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>1 5?
Computerised
Accounting
AS PER CBCS SYLLABUS
COMPUTER! bcc&a
ACCOUNTIKk.
(ForB.Com. 5th Semester Students of Telangana Universities
and allied Courses of other Universities)
Dr. Neeraj Goyal

Ph.D., M.Com., M.B.E., U.G.C. (NET) in Commerce,
U.G.C. (NET) in Management.
Head, Department of Business Management,
M M Modi College, Patiala. (Punjab)
Dr. Rohit Sachdeva

M.C.A, M.Phil., Ph.D.
Assistant Professor,
M M Modi College, Patiala (Punjab)
KALYANI PUBLISHERS
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KALYANI PUBLISHERS
Head Office Proper aa
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Every effort has been made to avoid errors or omissions in this publication. In spite of this, errors may
creep in. Any mistake, error or discrepancy noted may be brought to our notice, which shall be taken care
of in the next edition. It is notified that neither the publisher nor the author or seller will be responsible for
any damage or loss of action to any one, of any kind, in any manner, therefrom. It is suggested that to
avoid any doubt the reader should cross-check all the facts, law and contents of the publication with original
Government publication or notifications.
For binding mistake, misprints or for missing pages, etc., the publisher’s liability is limited to replacement
within one month of purchase by similar edition. All additional expenses in this connection are to be borne
by the purchaser.
10 + 230 = 240 Pages 20" x 30" 30 Formes
KPP O 26428 2 0-26637 2
ISBN 978-93-272-9357-9
PRINTED IN INDIA
At Yash Printographics. C-37, Sector-58, NOIDA
and published by Mrs. Usha Raj Kumar for
Kalyani Publishers, New Delhi-110 002
Preface
Proper account management is vital for the success of any business or company.
For centuries, accounting was done using hand-written records usually kept in book
form. When computers entered the consumer market in the early 1980s, many software
companies developed electronic spreadsheet and accounting programs to take advantage
of this emerging technology. One of the first software in this field was Lotus 1-2-3,
released by Lotus Corp. Today, there are dozens of accounting software packages
available in the market. The present book is an effort to explain the concepts related to
computerized accounting in simple and lucid manner. It is earnestly hoped that the
book will be found useful by students as well asteachers. While every endeavor has been
made to make this book completeand comprehensive, the scope for further
improvements is always there. We would be more than eager to receive comments and
suggestions for improving the contents including their presentation. Kindly feel free to
give any comment or suggestion at email id
profneerajgoyal@gmail.com
We find this a suitable platform to thank all our family, colleagues, college
administration and college management who inspired us for this work. Our gratitude to
the publishers M/s Kalyani Publishers, especially Sh. Raj Kumar Ji and Sh. Taun Ji, for
their continued support and for giving this book an attractive form.
Dr. Neeraj Goyal
Dr. Rohit Sachdeva
Paper: BC
PPW: 5 (41
Obj<
software
Unit 1: Ma
Intr
Creation -
and Config
Group-Led^
displaying
Displaying
Groups am
Unit II: 5
In:
Stock Gro
defining o-
Unit HI:
In
Transact!
Payment
Note <Ctr
Unit IV:
*
" 11
II Jkmatia
Advance
UnitV:
1
*£? -1
nee An
-Sales]
Syllabus
Paper: (BC 507): Computerised Accounting
Paper: BC 507 Max. Marks: 80+20
PPW: 5 (4T & 2P) Exam Duration: 3 Hrs.
Objective : to make the students to acquire the knowledge of computer
software
Unit 1: Maintaining Chart of Accounts in ERP:
Introduction - Getting started with ERP - Mouse/Keyboard Conventions - Company
Creation - shut a company Select a Company. Alter Company Details - Company Features
and Configurations. Fll: Company Features-Fl2: configuration-chart of Accounts - Ledger-
Group-Ledger Creation - Single Ledger Creation - Multi Ledger Creation - latering and
displaying Ledgers-Group Creation-Single Group Creation - Multiple Group Creation-
Displaying Groups and Ledgers Displaying Groups -Display of Ledgers - Detection of
Groups and Ledgers - P2P procure to page.
Unit II: Maintaining Stock Keeping Units (SKU):

Introduction - Inventory Masters in ERP - Creating Inventory Masters - creation of
Stock Group Creation of Units of Measure - Creation of Stock Item- Creation of Godown
defining of Stock Opening Balance in ERP Stock Category Reports.
Unit III: Recording Day-To-Day Transactions in ERP:

Introduction Business Transactions - Source Document for Voucher-Recording
Transactions in ERP - Accounting Vouchers - Receipt Voucher (F5)-Contra voucher (F4) -
Payment voucher (F5) Purchase voucher (F9) Sales. Voucher (F8) Debit Note Voucher Credit
Note (Ctrl+F8) Journal Voucher (F7).
Unit IV: Accounts Receivable and Payable Management:

Introduction - Accounts Payables and Receivables - Maintaining Bill wise Details -
Activation of Maintain Bill wise Details Feature New Reference - Against Reference
Advance - on Account - Stock Category Report - Changing the Financial Year in ERP.
Unit V: MIS Reports:

Introduction - Advantages of Management Information Systems - MIS Reports in
ERP - Trial Balance - Balance Sheet - Profit and Loss Account - Cash Flow Statement -
ratio Analysis - Books and Report - Day Book - Receipts and Payments - Purchase Register
- Sales Register - Bills Receivable and Bi811s Payable.
SLY©.
1. Intr
Intr
3. Crej
4. Chai
5. Stoc
6. Recc
H
h
'I
7. Reci
8. MIS
Appe
i
Contents
S.No. Chapters Name Pages
1. Introduction To Computerized Accounting 1.1 - 1.24
2. Introduction To Tally.ERP 9 2.1-2.14
3. Creation And Configuration Of Company In Tally 3.1-3.26
4. Chart Of Account, Groups And Ledger Creation 4.1 - 4.30
5. Stock Maintenance In Tally 5.1-5.28
6. Recording Day To Day Transactions In Tally 6.1 - 6.20
7. Receivables And Payables Management In Tally 7.1-7.30
8. MIS Reports In Tally 8.1 - 8.43
Appendix 1-11
£
c
□ ACCOUNT!
□ MANUALS
□ COMPUTEI
□ DIFFERED
□ SPREADS*
□ PREPACK)
□ CUSTOMIS
□ ENTERPRI
□ DIFFERENl
| ACCOUNT
The term Ai
one of the mo=
"Language of
’C< mmunication
economic event
r?i-.?zations. Te
haabes. The Am«
"The art of i
HBjcey. transac
lEEerp reting the
Introduction To
Computerized Accounting
CONTENTS
□ ACCOUNTING INFORMATION SYSTEM;
O MANUAL ACCOUNTING SYSTEM;
□ COMPUTERIZED ACCOUNTING SYSTEM;
O DIFFERENT TYPES OF ACCOUNTING SOFTWARE;
□ SPREADSHEET SOFTWARE;
□ PREPACKAGED (READYMADE) ACCOUNTING PACKAGE;
□ CUSTOMISED ACCOUNTING SOFTWARE;
□ ENTERPRISE RESOURCE PLANNING;
□ DIFFERENCE BETWEEN COMPUTERIZED ACCOUNTING AND MANUAL ACCOUNTING
| ACCOUNTING INFORMATION SYSTEM

The term Accounting is very common we use this term in our day to day life. Accounting is
one of fhe most important functions of any business enterprise. It is often referred to as
“Language of Business”. Here when we are using the word ‘Language’ we mean the
'Communication’. Accounting plays a very significant role in recording and communicating
economic events of the business. The origin of accounting can be traced back to ancient
civilizations. Technical definitions of accounting have been published by different accounting
bodies. The American Institute of Certified Public Accountants (AICPA) defines accounting as:
“The art of recording, classifying, and summarizing in a significant manner and in terms of
money, transactions and events which are, in part at least of financial character, and
interpreting the results thereof.”
1.2 Introduction To Computerized Accounting on Tc
An accounting information system (AIS) is a structure that a business uses to collect, store,
manage, process, retrieve and report its financial data so that it can be used by accountants,
consultants, business analysts, managers, chief financial officers (CFOs), auditors and regulatory
and tax agencies. There are many types of accounting information systems and, as a result, they
vary greatly. A number of factors influence these systems such as the type of business, the size of
the business, the volume of data, the type of data management needs, and other factors. Broadly
we divide the accounting systems into two parts:
• Manual Accounting system
• Computerized Accounting System
| MANUAL ACCOUNTING SYSTEM
Introduction to Manual Accounting

Manual accounting systems can still provide an effective and useful way of recording
business transactions and can prove an efficient accounting information system specially for
small business owner, even in todays world where computerized accounting systems slowly but T_
—
surely taking over paper based systems. Manual accounting information systems are mostly used
by very small businesses. The process of accounting includes four basic steps i.e. journalizing the
transactions, posting them to ledger accounts, preparing trial balance, preparing final accounts. vea
If all these steps are carried out by a person, than such system of accounting is called as Manual
Accounting. In Manual accounting system all records are maintained by employees of the
I
business by using books of accounts and records are maintained in physical form. This method of
accounting is age old but still very popular in many parts of the world specially in case of
accounts maintenance by small firms. We can define manual accounting as :
“A traditional system of accounting in which all the basic steps of accounting i.e. Journal,
Ledger, Trial Balance and Final Accounts are recorded by accountant using accounting books
and pen” Implements
Generally the use of machines is very less in Manual accounting system and it is mainly
Accountins i
limited to use of basic machines such as calculators etc.
t -isincss transs i
of accounts and
Characteristics of Manual Accounting
taese primary ol
A manual accounting system is a way of keeping business financial records with a written
ledger of transactions. Computers and software are not used as part of a manual system. Using
Following ar
paper requires that the bookkeeper must have more knowledge of basic accounting principles
than aiyemployee using accounting software. This makes accounting work more challenging. 1. Collee
Following are some of the important characteristic of Manual Accounting System:

affeetin
1. Manual accounting system is very old accounting system and its roots can be found in transac
ancient civilizations also. transac
2. In this system of accounting, accounts are mostly maintained by employees using paper to theii
and pen. 2. Measu
3. It is not necessary that accounts are maintained on paper only. In case a business is recorde
using spreadsheet like Microsoft Excel for recording Journal or Ledger, it is part of transac
is not
iting Introduction To Computerized Accounting_____________________________________ 1-3
itore, Manual Accounting System as in such case all the steps of accounting has to be
ants, performed manually. System will not complete the accounting cycle automatically.
itory
4. In manual accounting the accountant is responsible is responsible for making sure that
they
journal entries balance prior to posting information into the company’s general ledger.
ize of
)adly 5. The scope for use of machines is very less in manual accounting system. Either it use no
machines or the use of machine is limited to very basic machines like calculator etc.
6. Accounting staff plays more important and active role in manual accounting system.
7. Accounting staff must possess more knowledge about all the accounting concepts,
principles and process since all the steps of accounting have to be completed by
accounting staff manually.
8. This system of accounting is more suitable for small business concerns having limited
number of transactions.
rding 9. As all the accounting steps are performed by accounting staff manually, there is more
y for scope of personal creativity and judgment in the manual accounting.
y but 10. In manual accounting system, the results of business can be ascertained only at end of
used the financial year when books are closed and financial statements are prepared.
g the Normally it is very difficult to ascertain the results of business transactions during the
unts. year.
inual
11. Normally in manual accounting system we maintain all the records in monetary terms
f the
only. It is very difficult in manual financial accounting to maintain the records of
lod of
physical quantity. Stock calculation in done at the end of the financial year by making
se of
physical verification.
12. In manual accounting, the process of accounting is very long and locating of any error is
irnal,
very difficult and time consuming task.
looks
Implementation of Accounting Cycle in Manual Accounting
ainly
Accounting is the process of recording business transaction and ascertaining the results of
business transaction of the period. For this purpose all the transactions are recorded in the books
of accounts and financial statements are prepared at the end of the accounting period. To meet
rhese primary objectives, a series of steps is required. These steps are known as the accounting
•itten cycle.
Jsing
Following are the main steps of manual accounting system.
hples
ly Collect data related to transactions: This the first step in manual accounting
system. Financial accounting deals with recording transactions of financial nature only
affecting the profitability or financial position of the business. So, before recording
nd in transactions in the books of accounts, it is necessary to find out that whether some
transaction has taken place or not. Transactions and events are analyzed with respect
paper to their effect on the financial position of the company.
2. Measuring the amount of transaction: In financial accounting, transactions are
ess is recorded in monetary terms. So, it is very important to measure the amount of
irt of transaction before recording it in books of accounts. For example purchase transaction
is not recorded at catalogue price, it is necessary to deduct trade discount before
1.4 Introduction To Computerized Accounting
recording the transaction. Similarly, drawing of goods is recorded at cost price and not ir Pre]
at sale price.
3. Journalize transactions: After collecting and measuring, the information is entered
in the general journal, which is called the book of original entry. Journal is a book
which keeps record of all the transactions that have taken place in the business. 11. Rep<
However, business has option of maintaining Subsidiary Books in place of Journal also. OWD€
In subsidiary books, instead of maintaining a single Journal, we maintain specialized
Journals for recording business transactions.
stake
4. Post to General Ledger: The General Journal entries are posted to the organized
as re]
accounts. All transactions for the same account are collected, for example, the account
Safe
entitled "Sales" will accumulate the total value of the sales for the period. Posting to
ledger accounts gives the whole information regarding a single item which is very
difficult to find from Journal. Ledger posting may be done at the end of each day, at the
also a
end of the week, or possibly even at the end of the month.
5. Prepare an unadjusted Trial Balance: At the end of the period, double-entry a d vantage:
accounting requires that debits and credits recorded in the general ledger be equal. As
Fjuowing i
transactions are recorded in the general journal and subsequently posted to the ledger,
all amounts recorded on the debit side of accounts must be equal to all amounts 1. Chea
recorded on the credit side of accounts. Trail balance is a summary of accounts in which accou
all the debit or credit balances of accounts are recorded. The two sides of trial balance maint
must agree with each other. If unequal amounts of debits and credits are found in this i Suita
step, the reason for the is investigated and corrected before proceeding to the next step. small
6. Prepare adjustments: In accrual accounting system, transaction are recorded on the debtoi
base of period in which transaction take place that is incomes are recorded when these 3. No ri
are earned and expenses are recorded when these are incurred. Actual receipt of income depen
or payment of expenditure does not affect recognition of income or expenditure. Thus, 4. Less i
there is need to record several items which are not recorded in books of accounts prior softwa
to preparation of Trial Balance. These transactions are known as adjustments. accour
7. Prepare an adjusted Trial Balance: After ascertaining adjustment, adjusted Trial 5. Fraud
Balance is prepared. Like an unadjusted trial balance, this step checks the equality of and d
debits and credits. However, assets, liabilities, owners' equity, revenues, and expenses possibi
will now show the adjustments that have been made in the previous step. nanua
8. , Prepare financial statements: Financial statements are prepared using the 6. Suita!
corrected balances from the adjusted trial balance. Main financial statements that are desigm
prepared include income statement in the form of Statement of Profit & Loss and mainte
financial position statement in the form of Balance Sheet. These statements show 7. No ne
profitability and financial position of the business. operan
9. Close the accounts: Revenues and expenses are accumulated and reported by period, 8. More
either a monthly, quarterly, or yearly. At the end of the period all accounts related with decisio
Revenue and Expenditure are closed. Their net balances, which represent the income or of busi
loss for the period, are transferred into owners' equity. Once revenue and expense
accounts are closed, the only accounts that have balances are the asset, liability, and Limitations
owners' equity accounts. Their balances are carried forward to the next period. A manual a<
Introduction To Computerized Accounting 1.5
10. Prepare a post-closing trial balance: The purpose of this final step is two-fold: to
determine that all revenue and expense accounts have been closed properly and to test
the equality of debit and credit balances of all the balance sheet accounts, that is,
assets, liabilities and owners' equity.
11. Reporting Stage - Business Financial Statements are not only meant for business
owners or managers but there are a number of other persons whoare interested in
accounting information. These shareholders, lenders, suppliers, employees, government
and bankers etc. Business is required to send copy of their financial statements to these
stakeholders. Sending the copy of financial statements to these stakeholders is known
as reporting.
12. Safeguarding of Records Stage - Financial statements of the business are not only
required for current usage but are useful in future also. So, business must keep these
books and statements safe for future use. It is not only for the benefit of business but
also a legal requirement under tax laws.
Advantages of Manual Accounting System

Following are some of the main advantages of manual accounting system:
1. Cheaper : Manual accounting system is very cheap in comparison to computerized
accounting as businessmen need not invest large amount in purchase of machinery and
maintenance of machines.
2. Suitable for Small Scale Business : Manual accounting system is very suitable for
small scale business, as businessmen are interested only in information related to
debtors, creditor and cash position. They do not need detailed reports.
3. No risk of Obsolescence : In the manual accounting, as there is not much
dependence on machines, there is very less risk of obsolescence.
4. Less risk of loss of data : It is possible that data may be lost because of hardware or
software damage in computerized accounting system but it is not possible in manual
accounting system.
5. Fraud and embezzlement : There are numerous methods through which additions
and deletions to input data is possible in computerized accounting. So, there is
possibility of fraud s in computerized accounting system. However, it is not possible in
manual accounting system.
6. Suitable for needs of particular business : In manual accounting, system can be
designed according to the needs of particular business. So, there is more flexibility in
maintenance of accounts.
7. No need of computer trained operator : There is no need of computer trained
operator in the manual accounting.
8. More scope of creativity : In manual accounting there is more scope of creativity as
decisions are to be taken by individual. He can adjust the items according to the needs
of business.
Limitations of Manual Accounting System

A manual accounting system has many limitations, as discussed below:
1.6 Introduction To Computerized Accounting Introduction T
1. Not suitable for large scale business : Manual accounting system is suitable for Meaning of
small scale business but not for large scale business, as large scale business needs more Computenz
information. are maintained
2. Can’t handle large volume of transactions : Manual accounting is capable of manual methot
handling on small number of transactions. In case the number of transactions is very replacing mam
large, it can’t be handled by manual accounting. computers and
computer takes
3. No updated accounts : In manual accounting final accounts are prepared at the end
profit and loss)
of financial year only. So, any information related to profit or loss cannot be determined
accuracy. The i
in the mid of the year. valuation, sale
4. Difficulty in location of error : In manual accounting it is very difficult to locate any accounting syst
error which is committed during the posting of transactions. “A computt
5. Difficulty in handling queries : In manual accounting handling queries like list of processing the
debtors who have not paid their dues in time etc. is very difficult and time consuming. Principles and
human intervei
6. No record of physical quantity of stock : In manual accounting accounts are
prepared in monetary terms only, no record is kept for physical quantity of goods
purchased or sold. So, it is difficult to obtain any information regarding quantity of
goods purchased or sold, and balance of quantity in hand.
I
7. More paper work : Manual accounting needs more paper work which is not only time
consuming but consuming more paper is harmful for environment also.
| COMPUTERIZED ACCOUNTING SYSTEM
History of Computerized Accounting Features of

The most common method of keeping the financial records of a company was manually. A
The Compi
bookkeeper kept the journals, maintains ledger, prepares trial balance and also prepares final accounting sysi
accounts using best of his knowledge, experience and judgment. In later years, an accounting
1. Accou
machine, which was capable of performing basic bookkeeping functions, such as tabulating in
Tally.
vertical columns, performing arithmetic functions, and typing horizontal rows was used.
Similarly billing machines was also developed which was designed to typewrite names, 2. Hum
addresses, and descriptions, to multiply and extend, to compute discounts, and to add net total, 3. Accor
posting the requisite data to the proper accounts, and so to prepare a customer’s bill accou
automatically once the operator has entered the necessary information. Later with invent of 4. It get
personal ‘computers, many accounting software were developed which were capable of
5. It fac
maintaining various accounting records. But, earlier accounting software was very complex,
comprising of many modules and information was recorded by assigning different codes to 6. It gei
different ledgers. Moreover, these systems were capable of recording only basic accounting 7. It is c
information. Advanced functions like ratios, tax calculation, inventory records etc. were not 8. Itisc
available. Early accounting machines were marvels of mechanical complexity, often combining a
typewriter and various kinds of calculator elements. The refinements in speed and capacity made = -nctions c
possible development of new accounting software like quickbooks, tally etc. which are not only
.Accounting
easy to use but also capable of performing not only basic accounting operations but can also
aesgned that
perform advanced functions like budgeting, taxation, inventory control etc.
Meaning of Computerized Accounting

Computerized Accounting System refers to a system wherein the accounts of the business
are maintained using a computer system. With the increasing number of transactions, the
manual method of maintaining accounts has become unmanageable. That is why, firms are
replacing manual method of accounting by computerized accounting. Now, with the help of
computers and accounting, software, the accountants just need to do the voucher entry. The
computer takes care of posting these entries to the respective ledgers, and prepares trial balance,
profit and loss account, balance sheet and calculates major financial ratios with great speed and
accuracy. The accounting program carry out functions such as invoicing, paying wages, stock
valuation, sales analysis, GST returns, budget analysis etc. We can define computerized
accounting system as:
“A computerized Accounting System is the accounting information system that helps in
processing the financial transactions and events as per Generally Accepted Accounting
iting Introduction To Computerized Accounting_____________________________________ 1.7
le for Meaning of Computerized Accounting

more Computerized Accounting System refers to a system wherein the accounts of the business
are maintained using a computer system. With the increasing number of transactions, the
)le of manual method of maintaining accounts has become unmanageable. That is why, firms are
very replacing manual method of accounting by computerized accounting. Now, with the help of
computers and accounting, software, the accountants just need to do the voucher entry. The
computer takes care of posting these entries to the respective ledgers, and prepares trial balance,
e end
profit and loss account, balance sheet and calculates major financial ratios with great speed and
nined accuracy. The accounting program carry out functions such as invoicing, paying wages, stock
valuation, sales analysis, GST returns, budget analysis etc. We can define computerized
e any accounting system as:
list of processing the financial transactions and events as per Generally Accepted Accounting
mg. Principles and leads to generation of reports as per the requirements of the users with minimum
human intervention.”
s are
goods
ity of
• time
Figure - Computerized Accounting System
Features of Computerized Accounting System

ly. A The Computerized Accounting System is based on the concept of database. A computerized
! final accounting system comprises the following main features.
mting
1. Accounts are maintained using a computer software known as accounting software e.g.
ing in
Tally, Quickbooks etc.
used,
ames, 2. Human intervention in accounting process in minimum.
total, 3. Accountant has to record only voucher entry in computerized accounting system, rest
s bill accounting procedure is completed by software itself.
ent of 4. It generates different accounting reports quickly.
)le of
A , It facilitates grouping of various items.
nplex,
les to 6. It generates a print out of purchase and sales invoices.
mting 7. It is capable of generating GST returns and records.
re not 8. It is capable of maintaining inventory information also.
ning a
made Functions of Computerized Accounting
it only
Accounting software is used to perform the function of accounting. The software is so
n also signed that a transaction, once entered, is automatically transported to the Ledger Account
1.8_____________________________________ Introduction To Computerized Accounting
-Auction
also. In the present times, a number of accounting packages are available in the market. They do
a variety of jobs for the end users which are listed below : 8. Tax
deal-
1. Online Input and Storage of Accounting Data;
9. Fini
2. The processing of financial information.
repo
3. Printout of Vouchers and Invoices; 10. Cost
4. Printout of Ledgers and other books of accounts; anal;
5. Updating of customer accounts in Sales Ledger and supplier accounts in Purchase 11- Bud;
Ledgers; this s
6. Recording of Bank Receipts; 12. Man
7. Writing Day Books and General Ledger; repor
8. Maintenance of Stock Accounts; Area in wh

9. Aged Debtor Summary (who owes what and since when);
Computer
10. Preparation of Trial Balance, Profit and Loss Accounts and Balance Sheet; important are?
11. Stock Valuations; application rai
<rf financial sta
12. Payroll Analysis; and
Following
13. Statutory Returns, such as GST and Service Tax. used:
Components/Subsystems of Computerized Accounting System 1- Tran:

Busin
The various subsystems of Computerized Accounting are described below:-
transf
1. Cash and bank sub system : This system deals with receipts and payments of cash in inforn
physical form and electronic form. Electronic transaction is make entry or exit of cash difficu
using smart cards and E-banking. from.
2. Sales and accounts receivable sub system : It manages sales transactions and autom
maintains sales ledger and receivables. Periodic reports of sales, receivables, 2- Payrc
collections, over dues etc. are generated. cost o
3. Inventory sub system : It records and reports the movements of stock items emplo;
specifying date, price, quantity and balances. It also generates the inventory levels and emplo;
valuation reports. accour
salary
4. Purchase and account payable system : Deals with the purchases and payments to
organi
suppliers. All tasks such as ordering, sorting, payments, performance of suppliers,
great c
^payment schedules etc. are done.
task ve
5. Payroll accounting sub system : This system deals with the preparation of payrolls
3. Debto
and disbursement of salary and wages to employees. Details employees and pay
goods
components are recorded and maintained.
receiva
6. Fixed assets accounting sub system : It deals with recording of purchases, can rei
additions, deletions, usages, depreciations and valuation of fixed assets such as land, amouni
building, machinery, furniture etc. remind
7. Expense accounting sub system : This system is engaged in recording and reporting 4. Stores
of expenses under various departments. consum
items t
Introduction To Computerized Accounting_____________________________________ 1.9
8. Tax accounting sub system : This system implemented in large organizations to

deals with matters of GST, customs and income tax.
9. Final accounting sub system : Preparation of final accounts and its analysis and
reporting are done under this system.
10. Costing sub system : Deals with the ascertainment of cost of goods produced by
analyzing the cost elements available from other subsystems.
11. Budget sub system : Preparation of budgets and budgetary controls are done under
this system.
12. Management information system :MIS deals with generation and processing of
reports useful for decision making in various functions of management.
Area in which computerized accounting is commonly used :

