same way. Providing a standardized methodology
makes it easier for investors to compare the financial results of different firms, such as
competing ones operating in the same sector.

That said, accounting conventions are by no means flawless. They are sometimes loosely
explained, presenting companies and their accountants with the opportunity to potentially
bend or manipulate them to their advantage.

Accounting Convention Methods

There are four main accounting conventions designed to assist accountants:

 Conservatism: Playing it safe is both an accounting principle and convention. It tells

accountants to err on the side of caution when providing estimates for assets and
liabilities. That means that when two values of a transaction are available, the lower
one should be favoured. The general concept is to factor in the worst-case scenario
of a firm’s financial future.
 Consistency: A company should apply the same accounting principles across
different accounting cycles. Once it chooses a method it is urged to stick with it in
the future, unless it has a good reason to do otherwise. Without this convention,
investors' ability to compare and assess how the company performs from one
period to the next is made much more challenging.
 Full disclosure: Information considered potentially important and relevant must be
revealed, regardless of whether it is detrimental to the company.
  Materiality: Like full disclosure, this convention urges companies to lay all their
cards on the table. If an item or event is material, in other words important, it
should be disclosed. The idea here is that any information that could influence the
decision of a person looking at the financial statement must be included.

1.4 Types of Account- Real, Nominal, Personal, Modern classification

Rules of Journal Entries- Traditional & Modern Classification

Types of Accounts

Personal Account

These accounts types are related to persons. These persons may be natural persons like Raj’s
account, Rajesh’s account, Ramesh’s account, Suresh’s account, etc.

These persons can also be artificial persons like partnership firms, companies, bodies
corporate, an association of persons, etc.

For example – Rajesh and Suresh trading Co., Charitable trusts, XYZ Bank Ltd, C company Ltd,
etc.

There can be personal representative accounts as well.

For example – In the case of Salary, when it is payable to employees, it is known how much
amount is payable to each of the employee. But collectively it is called as ‘Salary payable A/c’.

Rule for this Account

Debit the receiver.

Credit the Giver.

For Example  – Goods sold to Suresh. In this transaction, Suresh is a personal account as being
a natural person. His account will be debited in the entry as the receiver.

Real Accounts

These account types are related to assets or properties. They are further classified as Tangible
real account and Intangible real accounts.

Tangible Real Accounts

These include assets that have a physical existence and can be touched. For example – Building
A/c, cash A/c, stationery A/c, inventory A/c, etc.

Intangible Real Accounts

These assets do not have any physical existence and cannot be touched. However, these can
be measured in terms of money and have value. For Example  – Goodwill, Patent, Copyright,
Trademark, etc.

Real Account Rules

Debit what comes into the business.

Credit what goes out of business.

For Example – Furniture purchased by an entity in cash. Debit furniture A/c  and credit cash
A/c.

Nominal Account

These accounts types are related to income or gains and expenses or losses. For example: –
Rent A/c, commission received A/c, salary A/c, wages A/c, conveyance A/c, etc.

Rules
Debit all the expenses and losses of the business.

Credit the incomes and gains of business.

For Example  – Salary paid to employees of the entity. Salary A/c will be debited when the
expenses are incurred. Whereas, when an entity receives any interest, discount, etc these are
credited whenever these are received by the entity.

Modern Classification of Accounts

Accounting for financial transactions can be classified into two types of approaches. One is the
Traditional Approach and another one is the Modern Approach. Traditional Approach is also
known as the British Approach. While the Modern Approach is also known as the American
Approach. Let us learn more about it.

Modern Approach to Accounting

Under the Modern Approach, the accounts are not debited and credited. Hence, the
Accounting Equation is used to debit or credit an account. Thus, it is also known as the
Accounting Equation Approach.

The Basic Accounting Equation is: Assets = Liabilities + Capital (Owner’s Equity)

Furthermore, it can be expanded as Assets = Liabilities + Capital + Revenues – Expenses

Also, Profit = Revenues – Expenses

The Accounting Equation should remain balanced every time. Because we know that each
transaction has a Dual aspect. Thus, each transaction will either affect the debit side and credit
side. Also, a transaction may affect two accounts on the debit side or two accounts on the
credit side. Also, the profits will increase the Capital and losses will decrease it.
Classification of Accounts under the Modern Approach

Under the Modern Approach the accounts can be classified as follows:

I. Assets Accounts

Assets are the properties, possessions or economic resources of a business. They help in
business operations and help in earning revenues. They can be measured in terms of money.

Assets can be tangible or intangible. Also, assets can be classified as Fixed Assets and Current
Assets. Fixed Assets are held for the long-term.

They help in carrying out the normal operations of the business. For example, land, building,
furniture, machinery, vehicles, etc. Current Assets are held for short-term. They are realizable
within a year usually. For example, debtors, bills receivable, bank balance, cash, stock, etc.

II. Liabilities Accounts

Liabilities are the amounts that an entity owes to the outsiders. These are the obligations or
the debts payable by the business. Liabilities can also be classified as Long-term and Current.

Long-term Liabilities are payable after a period of one year. For example, debentures, bank
loans, etc. Current liabilities are payable within one year. For example, creditors, bills payable,
rent outstanding, bank overdraft, etc.

III. Capital Accounts

The money brought into the business by the owner is called Capital or Owner’s Equity. The
Capital can be brought in cash or assets by the owner.

Capital is an obligation of the business that has to be paid back to the owner. Because business
is a separate entity from its owner.
Therefore, the Capital is shown on the liabilities side of the Balance Sheet. The capital account
is shown after deducting the Drawings by the owner. Drawings are the amount of cash, goods
or assets taken by the owner for personal use from the business.

IV. Revenue Accounts

Revenue is the amount earned by the business by selling goods or rendering of services. Also, it
includes other incomes such as rent received, the commission received, interest received,
dividend earned, etc. All items of revenue are also clubbed together under the Modern
Approach.

V. Expenses Accounts

All costs incurred or money spent by a business in order to earn revenues is called expenses. It
is noteworthy here that when the benefits of the money spent are exhausted within a period
of one year, it is called an Expense. While in case the benefit lasts for more than a year it is
called Expenditure.

Therefore, the purchase of goods is expenditure while the cost of goods sold is an expense. For
example, rent paid, salary paid, electricity charges, interest paid, etc. are expenses. While the
purchase of assets, purchase of short-term investments, etc. fall under the category of
expenditure.

Rules of Journal Entries

1 – Personal Account

A personal account is that of a person, company, an organization such as a bank, and so on.

 Debit the Receiver, Credit the giver

  Accounts that fall in this category are: Debtors, Creditors and so on

2 – Real Account

Real Account is the account of tangible and intangible items such as inventory, cash, bank
account, plant and machinery and so on

 Debit what comes in, Credit what goes out

 Accounts that fall in this category are: Cash, bank balance, stock of goods, Purchase,
Sales, Plant & Machinery and so on

3 – Nominal Account

This account is the account of profits, losses, incomes, and gains.