Computer have application in different fields of the human life. Accounting is one such
important area where computers can be used effectively. Computers have different accounting
implication ranging from recording of transaction, preparation of financial statements, analysis
:financial statement and providing data for decision making.
Following are some of the important areas of accounting where computers are commonly
used:
1. Transactions Processing : Transactions are the backbone of the business.
Businessman record transaction in the original book called Journal and then post these
transactions to Ledgers. This activity is very important as it provides all the
information to the business. In case number of transaction is very large, it is very
difficult to record these using the manual system. Computer accounting can overcome
from, such difficulties. To the computer once the transactions are fed it undertakes
automatically the process of posting and preparation of final accounts.
2. Payroll Accounting : Employees remuneration and benefits is one of the important
cost of business. Employee’s remuneration not only include the basic wage of the
employee but also various allowances provided to employee, contribution made by
employer towards social security schemes of the employees, deduction made on various
accounts etc. Payroll is a statement prepared to determine the amount of wages or
salary payable to the workers or employees of the organization. In a large scale
organization where huge number of men and women are engaged in work, it becomes
great difficult to prepare payroll but computerized accounting system can handle this
task very easily.
f
3. Debtors Accounting : In modern competitive business every enterprise has to sell
goods and services on credit basis. Debtors are the persons from whom money is
receivable from for sale of such goods and services. Computerized accounting system
can record all the information regarding debtors of the business. It can calculate
amount collected, amount due, interest on amount overdue and can issue payment
reminder to the overdue debtors.
4. Stores Accounting: Store is one of the departments where, raw materials,
consumable stores and other materials are stored. All these materials are very essential
items to run day-to-day activities of the concerns. Any shortage of these things may
Introduction
1,10____________________________________Introduction To Computerized Accounting
2. Spee
leads to stoppage of work or any surplus may leads to wastage of materials. To
turn
maintain proper stock level in the organization and for smooth running of all the
infor
activities of the organization it is essential to adopt the computer accounting system for
the stores. 3. Accu
5. Preparation of various type of budgets : A budget is a detailed plain of operations becai
for some specific future period. It is an estimate prepared in advance of the period to be ht
which it applies. It acts as a business barometer as it is complete programmed of 4. Relia
activities of the business for the period covered. Computers can help a business in They
maintaining the budgets. Computers can help a business manager to prepare budgets comp
like cash budget, production budget, purchase budget, sales budget, flexible budgets
5. Up-tc
etc.
prepa
6. Preparation of financial statements : Every organization will have to prepare
the a
financial statements like trading account, profit and loss account and balance sheet.
enter
These statements are prepared on the basis of prime records of the business. Trial
balance is prepared to ascertain correctness of the ledger accounts. Manual accounting 6. Rede
needs the reference of every account of the ledger to prepare trail balance and final comp'
statements of accounts. But once prime data are fed into the computers with the help of paper
accounting packages automatically. It prepares the trail balance and financial
7. Econ
statements.
Mach
Factors to be considered while introducing computerized accounting contir
8. Legil
Even before introducing computerized accounting in a business concerns, certain factors
have to be considered. Those factors are: chara
in avo
1. Administrative Factors : The management must verify whether the computerized
accounting system can operate successfully if it is introduced in the business concerns 9. Time:
and whether the employees of the accounting department have the required knowledge. the M
If there is need, the management must provide the training to the employees. the m;
2. Technical Factors : The management must ascertain whether the technology of the 10. Secur
business concerns permits the introduction of computerized accounting. Even the compa
management has to verify whether accounting package will meet the requirements of mainr.
business concerns. to the
3. Economic Factors : The management should ascertain whether it is economically 11. Queri
feasible to adopt such a system. That is, it should verify whether the economic benefits quick!
from the computerized accounting would be more than cost of manual accounting. time, t
4/ Scalability : Business must verify that the accounting software under consideration is 12. Large
sufficient in recording business transactions not only for present scale of business but
all the
also future needs of business after expansion of the business.
inform
5. Support : It is one of the important consideration in selection of accounting software.
13. Real
The suitable system is one for which after sale support is available not only at local
level but also immediately whenever any problem arises. linked
to vari
Advantages of Computerized Accounting System 14. Scalal
1. Computers play a unique role in the area of accounting : Computerized very la
accounting offers several advantages vis-a-vis manual accounting, these are easily ]
summarised as follows ;
2. Speed : Computer being an electronic device will work faster than human beings. It
turns out large quantum of work with in no time. It converts data into required
information at high speed.
3. Accuracy : The possibility of error is eliminated in a computerized accounting system
because once a particular program is fed, all the results based on such program would
be hundred percent accurate.
4. Reliability : The computer system is well-adapted to performing repetitive operations.
They never feel tiredness, boredom or fatigue. As a result, computers are highly reliable
compared to human beings.
5. Up-to-Date Information : In computerized accounting ledger posting, trial balance
preparation and maintenance of final accounts is done by computer automatically. So,
the accounting records are updated automatically as and when accounting data is
entered and stored.
6. Reduced Paper Work : In computerized accounting system transactions are stored in
computer hard disk, which reduces the paper work. This not only helps in reduction of
paper work but also helps in conservation of environment.
7. Economy : Computerized accounting is cheaper when compared with human labour.
Machine once purchased will be lasting for many years but human labour is to be paid
continuously.
8. Legibility : The data displayed on computer monitor is legible. This is because the
characters (alphabets, numerals, etc.) are type written using standard fonts. This helps
in avoiding errors caused by untidy written figures in a manual accounting system.
9. Timely Reporting : The computerized accounting system facilitates the generation of
the Management Information System (MIS) reports at a very high speed which enables
the management to take quick decisions.
10. Security of Data : Under computerized accounting, the accounting data is safer in
comparison to manual system. Under computerized system secrecy of data can be
maintained by using a password, which means only authorized person will have access
to the data.
11. Queries : In computerized system, replies to various queries can be obtained very
quickly. For example, if we want information about the debtors who have not paid in
time, the list of such debtors can be obtained immediately.
12. Large Storage Capacity : The computers have large storage capacity, so accounts of
all the past years are available on one single hard disk, which makes accessing past
information easy.
13. Real Time User Interface : Most of the automated accounting systems are inter
linked through a network of computers. This facilitates the availability of information
to various users at the same time on a real time basis (that is spontaneously).
14. Scalability : Computerized accounting system are very useful when scale of business is
very large and the number of transactions is very high. Computer system can very
easily handle large scale data.
Introduction To Computerized Accounting
I'troduction Ti
1.10
anual accounting, normally one ledger is maintained in
leads to St°R \orded. So, it is not possible that more than one person --oblems Fa
maintain pr ’taneously. However, in computerized accounting L User
activities of "■>rough networking of computers and many persons under?
the store ■ <a in the system. compui
9?
Prepar'^ % ng system offers online facility to store and with t
we information for generating and viewing softwaj
• Syster
the cot
hunting System system
controls are not built and, where built, are not followed, it verify t
is important to take back-ups at regular intervals to avoid Hard*
to opei
. : The data can get corrupted through viruses that may come in afford 1
ernet or the use of external input devices without scanning them for 4. Syster
losing i
x Computer Operators : Maintenance of accounts not only need persons must painful
Knowledge of accounts but knowledge of computers also. As a result, huge training statem
sts are incurred to understand the use of hardware and software on a continuous 3. Backu
basis because newer types of hardware and software are acquired to ensure efficient
data is
and effective use of computerised accounting systems.
inform,
4. Limitations of Software : The software is developed on the basis of the experiences of
6. Vouch
the team of developers. As such, it may not be able to deal with a specific problem that
vouche
may arise.
bring b
5. Staff Opposition : Whenever computerized accounting system is started in the
7. Securi
concern, generally there is resistance from existing accounting staff, because they feel
copied,
that their importance in organization will be reduced and they may lost their job also
very n
6. Ill-effects on Health : The extensive use of computers systems may lead to compui
development of various health problems: bad backs, eyestrain, muscular pains, etc. This time.
affects adversely the working efficiency of accounting staff.
7. Obsolescence : The rate of obsolescence is very high in computer industry. There is a | DIFFEREI
culture of ‘here today, gone tomorrow’ in the computer industry. Everyday there is
latest version of some software, which may or may not be compatible with old software. A software ii
So firm has to regularly update their system. a designated jot
8. ^Risk of Frauds : In computers it is very difficult to detect the crimes as there are
--.ancial inform
many ways in which a person can commit the crime. Many a time hackers finds the package saves
password of others and commits the crime. So, security planning is very important in accounting pack
computerized accounting. the requirement
and few of thes«
9. Lack of creativity and flexibility : As computers do not have own intelligence,
nature of the bu
computer software lacks the creativity. Accounts are maintained only according to the
software guidelines. Moreover, computerized accounting systems lacks flexibility also. 1. Spread
10 Easy to copy and spying : Data in computers can be easily copied using pendrive or 2. Prepac
other storage device. So, there are more chances that accounting staff may copy the 3. Custon
data and may leak the information to competitors.
ERP Si
Problems Faced In Computerized Accounting System

1. User Training: The user, for using computer accounting software, needs to
understand the concepts of the software. Hence, he should undergo proper training. A
computer operator must learn the basics of computer, concepts of software, working
with the operating system software [such as Windows/DOS] and the accounting
software.
2. System Dependency: Using a computer solution makes the user to depend fully on
the computer system and necessitates the availability of computer at all times. If the
system is not available [due to hardware failure or power cut], it would be difficult to
verify the accounts.
3. Hardware Requirements: A full-fledged computer system with a printer is required
to operate the computerized accounting system. Most small organizations may not
afford to have such facility with necessary software.
4. System Failure: When there is a system crash [hard disk crash], there is high risk of
losing the data available on the hard disk drive at any point of time. It would be highly
painful, if the problem occurs at end of the financial year, when the financial
statements should be ready.
5. Backups and Prints: Backups of the data should be done regularly so that, when the
data is lost, it can be restored from floppies [backups]. Regular print outs of the system
information would be useful as manual records.
6. Voucher Management: Accounting software allows easy alteration of data. If a
voucher is wrongly placed in a wrong head, it would be very difficult to sort out and
bring back the voucher. A good voucher management is very essential.
7. Security: Additional security has to be provided because computer data is easy to be
copied. Moreover, frequent repair and power failure may affect the accounting work
very much. Computers are prone to viruses. Often time’s people will assume the
computer is doing things correctly and problems will go unchecked for long period of
time.
| DIFFERENT TYPES OF ACCOUNTING SOFTWARE

A software is a program of set of instructions in a particular computer language that perform
; designated jot. When a software is written for the sole purpose of managing the accounts and
financial information of any business firm , it is called accounting package. An accounting
zackage saves the time, cost and human resource of business. There are various kind of
i ^counting packages available in the market. These softwares are designed and developed as per
die requirement of the business I corporate. Few of these softwares cater to particular industry
and few of these software are generic like Tally etc. Depending on the size of the business and
-ature of the business these accounting packages can have several types of classification.
1. Spreadsheet Software
2. Prepackaged Accounting Software
3. Customised Accounting Software
4. ERP System
| SPREADSHEET SOFTWARE
Spreadsheet takes its name from the accountant’s spreadsheet—a sheet of paper with rules
for rows and columns—on which calculation work was usually done. Electronic spreadsheets
allow you to do anything that you would normally do with a calculator. Spreadsheets were
primarily designed for managers who in the process of planning must do “what if’ calculations.
Due to their flexibility, electronic spreadsheets have found their way into small businesses.
Spreadsheet programs are much faster, more accurate, and easier to use than traditional
accounting techniques. The programs are widely used on personal computers for keeping sales,
expense and inventory records, and for budgeting and forecasting future sales and expenses. A
typical integrated double entry accounting system will contain some or all of the following
components: accounts receivable, accounts payable, general ledger, inventory, order entry,
payroll, time, and billing. As a result of these and many other applications, computer
spreadsheets have become the most important of all software tools for modern businesses.
Advantages of Spreadsheet Software

1. It is simple to use and easy to understand.
2. Most of the common functions like doing calculations, setting formulas, macros,
replication of cell contents, etc can be easily done in a spreadsheet.
3. Grouping and regrouping of accounts can be done.
4. Presentation can be made in various forms including graphical presentations like bar
diagram, histogram, pie-chart, etc.
5. Basic protection like restricted access and password protection of cell can be used to
give security to the spread sheet data.
6. You can mail data to other persons.
7. Spreadsheet allow formatting of data.
Limitations of a spreadsheet:
1. It has data limitations. Depending upon the package they can accept data only up to a I
specified limit.
2. Simultaneous access on a network may not be possible. Many of the modern softwares I
allow locking of the table when updation is taking place. This is not possible in a spread I
sheet.
3. Double entry is not automatically completed. Formulas or other means have to be I
adopted to complete the double entry.
4. Reports are not automatically formatted and generated but have to be user controlled. I
Each time a report has to be printed, settings have to be checked and data range has to 1
be set. In many accounting software this is automatically taken care of by the program. I
| PREPACKAGED (READYMADE) ACCOUNTING PACKAGE

In computerized accounting, accountants need some software to maintain the accounts.
There are several software available in the market which can help accountant in maintaining the
accounts. A business has choice between getting their own accounting software developed
according to the needs of the business or going for some readymade software available in the
market. The readymade package available in the market is known as ‘Prepackaged Accounting
Package’. There are several prepackaged accounting software which are available in the market
ind are used extensively for small and medium sized organisations. These software are easy to
cse, relatively inexpensive and readily available. The installation of these software are very
simple. An installation diskette or CD is provided with the software which can be used to install
the software on a personal computer. Along with the software an user manual is provided which
ruides the user on how to use the software. The vendor normally provides regular updates to
take care of the changes of law as well as add features to the existing software. These software
normally have a section (customer master file) which provides for the creation of a company. The
name, address, phone numbers and other details of the company like GST registration number,
PAN and TAN numbers are entered into the system. Since, competition is quite high in the
accounting package market, finding a good package from any reputable vendor is very easy and
not much time consuming.
Advantages of Pre-Packaged Accounting Software

Pre-packaged Accounting Software has many advantages as follows:
1. Easy to install: The CD or floppy disk is to be inserted and the setup file should be run
to complete the installation.
2. Relatively inexpensive: These packages are sold at very cheap prices nowadays.
3. Easy to use : Mostly menu driven with help options. Further the user manual provides
most of the solutions to problems that the user may face while using the software.
4. Backup procedure is simple: Housekeeping section provides a menu for backup. The
backup can be taken on floppy disk or CD or harddisk.
5. Flexibility: Certain flexibility of report formats provided by some of the software. This
allows the user to make the invoice, challan, GRNs look the way they want.
6. Very effective for small and medium size businesses: Most of their functional
areas are covered by these standardised packages.
7. Regular Updates: Most of vendors providing these packages provides regular updates
of the package according to change of rules.
8. Easy training of employees: As these packages are used all over the country, rather
many times in number of countries, getting trained employees is not a difficult task.
£ ,
Limitations of Pre-packaged Accounting Software
Some of the important limitations of Pre-packed Accounting Software are as follows:
1. Does not cover peculiarities of specific business: Business today are becoming
more and more complex. A standard package may not be able to take care of these
complexities.
2. Does not cover all functional area: There is a possibility that package may not be
covering all functional areas required by the business.
1.16____________________________________ Introduction To Computerized Accounting
3. Customisation may not be possible in most such softwares: The package provide
commonly required reports and cannot generate specific reports.The expertise for
customization may not have been retained by the vendor.
4. Reports generated is not sufficient or serve the purpose: The demands for
modern day business may make the management desire for several other reports for
exercising management control. These reports may not be available in a standard
package.
5. Lack of security: These package provide normal security which may not be sufficient
for sensitive data.
6. Bugs in the software: Certain bugs may remain in the software which takes long to
be rectified by the vendor and is common in the initial years of the software.
, CUSTOMISED ACCOUNTING SOFTWARE

We have discussed the various type of readymade software available in the market. But
sometime your business might have a different requirement which is not satisfied by any of the
readymade package available in the market. In that case you need to get some software specially
designed and deployed for your specific need. These tailor made software specially designed for
particular business are known as ‘Customised Accounting Package’. A customised accounting
software is one where the software is developed on the basis of requirement specifications
provided by the organisation. The choice of customised accounting software could be because of
the typical nature of the business or else the functionality desired to be computerised is not
available in any of the prepackaged accounting software.
A feasibility study is first made before the decision to develop a software is made. The life
cycle of a customised accounting software begins with the organisation providing the user
requirements. Based on the user requirement the system analyst prepares a requirement
specification which is given for approval by the user management. Once the requirement
specification is approved, the designing process begins. Development, testing and
implementation are the other components of the system development life cycle.
Advantages of a Customised Accounting Package

Advantages of a customised accounting package are the following:
1. The functional areas which are not in pre-packaged software covered gets
^computerised.
2. The input screens can be tailor made to match the input documents for ease of data
entry.
3. The reports can be as per the specification of the organisation. Many additional MIS
reports can be included in the list of reports.
4. Bar-code scanners can be used as input devices suitable for the specific needs of an
individual organisation.
5. The system can suitably match with the organisational structure of the company.
:-troduction To Computerized Accounting____________________________________ 1.17
Limitations of a Customised Accounting Package

The disadvantages which may arise in a customised accounting package are the following:
1. Requirement specifications are incomplete or ambiguous resulting in a defective or
incomplete system.
2. Inadequate testing results in bugs remaining in the software.
3. Documentation is not complete.
4. Frequent changes made to the system with inadequate change management procedure
resulting in system compromise.
5. Vendor unwilling to give support of the software due to other commitments.
6. Vendor not willing to part with the source code or enter into an escrow agreement.
7. Control measures are inadequate.
8. Delay in completion of the software due to problems with the vendor or inadequate
project management.
| ENTERPRISE RESOURCE PLANNING (ERP)

Enterprise Resource Planning is a system of business management where all parts of the
' -siness are included into one management system. It means that the planning, accounting,
- ' ufacturing, marketing and sales are all controlled by one program. As ERP system cover
e of the functions required by business, these are becoming very popular now days.
:. hunting package handles only individual business functions of accounts whereas Enterprise
• -source Planning (ERP) package handles the entire range of business functions of an
a-ganization. ERP system is a fully integrated business management system covering functional
: -- ss of an enterprise like Accounts, Finance, Human Resources, Production, Sales and Logistics
It organizes and integrates operation processes and information flows to make optimum use
-r sources such as men, material, money and machine.
advantages of ERP System

1. Reduce cost and resource inefficiencies
2. Gain better control of processes
3. Enhance productivity, customer satisfaction, flexibility and control
4. Manage operations from more than one office location...Dependant on your choice of
ERP solution
5. Improve communication and collaboration between all areas of your business.
6. ERP system helps the business in reducing operating costs.
The other benefits from implementing ERP systems is facilitation of day-to-day
management.
1. ERP system support Strategic Planning. Strategic Planning is “a deliberate set of steps
that assess needs and resources; define a target audience and a set of goals and
objectives”.
2. Majority of the desired reports are available in an ERP package. These reports are
standardised across industry and are generally acceptable to the users.
3. Duplication of data entry is avoided as it is an integrated package.
Limitations of ERP system

1. Lesser flexibility : The user may have to modify their business procedure at times to
be able to effectively use the ERP.
2. Implementation hurdles : Many of the consultants doing the implementation of the
ERP may not be able to fully appreciate the business procedure to be able to do a good
implementation of an ERP
3. Very expensive : ERP are normally priced at an amount which is often beyond the
reach of small and medium sized organisation. However, there are some ERP coming
into the market which are moderately priced and may be useful to the small businesses.
4. Complexity of the software : Generally an ERP package has large number of options
to choose from. Further the parameter settings and configuration makes it a little
complex for the common users.
DIFFERENCE BETWEEN COMPUTERIZED ACCOUNTING AND
I MANUAL ACCOUNTING
Basis of Difference Manual Accounting Computerized Accounting
1. Definition Manual accounting is the In this system of accounting, we

system in which we keep use computer and different
physical register of journal and accounting software for record of
ledger for keeping the records each transaction
of each transaction.
2. Calculation In manual accounting, all In computerized accounting, our

calculation of adding and duty is to record the transactions
subtracting are done manually. manually in the database. All the
For example, we find the calculations are done by computer i
balance of any ledger account. system. We need not to calculate
We will calculate the debit and each account's balance, it is
i ? ,
credit side and then we will calculated automatically by
find its difference for showing computerized accounting system
balance.
3. Ledger Accounts In manual accounting, we check Computerized accounting system i

the journal and then we will automatically process the 1
transfer figures to related system and will make all the!
accounts' debit or credit side accounts ledgers because we have!
through manual posting pass the voucher entries under its!
respected ledger account.
4. Adjustment Both adjustment journal Only adjustment entries will pass

Entries Record entries and its posting in the in the computerized accounting
ledger accounts will be done system, posting in the ledger
manually one by one accounts will be done
automatically.
5. Financial We have to make the financial We need not prepare financial
Statements statements manually at the end statement manually, financial
of the Financial Year statements will be prepared
automatically after each voucher
entry in the system.
6. Scope of Only Financial aspect is Record of Inventory can also be
Transactions recorded. No record is maintained in computerized
maintained for inventory. accounting.
7. Rate of In manual accounting there is In computerized accounting, rate

obsolescence no obsolescence. Accounts are of obsolescence is very high.
maintained traditionally using Continuous up gradation of both
copy and pen. computer and software is required.
8. Risk of Loss of There is less risk of loss of data There is more risk of data.
Data as there is no virus problem or
crash of system.
9. GST returns and All GST returns and records GST returns and records are
records. are maintained manually thus generated automatically, thus
making the task difficult. saving the time.
10. Suitability It is more suitable for small It is more suitable for large scale
scale concerns. concerns.
11. Reporting Time Financial reports are generated Financial statements are prepared
only at end of the financial after every transaction. Moreover,
year. Moreover, the process of reporting time is very less.
preparing financial statements
is very time consuming.
12. Modification of Modification of original entry is Any modification in original entry

original data. very difficult. is possible in computerized
accounting system.
THEORETICAL QUESTIONS
| LONG QUESITONS
1. What do you mean by computerized accounting system?
2. How computerized accounting system is better than manual accounting system?
1.20_________________________ Introduction To Computerized Accounting
3. What are the major advantages that are available with computerized accounting
system?
4. Define a computerized accounting system. Distinguish between a manual and
computerized accounting system
5. “Computerised Accounting system is better form of accounting system”. Do you agree?
6. Mention various limitations of computerized accounting system.
7. Explain various applications of computerized accounting system.
8. Discuss manual v/s computerized accounting.
9. What is computerized accounting? Why computers are used for accounting functions?
10. Explain input, processing and output stage of computerized accounting.
11. Explain different types of accounting software.
12. What are Readymade Accounting Software? What are its advantages and limitations.
13. Write a detailed note on cusotmised accounting software. Give its advantages and
limitations.
14. What are ERP systems. What are its advantages.
| SHORT QUESITONS
Ql. What is manual accounting?
Ans: “A traditional system of accounting in which all the basic steps of accounting i.e. Journal,
Ledger, Trial Balance and Final Accounts are recorded by accountant using accounting
books and pen”
Generally the use of machines is very less in Manual accounting system and it is mainly
limited to use of basic machines such as calculators etc.Following are some of the important
characteristic of Manual Accounting System:
1. In this system of accounting, accounts are mostly maintained by employees using paper
and pen.
2. In manual accounting the accountant is responsible is responsible for making sure that
journal entries balance prior to posting information into the company’s general ledger.
3. The scope for use of machines is very less in manual accounting system.
£
4. Accounting staff plays more important and active role in manual accounting system.
5. This system of accounting is more suitable for small business concerns having limited
number of transactions.
6. As all the accounting steps are performed by accounting staff manually.
7. In manual accounting system, the results of business can be ascertained only at end of
the financial year when books are closed and financial statements are prepared.
Q2. What is Computerized Accounting System?
Ans: Computerized Accounting System refers to a system wherein the accounts of the business
are maintained using a computer system. The computer takes care of posting these
entries to the respective ledgers, and prepares trial balance, profit and loss account,
balance sheet and calculates major financial ratios with great speed and accuracy.
processing the financial transactions and events as per Generally Accepted Accounting
Principles and leads to generation of reports as per the requirements of the users with
minimum human intervention.”
1. Accounts are maintained using a computer software known as accounting software
e.g. Tally, Quickbooks etc.
2. Human intervention in accounting process in minimum.
3. Accountant has to record only voucher entry in computerized accounting system,
rest accounting procedure is completed by software itself.
4. It generates different accounting reports quickly.
5. It generates a print out of purchase and sales invoices.
6. It is capable of generating GST returns and records.
7. It is capable of maintaining inventory information also.
Q3. What are advantages of computerized accounting?
Ans: Following are some of the advantages of computerized accounting:
1. Speed : Computer being an electronic device will work faster than human beings.
2. Accuracy : The possibility of error is eliminated in a computerized accounting
system because once a particular program is fed, all the results based on such
program would be hundred percent accurate.
3. Up-to-Date Information : Accounting records are updated automatically as and
when accounting data is entered and stored.
4. Reduced Paper Work : In computerized accounting system transactions are
stored in computer hard disk, which reduces the paper work.
5. Economy : Computerized accounting is cheaper when compared with human
labour.
6. Timely Reporting : The computerized accounting system facilitates the
generation of the Management Information System (MIS) reports at a very high
speed which enables the management to take quick decisions.
7. Queries : In computerized system, replies to various queries can be obtained very
quickly.
8. Large Storage Capacity : The computers have large storage capacity, so
accounts of all the past years are available on one single hard disk, which makes
accessing past information easy.
9. Scalability : Computerized accounting system are very useful when scale of
business is very large and the number of transactions is very high. Computer
system can very easily handle large scale data.
10. Online Facility: Computerized accounting system offers online facility to store
and process transaction data, so as to retrieve information for generating and
viewing financial reports any time at any place.
Q4. What are problems in computerized accounting?

Ans: Following are some of the problems in computerized accounting:
1. User Training: The user, for using computer accounting software, needs to
understand the concepts of the software. Hence, he should undergo proper
training.
2. System Dependency: Using a computer solution makes the user to depend fully
on the computer system and necessitates the availability of computer at all times.
3. Hardware Requirements: A full-fledged computer system with a printer is
required to operate the computerized accounting system. Most small organizations
may not afford to have such facility with necessary software.
4. System Failure: When there is a system crash [hard disk crash], there is high
risk of losing the data available on the hard disk drive at any point of time.
5. Backups and Prints: Backups of the data should be done regularly so that, when
the data is lost, it can be restored.
6. Security: Additional security has to be provided because computer data is easy to
be copied.
Q5. What are difference between manual and computerized accounting system?
Ans: Following are difference between manual and computerized accounting system:
Basis of Difference Manual Accounting Computerized Accounting
13. Definition Manual accounting is the In this system of accounting, we

system in which we keep use computer and different
physical register of journal and accounting software for record of
ledger for keeping the records each transaction
of each transaction.
14. Calculation In manual accounting, all In computerized accounting, our

calculation of adding and duty is to record the transactions
subtracting are done manually. manually in the database. All the
For example, we find the calculations are done by computer
balance of any ledger account. system. We need not to calculate!
We will calculate the debit and each account's balance, it is 1
credit side and then we will calculated automatically by 1
find its difference for showing computerized accounting system
balance.
15. Ledger Accounts In manual accounting, we check Computerized accounting system 1

the journal and then we will automatically process the!
transfer figures to related system and will make all the 1
accounts' debit or credit side accounts ledgers because we have!
through manual posting pass the voucher entries under its!
respected ledger account.
16. Adjustment Both adjustment journal Only adjustment entries will pass
Entries Record entries and its posting in the in the computerized accounting
ledger accounts will be done system, posting in the ledger
manually one by one accounts will be done
automatically.
17. Financial We have to make the financial We need not prepare financial
Statements statements manually at the end statement manually, financial
of the Financial Year statements will be prepared
automatically after each voucher
entry in the system.
18. Scope of Only Financial aspect is Record of Inventory can also be
Transactions recorded. No record is maintained in computerized
maintained for inventory. accounting.
19. Rate of In manual accounting there is In computerized accounting, rate

obsolescence no obsolescence. Accounts are of obsolescence is very high.
maintained traditionally using Continuous up gradation of both
copy and pen. computer and software is required.
20. Risk of Loss of There is less risk of loss of data There is more risk of data.
Data as there is no virus problem or
crash of system.
21. GST returns and All GST returns and records GST returns and records are
records. are maintained manually thus generated automatically, thus
making the task difficult. saving the time.
22. Suitability It is more suitable for small It is more suitable for large scale
scale concerns. concerns.
23. Reporting Time Financial reports are generated Financial statements are prepared
only at end of the financial after every transaction. Moreover,
year. Moreover, the process of reporting time is very less.
preparing financial statements
is very time consuming.
24. Modification of Modification of original entry is Any modification in original entry

original data. very difficult. is possible in computerized
accounting system.
Q6. What are Readymade Accounting Packages?

Ans: In computerized accounting, accountants need some software to maintain the accounts.
There are several softwares available in the market which can help accountant in
maintaining the accounts. A business has choice between getting their own accounting
software developed according to the needs of the business or going for some readymade
software available in the market. The readymade package available in the market is
known as ‘Prepackaged Accounting Package’. There are several prepackaged accounting
1.24 ____________________________ Introduction To Computerized Accounting
software which are available in the market like Tally, Wings, Busy and Quickbooks etc.
Pre-packaged Accounting Software has many advantages as follows:
1. Easy to install: The CD or floppy disk is to be inserted and the setup file should
be run to complete the installation.
2. Relatively inexpensive: These packages are sold at very cheap prices nowadays.
3. Easy to use : Mostly menu driven with help options. Further the user manual
provides most of the solutions to problems that the user may face while using the
software.
4. Backup procedure is simple: Housekeeping section provides a menu for backup.
The backup can be taken on floppy disk or CD or harddisk.
5. Very effective for small and medium size businesses: Most of their functional
areas are covered by these standardised packages.
6. Regular Updates: Most of vendors providing these packages provides regular
updates of the package according to change of rules.
Q7. What are customized Accounting Software?
Ans: Sometime your business might have a different requirement which is not satisfied by any
of the readymade package available in the market. In that case business needs software
specially designed. These tailor made software specially designed for particular business
are known as ‘Customised Accounting Package’. A customised accounting software is one
where the software is developed on the basis of requirement specifications provided by
the organisation. Advantages of a customised accounting package are as following:
The functional areas which are not in pre-packaged software covered gets|
computerised.
The input screens can be tailor made to match the input documents for ease
data entry.
The reports can be as per the specification of the organisation. Many addition
MIS reports can be included in the list of reports.
Bar-code scanners can be used as input devices suitable for the specific needs of
individual organisation.
The system can suitably match with the organisational structure of the company.
■e are
INTRODUCTION TO
TALLY.ERP 9
CONTENTS
□ INTRODUCTION TO TALLY;
□ BRIEF HISTORY OF TALLY;
□ DESIGN PRINCIPLES OF TALLY;
□ FEATURES OF TALLY;
□ APPLICATION OF TALLY;
| INTRODUCTION
Modern technology allows accounting professionals to handle their work with more flexibility
“I mobility. Computerized systems help business firms to record financial transactions which
an later be tracked anytime anywhere. Accounting firms can now avail benefits like easy and
efficient data collection, improved data quality, speedy data validation and many more. There
- ■t many accounting software available in market which can help in computerized maintenance
f accounts.
Tally is the wonderful accounting software available in market not only in India but also in
* -mber of foreign markets. It got good reputation in the field of business. Tally is the world's
iistest and most powerful concurrent Multi-lingual business Accounting and Inventory
lanagement software. Tally is quick to install, simple to learn and is designed to meet the needs
■f small, medium and large businesses. It provides an integrated business solution involving
Sales, Finance, Purchase, Inventory, Manufacturing, GST and Payroll besides tremendous
-7 porting, data synchronization, remote capabilities and so on. Tally is capable to record
afferent companies’ creation, display and alteration. It can record all ledger accounts under
efferent head or master accounts. Tally is not only simple to use but also a very secure system to
. -e. There are a number of security options in Tally which keeps the data secure. It not only
2.2 Introduction TO TALLY.ERP 9
helps in recording the information but also helps in decision making and future planning by
providing number of ratios and other statements like budgets etc.
| HISTORY OF TALLY
Accounting Software Tally is incredible powerful accounting software from Tally (Bangalore,
India) which has enjoyed a brilliant reputation in accounting solutions for the last 30
years. There are nearly 3 million users of Tally which are spread over more than 90 countries.
Tally Solutions, then known as Peutronics, was co-founded in 1986 by Shyam Sunder
Goenka and his son Bharat Shyam Sunder Goenka. Shyam Sunder 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, a Maths graduate to create a software application that could 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. It was known as the first code less package, a feature that made it easy for
most people to use.
• In 1986, Peutronics Private Limited was formed.
• In 1988, the product was renamed as TALLY.
• In 1997, the first Windows based version 5.4 was released.
• In 1999, the company formally changed its name from Peutronics Private Limited to
Tally Solutions.
• In 2005, Tally 7.2 was launched with features designed to meet Indian value-added
taxation (VAT) requirements.
• In 2006, Tally launched Tally 8.1, a concurrent multi-lingual version.
• In 2009, the company released Tally.ERP 9, offering complete business management
solution.
• In 2015, the company launched Tally.ERP 9 Release 5.0 with taxation and compliam
features.
• In 2016, Tally Solutions was shortlisted as a GST Suvidha Provider to provide interfai
between the new Goods and Services Tax (GST) server and taxpayers.
• In 2017, the company launched its updated GST compliance Software.
jC*
Following is the history and versions of Tally:
• Tally 4.5 : This version MS-DOS support financial accounting system. It takes care
accounting activities only such as Ledgers Classification Vouchers Entry. It providt
simple financial reports and bill wise analysis of debtors and creditors in the business.
• Tally 5.0: This version is an upgraded version to tally 4.5 and it works in window
operating system Inventory modules is introduced in this version, which invoh
detailed inventory, structure invoicing and integrating accounting and Inventory record
• Tally 5.4 : This version is an improved module over the version 5.0 where it is capable
converting earlier data formats in to the current data format. This is possible thou;
Import of Data Facility.
Introduction TO TALLY.ERP 9_______________________________________________ 2.3
• Tally 6.3: Tally 6.3 is extended enterprise systems whereby it interacts with other
system through ODBC (Open Data Base Connectivity) you and e-mail upload your
financial records form tally.
• Tally 7.2: This version is an integrated enterprise system provides different kind of
taxes like VAT, TDS & TCS and Service Tax modules is introduced in this version.
• Tally 8.1: Tally 8.1 is multi language support software. It supports 10 Languages
includes is introduced in this version.
• Tally 9.0: This version is an improved model over the version 8.1. It support 13
Languages (Includes Foreign Languages). Payroll, POS (Point of Sales) modules is
introduced in this version.
• Tally.ERP9: This is the latest version which provides different features like remote
access, much powerful data security, tally.net and many more.
| DESIGN PRINCIPLES OF TALLY

Following are certain principles on which design of Tally.ERP 9 is based:
1. Simple: Most important principles of Tally.ERP 9 design is to keep it simple. Tally is
designed in such a manner that a person who is having only basic knowledge of
computers and accounting can maintain the accounts using this package. Tally is not
based on codes of accounts, thus keeps the system very simple.
2. Flexible: Tally design is based on principle of flexibility. Tally allows user to create on
heads of accounts and there are many other flexibilities available in Tally like
accounting period can be selected according to requirement of user, multi currency etc.
3. Super Fast: Tally design makes the Tally package very fast. Tally package does not
need very high memory of computer or very fast processor. Tally operations are very
fast. Moreover, user is required only to record Voucher entry, rest all the processing
like Ledger posting, Trial Balance or Final Accounts etc. are prepared automatically by
the Tally.
4. Reliable: Tally design makes the system very reliable. There are very less chances of
system crash or system error. Most of the compliances in Tally package are accurate, so
there is not much room for error in Tally. Even power failures or machine shut down
during functioning does not affect data stored in Tally database.
5. Secure: Tally design is very secure. There many type of security levels available in
Tally. User can set up security levels according to the authority of the employee for
example Data Entry Operator can be only allowed to record entry but not to make any
changes, where as administrator could have full authority in Tally. Moreover Tally
design also provides automatic Backup of Data.
6. Scalable: Tally design suits to any style of business needs and eliminates the necessity
for a business to change its style of operation, in order to adapt to the application.
| FEATURES OF TALLY
Salient Features of Tally.ERP 9
General Features
1. A leading accounting package: Tally is number one accounting package in India
with user base of 1.5 million in the country. It has almost 90% share in the readymade
accounting package market.
2. 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.
3. No accounting codes: Earlier systems of computerized accounting were base on
accounting codes in which user first allot various codes to different accounts. It was not
possible to maintain records by using name of account, accounting was based on code
numbers. Unlike other computerised accounting packages Tally.ERP 9 pioneered the
‘no accounting codes’ concept. Tally users can allocate meaningful names to various
accounts as it is done in case of manual accounting.
4. Multi-lingual: Tally is not only used in India but also in number of other countries. It
supports many Indian as well as foreign languages. User can check the report made in
Tally not only in English language but in many local as well as international
languages.
5. Multi-company : There are many freelancer accountants who work for a number :
firms at a time. Sometime a business has a number of group firms or companies. In al
such cases, Tally provide the facility of creating a number of companies in a sing-
package. User need not to buy different package for different companies. It allows yod
to create and maintain up to 99,999 companies, concurrently.
6. Job Costing - In case a firm have a number of different projects, Tally enables Umj
business to generate profitability statements for each project executed, including
financial and material resource apportionments, wherever applicable.
7. POS Invoicing - A point of sale (POS) is the place where sales are made. It is the aid
where a customer completes a transaction, such as a checkout counter. Tally ald ««
POS facility also which means invoice can be issued to customer, cash register can I
maintained and automatic recording can be done. It allows faster data entry ■
printing on 40 column continuous stationery. It also provides barcode support
8. Flexible Financial Periods - Tally allows you to break away from inflesa
yf accounting years and perform all accounting functions in Tally for time-periods 4
suit your convenience.
9. Tax Reports : Tally has feature of generating tax reports. It cannot only genera
reports related to income tax but is able to generate tax reports and returns relate:
GST.
10. Financial Management : Tally has features of Financial Management also. It help
finding returns of business and helps in efficient financial management by preparam
of budgets and management of cash.
11. Payroll Recording : Tally has the feature of maintaining Payroll for the busina
Tally can maintain employee wise record of wage and salaries and various deduc:
etc. made from this, so business need not to maintain seprate Payroll.
Introduction TO TALLY.ERP 9 2.5
12. Data Synchronisation - Data Synchronization, help the branch offices to Transfer
data to the head office and vice versa over the Internet or a private network. Data
Synchronization is a two-way process; i.e., all the data pertaining to masters and
transactions from the Client Company (Branch) is transferred to the Server (Head
Office) and similarly data from the Server can be transferred to the Client.
13. Consolidation of Companies - Tally helps in grouping of companies and provides
consolidated reports. If any changes is done in any constituent or branch company, it is
automatically updated in the grouped information.
14. Advanced MIS - Tally helps to compare information in order to understand and
analyse performance levels for various periods or divisions. It helps to study and
understand the buying patterns of customers, so that business can channel resources to
specific segments, periods or customers. It also helps to analyse cash flow situations.
15. Drill Down Facility - A Drill Down facility moves from one report to the other to give
a detailed view based on the selection in the current report. A user can return to the
first Report from the detailed view starting from the Balance Sheet down to Vouchers,
or vice versa.
16. Customized Security Control - Tally has a very Customized on security system.
Business can set up Security Levels and users who are placed at these levels. Tally has
two default Security Levels. One is Owner and the other Data Entry. Owner has full
access and rights to all features of Tally, except Tally Audit & Company Alteration
screen, which are reserved for the Administrator alone. Data Entry has restricted
rights. Business can create New Security Levels and define task wise access rights.
Accounting Features
1. Complete Bookkeeping - Tally enables business to record all types of transactions
including receipts, payments, income and .expenses, sales and purchases, debit notes,
credit notes, adjustment journals, memorandum journals and reversing journals.
Transaction data entry through unique voucher entry is easy and flexible to configure,
for diverse types of transactions
2. Multi-currency Accounting - Tally offers flexibility of multiple currencies in the
same transaction and allows viewing of all reports in one or more currency.
3. Receivables and Payables - Tally enables to get reports that are classified,
grouped, and aged to your definitions and helps to identify troublesome debtors and
persistent late payers, thereby helping to generate customizable reminders, over dues.
4. Ratio Analysis - Tally offers you a bird's eye view of company, through a single sheet
performance analysis, based on a range of key performance ratios.
5. Generate Quotations, Orders and Cheque Printing - Tally can generate quotes,
purchase orders and other documents that can either be printed or mailed directly to
the recipient.
6. Budgeting - Tally has the feature of preparation of budgets. It gives unlimited
budgets and periods and can prepare original and revised budgets.
7. Powerful Audit capabilities - Tally is very helpful for auditing. It allows to track
changes, while making genuine corrections with unparalleled ease.
2.6_______________________________________________ Introduction TO TALLY.ERP 9
8. "Scenario" management - Tally can do business forecasting and planning. Business

can use optional, reversing journals and memorandum vouchers, to aid in
recording provisional entries that are useful for interim reports. It helps in prediction
of future scenario.
Inventory Features
1. Multi-location Stock Control - helps you manage simple single-location, or complex
multi-location stocks, with unlimited classification systems for your items, and your
own units of measure.
2. Flexible Units of Measure - Tally has feature of flexible units of measure. It can
track stock, irrespective of the units of measure. For example, when goods are
purchased in tons and sold in kilograms it can record inventory.
3. Comprehensive recording of stock movement - Tally can record all sorts of
inventory transactions, using the inventory voucher forms. Vouchers include goods
receipt notes, delivery notes, stock journals, manufacturing journals and physical stock
journals. All stock movements are fully recorded and maintained in stock registers.
4. Stock Ageing - Tally can identifies stocks based on age that is the period for which
item remained in stock thus it helps business to dispose off old stocks quickly.
5. Multiple Stock Valuations - Tally has feature to choose inventory value from
different types of valuation methods, including ‘First in First out’, ‘Age Cost’, ‘Last in
Last out’, ‘Standard’, among others.
6. Reorder Levels - Tally allows for user-defined Reorder levels for any given
period thus able to avoid excess stocking of items. Business can fix reorder level of
item based on previous consumption patterns.
ADVANTAGES/BENEFITS OF TALLY
Installation of Tally is fast and easy: Tally has a simple procedure of installation
and the software does not require high level of hardware configuration for installation
It takes not much time to install and you do not require more than 8 MB space fo
loading the software. Buyers can specify the directory to install the software and get:
installed in 1 minute.
Integrated/ Non-integrated accounting and inventory: InTally.ERP 9, the user
able to choose between accounting and accounting with inventory. If accounting wir
inventory is opted for, the user can choose whether it should be integrated or not.
User-friendly : Tally software is very simple to use and a person without mui
knowledge of accounting or computers can use this software.
Speed : Tally.ERP 9 provides the capability to generate instant and accurate repor
which assists the management to take timely and correct decisions for the over
productivity and growth of the company..
Flexible : Tally.ERP 9 provides flexiblity to generate instant reports for any giv
period (month/year) or at any point of time.
6. Concurrent multi-lingual capability : Tally.ERP 9 offers the exclusive capability of

maintaining your accounts in any Indian language, viewing them in another language
and printing them in yet another Indian language.
7. Real time processing : Tally provides immediate posting & updation of books of
accounts as soon as the transactions are entered, thereby facilitating instant
statements & Reports. It also facilitates real-time multi-user environment.
8. Complete business solution : Tally is a complete business solution as it provides
facilities like accounting, inventory management, payroll, point of sale, tax compliance,
financial management, banking etc.
9. Versatility : Tally is suitable for a range of organisations. A small trader to big
manufacturing organisation, all business organisations can use Tally Software.
10. High operating system compatibility: It runs on many operating systems and it is
very compatible to other software products. You can install Tally on Windows NT,
Windows 95, Windows 98 and Windows 2000.
11. Generate Quotations, Orders, Invoice, Voucher and Cheque Printing: Tally
ensures real-time linking of accounts and inventory besides enabling instantaneous
generation of documents, which can either be printed or mailed directly to the recipient.
12. Auditor’s Edition: Tally offers special edition of Tally. ERP 9 exclusively for Auditors
with extensive auditing and compliance tools to effectively conduct Audit and expedite
the audit process.
13. Online Help : Tally.ERP 9 is in built with online help mechanism which provides
context sensitive help on numerous product features and functionality.
14. Remote Access : Tally provides remote capabilities to access the data from any-where
and anytime.
15. Split Company Data: Tally.ERP 9 allows splitting of company data into multiple
companies for the required financial period. Once the data is split, the closing balances
of the previous period are automati-cally carried forward as the opening balance for the
subsequent period.
16. Import and Export of Data Tally.ERP 9 allows you to flexibly export and import data
in various formats such as MS EXCEL, JPEG, PDF, XML, HTML or ASCII format.
17. Backup/ restore Data : Tally.ERP 9 provides automatic backup facility to secure your
company from any kind of data loss/corruption and helps in smooth functioning of your
business.
18. Graphical analysis of data : Tally.ERP 9 allows easy analysis of results/reports with
graphical representation of values.
19. Accuracy : In Tally user need to record Voucher entry only, rest all the functions are
performed by software automatically. So, there are very less chances of error in Tally.
20. Data Security : Tally.ERP 9 uses a binary encoding format to prevent devious
grouping of information besides ensuring that there are no external changes to the
data.
21. E-Mail Facility: Tally.ERP 9 supports mailing of required information to intended
recipients and also mass mailing facility for certain reports like Payslip etc.
| Application of Tally.ERP 9
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.
1. Tally applications in Financial Accounting

Tally.ERP 9 maintains all books of accounts starting from record of vouchers to ledgers etc.
You can use different types of vouchers like payment, receipt, sales, purchases, receipt notes,
delivery notes and adjustment entry vouchers like journals, debit & credit notes.
Tally has following applications in Financial Accounting:
• Simple & Easy Voucher Entry
• Books & Registers
• Preparation of Ledgers.
• Preparation of Trial Balance
• Statements of Accounts
• Maintain Multiple Companies
• Fund Flow & Cash Flow
• Unlimited Cost & Profit Centers
• Multi Currency Accounting
• Interest Calculation
2. Tally applications in Financial Management

Tally.ERP 9 provides you the capability to generate various financial statements and
Management Information system reports, thereby facilitating better management, effective
control and wellinformed decisions. Following are the some of salient features, which make-
Tally.ERP 9 best for basic financial management.
• Fund Flows
• Receivables Turnover (Payment performance of debtors)
• Branch Accounting
• Flexible Period Accounting
• Budgeting and Control
• Cost centers I Profit centers with multiple Cost Categories
• Ratio Analysis
• Scenario Management
3. Tally applications in Inventory Management

Tally.ERP 9 provides you the capability to record inventory transactions without chanj
»9 Introduction TO TALLY.ERP 9 2.9
the way you do your business. It provides predefined Inventory vouchers to suit your business
requirements besides allowing you to create userdefined voucher types and flexibility to track
;ss your inventory at any point/stage/process and numerous other features.
he
• Stock Query
lie
• Multiple Warehouses I Locations:
• Sub-Godowns
• Stock transfers to Godowns
tc.
• Multiple Stock Valuation
3S,
• Batch-wise / Lot-wise & Expiry Date Handling
• Sales and Purchase Order Processing
• Tracking Inventory
• Rejection In and Rejection Out
• Additional Costs Incurred on Purchase
• Unlimited Stock Item Classification
• Bill of Materials
4. Tally applications in Payroll

*
Payroll refers to a series of accounting transactions involved in the process of paying
employees for services rendered after taking into account all statutory and non-statutory
reductions. Payroll in Tally.ERP 9 handles all the functional, accounting and statutory
requirements of the payroll department. It provides you with the flexibility to define earning &
reduction heads on of ESI, EPF, Gratuity, etc.
• Pay Slip Printing and Emailing
id • Employee Category I Group Wise Pay Sheet
/e
• Employee Profile, Group & Category
• Employee Pay structure Management
• Attendance Recording and Pay Process
• Payroll Accounting
• Personal Income Tax with Reports & E-return
• Payroll Statutory (PF / ESI)
• PF/ESI E - Returns
• Payroll Exception Reports
• Employee Profile Report
• Payment Advice
5. Tally applications in Banking

g A separate menu Banking has been provided under Utilities in the Gateway of Tally and the
2.10______________________________________________ Introduction TO TALLY.ERP 9
Lrc-oduction '
user need not go to different menus to operate the banking related operations in Tally.ERP 9,
Tie Tax comp
such as printing cheques, BRS, printing deposit slips, printing payment advices, etc. i«xrtmg and
• Auto I Manual BRS
• E-Filin
• Cheque Book Management
• Tax Im
• Cheque Printing
• Tax De
• Cash I Cheque Deposit Slip
• Payment Advice
> Tally app
Tally.ERP
6. Tally applications in Sales Management sc ~ ? in and
Sales management System helps Sales Persons to Plan, Monitor, Control, and Organise •Krmined an;
their Sales Opportunities, resulting in better visualisation of performance and remove any • Job On
bottlenecks during sales process. Sales Management helps the company to get detailed report on
• Gate-pi
every ongoing and past activities. Following are applications of Tally on Sales Management.
• Job Wo
• Sales I Tax Invoicing
• Excise Invoicing 10 Tally ap
• Sales Orders Processing Manufactu
• Stock Query from Invoice ■aa effectively
ecu r~ and quic
• Price List & Discount Management
• Multi-I
• Item-wise & Invoice wise Profitability
• Manufi
• Item Batch-wise details
• Go-dow
• Multi Level Classification of Items
• Materii
• POS Invoicing & Registers
• Sales &
7. Tally applications in Purchase Management
-Tally ap
With Tally.ERP 9, you can manage your purchases efficiently by creating purchase records,
generating expense reports, and making updates to purchase records as and when needed. Tally I Tally.ERP !
Purchase Module helps to maintain masters for various suppliers and their contacts, track fcttjts of Accou
purchases, get a complete purchase rate history etc. It systematically records all the details Unisonal State
pertaining to various suppliers, purchase orders, purchase requests, quality checks, purchase ■s-x xo be subr
returns and much more. It enables you to evaluate a supplier based on delivery time, quality of J • XBRLI
material and cost of procurement.
• Balano
• Purchase Invoicing
• Statu to
• Purchase Orders Processing • Tax Au
• Reorder Levels
• Item Batch-wise Details
12. Tally ap
• Additional Cost of Purchase MIS Repor

rrimzation a
8. Tally applications in Tax Management inrrmation Si
enable mat
Tally.ERP 9 provides GST solution and Income Tax compliance to across 32 states in India
• Compaj
The Tax compliance in Tally.ERP 9 is completely integrated with Accounting, Inventory &
Reporting and simplifies these aspects with absolute ease, accuracy and speed.
• E-Filing (GST)
• Tax Invoices
• Tax Deducted at Source (TDS)
9. Tally applications in Job Work

Tally.ERP 9 can fulfill all Job Work requirements and provide real time record of materials
coming in and going out. Job Work reports can be generated and accurate stock positions can be
determined anytime using Tally.
• Job Order Processing
• Gate-pass for Job Work
• Job Work Related Reports
10. Tally applications in Manufacturing

Manufacturing business produces items with the usage of machines, tools and labor. Tally
:an effectively streamline and integrate your business processes, optimize the entire supply
: hain, and quickly identify customer needs, eventually contributing to an improved bottom line.
• Multi-Bill of Material
• Manufacturing Journal
• Go-downs
• Material Requirement Plan
• Sales & Dispatch Management
11. Tally applications in Auditing

Tally.ERP 9 is a powerful tool to perform Statutory Audit. It enables Auditors to analyse the
3ooks of Accounts, discover exceptions and highlight deviations. Using it, Auditors can generate
Financial Statements like Balance Sheet and Profit & Loss Account as per Schedule III, which
need to be submitted to stakeholders as prescribed in Company's act.
• XBRL Reports
• Balance Sheet and P & L as per Schedule III
• Statutory Audit
• Tax Audit
12. Tally applications in Management Information System

MIS Reports are reports required by the management to assess the performance of the
irganization and allow for faster decision-making. Tally 9 has very powerful Management
.nformation Systems capability. MIS reports ensure complete and critical information that
will enable management to make quick and accurate decisions.
• Comparative Reports in Multi-columnar Format
2.12 Introduction TO TALLY.ERP 9 Introductio
• Exception Reports 15. Tally

• Payment Performance of Debtors Tally.EB
• Stock Ageing Analysis more than o
between the.
• Profit Analysis
analyse the
• Stock Movement Analysis tte group co
• Job Costing Analysis updated at t]
• Ratio Analysis • Cent
• Final Account Reports • Cons

• Infor
• Income & Expenditure Statements
• Scenario Management
• Cheque Register
| LONG q
13. Tally applications in Point of Sales (POS)
1. Wh;
Point of sale in the location where actual transactions of sales takes place e.g. when we go for
2. Whj
purchase in some super store etc., the counter where billing is done is point of sale. At point of
sale billing of items is done, cash is collected, excess balance is refunded, gift coupons etc are 3- Exp
managed. 4. Tai
Con:
• Generates POS Invoices.
5- Whi
• Management of gift coupons, vouchers and discount tickets and so on.
6. Wha
• Cash and Credit I Debit Card transactions. 7. Expi
• Balances to be returned to buyers.
• Bar code scanning. 1SH0RT1
• Identifying consumer purchasing patterns *<— What
• Reports of Cash Registers, POS Registers, Inventory Reports. Tally
ajao ir
14. Tally applications in Remote Capabilities the wx
Inven,
When a business is closed for the day its data is also locked. However, Remote Access featura
w n&cn
in Tally.ERP 9 makes regular functions available outside the physical confines of the premises. 4
person or auditor can access the data even when he is sitting at home or any other remota
locafjon.
• Emailing of Documents and Reports
• Help & Support from Tally staff
• Online Access to Knowledge Base Write
• License and User Management
• Complete Remote Access
• SMS With Natural Language Support
• Message Centre
9 Introduction TO TALLY.ERP 9 2.13
15. Tally applications in Branch Management