 Debit all losses and expenses, Credit all incomes and gains.
 Accounts that fall in this category are Profit, Interest, Dividend, Depreciation

1.5 Accounting Methods- Meaning, Advantages and Disadvantages.

Difference between Accrual Accounting and Cash basis of accounting

Meaning

An accounting method refers to the rules a company follows in reporting revenues and
expenses. The two primary methods of accounting are accrual accounting (generally used
by companies) and cash accounting (generally used by individuals).

Cash accounting reports revenues and expenses as they are received and paid through cash
inflows and outflows; accrual accounting reports them as they are earned and incurred
through sales and purchases on credit and by using accounts receivable & accounts
payable. Generally accepted accounting principles (GAAP) requires accrual accounting.
KEY TAKEAWAYS

 An accounting method consists of the rules and procedures a company follows in

reporting its revenues and expenses.
 The two main accounting methods are cash accounting and accrual accounting.
 Cash accounting records revenues and expenses when they are received and paid.
 Accrual accounting records revenues and expenses when they occur. Generally
accepted accounting principles (GAAP) requires accrual accounting.
 The Internal Revenue Services (IRS) requires accrual accounting for businesses
making an average of $25 million or more in sales for the preceding three years.
 Once a company chooses an accounting method, it has to stick to that method per
rules set by the IRS and requires approval if it wants to change its accounting
method.

Understanding an Accounting Method

All businesses need to keep accounting records. Public companies are required to do so.
Accounting allows a business to monitor every aspect of its finances, from revenues to
costs to taxes and more. Without accurate accounting, a business would not know where it
stood financially, most likely resulting in its demise.

Accounting is also needed to pay accurate taxes to the Internal Revenue Service (IRS). If the
IRS ever conducts an audit on a company, it looks at a company's accounting records and
methods. Furthermore, the IRS requires taxpayers to choose an accounting method that
accurately reflects their income and to be consistent in their choice of accounting method
from year to year.

This is because switching between methods would potentially allow a company to

manipulate revenue to minimize their tax burdens. As such, IRS approval is required to
change methods. Companies may use a hybrid of the two methods, which is allowable
under IRS rules if specified requirements are met.
Advantages of cash-basis accounting

For smaller businesses, cash-basis accounting has a number of advantages over accrual or
modified cash basis.

1. Easy to use

Because cash basis is the easiest accounting method, it’s much easier to learn, implement,
and maintain for business owners. Not to mention, it might be more cost-efficient, too.

The learning curve for cash-basis accounting is significantly lower than for accrual
accounting. There are fewer accounts to keep track of, and therefore less information to
track.

You don’t have to plan as much or go into specifics with cash accounting. That means more
time for your business and less time engrossed in the nitty-gritty details of accounting.

2. Exists in the present

Another advantage of cash-basis accounting is that it lets you easily see how much cash you
actually have on hand.

Cash-basis accounting only deals with concrete funds that go in and come out, meaning it
exists in the now. You don’t have to factor in future expenses and income into your books
until cash actually changes hands.

3. Potential tax advantage

Some businesses may benefit from using cash accounting when it comes to taxes. Because
you only record income and expenses when money actually changes hands, you can control
the timing of transactions.

By controlling transaction timing, you can speed up expenses and slow down revenue. That
way, you can legally increase your expenses and decrease income to lower your tax liability.
Disadvantages of cash-basis accounting

Despite its benefits, there are some cons to using cash-basis accounting. Consider the
following before deciding on the cash-basis method.

1. Doesn’t show the full picture

One disadvantage of cash-basis accounting is that it gives your business a limited look at
your income and expenses.

Cash basis does not show your business’s liabilities. As a result, you may think you have
more money to spend than you actually have. Likewise, it doesn’t show your customer’s
liabilities to your business, which could cause you to forget about unpaid customer debts.

Because cash basis is just a snapshot of your business’s finances, you may not have a clear
picture of your long-term finances. This could impact decision-making as well as growth.

2. Restricted use

Not all businesses can use cash-basis accounting. You cannot use cash-basis accounting if
you:

 Sell products or services on credit

 Have gross receipts higher than the IRS requirements

 Need inventory to account for income

If you offer credit to customers, you must use accrual accounting. Why? Because offering
credit means customers don’t pay right away. You need to be able to record transactions
when they take place, not just when you receive the money.

The IRS also sets restrictions on who can use cash-basis accounting. The following cannot
use cash-basis accounting:

 C corporations or partnerships with average annual gross receipts for the three
preceding tax years exceeding $25 million
3. Potentially difficult to switch over

As your business grows, you may decide (or be required) to change accounting methods.
To change from cash to accrual, you need to make some adjustments.

When transitioning your accounting books from cash to accrual, you must:

1. Add accrued and prepaid expenses

2. Add accounts receivable

3. Subtract cash payments, cash receipts, and customer prepayments

Advantages of Accrual Basis Accounting

1. It grants more useful business analysis.

The matching of expenses and revenue using this method allows you to conduct more
useful business analysis. For instance, when you purchase expensive machinery to be used
over the next decade, its cost will be spread over such a period. Just as this time frame will
see some benefits of the equipment, each year in the period will also get some of the
expenses through the revenue gained from selling products the machine has produced.

2. It allows for easy planning.

One process that will become easier with accrual basis accounting is planning, especially
that it allows you to account for all of your expenses and revenue within the right period.
This entails that you will be able to create budgets for your expenses and predict sales,
which is essential to inventories, staffing and other areas of operation. Aside from easier
planning, this accounting method can help with reducing your tax burden by issuing invoices
at the start and the end of the year.

3. It is compliant with GAAP.

With expenses and revenue matched, accrual accounting allows for financial statements
that are unaffected by cash timing in business negotiations. Basically, this will make periodic
financial statements to become more representative of your business’s health, rather than
 what the chequebook shows. While not all small business are required to be compliant with
GAAP, they will be in the future if they plan to expand to outside investors.

Disadvantages of Accrual Basis Accounting

1. It poses some difficulties.

Difficulty is one huge drawback of accrual basis accounting, where rules in the recognition of
revenue and expenses can be very complicated. Now, if you want to fully and record
transactions in your small business in accordance with GAAP, you should seek the help of an
accountant.

2. It can lead to deception.

It is important to note that the confusion coming with this accounting practice can lead
people to deception of financial statements. For example, some businesses have misused
the method to hide weaknesses and mistakes within their financial reports. Simply put, it
can be used to hide fraud.

3. It is difficult to switch costs.

If you have started with another method of accounting, it can be difficult to switch to the
accrual basis. This is because you might already be having difficulties with cash-flow at the
start, which is why most start-ups go for cash basis accounting.
Of course, accrual basis accounting can be beneficial when implemented properly. By
understanding the advantages and disadvantages that come with it and discussing them
with your accountant, you can determine whether it is best to implement in your business
or not.