Tally.ERP 9 lets users create and maintain any number of companies. The user can open
more than one company and simultaneously work on all or any of the companies by switching
between them. Tally.ERP 9 also allows users to group companies. This way the management can
analyse the performance of the company at Head Office and can prepare consolidated report for
the group companies. Any changes made in any one of the branch companies are automatically
updated at the Head Office.
• Central data can be managed at head office.
• Consolidated reports can be prepared.
• Information from head office to branch or vice-versa.
| LONG QUESTIONS
1. What is Tally. What are benefits of Tally accounting software?
'or
2. What are the various features of Tally accounting software.
of
3. Explain the brief history of Tally accounting software.
ire
4. "Tally accounting software is one of the best accounting software in the market”.
Comment on the statement giving various features available in Tally.
5. What is new in Tally. ERP9 software.
6. What are the inherent features of Tally.ERP 9.
7. Explain various application areas of Tally.ERP 9.
| SHORT QUESTIONS
Ql. What is Tally?
Ans. Tally 9 is the wonderful accounting software available in market not only in India but
also in number of foreign markets. It got good reputation in the field of business. Tally is
the world's fastest and most powerful concurrent Multi-lingual business Accounting and
Inventory Management software. Tally is quick to install, simple to learn and is designed
ire to meet the needs of small, medium and large businesses. It provides an integrated
A business solution involving Sales, Finance, Purchase, Inventory, Manufacturing, GST
ote and Payroll besides tremendous reporting, data synchronization, remote capabilities and
so. on. Tally is capable to record different companies’ creation, display and alteration. It
can record all ledger accounts under different head or master accounts. Tally is not only
simple to use but also a very secure system to use.
Q2. Write brief history of Tally.
Ans. Following is the history of development of Tally.
• In 1986, Peutronics Private Limited was formed.
• In 1988, the product was renamed as TALLY.
• In 1997, the first Windows based version 5.4 was released.
• In 1999, the company formally changed its name from Peutronics Private Limited
to Tally Solutions.
• In 2005, Tally 7.2 was launched with features designed to meet Indian value-added
taxation (VAT) requirements.
• In 2006, Tally launched Tally 8.1, a concurrent multi-lingual version.
• In 2009, the company released Tally.ERP 9, offering complete business
management solution.
• In 2015, the company launched Tally.ERP 9 Release 5.0 with taxation and
compliance features.
• 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.
• In 2017, the company launched its updated GST compliance Software.
Q3. Write any five important features of Tally Software.
Ans. Following are important features of Tally software:
1. No accounting codes: Tally.ERP 9 pioneered the ‘no accounting codes’ concept.
Tally users can allocate meaningful names to various accounts as it is done in case
of manual accounting.
2. Multi-lingual : Tally is not only used in India but also in number of other
countries. It supports many Indian as well as foreign languages.
3. Multi-company : Tally provide the facility of creating a number of companies in a
single package. User need not to buy different package for different companies. It
allows you to create and maintain up to 99,999 companies, concurrently.
4. POS Invoicing - A point of sale (POS) is the place where sales are made. It is the
area where a customer completes a transaction, such as a checkout counter. Tally
allows POS facility also which means invoice can be issued to customer, cash
register can be maintained and automatic recording can be done. It allows faster
data entry and printing on 40 column continuous stationery. It also provides
barcode support
5. Flexible Financial Periods - Tally allows user to perform all accounting
functions in Tally for time-periods that suit business convenience.
Q4. Write any five advantages of Tally software.
1. Installation of Tally is fast and easy: Tally has a simple procedure of
installation and the software does not require high level of hardware configuration
for installation.
2. Integrated/ Non-integrated accounting and inventory: InTally.ERP 9, the
y; user is able to choose between accounting and accounting with inventory.
3. User-friendly : Tally software is very simple to use and a person without muc:
knowledge of accounting or computers can use this software.
4. Real time processing : Tally provides immediate posting & updation of books
accounts as soon as the transactions are entered, thereby facilitating instai
statements & Reports.
5. Complete business solution : Tally is a complete business solution as it provide
facilities like accounting, inventory management, payroll, point of sale, ti
compliance, financial management, banking etc.
□ □□
RP 9
dded
CHAPTER
mess
CREATION AND
jther
CONFIGURATION OF
i in a
es. It
COMPANY IN TALLY
CONTENTS
3 GETTING START WITH TALLY;
3 MEANING OF COMPANY IN TALLY;
□ STEPS TO CREATE COMPANY;
nting 3 CREATION OF COMPANY IN TALLY;
3 SELECT THE COMPANY IN TALLY;
3 DELETE THE COMPANY IN TALLY;
re of 3 SHUT THE COMPANY IN TALLY;
ation
3 DIFFERENCE BETWEEN SHUT AND DELETE COMPANIES;
3 ALTER THE COMPANY IN TALLY;
3 CONFIGURATION OF TALLY;
3 FEATURES OF TALLY;
>ks of
stant GETTING STARTED WITH TALLY
Tally is a very advanced software that provide a number of options to the user related to
vides maintencance of accounts. However, an user can use only that options that are useful to him.
, tax ?: llowing are some of the steps in maintenance of accounts in Tally:
1. Create Company: - In Tally this is the First task or primary task to create a company.
For this Purpose we have to select the Create Company option from menu Gateway of
3.2 Creation and Configuration of Company in Tally Creation
Tally. After selecting the option we have to fill up the details for the Company like vn.
Company Name, Address, Started Date, and Income Tax No etc.
Creates Groups: -Groups are created for same type of Ledger A/cs. In Tally There are
many groups which are used for making ledgers. So in the rare cases we have to create
groups. These are the main groups in the tally.
• Reserve and Surplus (Retained Earning)
• Current Assets:
• Current Liabilities:
• Fixed Assets:
• Investment
• Loan Liabilities:
• Suspense Accounts
• Miscellaneous Expenses
• Branches/Division
• Sales Account
• Purchase Account
• Direct Income
• Indirect Income
• Direct Expenses
• Indirect Expenses
Double cl
Create Ledgers: -Ledgers are actual account heads to which the transactions are
identified. You Make all voucher entries in these accounts. You have to classify all
ledgers in to groups.
Voucher Entries: -For Making the Voucher Entries first of all we have to set the
voucher date by pressing F2 then enter the voucher date. There are various types of
vouchers in tally. Those are describes as follows:
I. Contra Voucher: -This type of voucher is used for Cash to Bank, Bank to Cash
and Bank to Bank Entries. Press F4 to select the voucher type.
II. Payment Voucher: -This type of voucher is used for the Cash Payment Entries.
Press F5 to select the voucher type.
Ill Receipts Voucher: - This type of voucher is used for the Cash Receipts Entries.
Press F6 to select the voucher type.
IV Journal: - This is used for the Journal Entries like debit of credit Entries. Press
F7 to select the voucher type.
Sales Voucher: -This is used for the Goods Sales Entries. Press F8 to select the
voucher type.
VI Purchase Voucher: - This is used for Goods Purchase Entries. Press F9 to select
the voucher type.
Creation and Configuration of Company in Tally 3.3
VII. Memo: - This is used to create Memorandum or Reverse Journal Voucher. Press
F10 to select the voucher type.
5. Display Reports: -There are several types of reports are generated by the tally like
Trading and Profit and Loss Account, Balance Sheet, Inventory Reporting Ratio
Analysis etc.
To start the tally following are the steps:
Click on Start > Programs > Tally.ERP 9 > Tally.ERP 9.
Double click on the Tally.ERP 9 icon on your desktop.
:t
3.4 Creation and Configuration of Company in Tally Creation an
1. The 1
ally websit<
1. Ho
son
rigl
the
cen
Buttt
P $«« ««s*t twite
port
Press start and in run write tally then tally ERP 9 option appears on above side then click on
^-Mail
that.
The application opens to the screen popularly known as Gateway of Tally. The Gateway of I
Tally screen is divided into Eight sections, namely Title Bar, Horizontal Button Bar, Main Area I
(Gateway of Tally), Button Tool Bar, Close Button, Info. Panel, Calculator Area and Task Bar I
Task Bar. The elements of the Gateway of Tally screen are explained below:
i-sen Cen
aepport Cei
X Gatew
separated int
Left-hanc
Rigfat-hai
The left-1
Ciantzames * ?
The righi
JCseaze a Con:
4- Buttoi
tm one sere
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r--------- ~i
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—r
__
Creation and Configuration of Company in Tally________________________________ 3.5
1. The Title Bar: It displays the version number of Tally.ERP 9. Title Area also contains the
Tally website link. You can access the Tally website directly from the Tally screen.
1. Horizontal Button Bar: This is a panel with a series of buttons,some are active and
some are not These buttons are used to do functions like print, export email etc. On the
right side of top button panel you will find language button to change the language of
the software .Keyboard buttons to change the typing language, Help to access Control
center, Support center & access help files online.
Buttons Shortcut Key Functionality
Print Alt + P Navigate to Print menu
Export Alt + E These buttons are disabled in the Gateway of

n Tally screen.
E-Mail Alt + M
of Upload Alt + O
:a
Language Alt + G To change the language
ir
Keyboard Alt + K To change the keyboard language
Control Centre Ctrl + K Login to Control Centre
Support Centre Ctrl + H To post queries, if any, relating to the product.
3. Gateway of Tally: - This is the working area and display area of tally. The Main Area is
separated into two:
Left-hand side area
Right-hand side area
The left-hand side provides information on Current Period, Current Date and List of Selected
Companies (Name of the company and the date when last entry has been made).
The right-hand side displays the Company Information menu such as Select a Company,
Create a Company, Backup a Company or Restore a Company and so on.
4. Button Tool Bar: The buttons are designed to make the work easier and faster, they vary
from one screen to another based on the screen functionality. They appear on the right hand side
:f the Tally.ERP 9 screen and the inactive buttons are greyed out. You can either click these
* uttons or press the shortcut keys to access the relevant screen.
The following are some of the buttons and their functions:
Buttons Shortcut Key Functionality
Select Cmp FI To select a company
Shut Cmp Alt + FI To shut or close the company

3.6 Creation and Configuration of Company in Tally Creation a
Date F2 To change the current date Choose

Select. Pre
Period Alt + F2 To change the period
Fn
Company F3 To select a different company which is already loaded.
(If a company is loaded, this button is disabled)
Company Info Alt + F3 To access the Company Info, menu

| MEANI
Connect F4 To connect companies to Tally.NET Server Tally So

jackage. In
Disconnect Alt + F4 To disconnect companies from Tally.NET Server □aetalling a
sasbsidiary c«
Features Fll To access the Company Features menu for a company
•■Cities. The
Configure F12 To access configuration settings *:fr»-are. act
dHferent fro:
5. Close Button: This panel will help you to close the tally software when you are in Qmpany. Ir
Gateway of Tally .Also used to come back to previous menu. KBnpany in 1
6. The Info Bar: It is at the bottom of the screen and displays the other details related to ®cty for wh
Tally. The info, panel is divided into four sections: *ah»are. tne
*=ount book
(a) Product: Displays the Tally logo. You can click the logo to visit the website.
“COMPAN
(b) Versions & Updates: Displays details about the current and latest releases and the
TDL information. Press Ctrl+Alt+T to display the version and updates information.
STEPS 1
(c) License & Subscription: Displays information related to the product license such as
Site ID, Account ID, Serial Number and so on. Press Ctrl+Alt+L to display the license |
and subscription information.
(d) Configuration: Displays statutory details, configuration details such as proxy I
configuration, data configuration and so on. Press Ctrl+Alt+F to display the |
configuration information.
7. Calculator Area: At the end of the panel there is one calculator if you click on calculate
will expand the area and rest of the panel will disappear. It works as a normal calculator
support arithmetical operations, press Ctrl+N from gateway of tally to activate calculator an:
press Ctrl +M go back to company information screen. These two keys combination works
toggle between calculator and gateway of tally.
8. fTa,skbar: Like window task bar this bar shows Current date, Current time and men.
path.
Keyboard and Mouse Conventions | CREATIO
While working on Tally.Erp9 , you can use the following conventions:
Actions Particulars
Click Press the left mouse button
Double-Click Press and release the left Mouse button twice by pointing on the item
Choose Select the Mouse Pointer on the item and click the left mouse button
Select/Press Select the Mouse Pointer on the item and double click the left mouse button
Fn Press the function key
Fn Press Alt+ Function key Or Ctrl+ Function key
| MEANING OF COMPANY IN TALLY

Tally Software provides the facility of maintain accounts of more than one entity is a single
package. In other terms a person can maintain accounts of more than one business entity by
installing a single package of Tally. This provides benefit in case of group firms, holding and
subsidiary companies or freelancer accountants who maintain accounts of many small business
entities. The creation of one business entity in Tally is known as ‘Company’. In Tally accounting
software, accounts are prepared for company. However, the concept of ‘company’ in Tally is very
different from the term company in legal or statutory sense, which is used for Joint Stock
Company. In Tally the term company can be used for any form of organization. The term
company in Tally is used for creation of any entity. This term in context of Tally stands for any
entity for whom a separate set of books of accounts is maintained. It may be a company, par in
software, tnership firm, individual organization even a branch office for which a separate set of
account books is maintained for accounting. For each entity you create a profile which is termed
as “COMPANY” in Tally.
, STEPS TO CREATE COMPANY

1. Open Tally Software.
2. If you are opening Tally ERP 9,First time after installation, you will be landed to a
menu called company info menu. ( If you are in Gateway of Tally Press Alt+F3 to get
that menu).
3. Select Create Company option in the menu and press enter key.
4. The screen displayed in-front of you is company creation screen.
5. Type the name of the company address, Financial year begins and all other details
asked by the creation screen.
6. Press Enter Key, Finally the program will ask you the confirmation to Save, Yes or No.
7. To save and create company do Press Enter Key, Press Y Key or click on Yes. The
^program will create a company and you will be entered into it.
| CREATION OF COMPANY IN TALLY

Whenever we want to maintain accounts in Accounting Software for a particular entity, the
first step is to create the record of that entity in the software package. This is known as creation
of company. Tally provides the facility of creating any number of companies in Tally. It means in
one Tally package we can maintain accounts for any number of business entities. For that we
just have to create that entity in Tally.
3.8 Creation and Configuration of Company in Tally
In this screen, enter all the details asking by software to create a company. This details will
be used in your report printing, and for complying statutory requirements. Let’s examine each
options in the list.:-
1. Directory: This is the data path, where Tally ERP9 store company data. You can
change it if required. But the cursor by default rests on second option ‘Name’. Because
normally there is no need to change the data directory if you are taking a regular data
£ backup. By default Tally data will save in C:\Users\Public\Tally.ERP9\Data Keep it
same recommended.
2. Name: Name of your company.
3. Mailing Name: If you have different mailing name enter that name here.
4. Address : Enter Address of the company.
5. Country: Country name where your business exists.
6. State: Enter state name, in which business is carries.
7. Pincode: The Pin code of the area.
Creation and Configuration of Company in Tally________________________________ 3.9
Contact Details
Enter contact details like
1. Phone No,
2. Mobile No,
3. Fax No,
4. Email
5. Website details.
Books and Financial Year Details
1. Financial Year Begins From: Normally financial year starts from 1st April and ends
at 31st March. But in some cases starts from 1st January to 31st December. Enter
whatever your case is.
2. Book begnning from: In most cases book beginning date is the financial year starting
date, but sometimes it differ like, starting a company in the middle of a financial year
and migrating from manual accounting to Tally ERP9 may change the book beginning
date. Enter the book beginning date here.
Security Control
1. Tally Vault password: If you are giving password in this option, The Tally ERP9 data
will encrypted and losing password will render data unusable.
2. Use Security control: This is another section where administrator can be created,
administrator can create users and define their rights, tracking their activity in Tally
ERP9. Enable by typing yes will create some more option in the screen. Enter name of
Administrator and password here.
3. Use Tally Audit Features: This will enhance the capability of an administrator to an
auditor level. Enable if you want to track the data changes and other activity of users.
4. Disallow opening in educational mode: Tally ERP9 Software provides a free
1 I version called Educational version. You can disable accessing data by Typing Yes’
here, when software are in Educational mode,
h
Base Currency Information
n I Under this option, the currency details of selected country will populated automatically.
,e 1 Like Base currency symbol, Formal name of currency etc, change if your are dealing with
a I different currency.
1. ^Base Currency Symbol: Country currency symbol appears ( ) as we selected India as
Country.
2. Formal Name: The full name of the currency display in this option which INR shown
in this Column.
3. Suffix Symbol to Amount: By enabling this option, currency symbol will display just
before the amount in reports and data entry columns and rows.
4. Add space between amount and symbol: This put a space in between amount and
symbol.
5. Show amount in millions: For larger companies dealing with big figure, this option is
useful.
6. Number of decimal places: If you are dealing with fraction of currency number of
decimal places used to show the fraction of currency, normally two.
7. Word used to print decimal portion of amount: This is used inWhile priniting the
fraction name like cent,paisa etc .
8. Decimal place for printing amounts in words: Here you can mention the decimal
places to print in report.
Fields Description
Tally.ERP 9 assumes that the company is to be created in the data path given in
the Tally.INI file, which is displayed by default. This field is skipped by default.
Directory
However, you can change this path, if you want to, by using the backspace key,
so that Tally.ERP 9 saves the data to a different directory specified by you.
This specifies the name of the company as it appears in Tally.ERP 9. If you have
Name several companies to create with similar names, you will have to distinguish
between them to provide a unique name for Tally.ERP 9.
The company name given in the Name field automatically appears in this field.
Mailing
This can be changed according to your requirements. The correct name of the
Name
company for mailing purposes should be entered.
The address of the company (The mailing name and address details are picked
Address
from here for any report such as balance sheet and statement of accounts).
Country Select India from the list of countries.
State Select the appropriate State from the list of States.
Pin Code Enter the PIN code of the specified address.
Phone No. Enter the telephone number of the company.
Mobile No. Enter the mobile number of the company.
Fax No.: Enter the fax number of the company.

_____________
E-mail address will be used to e-mail documents, reports and data from
E- Mail
Tally.ERP 9.
Website: Enter the website of the company.
From Specify the Financial Year (FY) for the company. Tally.ERP 9 considers 12
Financial
months from the date you give here as the Financial Year. For example, if you
Year Begins
give 1st April 2017, your FY will be April to March - in this case, ending with
From:
31st March 2018.
The date given for ‘Financial Year From’ is automatically displayed. However,
Books
we can specify the actual date on which the books of accounts start. In case our
Beginning
accounts are opened mid-way during the financial year specified, we can enter
From
the required date and start the books of accounts accordingly.
TallyVault is an enhanced security feature utilised to protect company data in

an encrypted form by means of a Password. The TallyVault password entered
ensures that the data is maintained permanently in an encrypted form without
Tally Vault
retaining information of the password used. Data is not accessible without the
? issword
Tally Vault password. Remember to keep this password private and known only
to those who need to know. If the password is lost, your data cannot be
recovered.
Tse Security Tally.ERP 9 has a range of security controls, which can define the authority of
ntrol various users to access the information and to enter/ alt
' crrency This refers to the currency symbol Tally.ERP 9 will use for monetary7 values. By-
Symbol default, Tally.ERP 9 displays ( )
| SELECT THE COMPANY IN TALLY

For recording transactions in the books of accounts of a business, first step is to Select the
mpany in which transactions are to be recorded. Following are steps for Selection the
mpany in Tally.
• In the Company Info, menu choose Select Company option or Press Fl Key.
• List of Companies will be displayed under the Company Info. menu.
• From the list choose any one of the companies.
• The selected company will be show in Bold Font Style in the Left Page of the Gateway of
Tally screen.
Gateway of Tally.
Company Info.
Se:ec! Company
SHut Company
Create Company
Create Group Company
Alter
Change TallyVautt
SPHt Company Data

Backup
Restore
Quit
Selecting a company will load all the Company Features, and Company Data into primary
memory. After you have selected a company, the company will be listed under the List of
Selected Companies in the Gateway of Tally screen.
1 DELETE THE COMPANY IN TALLY

Deleting a company is the thing that user should take more care about. Once deleted
company cannot be recovered if user do not have back-up of data. When we delete a company, all
the entries, voucher or other records entered in Tally are also deleted. Following are the steps in
Deleting of a Company. «■ SS^
1. Load the company you want to delete.

2. From the gateway of Tally Press Alt + F3 Shortcut key of click on Alt+F3 info.
T; Print 1M: 3. TaiiyShcp G: Language K: Keyboard K: CMdCete H; SyppxlCette H; Help
Gateway ofTatt
Cwrertf Period
14-2017 to 31-3-2018 Saturday, 1 Apr, 2017
Utt of Sdccttd CompaiUM Accounts Info

Inventory Info
NameofCompsty Date of Last Transactions

Accounting Vouchors
M/s SG Traders Mo touctefrtoto IrtvenTory Vouchers
Import Data
Ba N king
Audit
Audit & Compliant*
Reports
Balance Sheet
Profit A loss Me.
Slock Summary
Ratio Analysis
Display
Mull! Account Printing
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3. In the company info menu select Alter menu, now you are in company alteration screen.
s- myshop G: Language tv Keyboard Kt Cow Cwt H: ZgKia* H. Help

Gateway of fall
Current Period Cumnt Data

Gateway o? ..
Company Info.
14-2017 to 31 -3-2018 Saturday. 1 Apr, 2017
List of Scircted Cempanlw

Select Company
Hama of Company Dale el Last Entry
CoNnect Company
Mis SO Traders Mo Kwsders Entered
SHut company
Create Company
Create Group Compa;
Alter
security control
Change Tallyvautt
SPIH Company Data

Backup
Restore
Qua
Fnpauct & if.

ai
T5SS expiry
r<CH!T-LAP:^£OaJ
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yswtw m aiMrucnv
Telly ERP 9 1>
GatewayofTaMy ♦*> Company Ma C Tatty Solutions (M lid. 1 Sat. 16 lun. ?! 1LV4C
4. Now press Alt+D Shortcut Key
TallyJMlN -> Gateway of Talty --> Company Info. -> Company Alteration S Tally Solutions Pvt Ltd.. 1 Sat. IS Jun, 2(1142:33
3.14_______________________________ Creation and Configuration of Company in Tally
5. First confirmation message ‘Delete’ will be asked by Tally

6. Click on Yes or Press enter or press Y from your Key board.
7. Second confirmation message will be asked ‘Are you sure’.
8. Repeat the previous action Click on Yes
9. The company will have deleted.
| SHUT THE COMPANY IN TALLY

Shutting the Company means just closing the company after data entry is completed. Again
when a person needs to enter some data, he can reopen the company. If you already opened the
multi-companies and working on them and want to close any of them or two then there is two
ways to close them.
Option - 1
• go to company info by pressing ALT+F3

• There you will see the option Shut company,click on it.
• You will see all companies list.
• Select the company which you want to close one by one.

• Selected company will close after you have selected.
Option - 2
• Press ALT+Fl
• The list will show all comapanies you selected to work.
• Then select the company one by one which you like to close.
| DIFFERENCE BETWEEN SHUT AND DELETE COMPANIES

When user choose to delete, that will permanently deleted and user can't find out that again
and can't open it again, but when user selected to shut he can again open it and work on it.
Shutting is just closing it after completion of the work, just like you go to office, opens the door
and works for some time, after work is finished, you will close the door and go to home. On the
next day again you go to office and open the door. Shutting is as simple as closing and opening
your doors.
| ALTER the COMPANY IN TALLY

In Tally we have the option of Alteration of the company. By Alter of company we mean
making some change in profile of some existing company in the Tally. Such change could be
related to any data which we entered at the time of creation of company such as name of the
company, change in address of company, change from accounts only to accounts with inventor}'
etc. Following are the steps in alteration of the company.
• Go to Gateway of Tally
• Select F3: Cmp Info. (ALT+F3) from the button bar
• Select Alter and press Enter and the screen appears as shown below:
Select Item M/s SG Traders Ctrl + M lx
Name of Company
List of Companies
M/s SG Traders (W22j

NEERAJ ENTERPRISES (10009)
SACHDEVA ACCOUNTING SOLUTIONS (10019)
SACHDEVA ENTERPRISES (1001%
• Select the company from the List of Companies and press Enter to view the Compan
Alteration screen.
£
Make the necessary changes in the required fields and accept the screen.
| CONFIGURATION OF TALLY
Every business has own requirements related to maintenance of accounts. Tally provides the
flexibility to adjust books of accounts according to particular needs of the business. Makim
adjustments of various accounting and other features of software before recording various
transactions is known as Configuration of the software. The Configuration is used for alterim
some setting in tally software, like date format, company name on report, symbols, numbers I:
be used and many more. To configure the company that we have created earlier Press F12
Button on the button panel or F12 function key from the keyboard, you get the following screen
Gateway of Tatty
1. General Configuration - In General Configuration screen, you can configure

Country Details, Style of Names, Dates and Numbers in the General configuration
screen.
Go to Gateway of Tally > F12: Configure > General
2223
Country Details
List of Countries
Us© accounting terminology of _India / SAARC
(SAARC countries include India, Pakistan,
Sri Lanka, Bangladesh, Nepal, Bhutan and India/SAARC
Naming Style International
Default appearance of names in reports : Name Only
Default appearance of stock item names in reports: Name Only
Format of Dates
Short date format dd-mm-yy
Separator between day, month, and year
Format of Numbers
Character to use for decimals
Separator to use for thousands
Add sign before currency/unit symbol ? No
Show amount in millions ? No
Table Configuration
In vou c h a is, show only stock item names (without quariti ty] ’? No
( Apply keyword filter to list of items ? Yes
Apply for all columns ? Yes
Show tables with masters only in current language? No
l mpart/Export Configuration
Ignore errors during data import ? No
(Applicable for importing vouchers in XML
formet/SCAP request)
Oretwitevouchers, instead of du p licating, duri ng i m p o rt ? No
(Naw vouchers are created ifGUIDs do not match)
Export base currency symbol along with amount? No
Open file after export ? Yes
Other Options
Show graphs in monthly reports ? Yes
Use separate menu for final A/c statements ? No
• Enable sound notification for alerts ? Yes
Always show information panel ? No
.18 Creation and Configuration of Company in Tally
2. Numeric Symbols - In Numeric Symbols screen, you can configure Number Styles
and Symbols used to represent Positive Numbers, Negative Numbers, Debit Amounts
and Credit Amounts by using Numeric Symbols.
Go to Gateway of Tally > F12: Configure > Numeric Symbols
robots__________________________________M/s SG Traders
Configuration of Numeric Symbols

(Use underscore io denote a space)
Symbols to use for Positive Numbers
Symbol before number (prefix) IliM default:'(+)'

Symbol after number (suffix) Default: blank
Symbols to use for Negative Numbers
Symbol before number (prefix) (-) default'(-)'

Symbol after number (suffix) Default blank
Symbols to use for Debit Amount
Symbol before number (prefix) Default: blank

Symbol after number (suffix) : _Dr Default '_Dr'
Symbols to use for Credit Amount
Symbol before number (prefix) Default: blank

Symbol after number (suffix) _Cr Default: '_Ct
3. Accts/ Inventory Info. Configuration - The Accts/ Inventory Configuration is

used to enable additional settings I options/ configurations in Accounting and Inventory
masters. You can also configure Accts/ Inventory Info, configurations from Accounts
and Inventory voucher entry screens, by pressing F12: Configure.
Go to Gateway of Tally > F12: Configure > Accts/Inventory Info.
Master Configuration
Provide aliases along with name ’BSB