Difference between Cash And Accrual Accounting

Cash Basis of Accounting Accrual basis of Accounting

 Definition

It is that basis of accounting where any It is that basis of accounting where any income
income or expense is recognised only when or expense is recognised when it is earned/
there is an inflow or outflow of cash incurred, irrespective of the time when it is paid/
collected

Nature

Cash basis is simple in nature Accrual basis is complex in nature

Accounting system followed

Cash basis of accounting follows the single It follows a double entry system of accounting
entry system that records either inflow or where each transaction has two outcomes in the
outflow of cash form of debit and credit

Variations in Income Statement

Income statement will show a relatively lower Income statement will show higher income
income under cash basis of accounting levels under the accrual basis of accounting

Accuracy

Cash basis of accounting has low accuracy Accrual basis of accounting is more accurate
than the cash basis of accounting

Auditing of Financial Statements

Under cash basis of accounting financial Financial statements can be audited only when
statements cannot be audited they are prepared using accrual basis of
accounting

Suitable for

Cash basis of accounting is suitable for micro Accrual basis of accounting is suitable for large
to small businesses corporations

UNIT 2

2.1 Introduction to Tally ERP 9 Accounting Software

Tally.ERP 9 is one of the most widely used financial software.
Tally.ERP 9 reports can help a business owner make informed
decisions to increase efficiency, reduce costs, and organize business
operations.
With Tally.ERP 9, accurate, up-to-date business information is
available at your fingertips anytime. It provides a Comprehensive
solution for the accounting and inventory needs of a business.It
provides the capability to generate fully accurate tax returns in a
matter of minutes and is also capable of extracting, interpreting and
presenting financial data.

Tally.ERP 9 is the world’s fastest and most powerful concurrent

Multi-lingual business Accounting and Inventory Management
software. Tally.ERP 9, designed exclusively to meet the needs of
small and medium businesses, is a fully integrated, affordable and
highly reliable software. Tally.ERP 9 is easy to buy, quick to install,
and easy to learn and use. Tally.ERP 9 is designed to automate and
integrate all your business operations, such as sales, finance,
purchasing, inventory, and manufacturing. With Tally.ERP 9,
accurate, up-to-date business information is literally at your fingertips
anywhere. The powerful new features and blazing speed and power of
Tally.ERP 9 combined with enhanced MIS, Multilingual, Data
Synchronization and Remote capabilities help you simplify all your
business processes easily and cost-effectively.
2.1.1 . Salient features of Tally ERP 9

 A leading accounting package: The first version of Tally

was released in 1988 and, through continuous development,
is now recognised as one of the leading accounting packages
across the world, with over a quarter million customers.
Tally’s market share is more than 90%.

 No Accounting Codes : Unlike other computerised

accounting packages which require numeric codes, Tally.ERP
 9 pioneered the ‘no accounting codes’ concept. Tally.ERP 9
users have the freedom to allocate meaningful names in plain
English to their data items in the system.

 Complete Business solution : Tally.ERP 9 provides a

comprehensive solution to the accounting and inventory
needs of a business. The package comprises financial
accounting, book-keeping and inventory accounting. It also
has various tools to extract, interpret and present data.

 Integrated \ non – integrated accounting and

Inventory : With Tally.ERP 9, the user is able to choose to
maintain accounts only. If accounting with inventory is opted
for, the user can choose whether it should be integrated or
not.

 Flexible and easy to use : Tally.ERP 9 is very flexible. It

mimics the human thought process, which means that
Tally.ERP 9 can adapt itself to any business need. Tally.ERP
9 users need not change the way their business is run to adapt
themselves to the package.

 Speed : Tally.ERP 9 provides the capability to generate

instant and accurate reports, which assist the management to
take timely and correct decisions for the overall productivity
and growth of the company.

 Power: Tally.ERP 9 allows the user to maintain multiple

companies and with unlimited levels of classification &
grouping capabilities. It also allows drill down facility from
report level to transaction level.
  Flexibility: Tally.ERP 9 provides flexibility to generate
instant reports for any given period (month/year) or at any
point of time besides providing the facility to toggle between
Accounting & Inventory reports of the same company or
between companies.

 Concurrent multilingual capability: Tally.ERP 9 offers you

the exclusive capability of maintaining your accounts in any
Indian language, viewing them in another language and
printing them in yet another Indian language.

 Real time processing: Immediate posting & updation of

books of accounts as soon as the transactions are entered,
thereby facilitating instant statements & Reports. It also
faciliates a real-time multi-user environment.

 Versatility: Tally.ERP 9 is suitable for a range of

organisations, from small grocery stores to large corporations
with international locations and operations.

 Multi-platform availability: Tally.ERP 9 is available on

multiple versions of windows. It runs on a single PC or on a
network. On a network, it supports access via any
combination of platforms.

Online Help: The Tally.ERP 9 Online Help (Alt+H)

provides instant assistance on basic and advanced features or
any other relevant topics of Tally.ERP 9.

 Tally.NET: is an enabling framework which establishes a

connection through which the remote user can access the
client’s data without copying / transferring the data.
  Remote Access: Tally.ERP 9 provides remote capabilities to
access the data from anywhere and anytime.

 Control Centre: works as an interface between the user and

Tally.ERP 9 installed at different sites and enables the user to
centrally configure and administer Site/User belonging to an
account.

 Support Centre: allows a user to directly post his support

queries on the functional and technical aspects of the Product .

 Auditor’s Edition: Tally.ERP 9 offers a special Auditors’

Edition of Tally.ERP 9, which provides auditing and compliance
capabilitie exclusively for chartered accountant.

2.1.2 . Functional features of Tallly ERP 9

Basic Accounting Basic Inventory

Complete book-keeping Stock categories

Books, registers and statements of accounts Stock query by stock group, or stock category

General ledgers Multiple godowns

Accounts receivable and accounts payable Stock transfers to godowns and branches

Flexible voucher numbering Multiple stock valuation methods

Batch-wise/Lot-wise, including expiry date

Flexible classification of account heads handling

Panoramic view Alternate units of measure and tail units

Drill-down display Tracking through receipt notes/delivery

notes/rejections
 inwards/rejections outwards

Database reporting Additional costs incurred on purchase

Movement/Profitability analysis
Voucher and cheque printing Party-wise/Item-wise/
Stock Group-wise

Customisable sales invoices using price

Columnar reports lists with
multiple prices

Bank reconciliation Sales and purchase order processing

Cash flow statement

Advanced Accounting Advanced Inventory

Multiple companies Stock items classified as raw materials, work-in-

process, finished goods

Multi-currency Bill of Material with auto-adjustment of stocks

Multiple financial years Job-working concepts, including sub-contracting

Comparison of data using multi-columnar reporting Additional cost of manufacturing with notional value
and percentage

Memo vouchers CENVAT support

Post-dated vouchers Reorder levels

User-defined voucher types Stock ageing analysis

2.1.3. Technological Advantage of Tally ERP 9

Simple and rapid installation: Tally.ERP 9 has a simple,
menu-driven installation proce- dure. The user can install
the program files on any drive if the hard disk has
partitions. The user can also specify the name and directory
location of the program files. Tally.ERP 9 uses minimum
hard disk space in the local drive. Its installation on the
local disk takes just a few seconds.

Unlimited multi-user support: A multi-user version of

Tally.ERP 9 can be installed on a network, having any
number of computers with different operating systems
such as Win 98, NT, 2000, XP etc.

Internal backup/restore: Tally.ERP 9 has an in-built, user-

friendly ‘backup and restore’ option. It helps the user to take
a backup of one or more companies or all companies, in a
single directory, in the local hard disk, or in any external
media.

Data reliability: Tally.ERP 9 offers reliable data. It uses a

flexi-field, flexi-length, self-indexed, weighted file structure
for an extremely compact and fast database. Tally.ERP 9 is
robust. Tally.ERP 9 uses signalling quality data integrity
checks, at regular levels, to ensure the complete reliability
of data.

User-defined security levels: Tally.ERP 9 offers high levels

of security. Users can define multiple levels of security
according to their requirements. Every authorised user in the
company can have an individual password, with rights to use
specific features only. The user with the administrator level
password will have full access and can set controls for other
users.

Data security: Tally.ERP 9’s data integrity checks ensure that there
are no external changes to the data.Tally.ERP 9 also uses a binary
encoding format of storage to prevent devious grouping of
information.

Tally audit: The Tally.ERP 9 audit feature provides the

user with administrator rights and the capability to check
the entries made by the authorised users and alter these
entries, if necessary. Once the entries are audited,
Tally.ERP 9 displays the altered entries, if any, along with
the name of the user, who has altered the entry, and the date
and time of the alteration.
TallyVault: Tally.ERP 9 offers a data encryption option called
TallyVault. Without the valid TallyVault password, the data cannot
be accessed. Tally.ERP 9 follows the DES (Data Encryption
Standard) encryption method to safeguard the data.

Removal of data into a separate company: Tally.ERP 9 allows

users to maintain a company for any number of financial years. Once
the books of accounts have been completed for the earlier financial
years, the user can split the company data into multiple companies as
per financial periods required. The user can specify the date from
which the company has to be split and Tally.ERP 9 will split the
company to form two companies as per periods specified. Once the
data has been split, the closing balance of the first period (first
company) becomes the opening balance for the next period (second
company).
Multi-directory for company management: The user can create
multiple directories to store data. The data stored in these directories
can be accessed directly in Tally.ERP 9, by specifying the path.

Import/Export of data: Any transaction can be exported and

imported to other software after suitably altering the current structures
to accept the Tally.ERP 9 data structure. Data can also be imported to
Tally. ERP 9 by writing a TDL program. The data which is to be
exported from Tally.ERP 9 can be in XML, HTML or ASCII format.

Data Synchronization: Synchronization is the process of exchanging

Tally.ERP 9 data between two or more locations. This process
enables a branch office to send its data to the head office, over the
Internet or a private network.
Graphical analysis of data: Tally.ERP 9 provides graphical analysis
of data which helps the user to perform deeper analysis. The user can
generate graphical analysis reports such as Sales register, Purchase
register, Ledgers, Funds flow, Cash flow, Stock Item registers and so
on. This helps the management to quickly judge performance and be
better prepared for difficult times.

ODBC (Open Database Connectivity) compliance: It allows other

programs to use data from Tally.ERP 9, directly. Thus, any program
such as MS-Excel or Oracle, which is ODBC compliant, can use data
from Tally.ERP 9. Data connectivity is dynamic, which means that
any update in Tally.ERP 9 is reflected in real time in other ODBC
compliant software. The user can also extract data from Tally.ERP 9
and design his/her own report formats in other ODBC compliant
software.
Protocol support: Tally.ERP 9 provides protocol support for HTTP,
HTTPS, FTP, SMTP, ODBC and raw sockets with data interchange
formats such as XML, HTML with XML islands, SOAP and related
formats. Protocol refers to a mecha- nism by which information (data)
can be put into or taken from Tally.ERP 9. Formats refer to the
standard for informa- tion to be generated from Tally.ERP 9 or from
other applications which can exchange data with Tally.ERP 9.

Direct web browser access: While working on Tally.ERP 9, the user

can directly log on to the Tally website, provided he/she has access to
the Internet. The website lists details of all the facilities offered by
Tally. ERP 9. The user can also download the latest release of
Tally.ERP 9 as and when it is available. The Tally website also offers
Tally Chat, by which a user can communicate with a Tally
representative and get required information.
Ability to preview and publish reports and documents on the
Internet: Companies which want to publish reports and price lists on
their website can do so directly from Tally.ERP 9.

E-mail Facility: Tally.ERP 9 facilitates the mailing of any Tally.ERP

9 report or document.

Multilingual capability: Tally is the world’s first

accounting and inventory software with multilingual
capability. Currently, Tally.ERP 9’s multilingual capability
extends to 12 languages which include nine Indian
languages (Hindi, Gujarati, Punjabi, Tamil, Telugu, Marathi,
Kannada, Malayalam and Bengali), Arabic, Bahasa Melayu
and Bahasa Indonesia. Tally.ERP 9 enables you to enter data
in one language and have it transliterated into different
languages. You can generate invoices, purchase orders or
delivery notes in the language of your choice after entering
data for the same in any of the nine specified languages.
Also, the phonetic keyboard allows you to spell the term
phonetically based on how it sounds and Tally.ERP 9
displays the data in the language selected after
transliteration.
Point of Sale (POS): POS is an acronym for Point of Sale.
Point of Sale can be a retail outlet, a check out counter in a
shop, or any other location where a sales transaction takes
place. It is a computerised cash register which adds up the
sales totals, calculates the balance to be returned to buyer
and automatically adjusts the inventory level to reflect the
quantity sold. The equipment required for POS to work
effectively are cash registers, card readers, barcode scanners
and so on.

2.2 Getting started with tally ERP 9

2.2.1 Creating a company in tally erp 9

The first step towards working with Tally.ERP 9 is to create a
‘company’. A ‘company’ in Tally.ERP 9 is a central repository
where you can maintain all the financial records of your
 business, and from where you can extract the required financial
reports and statements.

Go to Gateway of Tally > Company Info. > Create company

The fields in the company creation screen and the

information to be filled in each of them are explained below.
To navigate between the fields, use the Enter/Tab/Arrow
Keys, or Mouse clicks.
Directory: The path to the location of Tally.ERP 9 data is displayed
here. By default, the path provided while installing Tally.ERP 9 will
be displayed. However, you can press backspace and specify the
location in which you want the data to be stored.