Provide language aliases for name ? No
-------------------------------------------------------------------------------
Accounts Inventory
Provide advanced information in masters ? Yes Allow advanced entries in masters ? Yes
Provide addresses for ledger accounts ? Yes Provide pan numbers for stock items ? Yes
Provide contact details ? No Add description for stock items ? Yes
Add notes for ledger accounts ? No Add remarks for stock items ? Yes
Add description for ledger accounts ? No Use alternate units for stock items ? Yes
Enable standard rates for stock items ? Yes
Specify default ledger allocation for invoicing ? Yes
Enable component list details (Bill of Materials) ? Yes
Provide address for Godowns ? No
4. Voucher Entry Configuration - Voucher Configuration is used to configure

additional settings and options during voucher entry.
Go to Gateway of Tally > F12: Configure > Voucher Entry
Voucher Entry Configuration
Accounts Inventory
Skip Date field during creation for faster entry 7J5EEHB Provide reference number in stock journal 7 NO
Use single entry mode for paymenVreceipt/conira vouchers’? No Show compound unit of item based on rate 7 No
Use payment/receipt as contra voucher 7 No Show full details of compound unit 7 NO
Use Cr/Dr instead of To/By during entry 7 Yes Warn on negative stock balance 7 Yes
Enable cheque printing for contra voucher 7 No Show balances as on voucher date 7 No
Warn on negative cash balance 7 Yes Show Godown-wise details 7 Yes
Preallocate bills for payment/receipt/journal voucher 7 No Show batch-wise details 7 Yes
Allow cash accounts in journal vouchers 7 No

Allow expenses/fixect assets in purchase vouchers 7 Yes
Allow income accounts in sales vouchers 7 No
Show inventory details 7 Yes

Show table of bills for selection 7 Yes
Show final balances of bill 7 Yes
Show bill-wise details 7 Yes
Expand into multiple lines 7 Yes
Show current balances of ledgers 7 Yes
Show balances as on voucher date ? No
5. Invoice I Orders Entry Configuration - The Invoice entry and Order entry screens
can be configured for additional information such as export details, shipping details,
etc.
Go to Gateway of Tally > F12: Configure > Invoice / Orders Entry
involceJDelivery NotofOrder Voucher Configuration
Sonera! Inventory
Enable supplementary details | Warn on negative stock balance Yes

fAPWsss details, despatch details, etc.,' Warn on duplicate order number 7 No
Provde complete accounting allocations in order/delivery note7 Yes
Allow separate buyer and consignee names 7 No
Statutory
Allow modification of ail fields during entry 7 NO
Calculate tax on current sub-total 7 No
Allow ledgers grouped under provision 7 NO
(else calculations ate on inventory iota) only)
Use common ledger account for item allocation 7 Yes
Use aefaults for bill allocations 7 Yes
Provide additional descriptions for stock item name 7 NO
Provide additional descriptions for ledger name 7 No
for accounting mvotca)
Consolidate stock items with same rates 7 No

Show compound unit of item based on rate 7 No
Show full details of compound unit 7 No
Sh^w turnover achieved with customer 7 No
Exporters' Options
Provide export shipping details 7 No

Provide marks and numbers/container no 7 No
Provide number and kind of packages 7 No
6. Payroll Configuration - The Payroll Configuration screen allows you to enable

additional configurations for entering infor-mation related to Statutory Details,
Passport & Visa Details, Contract Details and Resigned I Retired Employees.
Go to Gateway of Tally >F12: Configure > Payroll Configuration
3.20_______________________________ Creation and Configuration of Company in Tally Creation and (
7. Banking Configuration - This configuration helps you to configure settings related to

|FEATURE
Bank Reconciliation Statement.
Go to Gateway of Tally >F12: Configure > Banking Configuration Features g
features of a c<
bv using the F
Banking Configuration following screei
Show all unreconciled transactions in BRS till date

Remove bank date on altering reconciled voucher ? NO
(BM ledger/amauntkoudiertype)
Location of new bank statements. : EdProgram FilesVTally,ERP9

Location of imported bank statements : ErtProgram Files\Tally.ERP9
Location of payment instructions : ErtProgram FileslTally.ERP9

Show details before exportfupload ?Yes
Allow reset on the uploaded transactions : No
Location of new intermediate files : EdProgram FilesVTally.ERP9

Location of imported intermediate files i EdProgram FilesVTally.ERP9
8. Printing Configuration - This configuration helps you to configure the print settings
for various Accounting, Inventory vouchers and other MIS related statements.
Accounting F
Go to Gateway of Tally > F12: Configure > Printing
By using the
9. E-Mailing Configuration - This configuration helps you to define settings related to
~ fifing transacti
email such Email Server, Server Address, Authentication details and so on.
Go to Gatewa
Go to Gateway of Tally > F12: Configure > E-Mailing
10. Data Configuration - This configuration helps you to define location of Language
Files, Tally Configuration File, Export Files, Data Files and details of the companies to
be loaded on startup. « “rtain accounts ont
—■s-w'erc© accounts arc
Go to Gateway of Tally > F12: Configure > Data Configuration income and Expens
—multi-currency
-*arar<jlnq Mmmninl
11. TDL Configuration - This screen provides details regarding TDL Configuration viz. « ~am bill-wise data
”~®r nor>-trading acct
JSocal TDLs, Account TDLs & Remote TDLs enabled for the product. * — ^sre interest ealeui
~^se advanced Dara’
Go to Gateway of Tally >F12: Configure > TDL Configuration am payroll

am cost centres
12. Advanced Configuration - This configuration helps you to specify Client/Server • cost centre for «
-rem more thar'c
sre-defined cost
Configuration, Connection configuration and Proxy configuration for ODBC opening ba:a-
connectivity and Synchronisation of Data.

Go to Gateway of Tally >F12: Configure > Advanced Configuration
13. Licensing Configuration - This configuration helps you to update, surrender, rese;
license and also configure existing License. Enble or disabi
Press Ctrl+A t
Creation and Configuration of Company in Tally________________________ _______3.21
| FEATURES OF TALLY
Features gives option to enable or disable features provided by Tally.ERP9. Different
features of a company can be selected or modified such as Accounting, Inventory, Statutory etc.
by using the F11 Button on the button panel or Fll function key from the keyboard, you get the
following screen.
Gateway of Tally.
Company Features
. Accounting Features
Inventory Features
Statutory & Taxation
TSS Features
Audit Features
Add-On Features
Quit
Accounting Features
By using the Accounting Features , we can enable or disable various options required for
— aking transactions for company. To enable the accounting features following are the steps:
Go to Gateway of tally > Fll: Features > FI: Accounts
Comparry: IO Trnd»ra
Accounttrtfl Features
?«n«rad
aintain accounts only ■? Enable invoicing •? Yea
—:tegrate accounts and inventory '? Yea Record purchases in invoice mode ■? Yew
-se Income and Expenses A/c instead of Profit and Loss A/C? rsio Use debit and credit notes •?
Record credit notes in invoice mode ■?
Enable multi-currency ■? MO Record debit notes in invoice mode ?
XXetundlng M»n«y«rnint Budgetu auid Scenario Minmntnt
•'aintain bill-wise details •? Yea Maintain budgets and controls •? mo
F or non-trading accounts el so ■? No
Use reversing journals and optional vouchers ? Mo
— ctivate interest calculation •? No
Use advanced parameters '? No Banking Features
ToytTroflt Cantraw Minmnunt Enable cheque printing ■? Yea
• 'aintain payroll •? No Set/alter transaction types ■? Mo
aintain cost centres ■? Mo Set/alter banking features •? Mo
Use cost centre for job costing ■? No Set/alter post-dated transaction features ? Mo
Maintain more than one payroll or cost category ■? No
Use pre-defined cost centre allocations in transactions'? Other Features
Show opening balance for revenue items in reports '?
Enable zero-valued transactions •? Mo
Maintain multiple mailing details for company and ledgers'? Mo
Set/alter company mailing details •? No
Enable company logo •? No
Mark changed vouchers •? Mo
Enble or disable the required options accordngly

Press Ctrl+A to accept.
3,22 ________ Creation and Configuration of Company in Tally Creation
Inventory Features
This feature enable to set the Inventory Features required for the transactions. To enable the
Inventory features following are the steps:
Go to Gateway of tally > Fll: Features > F2: Inventory
1. V
Company: MIBBGTTadata
2. E
itwantoryFealuraB
3. y
Brntral Invoicing a
integrate accounts and Inventory ?BZJ3H Enable invoicing ? Yes
Enable zero-valued transactions 7 no
Record purchases In Invoice mode 7 Yea 4. V
Use debit and credit notes 7 No gi
Blar«fl« pin ci«a»imaBon Record credit notes In Invoice mode 7 No
Record debit notes In Invoice mode 7 No
Maintain multiple Godowris 7 No
5. E
Use separate discount column in invoices 7 No
Maintain stock categories ? No
Maintain oatcn-tNtse details
Set expiry dates for patches
? no
7 No
Puraneat Menefltmenl 6. E
Track additional costs or purchases 7 No
Use separate actual and Pilled quantity columns 7 No
Baiea Manaflamant
7. E
ow«fPrec«MMna use multiple price levels 7 No
Enable purchase order processing ? No
Enable sales order processing 7 No MWarFenmes | Short
Enable job order processing ? No Use tracking numbers (enables delivery and receipt notes)? No
(Enables the options ‘Maintain multiple oodoms' Use rejection Inward and outward notes 7 No
and 'Use material in and out vouchers')
Use material In and out vouchers 7 No
Ql. Me
Use cost tracking for stock Item 7 No
Ans. In 1
of ‘c
Ft: Accaints .. FT Statutory PA: TSS PS: Audit F8: Add-Ons whi
forn
Enable or disable the required options accordngly. tern
acco
Press Ctrl+A to accept. orga
for {
Statutory Features
Tall;
This feature enable to set the Statutory and taxation features required for the transactions.
Q2. Wrii
To enable the Statutory features following are the steps:
Ans. Folic
Go to Gateway of tally > Fll: Features > F3: Statutory
1.
Company: Mfg SG Tradere
2.
Statutory and Taxation
Enable Goods and Services Tax (GST) ?|gP— Enable Tax Deducted at Source (TDS) 7 No
.Set/aiter GST details 7 No Set/aiter TDS details '? No
B^nable Value Added Tax (VAT) 7 NO Enable Tax Collected at Source (TCS) 7 No
Set/aiter VAT details 7 No Set/alterTCS details 7No 3.
Enable excise 7 No
Set/aiter excise details 7 NO 4.
Enable service tax 7 No
Set/aiter service tax details 7 No
5.
Tax Infonwtffon
PANdncome ts« no :
6.
Corporate Identty No. (CIN)
7.
Ft: Accounts F2: inventory'3: Sh-.t ;: F4: TSS FS: Audit F6 Add-Ons
ally Creation and Configuration of Company in Tally_______________________________ 3.23
the
| LONG QUESTIONS
1. What is meaning of company in Tally?
2. Explain various steps in creation of company.
3. What do you mean by alteration of company? Give various steps in alteration of
company.
4. What is difference between ‘Shut’ of company and ‘Delete’ of company in Tally? Also
give various steps in shut of company and delete of company.
5. Explain in detail the various fields for Creation of Company in Tally.ERP 9.
6. Explain the steps of Configuration of company in Tally.
7. Explain the various components of Home Screen in Tally.
| Short QUESTIONS
Ql. Meaning of Company?
Ans. In Tally accounting software, accounts are prepared for company. However, the concept
of ‘company’ in Tally is very different from the term company in legal or statutory sense,
which is used for Joint Stock Company. In Tally the term company can be used for any
form of organization. The term company in Tally is used for creation of any entity. This
term in context of Tally stands for any entity for whom a separate set of books of
accounts is maintained. It may be a company, par in software, tnership firm, individual
organization even a branch office for which a separate set of account books is maintained
for accounting. For each entity you create a profile which is termed as “COMPANY” in
Tally.
Q2. Write steps for creation of Company.
Ans. Following are steps in creation of company in Tally.
1. Open Tally Software by double clicking on the Tally.ERP 9 icon.
2. If you are opening Tally ERP 9,First time after installation, you will be landed to a
menu called company info menu. ( If you are in Gateway of Tally Press Alt+F3 to
get that menu).
P 3. Select Create Company option in the menu and press enter key.
4. The screen displayed in-front of you is company creation screen.
5. Type the name of the company address, Financial year begins and all other details
asked by the creation screen.
6. Press Enter Key, Finally the program will ask you the confirmation to Save, Yes or
No.
7. To save and create company do Press Enter Key, Press Y Key or click on Yes. The
program will create a company and you will be entered into it.
3.24 Creation and Configuration of Company in Tally Creation an
Q3. What is Alteration of Company.

Ans. By Alter of company we mean making some change in profile of some existing company
in the Tally. Such change could be related to any data which we entered at the time of
creation of company such as name of the company, change in address of company, change
3.
from accounts only to accounts with inventory etc. Following are the steps in alteration of
the company.
• Select F3: Cmp Info. (ALT+F3) from the button bar
• Select Alter and press Enter.
• Select the company from the List of Companies and press Enter to view the Company
Alteration screen.
• Make the necessary changes in the required fields and accept the screen.
7.
Q4. What do your mean by Selecting a Company in Tally.
Ans. For recording transactions in the books of accounts of a business, first step is to Select
the Company in which transactions are to be recorded. Following are steps for Selection
the Company in Tally.
• In the Company Info, menu choose Select Company option or Press Fl Key.
• List of Companies will be displayed under the Company Info. menu.
• From the list choose any one of the companies.
The selected company will be show in Bold Font Style in the Left Page of the Gateway of
Tally screen.
Q5. What is difference between Delet the company and shut the company.
Ans. When user choose to delete, that will permanently deleted and user can't find out that
again and can’t open it again, but when user selected to shut he can again open it and
work on it. Shutting is just closing it after completion of the work, just like you go to
office, opens the door and works for some time, after work is finished, you will close the
door and go to home. On the next day again you go to office and open the door. Shutting
1. Create
is as simple as closing and opening your doors.
Explain the use of configuration of company (F12)? Name
To configure company, click on F12 button from the button panel. It shows the following '■Libng Name
screen in gateway of tally: ' Address
Configuration
I
General
Numeric symbol ifcate
Accts/inv. Info Code
Voucher entry Te.ephone No
| E-Mail
Invoice/order entry
sncy Syrnbe
Printing
itain
Quit
Creation and Configuration of Company in Tally_______________________________ 3.25
1. Configuration changes may affect all the active companies.

2. Configuration has different options like general, numeric symbols, accts/inv. Info,
voucher entry, invoice, order entry, printing, etc.
3. General options are used to change information like country detail, date format or
graphs in monthly report, etc.
4. Numeric symbol option is used to change format of the numbers.
5. Accts/inv info option is used to check the default settings. In this option, if user
sets allow alias for the name then only it asks the alias otherwise it doesn’t ask
any alias for the name.
6. Voucher entry set the features of the vouchers, such as cost vouchers details, bill
wise details, ledger current balance, etc.
7. Invoice/order entry sets the features of the invoices and purchase, sales order
entry.
t 8. Printing options is used for printing Vouchers, Invoices, Financial Statements, etc.
1
9. Quit option is used to quit from the configuration menu and go to the previous
menu.
Q7. Explain uses of the feature options (Fll)?
Ans. Features is used to change the options related to the selected company only.
1. For this Fll button in button panel is a short cut.
»f
2. Using this menu, feature of the company are changed that means enables or
disables.
3. Various features are available like whether company wants invoicing or not,
It
whether company required multiple currencies or cheque printing or not, etc.
d
X)
ie PRACTICAL QUESTIONS
tg 1. Create a Company in Tally with following details:
Name Sachdeva Enterprises

Mailing Name Sachdeva
Address 10 D, Main Market, Model To wn, Patiala
X .
State Punjab
PIN Code 147001
Telephone No 2223344
E-Mail sachdevas@gmail.com
Currency Symbol ?
Maintain Account only
3.26 _________Creation and Configuration of Company in Tally
2. Create a Company in Tally with following details:

Name Jain Traders
Mailing Name Jain Ent.
Address 3456, Sector 26, Chandigarh.
State Chandigarh
PIN Code 156890
E-Mail Jtraders@yahoo.com
Currency Symbol ?
Maintain Account with Inventory
3. Create a company Punjab Traders with details given below.
Name: Punjab Traders
Address : 25, Sector 17, Chandigarh, India
E-Mail: pbtraders@yahoo.com
Financial Year : 1 - 4-2017
Books beginning from : 1 — 4- 2017
Phone 0172- 2246562
4. Create a Company in Tally with following details:
Name Surya Enterprises

Address 9, Model Town Kolkata
Statutory Compliance for India
State West Bengal
Pin 700 020
Mobile No 969534870
Email suryaent@gmail.com
Currency Symbol ?
Maintain Accounts with Inventory
Financial Year from 01-04-17
Books Beginning from 01-04-17
Tally Vault Password Not Applicable
Use Security Control Yes
Name of Administrator Rohit
Password ROH12
□□□
CHART OF ACCOUNT,
GROUPS AND
LEDGER CREATION
CONTENTS
□ CLASSIFICATION OF ACCOUNTS
□ CHARTS OF ACCOUNTS
□ CHARTS OF ACCOUNTS IN TALLY
□ MEANING OF ACCOUNTING MASTERS;
□ ACCOUNTING GROUPS;
□ ACCOUNTING LEDGERS;
□ ACCOUNTING VOUCHERS;
I
■ CLASSIFICATION OF ACCOUNTS
_____________
An account may be defined as a record to keep track of increases and decreases in financial
statement items such as revenue, expenses, cash, machinery, accounts payable and loan etc. In
accounting, the accounts are classified using one of two approaches — modern approach or
traditional approach.
Modern approach: According to modern approach, the accounts are classified as asset
accounts, liability accounts, capital or owner’s equity accounts, withdrawal accounts,
revenue/income accounts and expense accounts.
(a) Asset accounts: Assets are things or items of value owned by a business and are
usually divided into tangible or intangible. Tangible assets are physical items such as
4.2_________________________________ Chart of Account, Groups and Ledger Creation Chart of
building, machinery, inventories, receivables, cash, prepaid expenses and advance statement
payments to other parties. Intangible assets normally include non-physical items and a chart of
rights. Examples of intangible assets include goodwill, trademarks, copyrights, patent ■that a bus
rights and brand recognition etc. of all final
(b) Liability accounts: Liabilities are obligations or debts payable to outsiders or use charts
creditors. Examples include accounts payable, bills payable, wages payable, interest liabilities 1
payable, rent payable and loan payable etc. [ contains a>
i Jceounts v
(c) Capital or owner’s equity accounts: Capital is the owner’s claim against the assets
nave 20-25
of the business and is equal to total assets less all liabilities to external parties.
! of accounts
(d) Revenue or income accounts: Revenue is the inflow of cash as a result of primary system. It
activities such as provision of services or sale of goods. In accounting and finance, the i ai old accot
term is also used to denote all inflows of cash resulted by those activities that are not
primary revenue generating activities of the business. Types of
(e) Expense accounts: Any resource expended or service consumed to generate revenue is There a
known as expense. Examples of expenses include salaries expense, rent expense, wages
1. O]
expense, supplies expense, electricity expense, telephone expense, depreciation expense
and miscellaneous expense. br
co
Traditional approach:According to traditional approach, the accounts are classified into
three types — personal accounts, real accounts and nominal accounts.A brief explanation of each 2. Gt
is given below: he
brj
i (a) Personal accounts: The accounts related to real persons and organizations are
ma
classified as personal accounts. Examples of personal accounts include Rohit’s account,
Anil’s account, Reliance Limited. 3. Co
(b) Real accounts: Real accounts are accounts related to assets or properties (both
leg
tangible and intangible) owned by a business enterprise. Examples of real accounts gui
include cash account, inventory account, investment account, plant account, building
account, goodwill account, patent account, copyright account etc.
Structure
(c) Nominal accounts: The accounts related to incomes, gains, expenses and losses are There is
classified as nominal accounts. Examples of nominal accounts include sales account, ~pes of bu
purchases account, wages account, salaries account, interest account, rent account, gain individual re
on sale of fixed assets account and loss on sale of fixed assets account etc. Business stn
-urge corpora
| CHftRT OF ACCOUNTS accounts thai
The type
Different types of businesses will have different accounts. For example, to report the cost of
such as the
goods sold a manufacturing business will have accounts for its various manufacturing costs
Management
whereas a retailer will have accounts for the purchase of its stock merchandise. Many industry
financial stat
associations publish recommended list of accounts for their respective industries in order to
mart of accoi
establish a consistent standard of comparison among firms in their industry. Accounting
software packages often come with a selection of predefined account lists for various types of Usually, the t
businesses. ■■come staten
.mart of accou
Every businesses need to organize their financial information into three main financial
Chart of Account, Groups and Ledger Creation_________________________________ 4.3
statements: balance sheet, income statement, and cash flow statement. For this purpose it need
a chart of accounts (COA). A company’s chart of accounts is an index of the financial accounts
that a business uses in its accounting system and that it posts to its general ledger — the record
of all financial transactions within the company during a particular accounting cycle. Companies
use charts of accounts to organize their finances and separate expenditures, revenue, assets, and
liabilities to get a clear picture of the financial standing of the company. The chart of accounts
contains account names and account numbers. The number of accounts included in the chart of
accounts varies depending on the size of the company. A small family run business may only
have 20-25 total accounts whereas a worldwide company like Samsung will likely have hundreds
of accounts. Chart of Accounts serves as the foundation for a company’s financial record keeping
system. It provides a logical structure that facilitates the addition of new accounts and deletion
of old accounts.
Types of Chart of Accounts

There are three types of Chart of Accounts, that is:
1. Operating chart of accounts: They are used in routine accounting and prepared by each
business according to own requirement. The accounts in Operating Chart of Accounts
could be related to expense or revenue accounts etc
2. Group Chart of Accounts: These are accounts used by the entire corporate group. They
help in generating reports at the corporate level. When a company have more than one
branch, subsidiary or sister concern, it can prepare Group Chart of Account for
maintaining uniformity in accounting in whole group.
3. Country-specific chart of accounts: This Chart Of Accounts help meet country-specific
legal requirements. In many countries, there are general guidelines, but in France the
guidelines have been codified in law.
Structure of Chart of Accounts

There is no common structure or template of chart of accounts available for the use of all
Types of businesses. Each company prepares its own chart of accounts depending on its
individual requirements. The structure of a chart of accounts is normally as complex as the
ousiness structure of the company. For example, the type and number of accounts needed by a
Large corporation would significantly differ from those needed by a small retailer. Similarly ny
recounts that are essential in manufacturing businesses are not used by Trading companies.
The type and number of accounts used in a chart of accounts depends on a number of factors
such as the nature and volume of business carried on by the company, the need of internal
management for making important business decisions and the need of external parties who use
financial statements of the company for various purposes. The account names are listed in the
:hart of accounts in the same order in which they appear in company’s financial statements.
Usually, the balance sheet accounts (i.e., assets, liabilities and owner’s equity) are listed first and
income statement accounts (i.e., revenue and expense) are listed later. Following is an example
hart of accounts of a Trading company:
4.4 Chart of Account, Groups and Ledger Creation
CHART OF ACCOUNTS
100 Assets 400 Revenues

110 Cash 410 Sales
111 Notes receivable 411 Sales returns and
112 Accounts receivable allowances
113 Interest receivable 412 Sales discount
115 Merchandise inventory 500 Costs and expenses
116 Office supplies
510 Cost of goods sold
117 Prepaid insurance
520 Sales salaries expense
120 Land
521 Advertising expense
123 Store equipment
522 Depreciation expense -
124 Accumulated depreciation -
store equipment
store equipment
529 Miscellaneous selling
125 Office equipment
expense
126 Accumulated depreciation-
530 Office salaries expense
office equipment
531 Rent expense
200 Liabilities 532 Depreciation expense -
210 Accounts payable office equipment
211 Salaries payable 533 Insurance expense
212 Unearned rent 534 Office supplies expense
215 Notes payable 539 Miscellaneous admin.
1
300 Stockholder’s equity expense
310 Capital stock 600 Other income

311 Retained earnings 610 Rent income
312 Dividends 611 Interest income
313 Income summary 700 Other expenses
710 Interest expense
Benefits of Chart of Accounts

A well-designed chart of accounts provides the following benefits:
1. Charts of Accounts helps in effective management of an organization's financial
.accounts.
I , "*
2. It supports the audit and control of financial transactions.
3. It provides flexibility for management reporting and analysis.
4. It anticipates growth and maintenance needs as organizational changes occur.
5. It facilitates an efficient data processing flow.
6. It allows for delegation of responsibility for cost control, profit attainment, and asset
utilization
7. It measures performance against corporate objectives.
8. It helps in meeting statutory requirements.
Chart of Account, Groups and Ledger Creation_________________________________ 4.5
| CHART OF ACCOUNTS IN TALLY__________________________

Tally.ERP 9 gives user great flexibility in setting up chart of accounts. It allows user to group
ledger accounts right at the time of creating accounts chart. Reports and statements reflect the
desired classification at all times.
Following are features of Chart of Accounts in Tally.
1. Chart of Accounts in Tally are based on Ledger names. No coding is done in Tally for
various Charts of Accounts, whereas most other accounting software are based on
coding of chart of accounts in which unique code is assigned to each ledger.
2. In Tally chart of accounts are divided into Accounting Charts, Inventory Charts,
Payroll Charts and Statutory Requirement like Taxes and Duties Charts.
3. Tally structure is based on dividing chart of accounts in Groups, Sub Groups, Ledger
and Items etc.
4. Tally provides predefined Groups for accounting. However there are no predefined
Groups for inventory or payroll etc.
5. Chart of Accounts in Tally are flexible and user can make changes in Tally according to
needs and requirement of the business.
Creation of Chart of Accounts in Tally

Chart of account creation is the second step in Tally. After creating a company in Tally, user
-.as to create Chart of Accounts. When user create a company in tally, by default, tally will give a
mart of account. This chart of account consists 30 items (if the company is accounts with
inventory option). Out of this 30 items 28 are groups and 2 ledgers. Following are some of the
: mmon ledgers that can be created under Tally.
List of Tally Ledgers for Balance Sheet

Liability and Equity Assets
Ledger Name Tally Head Ledger Hame Tally Head
Capital Capital Furniture Fixed asset
Drawing Capital Goods Fixed asset
income Tax Capital Land & Building Fixed asset
Life insurance Capital Long term investment Fixed asset
Reserves ^Surplus Reserves & Surplus Machinary & plant Fixed asset
Advance Current Libilities Bank Cash at bank
3ank Overdraft Current Libilities Cash Cash in hand
Bill Payable Current Libilities Stock Stock in Hand
Outstanding expenses Current Libilities Debitor name Sundry Debtors
Salary payable Current Libilities Bad debitor Sundry Debtors
reditor name Sundry Creditors Bill receivable Current Assets
Loan Loan Liabilities Good will Current Assets
Branch in division Branch in division National plant Current Assets