Name: Provide a name for the company that is being created. In this
example, we are creating a company named Akshay Yadav Bcom 3C.

Primary Mailing details: The mailing name and address details are
picked from here for any report such as balance sheet and statements
of accounts.

Mailing Name: The name provided for the company in the name
field is automatically displayed here. However, you can change it as
per requirements. The name specified here will be used for mailing
purposes.

Fill in the company’s address.

Country: Select the country in which the company is located. This

will allow users to choose the statutory capabilities available for that
country. In this example, the country selected is India.

Fill in the relevant numbers in the Telephone No. and Mobile No.
fields.

E-Mail: Fill in the company’s official e-mail ID here. This will be

used while e-mailing reports and statements from Tally.ERP 9.

Financial Year from: This refers to the twelve-month accounting

period of the company. For Akshay Yadav Bcom 3C , the financial
year begins on 1-4-2021.

Books beginning from: The date provided in the aforesaid field will
be automatically displayed here. In the example, the date is retained.
However, if you have started with maintaining your books of
accounts with Tally.ERP 9 mid-year, the required date can be set
accordingly. Tally will not allow you to record the transactions for
dates preceding the date entered in the books beginning from field.

TallyVault Password (if any): Once you enter a password here, you
will need it to open your company each time. The name of a company
that is locked using TallyVault will be hidden with the asterisk ‘*’
symbol. You need to provide the TallyVault password to open and
access the company.

Repeat Password: Here, enter the password entered in the TallyVault

field, as a confirmation.

Use Security Control?: Setting this option to Yes will allow you to
define the access rights for each user who will access your company.
This feature is explained in forthcoming chapters.
Base Currency Symbol: The base currency symbol will be filled as
per the country selected.

Formal Name: The currency’s formal name will be filled here. In this
example, it is INR (Indian Rupees).

Suffix Symbol to Amount: For some countries, the currency symbol

is specified after the amount. This option can be enabled for such
countries, so that the currency symbol may be printed after the
amount. However, Akshay Yadav Bcom 3C is an Indian company
and hence this option is set to No.

Add Space between Amount and Symbol?: Tally.ERP 9 will

provide a single space between the amount and the currency symbol,
if this option is set to Yes. For e.g.: KSh 5,000. Notice the space
between symbol and the amount.

Show amounts in Millions?: If the company’s financial statements

need to have their values expressed in terms of millions, set this
option to Yes.

Number of Decimal Places: By default, the number of decimal

places for the base currency is set to 2. However, you can have up to 4
decimal places. The Indian currency has 2 decimal places whereas
certain other countries require 3 decimal places and so on.

Word representing amount after decimal: The symbol for amounts

expressed in decimals will be set by default. For India, it is Paise.

Decimal Places for printing amounts in Words: You can specify

the number of decimal places for printing the amount in words. This
number should be equal to or lesser than the number specified in
number of decimal Places field. For example, if the currency has up to
3 decimal places, the value to be printed in words can be restricted to
2 decimal places.

The message Accept? Yes or No will be displayed.

Press Y or Enter to save the details.

2.2.2 Select a Company

By ‘selecting’ a company, you are essentially opening the company it
in Tally.ERP 9.

1. Go to Gateway of Tally > F3: Company Info. (Alt+F3)

2. Click Select Company, or press S. Tally.ERP 9 displays the
Select Company screen, with a List of Companies that are available
in the location specified. You can also press F1 to get to the Select
Company screen.
2.2.3. Shut a Company
By ‘shutting’ a company, you are essentially closing a company.

1. Go to Gateway of Tally > F3: Company Info. (Alt+F3)

2. Click Shut Company. Tally.ERP 9 displays the Close Company

screen, with the List of Companies that are open. You can also
use Alt+F1 from the Gateway of Tally to get to this screen.

2.2.4. Alter Company Details

By ‘altering’ a company, you are modifying the details which you
have provided in the Company Creation screen.

1. Go to Gateway of Tally > F3: Company Info. (Alt+F3)

2. Click Alter or press A. Tally.ERP 9 displays the Select Item

screen, with a List of Companies that are available in the location
specified. Select the company which you need to alter and press
Enter to view the Company Alteration screen. Alter the company
details as required and accept the screen.
2.3 Introduction to Tally ERP 9 Features and Configurations

2.3.1 Introduction
The ‘Features’ in Tally.ERP 9 are a set of capabilities, provided as
options, that enable you to maintain financial records as per your
business needs. The company features menu can be found by clicking
F11: Features on the vertical button bar. The effect of these options
will be reflected only in the company for which they are enabled.
The ‘Configurations’ in Tally.ERP 9 are options that help you modify
the way a feature works. The configuration menu can be found by
clicking F12: Configure on the vertical button bar. The options when
enabled, will have an effect on all the companies in the data directory.
Once you have created a company in Tally.ERP 9, the next step
would be to setup Tally.ERP 9’s ‘Features’ and ‘Configurations’.
There are sets of options that help you optimise your usage of
Tally.ERP 9.
2.3.1.1 Features
The Company Features section in Tally.ERP 9 is divided
into the following major categories:

 Accounting Features
 Inventory Features
 Statutory & Taxation
 TSS Features
 Add-On Features

You can press F11: Features from any screen of Tally.ERP 9 or you
may also click the F11: Features button available in the vertical
button bar, to enable the required features. The features are specific
only to the company currently in use (for which the said feature is
enabled), thereby allowing flexibility of independently enabling
different features for each of the companies.

Load the company by name Akshay Yadav Bcom 3C and go to

Gateway of Tally > press F11: Company Features.

The Company Features Screen appears

There are various settings available under accounting features,

inventory features and statutory & taxation features, which facilitate
the entry of additional information during voucher entry.
TSS Features option is not active, to activate the same you need
to enable the Security Control option in Company Alteration
screen.

2.3.1.2. Accounting Features

The Accounting Features consists of configurations/functionalities,
which generally affect accounting transactions and reports.

The Accounting features section is further divided into six sub-

sections, namely:
  General

 Outstandings Management

 Cost/Profit Centres Management

 Invoicing

 Budgets and Scenario Management

 Banking Features

 Other Feature

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

Features or click F1: Accounting Features .

The Accounting Features Screen appears:

 Enable the required features

 Press Enter to accept

2.3.1.3. Inventory Features
The Inventory features comprise of configurations/functionalities
pertaining to inventory transactions and reports.

The Inventory features section is further divided into seven sub-

sections, namely:
 General
 Storage & Classification
 Order Processing
 Invoicing
 Purchase Management

 Sales Management
 Other Features

Go to Gateway of Tally > F11: Company Features >

Inventory Features or click F2: Inventory

The Inventory Feature screen appears:

  Enable the required feature.
 Press enter to acccept.

2.3.1.4 Statutory & Taxation Features

The Statutory & Taxation features comprise of
configurations/functionalities pertaining to statutory compliances
available in Tally.ERP 9. The Statutory features are country specific
and strictly depend upon the country selected in the Company
Creation screen.

2.3.1.5 TSS Features

The Tally Software Services (TSS) screen comprises information
about Connection, Remote Access and SMS Access details of a
company. The TSS Features will be available only when Use Security
Control is set to Yes in Company Creation screen.
Go to Gateway of Tally > F11: Company Features > TSS Features or
click F4: TSS

2.3.1.6. Add – on features

Customers, to meet their accounting requirements, may purchase
customised solutions from Tally Partners. Depending on the customer
requirement, the solution provider formulates the solution. In some
cases, a solution may require the introduction of a new feature in
Tally.ERP 9 to support the functionality. F6: Add-On Features is a
place holder for the features provided in the Add-ons/Local TDLs
loaded.

Go to Gateway of Tally > F11: Company Features > F6: Add-On

Features.

2.3.1.7 Data Management and security Features

The data management and security features comprises of
configurations/functionalities pertaining to:
 Taking backup of a company
 Restoring the backup of a company
 Splitting a company
 Exporting and importing data using Tally.ERP 9
 E-Mailing

 Data Security

2.3.1.8 Payroll Features

Tally.ERP 9 integrates payroll features with accounting features, and
simplifies payroll processing . Tally.ERP 9 enables users to set up and
implement salary structures, ranging from simple to complex, as per
the organisation’s requirements. Users can also align and automate
payroll processes and integrate the same with other accounting
applications. Tally.ERP 9 also supports payslip printing, recording of
attendance, leave, and overtime. Users can also generate gratuity and
expat reports.
2.3.1.9 Configurations
In Tally.ERP 9, F12: Configurations are provided for Accounting,
Inventory & printing options and are user-definable as per the
business’ requirements.The F12: Configurations are applicable to all
the companies residing in the Tally.ERP 9 data Directory. The
F12:Configuration options vary depending upon the context, i.e., if
you press F12: Configure from voucher entry screen, the respective
F:12 Configurations screen is displayed. Go to gateway of tally >
F12 :config
2.4 Maintaining chart of Accounts in Tally ERP 9

2.4.1 Introduction
A ‘Chart of Accounts’ is a list that depicts the accounts that a
business uses to record transactions in its books of accounts.
Tally.ERP 9 will put together your business’ chart of accounts based
on the ‘Ledgers’ and ‘Groups’ that you identify.
2.4.1.1 Ledgers and Groups

2.4.1.1.1 Ledgers
A ‘Ledger’ is an account head. For instance, the sales account head
will be called a ‘Sales Ledger’ in Tally.ERP 9. Similarly, a customer
would be an account head, and will be called a ‘party ledger’.
You can create ledgers specific to your business transactions.
For a newly created company, there are two pre-defined ledgers
available in Tally.ERP 9:

 Cash

 Profit & Loss A/c

To view the list of ledgers, go to Gateway of Tally > Accounts Info.
> Ledgers > Display (Multiple Ledgers) > Select All Items.
The Multi Ledger Display Screen appears

2.4.1.1.2 Groups
A ‘Group’ is the accounting group under which ledgers of the same
nature can be classified. For instance, Tally.ERP 9 has a default
Group ‘Sales Accounts’, under which all the sales ledgers will be
classified.

There are 28 pre-defined groups in Tally.ERP 9, which feature in the

chart of accounts of many organizations. Out of these, 15 groups are
primary groups and the remaining 13 are sub-groups.

Among the 15 primary groups, 9 groups are balance sheet items and
the remaining 6 groups are Profit & Loss A/c items. You can use
these groups to build your chart of accounts, as well as create and
used group’s specific to your business transactions.
However, you may also alter the nomenclature of these 28 groups.
To view the list of the 28 groups, known as the List of Accounts, go
to Gateway of Tally > Accounts Info. >

Groups > Display (Multiple Groups) > Select All Items.

The Multi Group Display Screen apperars

Out of the 15 Primary groups, the following appear in the Profit &
Loss Account:
1. Sales Accounts
2. Purchase Accounts

3. Direct Incomes or Income (Direct)

4. Indirect Incomes or Income (Indirect)

5. Direct Expenses or Expenses (Direct)

6. Indirect Expenses or Expenses (Indirect)

2.4.1.1.3. Ledger Creation

In Tally.ERP 9, we can create the ledgers in two ways given below:

I. Single Ledger Creation: Here we can create one ledger at a time.

II. Multiple Ledger Creation: Here we can create different ledgers
at one go and also ledgers which belong to particular group.

I. Single Ledger Creation

Creation of Proprietor’s Capital Account ledger from single
ledger creation screen.
1. Go to Gateway of Tally > Accounts Info. > Ledgers > Create
(Single Ledger Creation)
2. Enter Name as Proprietor’s Capital Account
3. Select Capital Account from the List of Groups

The Ledger Creation Screen appears

4. Press Y or Enter to accept the screen

Tally.ERP 9 displays the total debit and credit opening balances
in in the ledger creation screen. This is to avoid differences in
the opening balance.

II. Multi Ledger Creation

Now let us create the following ledgers using the Multi Ledger
Creation option:
To create Multiple Ledgers at once, follow the below given steps.
1. Go to Gateway of Tally > Accounts Info > Ledgers > Multiple
ledgers > Create
2. From Under Group field select All Items.
3. Under name of ledger enters the name as Kaltronics Ltd
4. Select as Sundry Creditors from the List of Groups
5. Press Enter and move to next line as there is no opening balance

6. Presss enter Y to Accept

Now that we have learnt how to create ledgers under Tally.ERP
9’s default pre-defined groups, let us move on to understand
how to make alterations to ledgers that are already created.

Altering and Displaying Ledgers

Now, go to Gateway of Tally >Accounts Info>Ledgers >
Select Display under single ledger, you will see that the List
7. of Ledgers.
You can also Alter ledgers from Accounts Info. >
Ledgers > Alter (Multiple Ledgers). Deleting Ledgers
You can delete a ledger, by pressing Alt+D in the
Ledger Alteration screen.
You will not be able to delete a ledger, once the financial transactions
(vouchers) have been entered (excluding the Opening Balance). If
there is a need to delete a ledger with any financial transactions, all
the transactions must be deleted first by pressing Alt+D.

2.4.1.1.3 Group Creation

In Tally.ERP 9, there are 28 predefined groups, this mean that it is
not necessary to create the Account Group in Tally.ERP 9. However,
considering the different requirement of an organisation and its
nature, Tally.ERP 9 has also provided flexibility to create the account
group, if need be.