Accrued expenses Current Libilities Prepaid expenses Current Assets
Short Term Investment Current Assets
Accrued income Current Assets
Prepaid rent Misc. Exp.- asset
Loss on theft Stock in Hand
List of Tally Ledgers for Profit & Loss List of Tally Ledgers for Trading
Account Account
Ledger name Tally Head Ledger Name Tally Head

Advertisement Indirect Expenses Sale Return Sales
Bank charges Indirect Expenses Sale Sales
Bill drawn Indirect Expenses Purchase Return Purchase
Carriage Indirect Expenses Purchase Purchase
Commission allowed Indirect Expenses Carriage Direct Expenses
Discount allowed Indirect Expenses Freight & Cartage Direct Expenses
Donation & charity Indirect Expenses Import duty Direct Expenses
Free sample Indirect Expenses Rent (Dr) Direct Expenses
Insurance premium Indirect Expenses Royalty Direct Expenses
Interest on loan Indirect Expenses Wages Direct Expenses
Legal charge Indirect Expenses
Loss by fire Indirect Expenses
Office lighting Indirect Expenses
Petty cashier Indirect Expenses
Postage & courier Indirect Expenses
Printing & stationery Indirect Expenses
Rent (cr) Indirect Expenses
Repair charge Indirect Expenses
Salary Indirect Expenses
<b
Sale tax Indirect Expenses
Taxi fire Indirect Expenses
Telephone charge Indirect Expenses
Trade account Indirect Expenses
Travelling expenses Indirect Expenses
Suspense Suspense 4
Miscellaneous exp. Miscellaneous exp.
sation Chart of Account, Groups and Ledger Creation 4.7
Depreciation Indirect Expenses

ts Commission Received Indirect Income
ts Bed Debts Recovered Indirect Income
ts Interest on Drawing Indirect Income
■.set Discount Received Indirect Income
Interest on Investment Indirect Income
A ledger is actual account head to which user identify a transaction and it is used in all
accounting vouchers. Without leger user cannot record any transaction. All ledgers are classified
into Groups. These Ledgers and Groups together comprise chart of accounts in Tally.
1 DISPLAY OF CHART OF ACCOUNTS IN TALLY

In Tally user can view the list of Chart of Accounts already created. The List of Ledgers is
displayed in alphabetical order of main groups. Hence, Branch/Divisions is listed first and not
:he account name, which is under the group Capital. The groups are shown in bold, and begin on
the extreme left, sub-groups slightly indented towards the right and still bold, while at the
lowest level it is the ledger account, which is in italics and not bold.Drill down a ledger name to
alter its details or Use the keys SHIFT+ENTER to reduce the details. User create the chart of
accounts from the Accounts Info menu. However, to view an existing chart:
Gateway of Tally.ERP > Display > List of Accounts
□ Taiiy.tp.p 9_______________________ rr
- Print E: Export M: E-Mail 0: Upload
List of Accounts M/s SG Traders
List of Ledgers For 1-Apr-2017 G: Groups
/ Divisions
Capital Account
Reserves & Surplus (Retained Earnings)
Current Assets |E: Currencies
Bank Accounts
Cash-in-Hand
IT: stock Craps
Cash
|K: SWCaegcos
Deposits (Asset)
Loans & Advances (Asset) lITst'Xkitems
Stock-in-Hand pH Units’
Sundry Debtors
JO: Godwins
Current Liabilities
Duties & Taxes IV: VwlefTypes
Provisions
Sundry Creditors
Direct Expenses (Expenses (Direct))
Direct Incomes (Income (Direct))
-ixed Assets
ridirect Expenses (Expenses (Indirect))
ndirect Incomes (Income (Indirect))
investments
_oans (Liability)
BankODA/c (BankOCCA/c)
Secured Loans
6 more... )F5: Srcv.IJrilsedi
:;Group(s) and 2 Ledger(s)
|F11Features
j: Quit Enter: Ateri D: Delete C: CreateMst I R: RemeUel U: Space:*' . -
JF12: Range
Chart of Account, Groups and Ledger Creation 4.7
Depreciation Indirect Expenses

Commission Received Indirect Income
Bed Debts Recovered Indirect Income
Interest on Drawing Indirect Income
Discount Received Indirect Income
Interest on Investment Indirect Income
A ledger is actual account head to which user identify a transaction and it is used in all
accounting vouchers. Without leger user cannot record any transaction. All ledgers are classified
into Groups. These Ledgers and Groups together comprise chart of accounts in Tally.
| DISPLAY OF CHART OF ACCOUNTS IN TALLY

In Tally user can view the list of Chart of Accounts already created. The List of Ledgers is
displayed in alphabetical order of main groups. Hence, Branch/Divisions is listed first and not
the account name, which is under the group Capital. The groups are shown in bold, and begin on
the extreme left, sub-groups slightly indented towards the right and still bold, while at the
lowest level it is the ledger account, which is in italics and not bold.Drill down a ledger name to
alter its details or Use the keys SHIFT+ENTER to reduce the details. User create the chart of
accounts from the Accounts Info menu. However, to view an existing chart:
Gateway of Tally.ERP > Display > List of Accounts
3 Tally,ERP 9
P: Print E: Export M: E-Mail IO: Upload IS;TallyShopl G: Language;K . . . .. K: ControlCw! H: StffMOMei H: Help
For 1-Apr-2
<J Chart of Account, Groups and Ledger Creation
I W £ ANI SG OF ACCOUNTING MASTERS

•j.Data can be recorded and maintained in Tally.ERP 9 Accounting Software wv
:* Masters and Vouchers. We can change data in Tally.ERP 9 whenever, and as mar;
tures as we wish. Masters are the containers of the Accounting Data. Accounting Masters la Tally, ac
pre defined structure and content of accounting information system. It includes Ledgers in Char same natu
:: Accounts and the Groups under which they are classified. For example, the Ledgers Furniture ent schedi
& Fixtures, Computer Equipment and Vehicles are classified under the Group Fixed Assets. Sc irly we ha
masters are like default templates into which information is entered using vouchers. The example th<
template or master gives the 'shape' to the information we enter into it. Information entered can less firm tl
be different each time but the Masters allows us to have a standard format and structure so that imagine h
we can manage our business as we need. These are the heads, which will be set once and used in i r e this probl
many places such as Accounting Voucher Creation, Reports Generation etc. Data stored in shall create
Masters is independent. In Masters we can only create, alter, display or delete the Ledgers. cunt under i
Stock Item and their inter-related elements like Groups, Stock Categories, Unit of Measure. f Ledger Account
Masters can been classified into | Croups can be i
• Accounting Masters income and Ex]
fcrount which i
• Inventory Masters ire self explanai
• Payroll Masters and
Different Ao
• Statutory Masters
In Tally. ERP9 accounting masters are available in Gateway of Tally. There are 2
I Accounts of man
Gateway of Tally I Groups, but in i
I Groups are give
Masters I :_so. so list goes
| -rtnaining 13 ar
Accounts Info
inventory info | terns and the re
I -omenclature of
Transactions
Accounting Vouchers
15 I
Invert Tory Vouchers
Branch / Divisio
Import
Capital Account
import of Data
iurrent Assets
Reports
I
f- Balance Sheet Current Liabiliti
Profit & Loss A/c
Stock Summary Dsrect Expenses
Ratio Analysis
C Greet Incomes
Display
*ixec Assets
Quit
feifirect Expense
Accounting Masters mainly consists of three parts ie. Groups, Ledgers and Vouchers. Smuureet Income-
| ACCOUNTING GROUPS
Meaning of Accounting Groups

In Tally, accounts are maintained with help of the groups. Groups are collection of Ledgers of
-he same nature. Basically, the group is the alternative name of schedules. Like we have
afferent schedules prepared while making P&L account or Balance Sheet in manual accounting,
-imilarly we have concept of groups in Tally. Schedules are the support details of final accounts.
-* or example there are 100 customers in an organization. If you prepare the balance sheet of that
'usiness firm then the individual balances of all 100 customers will be shown in balance sheet.
Now, imagine how it will look. It will very lengthy and will be very difficult to understand. To
solve this problem, tally has given you a group namely ‘Sundry Debtors’. It means, whenever,
; u shall create new account of any customer, it will ask the name of group and you will put that
iocount under ‘Sundry Debtors’. Account Groups are maintained to determine the hierarchy of
_edger Accounts which is helpful in determining and presenting meaningful and reports. The
Sroups can be classified into Capital or Revenue and more specifically into Assets, Liabilities,
.ncome and Expenditure. The Groups ascertain whether the same will affect Profit and Loss
Account which is revenue in nature or Balance Sheet which is capital in nature. Mostly, groups
ire self explanatory in Tally.
Different Accounting Groups Available in Tally:

There are 28 predefined groups in Tally.ERP 9, which are widely used in the Chart of
V-counts of many trading organizations. Though Tally.ERP 9 software gives list of 34 Accounting
1- roups, but in reality there are only 28 Predefined Accounting Groups in Tally because many
2- roups are given two names like Retained Earning is given the name of Reserve and Suplus
L~o, so list goes to 34 accounting groups. Out of these, 15 groups are Primary Groups and the
remaining 13 are Sub-Groups. Among the 15 predefined groups, 9 Groups are Balance Sheet
*ems and the remaining 6 groups are Profit & Loss A/’c items. However, you may also alter the
x menclature of these predefined 28 Groups.
15 Primary Groups 13 Sub Groups
i ranch / Divisions Bank Accounts
Capital Account Bank OD A/c
C urrent Assets Cash-in-hand

-
Current Liabilities Deposits (Asset)
Direct Expenses Duties & Taxes
Direct Incomes Loans & Advances (Asset)
rixed Assets Provisions
indirect Expenses Reserves & Surplus
Indirect Incomes Secured Loans

Investments Stock-in-hand
Loans (Liability) Sundry Creditors
Misc. Expenses (ASSET) Sundry Debtors
Purchase Accounts Unsecured Loans
Sales Accounts
Suspense A/c
Primary Groups
1. Capital Account : Capital Account is primary and different sub groups may may be
created under it. Common example of Ledger Accounts under Capital Account group is
Share Capital, Partners’ Capital Accounts, and Proprietors Capital Account. Separate
Ledgers may be opened for Equity Capital, Preference Capital A/c etc.
2. Current Assets : Current assets are those assets which are to be converted into cash
with a period of one year or during the normal operating cycle of the business. I:
constitutes of 6 sub-groups like Stock-in-hand, Deposits (Assets), Loans & Advancer
(Assets), Cash-in-hand, Bank Accounts, Sundry Debtors.
3. Current Liabilities : Current Liabilities are those liabilities which require the use c:
Current Assets for settlement. In other words, liabilities payable within a year.
4. Fixed Assets : It refers to those assets which are held by way of investment and not for
the purpose of resale. They are of a permanent nature. Fixed assets are further
classified into (i) Tangible Assets, (ii) Intangible Assets.
5. Investment : This is a convenient head to view all the company's total investments
Investment accounts such as Investment is Shares, Bonds, Government Securities
Long-term Bank deposit accounts, etc., shall be classified under this group
6. Loans (Liability) : All long term loans taken by the company will come under th
Group. For example, debentures Loans from financial institution
7. Suspense account : Theoretically speaking, this group should not exist. However,
modern accounting, many large corporations use a Suspense Ledger to track mom
paid or recovered, the nature of which was not yet known then.
8. Miscellaneous Expenses (asset) : The main items that come under this head a
Preliminary Expenses, Share and Debenture Discount, Deferred Revenue Expenses li
expenditure on Advertisement, Research & Development (R&D) etc .These a
normally written off against profits over a period of time. Until it is fully written c
the amount not written off appears under this head.
9. Branches and Divisions : Branch I Divisions: This Group may be used :
convenience by multi-branch companies for Inter branch reconciliation a
consolidation. Create ledgers for all companies which may be Branches, Divisioi
Affiliates, Sister concerns, subsidiaries etc. Tally 9 will permit Sales I Purchs
transactions with these accounts.
10. Sales : Selling of goods in the normal course of business is termed as Sales. All sorts of
sales should constitute this group.
11. Purchases : Buying of goods for the purpose of resale is termed as purchases.
Purchase Returns will also come under this group.
12. Direct Incomes [Income (Direct)] : In the case of professional or servicing
companies, which do not have sales income but have income and professional fees and
services, you can place the ledger accounts under Direct Income.
13. Indirect Incomes [Income (Indirect)] : Normally, all non-major revenues like
receipts on account of Rent, Interest, Commission, Dividend etc should be placed here.
These are not considered for computation of Gross Profit but are considered for
computation of Net Profit only.
14. Direct Expenses [Expenses (Direct) : This primary group holds all Ledger accounts
of Direct Expenses. In case of Traders, normally Carriage Inwards should be placed
under this group. All expenses which are considered for computing Gross Profit/Loss
are to be placed here.
15. Indirect Expenses [Expense (Indirect)] : All Office, Administration, Selling
Expenses and Financial Expenses should be classified under this head.
Sub Groups
1. Reserves and Surplus (Retained Earnings): The Group Reserves & Surplus is a
sub-group to Capital Account. All Reserve accounts (recognized as Retained Earnings)
are placed under this group. Common examples are: General Reserve, Capital Reserve,
Investment Allowance Reserve, Share Premium Account etc.
2. Bank Accounts : For Current savings, short term deposit accounts, etc.
3. Cash-in hand : Tally automatically opens one Cash A/c under this group.
4. Deposits : In essence, a place for Fixed Deposits, Security Deposits, or any deposit
made by the company
5. Loans & Advances (Asset) : Place all advances of non-trading nature. Example of
advances which should be placed under this group are: Advances against salaries,
Loans to Employees etc. Even Advance for work-contracts or supply of fixed assets may
be placed here..
6. Stock-in-hand : This is a special sub group. You may wish to open accounts like Raw
Materials, Work-in-Progress and Finished Goods.
7/ Sundry Debtors : For your customer accounts.
8. Duties and Taxes : For all tax accounts like VAT, Sales and other trade taxes.
9. Provisions : Accounts like Provision for Taxation etc.
10. Sundry Creditors : For trade creditors of the company.
11. Bank OD Accounts : The Bank OD A/c is meant to record the company's overdraft
accounts with banks.
12. Secured Loans : Term loans and other Medium/Long term Secured Loans, should be
put under Secured Loans. Loans taken from Banks, Financial Institutes etc upon
4.12 Chart of Account, Groups and Ledger Crea
furnishing security, against which normal day to day transaction is not perm::'-J
should be placed here, debentures should also be placed under this sub-Group.
13. Unsecured Loans : For loans obtained without any security, e.g., Loans fn
Directors/partners or outside parties.
Balance Sheet Groups and Sub Groups P&L Groups and Sub Groups
1. Capital Account 1. Sales Accounts

• Reserves & Surplus [Retained 2. Purchase Accounts
Earnings] 3. Direct Incomes [Income (Direct)]
2. Current Assets 4. Indirect Incomes [Income (Indirect)]
• Bank Accounts 5. Direct Expenses [Expenses (Direct)]
• Cash-in-hand 6. Indirect Expenses [Expenses
• Deposits (Asset) (Indirect)]
• Loans & Advances (Asset)
• Stock-in-hand
• Sundry Debtors
3. Current Liabilities
• Duties & Taxes
• Provisions
• Sundry Creditors
4. Fixed Assets
5. Investments
6. Loans (Liability)
• Bank OD A/c [Bank OCC A/c]
• Secured Loans
• Unsecured Loans
7. Suspense A/c
8. Misc. Expenses (Asset)
9. Branch/Divisions
Creation of Groups in Tally:

Tally provides a number of predefined groups. However, a business can create more Gro j
in Tally depending upon need and nature of business. But in Tally it is not possible to create ni
primary group, a new group can be created only under some existing group. Creation of ra
Groups in Tally is very easy. New groups can be created on by one popularly known as sing
group creation or many groups can be created simultaneously known as multiple group creatm
Following are the steps in creating new Groups in Tally.
Create a single group

1. Go to Gateway of Tally > Accounts Info. > Groups.
2. Click the option Create under Single Group. The Group Creation screen appears.
3. Enter the Name of the group.
4. Enter the Alias name, if required.
5. In the field Under, from the List of Groups displayed, select the parent group under
which the group has to be classified. For example, Indirect Expenses.
The Group Creation screen appears as shown below:
Group Creation
Name : Administrative Expenses
: Office Expenses
Under Indirect Expenses Accept?
Yes or No
6. Click Yes to accept the screen.
4.14 Chart of Account, Groups and Ledger Creation Chart of i
Creating Multiple Groups 4. V

5. A
Gafeway of Tally....
Accounfs /nfo...
Displayi
Displa
32 Group u
T riisp
j
1. Q
2. t
3. 1
Group £
Name
(a//as)
User can create multiple groups in Tally.ERP 9.
To create multiple groups
1. Go to Gateway of Tally > Accounts Info. > Groups > Create (Multiple Groups).
Under
2. Select All Items under the Group.
3. Enter the Name of the group. The screen appears as shown below:
Nature
Multi Group Creation M/s SG Traders Ctrl * M □
Doc
Under Group : 1 All Items
Group
S.Ho. Name of Group Under
Nett Di
1. Staff Welfare Exps Indirect Expenses
2. Income Indirect Incomes Used f
(for
Methot
Alterim
Tally
done unc
Following
1.
2.
3.
4.
Accept ?
5.
Yes No
4. Write the name of parent group under which new group is to be created.
5. At last, Tally will ask ‘Yes’ or ‘No’, then you check all the details then press ‘Y”
Displaying a Group in Tally

Display option in Tally shows the list of Groups available, but user cannot make any changes
in Group under Display option.
To display a group
2. Click the option Display under Single Group.
3. Select the name of the group required from the List of Groups displayed. The ledger
display screen appears as shown below:
1 Group Display N/s SG Traders
Name : Direct Incomes

(alias) : Income (Direct)
Under : J Primary
Nature of Group ? Income

Does it affect gross profits ? Yes
Group behaves like a sub-ledger ? No

Nett Debit/Credit Balances for Reporting ? No
Used for calculation (for example: taxes, discounts) ? No
(for sales invoice entries)
Method to allocate when used in purchase invoice ? J Not Applicable
Altering a Group
Tally provides the option of making any changes in the groups already created. It can be
done under ‘Alter’ option. The details entered in a group can be modified when required.
Following are steps to alter a group
2. Click Alter under Single Group.
3. Select the name of the group required from the List of Groups displayed.
4. Make the necessary changes in the Group Alteration screen.
5. Click Yes to save the changes.
Gateway of Tally....
Accounts Info.......
Deleting a Group
Groups can be deleted from the alteration screen. Only one group can be deleted at a time.
However, so deletion is possible if:
• The group has sub-groups.
• The group has ledgers classified under it.
• The group is a predefined master.
To delete a group
• Go to Gateway of Tally > Accounts Info. > Groups.
• Click the option Alter under Single Group.
• Select the name of the group required from the List of Groups displayed.
• Click D: Delete.
• Click Yes to confirm deletion.
| ACCOUNTING LEDGERS
Meaning of Accounting Ledgers -

Afjfcer creating the company in Tally, Ledger creation is the preliminary steps to start with
recording of transactions. Ledger is a device used to record the effect of transactions on the
assets,1 iabilities and capital of an enterprise. We can define Ledger as “A ledger is the actual
account head to identify your transactions and are used in all accounting vouchers. For example,
purchase, payments, sales, receipts, and others accounts heads are ledger accounts”.
A Ledger is the actual account head to which you identify a transaction and must be used in
all Accounting Vouchers. Without a ledger we cannot record any transactions. For example
Purchase, sales, cash, salary, etc, all these accounts heads are ledger Accounts. All Ledgers have
to be classified into Groups. Classification of Ledgers to the appropriate groups is very
important. These Groups and Ledgers are classified to Profit & Loss or Balance Sheet. If a ledger
Chart of Account, Groups and Ledger Creation________________________________ 4.17
is not accurately classified in group, it may lead to error in Financial Statement. For example if
Furniture is grouped under Purchase, it will be shown in P&L account instead of Asset side of
Balance Sheet.
Pre-defined Ledgers in Tally Erp.9

In Tally we have to create all Ledgers before recording the transactions. However, there are
two pre-define ledgers in Tally. It means we need not to create these two ledgers, these are
available in Tally by default. These ledgers are:
1. Cash : This Ledger is maintained to record all cash receipt and payments. This Ledger
is created under the Group Cash-in-hand.
2. Profit & Loss Account : This Ledger is created under the Group Primary. Previous
year’s Profit or Loss is entered as the opening balance for this ledger. You cannot delete
this ledger, but you can modify the ledger.
Creation of Accounting Ledgers

When we record transactions first time in Tally, we have to create Ledgers. However, once a
Ledger is created in particular company, it need not to be created again whenever we have to
record transactions. In Tally.ERP 9, we can create the ledgers in two ways given below:
1. Single Ledger Creation
2. Multiple Ledger Creation
Gafewsy of T&lfy
Acccwts fnfo
4.18 Chart of Account, Groups and Ledger Creation Chart of Ai
1. Single Ledger Creation : Here we can create one ledger at a time. Following are steps BJWIilBIWWJ!
for creating single ledger in Tally
Under Group
1. Go to Gateway of Tally > Accounts Info. > Ledgers > Create (Single Ledger
Creation)
S.No.
2. Enter Name of the ledger
3. Select Group from the List of Groups Purcha
4. Press Enter Tea Ex
Lunch I
The Ledger Creation Screen appears as
Commi
Ledger Creation M/s SG Traders Frt & 0
Name : Sales Total Opining Balance Jain Tr<
(alias) Supplie
Printing
DCBBa
Malllna Details
Under Sales Accounts Name
Address
Inventory values are affected ? Yes

Type of Ledger Not Applicable
Provide bank details ? No
Tm Registration
PAN/ITNo.
Display a L
Accept ? Tally provi
-ee all the led$
Opening Balance (on 1 Apr-2017]:
Yes No :annot make a
1. Go to
2. Multiple Ledger Creation : Here we can create different ledgers at one go. These ledger
may be related to different groups or may belong to particular group. 2. Seleci
To create Multiple Ledgers at once, follow the below given steps: 3. Seleci
Go to Gateway of Tally > Accounts Info > Ledgers > Multiple ledgers > Create
Edit or Alte
From Under Group field select All Items
There cert;
Under Name of Ledger enter the name of account you want to create. name or addre
Select Group from the List of Groups ■ :dify existing
making midific
Press Enter and move to next line
Similarly, select the other ledgers 1. Go to
2. Ledge
Press Enter or Y to Accept
3. Make
Multi Ledger Creation______________________________________ M/s SG Traders__________________________________________________ Ctrl + M
Under Group :J All Items For 1-Apr-2017
S.No. Name of Ledger Under Opening Balance Dr/Cr
1. Purchase Purchase Accounts

2. Tea Exps Staff Welfare Exps
3. Lunch Exps Staff Welfare Exps
4. Commsion Income
5. Frt & Oct Indirect Expenses
6. Jain Traders Sundry Debtors
7. Supplier Sundry Creditors
8. Printing & Stationary Indirect Expenses
9. DCB Bank Bank Accounts
Accept?
Yes 0 No
Display a Ledger Account

Tally provides the facility of displaying or altering the ledger. Under display of ledger we can
see all the ledgers created in the Tally till date and can check balance in the ledger, however we
cannot make any change in the ledger.
1. Go to Gateway of Tally > Display > Account Books
2. Select ‘Display’ under gateway of tally.
3.. Select ‘Ledger’
Edit or Alter a Ledger

There certain situations we need to modify existing ledger created.For example changing of
name or address, selection of wrong group in under field etc. In such case user will have to
modify existing details. Tally provides facility of making changes in ledgers already created. For
making midifications /Edit of ledger following are the steps:
1. Go to Gateway of Tally>Accounts info>Ledger>Alter
2. Ledger alteration screen will appear, press enter.
3. Make necessary changes and save the screen.
AcooL/nfs Info......
Delete a Ledger
User can delete any ledger created by him if it is not required in future. However, Tally does
not permit to delete an account with transactions. That is if you have entered any voucher using
the ledger, that ledger cannot be deleted. If you want to delete a ledger with transactions, You
need to remove the ledger from those transactions by editing a voucher.
To delete an account go to the following screen
1. Gateway of Tally>Account info>Ledgers>Alter
2. Select the account to be deleted.
3. Now press delete button from bottom bar or Use key board shot cut Alt+D.
4. A confirmation will be asked.
5. Press Yes.
| ACCOUNTING VOUCHERS
Meaning of Accounting Vouchers -

A Voucher is a written document in support of a transaction. Some of examples of the
vouchers are sales invoice, counter foil of a pay-in slip, pay register, purchase invoice, record slip
etc. the vouchers validate the expenditure done on some item or the income earned. It is a proof
that a particular transaction has taken place for the value stated in the voucher. A Voucher is
not only necessary for recording of transaction but it is also necessary for audit the accounts. In
manual accounting, the transactions are recorded through journal entries whereas in Tally they
are done through voucher entry. Tally not only provides facility of creating a Voucher but it also
provides opportunity of altering a Voucher. Tally has may predefined vouchers that can be used
for recording various transactions. These vouchers are related to record of accounts known as
Accounting Voucher’ and record of Inventory known as ‘Inventory Vouchers’. Tally also has
feature of Vouchers related to Payroll.
• Accounting Voucher Types: For entering accounting data like sales, purchase, receipt,
payment etc.
• Inventory Voucher Type: For entering Inventory data, like stock journal, Material In,
rejection out etc.
• Payroll Voucher Type: - For input payroll data like attendance, salary, deductions
etc.
N/s SG Traders
Voucher Type
List of Voucher Types
Contra
Credit Note
Debit Note
Delivery Note
Job Work In Order
Job Work Out Order
Journal
Material In
Material Out
Memorandum
Payment
Physical Stock
Purchase
Purchase Order
Receipt
Receipt Note
Rejections In
5 more....
4.22 Chart of Account, Groups and Ledger Creation Chart of Ac
Display of Accounting Vouchers Teacher Type Gr
Same : Bar
To view the pre-defined voucher types alias)
1. Go to Gateway of Tally > Display > List of Accounts
2. Press Ctrl+V to display the voucher types.
3. The List of Voucher Types screen appears as shown below:
Se act type of volt
List of Accounts M/s SG Traders -coreviation
List of Voucher Types For 1-Apr-2017 '-■eenod of vouchi
as advanced
_se effective dst

Contra vs*© tris voucher (ft
Credit Note a.I»v narration in
Debit Note cv 3e narrations fc
Delivery Note
Job Work In Order - ‘ace default at
Job Work Out Order Sec/Alter Defau*
Journal
Material In
Material Out
Memorandum
Payment
Physical Stock
Purchase
Purchase Order
Receipt
Receipt Note
Rejections In
Rejections Out
Reversing Journal
Sales
Sales Order
Stock Journal
[ Voucher Type Creation M/s SG Traders Ctri + M C|
Name : Bank W/l f

(alias)
Sanaral Prlntlna Naim of Class

Select type of voucher: Contra Print voucher after saving ? No
Abbreviation : W/l
Method of voucher numbering ? Automatic
Use advanced configuration ? No

Use effective dates for vouchers ? No
Make this voucher type as 'Optional' by default? No
Allow narration in voucher ? Yes
Provide narrations for each ledger in voucher? No
=nable default accounting allocations? No

Set/Alter Default Accounting Entries? No
Enter the date in the given Screen.

• Name : Write name of Voucher Type
• Type of Voucher : Write Voucher type.
• Method of Numbering : Select automatic or manual.
• Use Advance configuration : No / Yes
• Use Effective dates for Vouchers : If you set this Yes ,You will have a new data entry
area where you can enter voucher effective date.
• Make Optional as default: Enabling this will make the voucher as “optional voucher ”
• Narration for each entry Yes/No
• Epabling Default Accounting Entries : Here you can set the Default Ledger for
allocating transactions .
• Print After Saving Voucher Enabling will print the invoice immediately after
saving.
Alter a Predefined Voucher Type

To edit the newly created voucher type go to
• Gateway of Tally»Accounting info»Voucher Types»Alter
• Make necessary changes and save.
| LONG QUESTIONS
1. Explain the concept of Accounting Masters.
2. What do you mean by Accounting Groups? What are various Accounting Groups
available in Tally?
3. Explain process of creation and alteration of accounting Groups.
4. Explain the concept of Accounting Ledger. How ledgers are created in Tally?
5. Explain process of creation, alteration and deletion of accounting ledger.
6. What are the difference between accounting Groups and accounting Ledgers?
7. What do you mean by Accounting Vouchers. Explain how these voucher can be created
in Tally
8. Explain the steps in Printing of the voucher.
| SHORT QUESTIONS
Ql. What do you mean by Chart of Accounts?
Ans. Every businesses need to organize their financial information into three main financial
statements: balance sheet, income statement, and cash flow statement. For this purpose
it need a chart of accounts (COA). A company’s chart of accounts is an index of the
financial accounts that a business uses in its accounting system and that it posts to its
general ledger — the record of all financial transactions within the company during a
particular accounting cycle. Companies use charts of accounts to organize their finances
and separate expenditures, revenue, assets, and liabilities to get a clear picture of the
financial standing of the company. The chart of accounts contains account names and
account numbers. The number of accounts included in the chart of accounts varies
depending on the size of the company. A small family run business may only have 20-25
total accounts whereas a worldwide company like Samsung will likely have hundreds of
accounts. Chart of Accounts serves as the foundation for a company’s financial record
keeping system. It provides a logical structure that facilitates the addition of new
accounts and deletion of old accounts.
Q2. Explain different types of Chart of Accounts.
Ans. There are three types of Chart of Accounts, that is:
1. Operating chart of accounts: They are used in routine accounting and prepared
by each business according to own requirement. The accounts in Operating Chart
of Accounts could be related to expense or revenue accounts etc
2. Group Chart of Accounts: These are accounts used by the entire corporate
group. They help in generating reports at the corporate level. When a company
have more than one branch, subsidiary or sister concern, it can prepare Group
Chart of Account for maintaining uniformity in accounting in whole group.
Country-specific chart of accounts: This Chart Of Accounts help meet country-specific

legal requirements. In many countries, there are general guidelines, but in France the
guidelines have been codified in law.
Q3. What are Benefits of Chart of Accounts.
Ans. A well-designed chart of accounts provides the following benefits:
1. Charts of Accounts helps in effective management of an organization's financial
accounts.
2. It supports the audit and control of financial transactions.
3. It provides flexibility for management reporting and analysis.
4. It anticipates growth and maintenance needs as organizational changes occur.

5. It facilitates an efficient data processing flow.
6. It allows for delegation of responsibility for cost control, profit attainment, and
asset utilization
7. It measures performance against corporate objectives.
8. It helps in meeting statutory requirements.
Q4. What do you mean by Masters in Tally.
Ans. Accounting Data can be recorded and maintained in Tally.ERP 9 Accounting Software
with the help of Masters and Vouchers. Accounting Masters are pre-defined structure
and content of accounting information system. It includes Ledgers in Chart of Accounts
and the Groups under which they are classified. These are the heads, which will be set
once and used in many places such as Accounting Voucher Creation, Reports Generation
etc. Data stored in Masters is independent. In Masters we can only create, alter, display
or delete the Ledgers, Stock Item and their inter-related elements like Groups, Stock
Categories, Unit of Measure. Masters can been classified into
• Accounting Masters
• Inventory Masters
• Payroll Masters and
• Statutory Masters
Q5. )Vhat do you mean by Accounting Groups.
.Ans. In Tally, accounts are maintained with help of the groups. Groups are collection of
Ledgers of the same nature. Basically, the group is the alternative name of schedules.
Like we have different schedules prepared while making P&L account or Balance Sheet
in manual accounting, similarly we have concept of groups in Tally. Account Groups are
maintained to determine the hierarchy of Ledger Accounts which is helpful in
determining and presenting meaningful and reports. The Groups can be classified into
Capital or Revenue and more specifically into Assets, Liabilities, Income and
Expenditure. The Groups ascertain whether the same will affect Profit and Loss Account
which is revenue in nature or Balance Sheet which is capital in nature.
Chart of A<
Q6. Write down names of Primary Groups available in Tally.
Ans. Following are the Primary Groups available in Tally:

1. Capital Account
2. Current Assets
3. Current Liabilities
4. Fixed Assets
5. Investment
6. Loans (Liability)
7. Suspense account
8. Miscellaneous Expenses (asset)
9. Branches and Divisions
10. Sales
11. Purchases voucl
12. Direct Incomes [Income (Direct)] recori
13. Indirect Incomes [Income (Indirect)] earne
the v
14. Direct Expenses [Expenses (Direct) neces
15. Indirect Expenses [Expense (Indirect)] throu
Write down names of Sub Groups available in Tally. ExpL
Following are the Sub Groups available in Tally: Tally
1. Bank Accounts These
recorc
2. Bank OD A/c
Tally.
3. Cash-in-hand
4. Deposits (Asset)
5. Duties & Taxes
6. Loans & Advances (Asset)
7. Provisions
8. Reserves & Surplus
9. Secured Loans
10. Stock-in-hand
11. Sundry Creditors
12. Sundry Debtors
13. Unsecured Loans
Write down various Pre-defined ledgers available in Tally.
In Tally we have to create all Ledgers before recording the transactions. However, the
are two pre-define ledgers in Tally. It means we need not to create these two ledger-j
these are available in Tally by default. These ledgers are:
1. Cash : This Ledger is maintained to record all cash receipt and payments. This
Ledger is created under the Group Cash-in-hand.
2. Profit & Loss Account : This Ledger is created under the Group Primary.
Previous year’s Profit or Loss is entered as the opening balance for this ledger. You
cannot delete this ledger, but you can modify the ledger.
Q9. Write down steps for creation of Ledgers in Tally.
Ans. Following are steps for creating ledger in Tally
1. Go to Gateway of Tally > Accounts Info. > Ledgers > Create (Single Ledger
Creation)
2. Enter Name of the ledger
3. Select Group from the List of Groups
4. Press Enter
Q10. What do you mean by Voucher in Tally?
Ans. A Voucher is a written document in support of a transaction. Some of examples of the
vouchers are sales invoice, counter foil of a pay-in slip, pay register, purchase invoice,
record slip etc. the vouchers validate the expenditure done on some item or the income
earned. It is a proof that a particular transaction has taken place for the value stated in
the voucher. A Voucher is not only necessary for recording of transaction but it is also
necessary for audit the accounts. In manual accounting, the transactions are recorded
through journal entries whereas in Tally they are done through voucher entry.
Qll. Explain various types of voucher in Tally>
Ans. Tally has may type of vouchers that can be used for recording various transactions.
These vouchers are related to record of accounts known as ‘Accounting Voucher’ and
record of Inventory known as ‘Inventory Vouchers’. Following vouchers are available in
Tally.
• Accounting Voucher Types: For entering accounting data like sales, purchase,
receipt, payment etc.
• Inventory Voucher Type: For entering Inventory data, like stock journal,
Material In, rejection out etc.
• Payroll Voucher Type: - For input payroll data like attendance, salary,
deductions etc.
PRACTICAL QUESTIONS
1. Create the following Ledger in Tally.ERP 9
Sumeet’s Capital A/C
Canara Bank
Purchase
Sales
Rent
Electricity Bill „
Wages
Stationery
Discount Paid
Insurance Paid
Discount Received
Commission Paid
Paid Petty Cash
Office Expenses
2. Create the following Ledger in Tally.ERP 9
Rahul’s Capital A/C
SBI Bank A/C
Purchase A/C
Sales A/C
Machinery & Furniture A/C
Investment A/C
Brokerage A/C
Typewriter A/C
Purchase from Alfa Computers A/C
Rent A/C
Salary A/C
Return Inward A/C
Return Outward A/C
Drawing A/C
Sold to Sharma A/C
Traveling Expenses A/C
Discount Allowed A/C
Telephone Charges A/C
£ Sales to Rohit traders A/C
3. Create the following Ledger with the opening amount as shown below in Tally.ERP 9
Land and Building 4,000
Inventory 2,000
Cash 1,500
Bank Loan 2,000
Capital 3,000
Chart of Account, Groups and Ledger Creation________________________________ 4.29
Sales 5,000
_________________
Purchases 2,500
Total 10,000 10,000
4. Create the following Ledger under the Group shown against their name:
Name of Ledger Account Groups

Equity Share Capital Capital Account
General Reserve Reserve and Surplus
Capital Reserve Reserve and Surplus
Loan from HDFC Secured Loan
Ranbir Ltd Sundry Creditors
Goswami Pvt Ltd Sundry Creditors
Provision for doubtful debts Provisions
Outstanding Rent Outstanding Expenses
Land & Building Fixed Assets
Plant & Machinery Fixed Assets
Furniture & Fixture Fixed Assets
Computer & Peripherals Fixed Assets
Investment in Shares Investments
Abir Pvt Ltd Sundry Debtors
Prepaid Insurance Current Assets
Loan to Employee Loans and Advances (Assets)
ICICI Bank Bank Accounts
5. State groups for ledgers involved in the following transactions and create the ledgers.
1. Mr. Ram starts business with ? 200000/- and deposited into bank ? 40,000.
2. Paid for office building ? 50000/ and furniture for ? 10000/-
3. Purchase raw material of? 10000 on credit from Mr. Avinash.
4. Paid Wages ? 2000
5. Paid salary ? 10000
6. Return money to Mr. Avinash in settlement of? 9500.
7. Sold goods to Mr. Shekar ? 15000/-
8. Received interest on bank amount ? 500.
9. Received from Mr. Shekar after discount of ? 500.
10. Sold old news paper ? 450/-

11. Sold old furniture ? 4000/-
6. Create following Ledgers in Multiple Ledger Creation mode
SI. No. Name of Ledger
1 Land A/c
2 Building A/c
3 Machinery A/c
4 Furniture A/c
5 Goodwill A/c
6 Trade Debtors A/c
7 Stock A/c
8 Bills Receivable A/c
9 Bank A/c
10 Cash A/c
11 Loan from Andhra Bank A/c
12 Loan from Ramu A/c
13 Capital Account A/c
7. Create following Ledgers in Single Ledger Creation mode
SI. No. Name of Ledger

1 Capital A/c
2 Machinery A/c
3 Cash A/c
4 Purchase A/c
5 Sales A/c
6 Nikhil A/c
7 Salaries A/c
8 Selling Expenses A/c
□ □□
STOCK MAINTENANCE
IN TALLY
CONTENTS
□ MEANING OF INVENTORY
□ TYPES OF INVENTORY
□ OBJECTIVE OF INVENTORY MANAGEMENT
□ INVENTORY CAPABILITIES OF TALLY.ERP 9
□ INVENTORY MASTERS IN TALLY.ERP 9
□ STOCK GROUPS
□ UNITS OF MEASURE
□ STOCK ITEM
□ STOCK GODOWNS IN TALLY
□ GENERATING INVENTORY REPORTS IN TALLY
| MEANING OF INVENTORY
Inventories occupy the most important position in working capital management of a business
enterprises. It constitutes the largest component of current asset in most business concerns. The
of working capital is largely governed by the turnover of inventory. It is therefore quite natural
Turnover that inventory which helps in maximize profit occupies the most significant place
among current assets. The over stock of inventory is unsuitable due to the large amount of
mvestment on it as well as other cost associated with it. On the other hand, if a business does not
get the required inventory as needed than the production system gets disturbed and business
fails to produce required quantity of products on time. Therefore, inventory management
includes the requirement of different types of inventory, period of stock and cost associate on it.
5.2_________________________________________________ Stock Maintenance In Tally
Inventory is the stock that firm maintains to meet its future requirement for production and
selling. The basis reason for holding inventory is to keep up the production activities
unhampered. Inventories are a part of current assets, which are used within one year. In
dictionary meaning of inventory is a “Detailed list of goods, furniture etc.” Many understand the
word inventory, as a stock of goods, but the generally accepted meaning of the word ‘goods’ in the
accounting language, is the stock of finished goods only. In a manufacturing organization,
however, in addition to the stock of finished goods, there will be stock of partly finished goods,
raw materials and stores. The collective name of these entire items is ‘inventory’.
Accounting Standard (AS - 2) issued by the Council of the Institute of Chartered
Accountants of India, defines the term as “assets
(a) held for sale in the ordinary course of business,
(b) in the process of production for such sale, or
(c) in the form of materials or supplies to be consumed in the production process or in the
rendering of services”.
Thus, Inventories are physical articles held for resale for use in manufacturing a production
or for consumption in carrying on business activity such as merchandise, goods purchased by the
business which are ready for sale.
| TYPES OF INVENTORY
The term inventory may be classified into two types namely:
Direct Inventories:
Direct inventories are those inventories that play a major role in the production or are meant
for direct sale Dirdtet inventories may be categorised into three parts.
(i) Raw materials# Raw materials are the physical resources to be used in the manufacture
of finished products. It include materials that are in their natural or raw form. For example,
cotton in the case of textile mijf, sugarcane in the case of sugar factory, oil seeds in the case of an
oil mill etc. The chief objective of keeping raw material is to ensure uninterrupted production in
the event of delays"iA delivery and also to enjoy the economies of large scale buying.
(ii) Semi-finished Goods: Semi-finished goods are those materials which are not hundred
per cent complete in all respects i.e., some processing still remains to be done before the product
can be sold.
(iii) Finished Goods: Inventory of finished products are the stock of goods which are ready
Tor sales. Stock of finished goods is required for smooth marketing operations of the products.
(iv) Spare Parts: Spare parts means duplicate parts of a machine. Usually, almost all the
industrial concerns maintain spare parts of various machines which they use for manufacture.
This will enable them to ensure smooth running of machines which in turn provide for
uninterrupted production.
Indirect Inventories:
Indirect inventories include those items which are necessary for manufacturing but do not
become component of the finished goods. They normally include petrol, maintenance materials.
Stock Maintenance In Tally_________________________________________________ 5.3
office materials, grease, oil lubricants etc. These inventories are used for ancillary purposes to
the business and cannot be assigned to specific, physical units. These inventories may be used in
the factory, the office or the selling and distribution divisions.2.1 Conventional Vouchers
| OBJECTIVE OF INVENTORY MANAGEMENT

The objectives of inventory management are mentioned below:
1. Continuous Supply of Materials: There should be continuous available of materials
in the factory or finished goods for trade. The main objective of inventory management
in to maintain required inventory so that production and sales process run smoothly.
2. To minimize the risk of under and over stocking of material: If a company keeps
inventory without proper analysis, there will be a chance of overstocking, which will
increase the cost of carrying the inventory.
3. To maintain systematic record of inventory: Management needs different
information regarding inventory for planning and decision-making. A systematic
recodes of inventory helps provides such information to the management. It also assists
to evaluate the current inventory management policy.
4. To reduce losses, damages and misappropriation of materials: Inventory
management aims to reduce or remove the losses and misappropriate of materials. This
is done by maintaining the proper stocks of materials with utmost care.
5. To minimize the cost associated with inventory: Proper maintenance of the
information regarding inventory helps to make decisions like whether to take discounts
or not, the size of order to be placed, when to order etc. the total cost associated with
inventory may be minimized by analyzing the lot size to be acquired, the offer of
discount on variable lot size and the timing of order. Such analysis helps to reduce the
unnecessary inventory in inventories.
6. To make stability in price: An effective inventory management system minimizes
the effects of regular price fluctuation. This is turn helps to gain the stability is selling
price.
7. To minimise capital investment: To minimise capital investment in inventory by
eliminating excessive stocks.
8. Smooth Sale: To ensure that finished goods are available for delivery to customers to
fulfil orders, smooth sales operation and efficient customer service.
| INVENTORY CAPABILITIES OF TALLY.ERP 9

Inventory is the total amount of goods and/or materials contained in a store or factory at any
given time. Store owners need to know the precise number of items they hold in-order to place
orders or control losses. Factory managers need to know how many units of their products are
available for customer orders. The Inventory Control system of Tally.ERP 9 offers comprehensive
reporting capabilities to keep you on top of inventory status. It can help you bring about the
.reation of new or improved purchasing policies, sales policies, pricing methods, and even
5.4 Stock Maintenance In Tally
enhanced customer service. Inventory under control and overall costs associated with having
inventory as low as possible without creating problems. It is an important part of any business
that must have a stock of products or items on hand. It helps in limiting inventory under balance
at all times in order to maximize profits. Inventory control can be integrated with Accounting
and Job costing modules to help track all inventory related expenses.
Following are the capabilities of Tally relating to Inventory:
1. Stock Groups: Grouping of stock items can be done effectively in tally.ERP9
depending on various parameters. Stock Grouping means placing all the items having
similar characteristics under same category. It not only provides information regarding
one category of goods but also helps in decision making.
2. Stock categories: Stock Category offers a parallel classification of stock items. Like
stock Groups, classification is done based on similarity in behaviour. The advantage of
Categorising items is that you can classify the stock items (based on functionality)
together - across different stock groups, which will enable you to obtain reports on
alternatives or substitutes for a stock item.
3. Multiple Godowns: Locations/godowns are places where Stock Items are stored. You
can monitor the location-wise movement of stock by creating multiple Godowns.
Tally.ERP 9 permits the creating of any number of godowns, under groups and
subgroups to match the structure you need. •
4. Ageing Analysis: Stock ageing report in Tally.ERP9 gives the detailed duration for
which the items are lying in the godown. Based on this information decision to liquidate
the items can be taken easily.
5. Re-order Status: Re-order report for each stock item gives the complete details of
Minimum Order Quantity, its balance, re-order level, shortfall and how much should be
ordered helping to maintain optimum levels of stocks.
6. Real Time Integration with Costing: The Inventory system in Tally.ERP 9 is
completely integrated with all other functionalities in real-time. Passing a Purchase or
delivery challan, will update the stocks immediately.
7. Inventory Valuation: Valuation of stocks is done automatically. Average Cost
valuation, FIFO, FIFO Perpetual, Last Purchase Cost, LIFO Annual, LIFO Perpetual.
Monthly Avg. Cost, Standard Cost are the evaluation methods provided in Tally.ERP9
which allows viewing of stock reports.
&. Comprehensive Recording of Stock Movement: All stock movements are fully
recorded and maintained in Stock Registers in Tally.ERP 9.It can easily and
comprehensively record inventory movement using Goods Receipt Notes, Delivery*
Notes, Stock Transfer Journals, Manufacturing Journals as well as Physical Stock
Journals.
9. Management Reports: Tally gives the party-wise details of goods bought and sold and
helps identify good and bad business partners. Stock Query is a unique single sheet
report that gives information on stocks in-hand.
Stock Maintenance In Tally_________________________________________________ 5.5
10. Batch-wise or lot-wise Inventory with Expiry: You can use the concept of Batches
or Lots to track stock at the batch level, with expiry date support.
11. Multiple units of measure: Stock Items are purchased or sold on the basis of
quantity. The quantity is measured in Units. In Tally ERP.9, you can define these
quantities as multiples of a unit of measurement, for e.g. dozens, gross, carton, etc
12. Additional costs incurred on purchase: In many situations, more than one item is
purchased and the expense incurred is charged as a lump-sum amount. However, to
arrive at an effective cost for each of the items, the additional costs of purchase option
is used. This process is automated and allocation of the expense to a stock item can be
done on a predefined basis.
13. Price lists: Price Lists are useful for orders and invoices. An up-to-date price list helps
in decision-making even at the lower levels of the organisation and quickens the sales
process. Tally.ERP 9 assists in creating quantity based pricing with a complex discount
structure.
14. Sales and purchase order processing: When an order is received from a customer
for the supply of goods, the details of items, quantities, date of delivery, etc., are given
along with the Sales Order Number. Once these goods are delivered, this Sales Order is
tracked for the order details either in the delivery note or in the sales invoice.
15. Bill of Materials: A Bill of Materials is a list of constituent items along with quantity
details that can be allotted for the manufacture of a certain product, by-product or
equivalent. This facilitates the automatic reduction in stock of the item. This process of
listing the items that make up another item is made possible in Tally by enabling the
Bill of Materials facility.
16. Point of Sale (POS): Point of Sale could mean a retail shop, a check-out counter in a
shop or any other location where a sales transaction takes place. The various POS
equipment used in retail outlets includes Cash registers, card readers and barcode
scanners. It is a computerized Cash Register which adds the sales total, computes the
GST, calculates the change from the money tendered and automatically adjusts the
store's inventory.
| INVENTORY MASTERS IN TALLY.ERP 9

Inventory accounting includes recording of stock details like the purchase of stock, the sale of
stock, stock movement between storage locations or godowns and providing information on stock
availability. Tally.ERP 9 makes it possible to integrate the inventory and accounting systems so
ihat the financial statements reflect the closing stock value from the Inventory system. The
inventory system operates in much the same way as the accounting system. In Tally.ERP 9 all
ihe inventory information is maintained with help of ‘Inventory Masters’. Masters are the
lontainers of the Inventory Data. These are the heads, which will be set once and used in many
places for inventory records. Data stored in Masters is independent. In Masters we can only
ireate, alter, display or delete the Stock Groups, Stock Item and their inter-related elements like
Stock Categories, Unit of Measure, Godowns etc. Inventory Masters in Tally are similar to
5.6_________________________________________________ Stock Maintenance In Tally
Accounting Masters but in case of Inventory Masters there are no pre-defined set of stock groups.
Similarly user create the individual stock items, which is similar to setting up the ledgers. In a
newly created company the Inventory Info, menu comprises of four types of Masters, viz.
Stock Groups, Stock Items, Units of Measure and Voucher Types.
1. Stock Group
2. Stock Items
3. Voucher types
4. Units of Measure
However in order to maintain proper Inventory information we activate two more features by
pressing Fll key. These are:
1. Maintain Stock Categories.
2. Maintain Multiple Godowns.
| STOCK GROUPS
Stqck Groups in Inventory are similar to Groups in Accounting Masters. Stock Groups are
provided to help in the classification of stock items. Classification is done based on some common
behaviour. User can group Stock Items under different Stock Group to reflect their classification
based on some common functionality. Items having same features can be placed under one Stock
Group. It enables you to locate Stock Items easily and report their details in statements. For
example, if a Dealer of electronic items is dealing with different itemes like Refrigerators,
Television, Air-conditioners etc., he can make Stock Groups for each items separately. Further
sub grouping is possible on the base of Brands in which he is dealing. It is shown in following
figure:
r
LG Sony Voltas
(Secondary) (Secondary) (Secondary)
f- L_____________ /
Creation of Single Stock Group

Tally does not provide any pre defined Groups under Inventory. User can create its own
inventory groups depending upon need of the business. New Group can be created in Tally under
Single Group Creation Mode or under Multiple Group Creation Mode. In single group creation,
all inventory groups are created one by one. This can be done as follows:
Stock Maintenance In Tally 5.7
Gafewsi/ of Tally....
1. Go to Gateway of Tally > Inventory Info. > Stock Groups

2. This brings up the ‘Stock Groups’ menu.
3. Select ‘Create’ under ‘Single Stock Group’ and press Enter.
4. This brings up the ‘Stock Group Creation’ screen.
5. For the field ‘Name’, enter ‘Television’ and press Enter.
6. For the field ‘alias’, enter ‘TV’ and press Enter.
7. For the field ‘Under’, select ‘Primary’ from the ‘List of Groups’ and press Enter.
8. For the field ‘Can Quantities of items be ADDED’ enter ‘Yes’ and press Enter.
9. Accept the entry by pressing ‘Yes’ at the end of the screen.
10. Return to ‘Inventory Info’ menu using Esc key.
Stock Group creation
Name Television
Under : □ Primary
Can Quantities of items be ADDED
Similarly we can create Sub-Group in Tally. For example we want to create Sub-Group ‘Sony’
under Television. We can do so by following steps:
1. Go to Gateway of Tally > Inventory Info. > Stock Groups > Create (under the Single
Stock Group)
2. Enter the Name for the stock group, that is, Sony TV
3. Classify the group under Television
4. Set the option ‘Should Quantities of items be added’ to Yes
The Stock Group Creation screen appears as per Figure
Creation of Multiple Stock Group

Tally provide facility of Multiple Groups Creation. In this many groups can be created
simultaneously in Tally. Following are steps of Multiple Group Creation in Tally.
1. Go to Gateway of Tally > Inventory Info. > Stock Groups.
2. Select ‘Create’ under ‘Multiple Stock Groups’ and press Enter.
3. This brings up the ‘Multiple Stock Group Creation’ screen.
4. For the field ‘Under Group’, select ‘All Items’ from the ‘List of Groups’ and press Enter.
This enables the user to create Groups or Sub Groups under the same group or under
different Groups.
5. In the column ‘Name of Stock Group’, enter ‘Television’ and press Enter.
6. In the column ‘Under’, select ‘Primary’ from the ‘List of Groups’ and press Enter.
/ 7. In the column ‘Items are Addable (Y/N)’ enter ‘Yes’ and press Enter.
8. In the column ‘Name of Stock Group’ enter ‘Refrigerator’ and press Enter.
9. In the column ‘Under’ select ‘Primary’ from the ‘List of Groups’ and press Enter.
10. In the column ‘Items are Addable (Y/N)’ enter ‘Yes’ and press Enter.
11. In the column ‘Name of Stock Group’ enter ‘Air-Conditioner’ and press Enter.
12. In the column ‘Under’ select ‘Primary’ from the ‘List of Groups’ and press Enter.
13. In the column ‘Items are Addable (Y/N)’ enter ‘Yes’ and press Enter.
14. Press Enter at the ‘Name of Stock Group’ column. This brings the cursor to the end on
the screen.
15. Accept the details by pressing ‘Yes’ at the end of the screen.
Display Stock Group

Display option in Tally shows all the Groups created by the user for the company. An user
can only view the Groups created under Display option, he cannot make any changes in groups
already created under Display option.
Following are steps for display of groups:
1. Gateway of Tally—> Inventory Info—> Stock Groups—* Single/Multiple Display
2. This brings up the ‘List of Groups’ menu.
3. Select any ‘Stock Group’ from the list to view the details. This displays the information
on the ‘Stock Group Display’ screen.
4. Return to ‘Stock Groups’ menu using Esc key.
Gateway of Tally Ctrl + M ix
Current Period Current Date