Group creation is similar to ledger creation in Tally.ERP 9. As with

ledgers, there are two ways of creating groups:

I. Single Group Creation: Involves creation of a single group at a

time

Group to be created Classification

Debtors – North Sundry Debtors

To create the group,

II. Multiple Group Creation: Involves
creation of multiple groups at a time
Single Group Creation

The group to be created, and the primary group under which it has to
be classified, is specified in the table below:
1. Go to Gateway of Tally > Accounts Info. > Groups > Create
(Single Group)
2. Enter Name as Debtors - North
3, Against the field Under select Sundry Debtors from the List of
Groups

The Group Creation Screen appears

Note: To create a Multi Group in Tally.ERP 9, go to Gateway of

Tally >. Accounts Info > Groups > Under Multiple Groups > Select
Create

Question discussed in Class

2.5 Accounting Vouchers
2.5.1 Introduction
In accounting terms, a voucher is a document containing the details of
a financial transaction. For example, a purchase invoice, a sales
receipt, a petty cash docket, a bank interest statement, and so on. For
every such transaction made, a voucher is used to enter the details into
the ledgers to update the financial position of the company. This
feature of Tally.ERP 9 will be used most often.
Tally.ERP 9 follows the Golden Rules of Accounting:

Golden Rules of Accounting

Type of Account Debit Aspect Credit Aspect

Personal The receiver The giver

Real What comes in What goes out

Nominal All Expenses and losses All incomes and gains

A voucher entry screen in Tally.ERP 9 comprises of the following

sections:

Type of Voucher
It is essential to check if you are using the right voucher for the
transaction. You can change the voucher type by selecting a new type
from the button bar, if required. For example on the selection of a
payment voucher, Tally. ERP 9 automatically displays the list of
voucher types you have created. You can select the voucher type
required.
Voucher Number
Tally.ERP 9 automatically sets the voucher number for you. You can
change the voucher number manually, if required.
Reference
You can enter a reference of your choice. A purchase order number or
an invoice number can be entered as a reference.
Date of Voucher
The date of the voucher you enter is displayed at the top-right of the
voucher creation screen. The date is taken initially from the Gateway
of Tally - Current Date and you may need to change it frequently to
ensure that the vouchers are dated as you want.
Effective Date
A voucher type can be configured to allow for an effective date. The
line below the date of voucher displays the date when the voucher
will be effective. This will be available only if the effective date
option is activated in the particular voucher type.
Particulars
This is where you enter the ledger names and the debit and credit
amounts. Each line displays a prompt of Dr or By for debit entries and
Cr or To for credit entries.
Depending on the voucher type, Tally.ERP 9 selects either ‘Dr’ or
‘Cr’ for the first prompt, which you cannot change. Thereafter, you
can change the prompt (if necessary) by typing over it with a ‘D’ or a
‘C’. To select a ledger, type the first letter of its name. Tally.ERP 9
then displays a List of ledger accounts beginning with the letter
highlighted. Only ledgers suitable for the voucher type are displayed.
The revised current balance is shown after the amount is entered. On
selecting the next ledger, Tally.ERP 9 suggests the balancing amount
as the value to be entered, which may be accepted or typed over. The
voucher entry cannot be completed until the debits equal the credits.
Narration
Here you type whatever appropriately describes the transaction.
Remember, you can have a separate narration for each line of
particulars, if you configure the voucher type in that way.
Once the narration is complete, press Enter to bring up the Accept?
The box. Once you accept the data, Tally.ERP 9 presents another
voucher entry screen.

2.3.1.1 Accounting Vouchers

Tally.ERP 9 is pre-programmed with a variety of accounting
vouchers, each designed to perform a different job. The standard
accounting vouchers are:

 Contra Voucher (F4)

 Payment Voucher (F5)

 Receipt Voucher (F6)

 Journal Voucher (F7)

 Sales Voucher/Invoice (F8)

 Credit Note Voucher (Ctrl+F8)

 Purchase Voucher (F9)

 Debit Note Voucher (Ctrl+F9)

You can alter these vouchers to suit your company, and also create
new ones. Read ahead to understand the function of each voucher
type. The following exercises are sample entries for understanding
voucher entry in Tally. ERP 9.with examples from the books of
accounts of Akshay Yadav bcom 3c.

Question discussed in class

UNIT 3

3.1 Bank Reconciliation Statement

Meaning

• A bank reconciliation statement is a summary of banking and

business activity that reconciles an entity's bank account with
its financial records. The statement outlines the deposits,
withdrawals and other activities affecting a bank account for a
specific period.

• Sometimes, the bank balance as per cash book and pass book
do not tally with each other, then we can know the difference
between them by preparing the bank reconciliation statement.
The process of checking the differences between a bank
column of the cash book and the bank statement or passbook is
called Bank reconciliation process in accounting terms.

Objectives

1. To know the accuracy of entries in the Cash Book and the Pass Book: The
basic object of preparing Bank Reconciliation Statement is to test the acuracy
of causes of difference in the Cash Book and the Pass Book. The trader tests
the accuracy on the basis of entries in the Cash Book and the Bank ori the basis
of its own transactions.

2. To know the errors in Cash Book and Pass Book: Cash inflow and outflow
must tally asper, Cash Book with the Bank Pass Book or,Bank Statement. This
brings into focus errors and irregularities in Cash Book and Pass Book as well as
in the business.

3. Knowledge of cheques deposited for collection: Bank Reconciliation

Statement gives information about the position of cheques deposited for
collection e.g.,

(i) How many cheques were issued and not presented for payment up to the
date of reconciliation?
(ii) How many cheques were not credited up to the reconciliation time or were
dishonoured,
(iii) Cause of delay, in clearance etc

4. Check on the embezzlement of cash: The continuous comparison of Cash

Book with the Pass Book keeps check on employees trying to indulge in
embezzlement and misappropriation of funds. The cases of embezzlement of
cash by employees can be detected easily.

5. Verification of Bank Balance: The balance of Bank can be known and it

becomes convenient for issuing cheques on its basis in future.

6. Mechanism of Internal control: The preparation of Bank Reconciliation

statement is an important mechanism of internal control on cash inflow and
outflow. It checks misappropriation of cheques, bank drafts, malpractices of
dishonest employees dealing with cash and bank etc.

7. Knowledge of interest allowed by bank or Commission and Interest charged

by Bank: The information regarding transaction of interest and other expenses
(e.g., commission) which are recorded by Bank, but not recorded by customer
in his Cash Book is received by preparation of Bank Reconciliation Statement.

8. Knowledge of Other Facts:

• The knowledge of wrong entries by bank;
• The correct position of cash and bank deposit.
• Dividend directly collected by bank;
• Direct deposit of cash or cheque by a debtor;
• Payment made by the bank on behalf of trader as per standing instructions;
• Position of dishonour of bills receivable.
How it is done in Tally

• Bank reconciliation Bank reconciliation explains the difference

between the bank balance shown in an organization’s bank
statement and the corresponding amount shown in the
organization’s accounting records, on a particular date.

• To reconcile the bank statement

• • Go to ‘Gateway of Tally > Banking > Bank Reconciliation’

• • Select the name of the required bank

• The ‘Bank Reconciliation’ screen appears:

• • Match every transaction with the bank statement and record

the transaction date in the ‘Bank Date’ field.
 3.2 Export and Import

Meaning Of Export

Data is exported from a software so that it can be used by another application for

data sharing. Export also helps in representing the data in various formats as per the

user’s requirement.
In Tally.ERP 9 the data can be exported to SEVEN formats [ASCII (Comma

delimited), Excel (Spreadsheet), HTML (web-publishing), JPEG (Image), PDF (Portable

Document Format), XML (data interchange) SDF (using SDF Utility)].

Export Formats

You can export data or report from Tally.ERP 9 in any one of the standard available
formats. You can select the required format before exporting the data and based on the
format selected you need to specify the resolution, page size and formatting.
You can also export the data in non-editable formats such as JPEG and PDF formats. The
JPEG format has dual facility, where the user can store the file in printable format or as
an image.
ASCII (Comma Delimited)
By selecting the ASCII (Comma Delimited) format, you can export all the reports or data
from Tally.ERP 9.  The data exported is converted to plain text separated with commas
and stored in a file with the extension .txt. This file format is widely used for sending data
using e-mail.
Microsoft Excel
You can export data and reports generated in Tally.ERP 9 to Excel by selecting the Excel
(Spreadsheet) format. The data is put in columns and the file is saved with the
extension .xls. You can also export data with formatting and background colour as it
appears in Tally.ERP 9. You can set the formatting and background colour in the Export
Report screen. The Excel file can be sent as an attachment and also used to generate
graphs for better presentation.
HTML (Web Publishing)
On selecting the HTML (Web Publishing) format, Tally.ERP 9 exports the data in HTML
format retaining the colours and formatting. The file name has an extension .htm. It can
be sent as an attachment and read using an internet browser. It is recommended that
you choose a higher resolution for better quality output.
JPEG (Image)
On selecting this format the specified report is exported as an image file which is stored
with an extension .jpg in the specified folder. The image file generated is non-editable,
platform independent and supports the highest level of compression. You need to specify
the paper orientation and paper size. If you are opting to store the report on a User
defined or customised paper size, you need to specify the page width and height in
millimeters. This image file can be mailed as an attachment to a recipient, viewed using
an image viewer and printed.
 XML (data interchange)
Extensible Markup Language (XML) is an extension of HTML. Using XML, data can be
imported by other systems. An XML file from Tally.ERP 9 has an XML envelope and
formatted with XML tags to enable import into other systems. The destination system
requires re-formatting of XSLT (XML Style Sheets) based on the inherent style used in
Tally.ERP 9 before importing the data. When two systems are running different versions
of Tally.ERP 9, XML data can be directly imported using the import menu option, without
re-formatting.

Meaning of Import

The main purpose of Import is to read and make use of the data produced by same

application or another application.

Tally.ERP 9 has the ability to import data that is in xml format. The data can be produced by

another Tally.ERP 9 or by another application. The xml that is used for importing should be

as per the Tally.ERP 9 schema if the same has to get imported to Tally.ERP 9.

You can import vouchers from one company to another in Tally.ERP 9. This could be due to
the following reasons:
● Importing data from third party applications.
● Migrating into a later release.
● Data corruption/loss.
1. Go to Gateway of Tally > Import Data > Vouchers .
2. Enter the name of the .xml file to be imported, in the Import Vouchers screen, as
shown below:
3. Press Enter to import
UNIT 4 Financial Statements
Financial Statements summarizes individual transactions to show totals, ratios, and
statistics required by users to analyse a company’s financial data. Broadly, Financial
Statements include the following four major statements, which form a part of the
statutory requirements for companies in most countries:
● Balance Sheet
● Profit & Loss A/c
● Trial Balance
Balance Sheet
A balance sheet is a financial statement that reports a company's financial position.
This report shows the balance between the assets and liabilities of a firm. The balance
sheet follows the fundamental accounting equation: Assets = Liabilities + Owner's
Equity.

View the Balance Sheet

1. Go to Gateway of Tally > Display > Balance Sheet .
2. Press F12 to configure the Balance Sheet .
3. Press Ctrl+A to accept.
Profit & Loss A/C
The Profit & Loss A/c is a periodic statement, which shows the net result of business
operations for a specified period. All the expenses incurred and incomes earned during
the reporting period are recorded here.

The Profit and Loss Account in Tally.ERP 9 displays information based on the default
primary groups. It is updated with every transaction/voucher that is entered and saved .
1. Go to Gateway of Tally > Display > Profit & Loss A/c .
2. Click F1 : Detailed to view the Profit & Loss Account in detailed format. The Profit &
Loss Account appears as shown below:

Trial Balance
A trial balance is a summary of all ledger balances, and helps in checking whether the
transactions are correct and balanced. If journal entries are error-free and posted
correctly to the general ledger, the total of all debit balances should be equal the total
of all credit balances.

Go to Gateway of Tally > Display > Trial Balance . The Trial Balance appears as

shown below
Accounting Books
In Tally.ERP 9, as soon as the transactions are entered they are immediately posted
to the respective ledgers, books and registers thereby facilitating instant reporting
and faster decision making.

Books of account record the transaction details as entered. Although items are posted
too many different ledgers, Tally.ERP 9 brings all the transactions of a particular
category together into a book of account for viewing and printing. For example, Cash
Book records all the transactions affecting cash and the Sales Book records all sales
transactions.

Let us see some typical examples of how to display the books of account and
registers. You will then be able to experiment with other Books for yourself.
Ratios
Ratio analysis is a powerful tool for financial analysis. A meaningful analysis of a financial
statement is made possible by the use of ratios.

Ratios are a set of figures compared with another set. The comparison gives an
understanding of the financial position of a business unit. There are a number of ratios
which can be computed from a single set of financial statements. The ratios to be
computed depend on the purpose for which these ratios are required. A single ratio may
sometimes give some information, but to make a comprehensive analysis, a set of inter-
related ratios are required to be analysed.
The Ratio Analysis Report is divided into two parts, Principal Groups and Principal Ratios.
The Principal Groups are the key figures that give perspective to the ratios. Principal
Ratios relate two pieces of financial data to obtain a comparison that is meaningful. You
can view this report in browser .
● Go to Gateway of Tally > Ratio Analysis . The Ratio Analysis screen is displayed as
shown below:
Exception Reports
Exception Reports track unusual transactions or balances.
● Go to Gateway of Tally > Display > Exception Reports .
Negative Ledgers