1-4-2017 to 31 -3-2018 Saturday, 1 Apr, 2017
Gateway of Tally..
List of Selected Companies Inventory Info.....
Name of Company Date of Last Entry
M/s SG Traders Wo Vouchers Entered
Alter Stock Group

Alter option in Tally allows the user for the company to make any changes in groups already
created.
Following are steps for display alter of groups:
1. Gateway of Tally—* Inventory Info—* Stock Groups—* Single/Multiple Alter
2. This brings up the ‘List of Groups’.
3. Select any ‘Stock Group’ from the list to alter the details. This will bring up the ‘Stock
Group Alteration’ screen.
4. Make the necessary changes and accept the changes by pressing ‘Yes’ at the end of the
screen.
5. Return to ‘Stock Groups’ screen using Esc key.
Ily Stock Maintenance In Tally__________________ 5.11
on
Delete Stock Group

User can delete a stock group only if it does not have any sub-group or any stock iterm under
it. If any group contains sub-group or stock item, it can not be deleted until sub group or item is
deleted. Tally does not have separate button for delete. It is done under alteration mode.
Following are steps for deletion under Tally.
1. Gateway of Tally—> Inventory Info—> Stock Groups—> single Alter
2. Press [ALT]+[D] to delete the stock Group
3. Note: User cannot delete a stock group from multiple mode.
| UNITS OF MEASURE
?ady Unit of Measure is very important part of inventory management in Tally. It is not possible
to study, inventory management in Tally without study Unit of Measure, because any stock item
-as to be measured in some specific units for e.g. liquids will be measured in liters, solid will be
measured in kg or items or nos or pieces and so on. We have to create a specific unit of measure
: >r whatever type of goods that we stock in our Business.
We can create two types of units in Tally that is Simple Unit & Compound Unit.
itock
1. Simple Unit of Measure: A unit of measure that consists of only one Single Unit is
called ‘Simple Unit of Measure’. For example: Meters, Kilograms, Inches etc.
f the
2. Compound Units of Measure: Many units are usually a combination of two or more
units. For example, dozen of 12 pieces or box of 10 numbers. They are units with
multiple factors. Such units are called ‘Compound Units of Measure’.
Stock Maintenance In Tally Stocl
5.12
Creation of Simple Unit of Measure

Tally does not provide any pre defined Units of Measure under Inventory. User must create
own Units of Measure in Tally before creating inventory items. A user can create any number of
Units of Measure in Tally depending upon need and requirement of the business. Following are
steps for creating Simple Units of Measure:
1. Go to Gateway of Tally > Inventory Info. > Units of Measure
Inventory Info......
II
1
11
i:
u
2. Select ‘Create’ from the ‘Units’ menu and press Enter.
3. For the field ‘Type’, select ‘Simple’ from the ‘Types of Units’ and press Enter. By defaul;
it will go to ‘Symbol’ press Backspace key to go to the previous field.
4. For the field ‘Symbol’ enter ‘No.’ and press Enter.
5. For the field ‘Formal Name’ enter ‘Numbers’ and press Enter.
6. For the field ‘Number of Decimal Places’ enter ‘0’ and press Enter.
Unit Creation
Type Simple
Symbol Nos
Oispl;
Formal Name: Numbers
u«
Number of Decimal Plac iiG;w yi
Accept?
1,
Yes or No 2
Creation of Compound Unit of Measure

3.
Tally provides opportunity of creating Compound Units also. For example we can cread
compound unit ‘Dozen’ comprising of ’12 Units’. Following are steps for creating compound uni; I
1. Go to Gateway of Tally > Inventory Info. > Units of Measure

2. By default it will go to ‘Symbol’. Press Backspace key to go to the previous field. For the
field ‘Type’; select ‘Compound’ from the ‘Types of Units’ and press Enter.
3. Once the user selects ‘Compound’ for ‘Type’ field, the screen will change and ask for
‘First Unit’.
4. Here, the user can either select ‘First Unit’ from ‘Units’ menu or create the ‘First Unit’
without selecting from the ‘Units’ menu . For example, to create a unit ‘Doz of 12 pc’s’
give ‘Doz’ as the ‘First Unit’.
5. As the unit ‘Doz’ is not yet created, press ‘ALT’ and ‘C’ to create a new ‘Unit Creation
Secondary)’.
6. For the field ‘Symbol’, enter ‘Doz’ and press Enter.
7. For the field ‘Formal Name’, enter ‘Dozens’ and press Enter.
8. For the field ‘Number of Decimal Places’ enter ‘2’ and press Enter.
10. Once the user presses Enter, the ‘Doz’ will automatically get entered in ‘First Unit’.
11. For the field ‘Conversion’, enter ‘12’ and press Enter.
12. For the field ‘Second Unit’, select ‘pc’s’ from ‘Units’ and press Enter.
13. Accept the details by pressing “Yes’ at the end of the screen.
14. Return to the ‘Inventory Info’ menu using Esc key.
Display of Unit of Measure

User 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. To display Units of Measure,
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.
3. The Unit Display screen is displayed as shown.
Alter/ Delete of Unit of Measure

User can make changes in Units of Measure already created by him or he can delete the unit.
To alter/delete Units of Measure:
1. Go to Gateway of Tally > Inventory Info. > Units of Measure > Alter
2. Select the Unit of Melsuretyiu want to alter from the Units list. The Unit Alteration
screen is displayed as shown.
Unit Alteration
Type Simple
Symbol Nos.
Formal Name: Numbers
Number of Decimal Places : 0
3. Make the necessary changes and accept Yes to save or Press CTRL+A for altering unit.
4. Press [ALT]+[D] to deleting the units of measure.
| STOCK ITEM
/ Stock items are goods that a business Purchase, Manufacture or Sell. Stock Items in the
Inventory transactions are similar to ledgers being used in accounting transactions. Therefore
Stock Items are important in an inventory just as ledgers are important in accounting. Like
Ledgers, stock items are the primary inventory entity. You will use stock items while recordir.:
their receipts and issues. This is lowest level of information about your inventory. Each item tha:
is required to be accounted for, needs to be created.
Creation of Single Stock Item

Under Single Stock Item creation, all items are created one by one. Following are steps fat
single stock item creation under Tally.
1. Go to Gateway of Tally > Inventory Info. > Stock Items > Create, and press Enter.
2. For the field ‘Name’, enter name of item like ‘Sony 29 Inch TV and press Enter.
3. For the field ‘Under’, select ‘Sony TV’ from the ‘List of Groups’ and press Enter.
4. For the field ‘Units’ select unit of measure like ‘Number’ in this case.
5. Enter opening balance, if any, in the field ‘Opening Balance’.
6. In Rate of Duty: Enter the rate of duty charged on the item
7. Accept the details by pressing ‘Yes’ at the end of the screen. This will close the creation
screen in default mode.
Creation of Multiple Stock Item

Under Multiple Stock Item creation, many items can created simultaneously. Following are
steps for single stock item creation under Tally.
1. Go to Gateway of Tally > Inventory Info. > Stock items > Create.
2. For the field ‘Under Group’, select ‘All Items’ and press Enter.
3. For the field ‘Name of Item’, enter ‘Sony 29 Inch TV’ and press Enter.
4. For the field ‘Under’, select ‘Sony TV’ and press Enter.
5. For the field ‘Units’, select ‘No’s’ from ‘Units’ and press Enter.
6. Enter ‘Opening Qty’ if any and press Enter.
7. For the field ‘Name of Item’, enter ‘Voltas 1.5 Ton AC’ and press Enter.
I 8. For the field ‘Under’, select ‘Voltas AC’ and press Enter.
9. For the field ‘Units’, select ‘No’s’ from ‘Units’ and press Enter.
10. E nter ‘Opening Qty’ if any and press Enter.
11. Press Enter to come to end of the screen.
Multi Stock Item € reation M/s SG Traders Ctrl + M Q

Under Group : J All Items For 1-Apr-2017
S.NO. Name or Item Under

Units Opening Qty Rate per Amount
Samsung 32" Television

nos
Voltas 1.5ton Air-Conditioner

nos
Hitachi Refrigerator
nos
Samsung 1.5ton Air-Conditioner

nos
Lg 1.5ton Air-Conditioner
nos
Accept ?
Yes or No
Displaying Stock Items

User can display Stock Items in Single mode and Multiple mode. Display will only show the
list of items already created but user cannot make any changes to Stock Items under Display
option. Following are steps for display.
1. Go to Gateway to Tally< Inventory Info.> Stock Items> Display
5.18 ___________________ Stock Maintenance In Tally
2. Select the name of the Stock Item from the List of Items.
3. The Stock Item Display screen display. You cannot make any changes in this screen.
Alter/Delete Stock Items

Altering allow the user to make any required change in item already created. For example if
user has given wrong group to item while creation, he can change the grouping of item in alter
option. He can also delete the item under alter option. Following are steps for alteration or
deletion of item:
1. Go to Gateway to Tally< Inventory Info.> Stock Items> Alter
2. Select the Stock item you want to alter from the List of Items.
3. The Stock Item Alteration screen displays. Make the necessary changes and accept Yes
to save.
4. You can delete a Stock Item only if you have not used it in any transaction entry.
5. Press ALT+D from the Stock Item Alteration screen to delete the Stock Item.
| STOCK GODOWNS IN TALLY

TaJIy provides the option of maintaining location wise inventory of the business. Now day-
even a small business firm could have inventory in more than one physical location. As the size
of the business firm increase there is need to maintain inventory on more and more location
known as ‘Godown’ in Tally. A Warehouse/Godown is a place where stocks/materials are stored
A company can create any number of Godown in Tally. Whenever company makes any purchase
it will specify the Godown where the item will be stored and in the similar manner whih
entering a sales transaction, compnay will specify the godown from where the goods are issuec
Tally.ERP 9 also allows transfer of materials from one godown to another. Company can view
stock reports for a godown or compare a godown with another and can also get consolidate:
stock report of all the Godowns.
Stock Maintenance In Tally________________________________________________ 5.19
Enabling Godown Option in Tally
I
By default Godown option in Tally is disabled and company cannot enter Godown
information without enabling such option. So, a company must activate the Godowns option from
the Inventory Info. menu. Following are steps for enabling Godown option in Tally:
Perform the following steps to activate the Godowns option:
1. Click the Fll: Features button in the button bar of the Inventory Info. menu.
The Company Features menu appears.
2. Select the Inventory Feature
3. The Company Operations Alteration screen appears . To create multiple godowns, set
the Maintain Multiple Godowns option under Storage & Classification to Yes.
4. Set the other options according to your requirement and click Yes, as shown in the
figure.
Company: Mfe SG Traders
inventory Features
BmwB invoicing
integrate accounts and inventory ? Yea Enable invoicing ? Yea
Enable zero-valued transactions ? NO Record purchases in invoice mode ? Yea
Use debit and credit notes ? NO
stortge end Claasncfttlon Record credit notes In invoice mode ? NO
Maintain multiple Godowns 7'fYfTW
Record debit notes In Invoice mode ? NO
Maintain stock cateoorles use separate discount column in invoices ? NO

? No
Maintain batcn-wise details ? NO PurchflM ManeflcnMRt
Set expiry elates tor batches ? No
Track additional costs or purchases ? NO
Use separate actual and billed quantity columns ? NO
5fi!«a Managtrrwnt
□Kl« Practising
Use multiple price levels ? NO
Enable purchase order processlno ? NO
Enable sales order processlno ? NO Diner Features
Enable Job order processlno ? NO use tracking numbers {enables delivery and receipt notes)? No
(Enables l/te options 'Maintain multiple Bottoms' use rejection inward and outward notes ? NO
and 'Lise material in and out vouchers)
Use material in and out vouchers ? NO
use cost tracking for stock item ? NO
Ft: Accounts F2: s -•>> ■ O: Statutory F4 : TSS Audit FS: Add-Ons
■5. The Goddwns option is now activated.
Creation of Single Godown

Tally provide option of creating any number of Godown either one by one or in multiple
number in one go. Following are steps of creating Godowns in Tally under single Godown mode:
1. Select the Godowns option from the Inventory Info. menu.
2. Select the Create option under Single Godown to create a single godown, as shown in
figure.
Gateway of Tally...
Inventory Info......
Godowns
Single Godown
Create
Display
Alter
Multiple Godowns
CReate
Display
AITer
Quit
1. Type the name of the godown beside the Name.

2. Type alias name beside the (alias) option it blank.
3. Type the address of the godown beside the Address.
4. Click beside the Under option and select the name of the godown under which you want
to create the new godown from the List of godows.
5. Set Allow Storage of material to Yes.
6. Click the Yes button, as shown in figure.
Creation of Multiple Godowns

■ Tally provides option of creating more than one account in one go. Following are steps tc
create multiple godowns:
1. Select the Create option under Multiple Godowns from the Godowns.
2. Select the godown name from the List of Godowns menu, beside the Under Godown.
3. Type the name of the sub-godowns under the Name.
4. Click Yes to save multiple godowns, as shown in figure:
Displaying Godown in Tally

After creating a godown, user can view its details. Following are steps to display a godown in
Tally:
1. Select the Display option from the Godowns. The List of Godowns menu appears.
2. Select the godown whose details you want to view.
Godown Display ____________________ ____________ M/s SG Traders
Name : Factory Area
Under : Main Location
Allow storage of materials ? Yes

Use for:
Our stock with third party ? No

Third party stock with us ? No
3. The Godown Display screen appears, displaying the detail of the selected godown, as
shown in figure.
4. Press the Esc key to close the Godown Display
Altering a Single Godown

If you want, you can alter the detail of an exiting godown by using the alter option. Perform
the following steps to alter the detail of a godown:
1. Select the Alter option under Single Godown from the Godowns. The List of
Godowns menu appears.
2. Select the godown that you want to alter from the List of Godowns. The Godown
Alteration screen appears.
3. Make the required change in the detail of the godown and click Yes to save the changes,
as shown in figure.
| GENERATING INVENTORY REPORTS IN TALLY

Tally prepares the inventory reports based on the vouchers you have entered to date. You
can then vary the appearance of reports according to your needs, for example, to make
comparisons between different companies, periods of the financial year, and so on. In each case,
when you display a report, you can step-down to the next level of detail by highlighting the item
and pressing Enter, and you can keep going until you reach an individual voucher. Similarly, you
can step back to higher levels by pressing [Esc]. The special features available for the currently
displayed report are indicated on the button bar, and can be selected with a single click of the
mouse.
In other words, inventory operates in exactly the same way as accounting regarding
displaying, modifying and printing of reports.
Viewing Stock Summary

A Stock Summary is a statement of the stock-in-hand on a particular date. It is one of the
primary inventory statements that is generated in Tally.ERP 9 and updates the stock record in
real time as and when transactions are entered. Stock Summary provides information on stock
groups and shows the quantity details, rate and closing value of the stock items under it.
The statement can be drilled-down, as with all Tallt.ERP 9 reports, and configured to enable
user to view different details, for instance, the total flow of stock can be viewed with a single
report.
Tally.ERP 9 treats Stock Summary as one of the primary statements and makes it accessible
directly from the Gateway of Tally.
To view Stock Summary
1. Go to Gateway of Tally > Display
2. Selcet Inventory Books
3. Group Summary
4. Select Primary to show all items.

5. Select Detailed to show another level of detail.
6. The detailed report which includes sub-groups or Stock Items is displayed as shown:
Viewing Physical Stock Register

A Physical Stick Register is used to record the actual stock of a particular stock item. In the
inventory books, the actual balance of stock in hand as on the date of voucher entry is shown and
the difference on stock is automatically recorded. The cause of discrepancy can be recorded in the
narration field of the physical stock journal voucher. This register summarises the stock
adjustments made during the reporting period. An analysis of the stock recorded in the register
gives us an insight into the causes of discrepancies to ensure that timely action is taken.
To view Physical Stock Register:
Go to Gateway of Tally > Display > Inventory Books > Physical Stock Register
| LONG QUESTIONS
1. What is Inventory? Give its types. What are objectives of Holding Inventory?
2. Explain various capabilities of Tally for dealing with Inventory.
3. Explain the process of maintaining Inventory in Tally.
4. What do you mean by Inventory Masters? What is need of Inventory Masters.
5. What are Inventory Groups? How these Groups are created, altered or displayed?
6. Write a note of creation, alteration and display of Unit of Measurement.
7. What are Inventory Items? How Inventory Items can be created, altered or displayed?
8. Write a note on Generating Inventory Reports in Tally.
| SHORT QUESTIONS
Ql. Explain various inventory features available in Tally.
Ans: Following are the capabilities of Tally relating to Inventory:
1. Stock Groups: Grouping of stock items can be done effectively in tally.ERP-
depending on various parameters. Stock Grouping means placing all the items
having similar characteristics under same category. It not only provides
information regarding one category of goods but also helps in decision making.
2. Stock categories: Stock Category offers a parallel classification of stock item?
Like stock Groups, classification is done based on similarity in behaviour. The
advantage of Categorising items is that you can classify the stock items (based or
functionality) together — across different stock groups, which will enable you :
obtain reports on alternatives or substitutes for a stock item.
3. Multiple Godowns: Locations/godowns are places where Stock Items are storec
You can monitor the location-wise movement of stock by creating multipfc
Godowns. Tally.ERP 9 permits the creating of any number of godowns, unde-
groups and subgroups to match the structure you need. •
4. Ageing Analysis: Stock ageing report in Tally.ERP9 gives the detailed duration
for which the items are lying in the godown. Based on this information decision to
liquidate the items can be taken easily.
5. Re-order Status: Re-order report for each stock item gives the complete details of
Minimum Order Quantity, its balance, re-order level, shortfall and how much
should be ordered helping to maintain optimum levels of stocks.
6. Real Time Integration with Costing: The Inventory system in Tally.ERP 9 is
completely integrated with all other functionalities in real-time. Passing a
Purchase or delivery challan, will update the stocks immediately.
7. Inventory Valuation: Valuation of stocks is done automatically. Average Cost
valuation, FIFO, FIFO Perpetual, Last Purchase Cost, LIFO Annual, LIFO
Perpetual, Monthly Avg. Cost, Standard Cost are the evaluation methods provided
in Tally.ERP9 which allows viewing of stock reports.
8. Comprehensive Recording of Stock Movement: All stock movements are fully
recorded and maintained in Stock Registers in Tally.ERP 9.It can easily and
comprehensively record inventory movement using Goods Receipt Notes, Delivery
Notes, Stock Transfer Journals, Manufacturing Journals as well as Physical Stock
Journals.
9. Management Reports: Tally gives the party-wise details of goods bought and
sold and helps identify good and bad business partners. Stock Query is a unique
single sheet report that gives information on stocks in-hand.
10. Batch-wise or lot-wise Inventory with Expiry: You can use the concept of
Batches or Lots to track stock at the batch level, with expiry date support.
11. Multiple units of measure: Stock Items are purchased or sold on the basis of
quantity. The quantity is measured in Units. In Tally ERP.9, you can define these
quantities as multiples of a unit of measurement, for e.g. dozens, gross, carton, etc
12. Additional costs incurred on purchase: In many situations, more than one
item is purchased and the expense incurred is charged as a lump-sum amount.
However, to arrive at an effective cost for each of the items, the additional costs of
purchase option is used. This process is automated and allocation of the expense to
a stock item can be done on a predefined basis.
13. Price lists: Price Lists are useful for orders and invoices. An up-to-date price list
helps in decision-making even at the lower levels of the organisation and quickens
the sales process. Tally.ERP 9 assists in creating quantity based pricing with a
complex discount structure.
14. Sales and purchase order processing: When an order is received from a
customer for the supply of goods, the details of items, quantities, date of delivery,
etc., are given along with the Sales Order Number. Once these goods are delivered,
this Sales Order is tracked for the order details either in the delivery note or in the
sales invoice.
15. Bill of Materials: A Bill of Materials is a list of constituent items along with
quantity details that can be allotted for the manufacture of a certain product, by
product or equivalent. This facilitates the automatic reduction in stock of the item.
This process of listing the items that make up another item is made possible in
Tally by enabling the Bill of Materials facility.
16. Point of Sale (POS): Point of Sale could mean a retail shop, a check-out counter
in a shop or any other location where a sales transaction takes place. The various
POS equipment used in retail outlets includes Cash registers, card readers and
barcode scanners. It is a computerized Cash Register which adds the sales total,
computes the GST, calculates the change from the money tendered and
automatically adjusts the store’s inventory.
Q2. Explain steps for creating stock group in Tally.
Ans: CREATION OF SINGLE STOCK GROUP
Tally does not provide any pre defined Groups under Inventory. User can create its own
inventory groups depending upon need of the business. This can be done as follows:
1. Go to Gateway of Tally > Inventory Info. > Stock Groups
2. This brings up the ‘Stock Groups’ menu.
3. Select ‘Create’ under ‘Single Stock Group’ and press Enter.
4. This brings up the ‘Stock Group Creation’ screen.
5. For the field ‘Name’, enter ‘Television’ and press Enter.
6. For the field ‘alias’, enter ‘TV’ and press Enter.
7. For the field ‘Under’, select ‘Primary’ from the ‘List of Groups’ and press Enter.
8. For the field ‘Can Quantities of items be ADDED’ enter ‘Yes’ and press Enter.
Q3. What do you mean by Units of Measure?
Ans: Unit of Measure is very important part of inventory management in Tally. It is na
possible to study inventory management in Tally without study Unit of Measure, because
any stock item has to be measured in some specific units for e.g. liquids will be measured
in liters, solid will be measured in kg or items or nos or pieces and so on. We have tn
create a specific unit of measure for whatever type of goods that we stock in »
Business. We can create two types of units in Tally that is Simple Unit & Compoun
Unit.
1. Simple Unit of Measure: A unit of measure that consists of only one Single Un
is called ‘Simple Unit of Measure’. For example: Meters, Kilograms, Inches etc.
2. Compound Units of Measure: Many units are usually a combination of twc
more units. For example, dozen of 12 pieces or box of 10 numbers. They are uni
with multiple factors. Such units are called ‘Compound Units of Measure’.
Q4. Wrtie steps for creation of stock item in Tally.
Ans. Stock items are goods that a business Purchase, Manufacture or Sell. Stock Items in d
Inventory transactions are similar to ledgers being used in accounting transactions. Ea
item that is required to be accounted for, needs to be created. Following are steps f
single stock item creation under Tally.
1. Go to Gateway of Tally > Inventory Info. > Stock Items > Create, and press Enter.
2. For the field ‘Name’, enter name of item like ‘Sony 29 Inch TV’ and press Enter.
3. For the field ‘Under’, select ‘Sony TV’ from the ‘List of Groups’ and press Enter.
4. For the field ‘Units’ select unit of measure like ‘Number’ in this case.
5. Enter opening balance, if any, in the field ‘Opening Balance’.
6. In Rate of Duty: Enter the rate of duty charged on the item
7. Accept the details by pressing ‘Yes’ at the end of the screen. This will close the
creation screen in default mode.
Q5. Write steps for creating Godowns in Tally.
Ans: Tally provide option of creating any number of Godown either one by one or in multiple
number in one go. Following are steps of creating Godowns in Tally under single Godown
mode:
1. Select the Godowns option from the Inventory Info. menu.
2. Select the Create option under Single Godown to create a single godown.
3. Type the name of the godown beside the Name.
4. Type alias name beside the (alias) option it blank.
5. Type the address of the godown beside the Address.
6. Click beside the Under option and select the name of the godown under which you
want to create the new godown from the List of godows.
7. Set Allow Storage of material to Yes.
8. Click the Yes button, as shown in figure.
PRACTICAL QUESTIONS
1. Create a company with name “Radhey General Store”
Insert the following stock items.
Stock items Company/Brand Measurement Unit Quantity Price
Rice Daawat Kilo gram 100 90
Mustard Oil Fortune Litre 80 120
Shampoo Loreal Piece 50 210
Red chili MDH Packet 60 40
Black paper MDH Packet 25 55
Salt Tata Packet 250 12
2. Create a company with name "Alfa Pvt. Ltd." and insert the following stock items
details.
Delhi Godown
Stock item Brand/Company Quantity Price
Television Samsung 400 4000
Iron LG 250 6500
Wire Twisted pair 2000 3500
Punjab Godown
Washing machine Godrej 100 17000
FM Radio Phillips 200 2000
DVD Player Phillips 350 2500
Haryana Godown
Head Phone Samsung 150 12000
Refrigerator Godrej 120 18000
DVDs WriteX 400 45
Pen drive HP 250 450
f-
□ □ □
: RECORDING DAY TO DAY
Z TRANSACTIONS IN TALLY
CONTENTS
□ ACCOUNTING VOUCHERS IN TALLY;
□ TYPES OF PREDEFINED VOUCHERS IN TALLY;
□ VOUCHER ENTRY SCREEN COMPONENT;
□ CONVENTIONAL VOUCHER TYPES IN TALLY;
| ACCOUNTING VOUCHERS IN TALLY

A Voucher is a written document in support of a transaction. Some of examples of the
vouchers are sales invoice, counter foil of a pay-in slip, pay register, purchase invoice, record slip
etc. the vouchers validate the expenditure done on some item or the income earned. It is a proof
that a particular transaction has taken place for the value stated in the voucher. A Voucher is
not only necessary for recording of transaction but it is also necessary for audit the accounts. In
manual accounting, the transactions are recorded through journal entries whereas in Tally they
are dow through voucher entry. Tally not only provides facility of creating a Voucher but it also
provides opportunity of altering a Voucher. Tally has may predefined vouchers that can be used
for recording various transactions. These vouchers are related to record of accounts known as
'Accounting Voucher’ and record of Inventory known as ‘Inventory Vouchers’.
Tally also has feature of Vouchers related to Payroll.
• Accounting Voucher Types: For entering accounting data like sales, purchase, receipt,
payment etc.
• Inventory Voucher Type: For entering Inventory data, like stock journal. Material In.
rejection out etc.
6.2 Recording Day to Day Transactions in Tally
• Payroll Voucher Type: - For input payroll data like attendance, salary, deductions
etc.
While accounting vouchers update accounts only, the inventory vouchers updates both
accounts and inventory.
Gateway of Tally> Accounting Vouchers
| TYPES OF PREDEFINED VOUCHERS IN TALLY

In computerized accounting, we record transactions through voucher entry. A voucher is a
basic recording document. To input any data in Tally we must use a voucher. Recording data
through the voucher entry mode may be called creating a voucher or voucher entry. Tally is pre
programmed with a variety of accounting vouchers, each designed, to perform a different jot
Tally gives us two types of voucher:
1. Conventional
2. Unconventional
1 Conventional Vouchers
Conventional vouchers are used to record all accounting transactions. These vouchers
directly affect to your final Account. It tally we have different types of conventional vouchers:
Types of voucher (Conventional):
Vouchers Shortcuts Functions
Contra F4 Contra entry is used to transfer amount from Cash a/c

to Bank a/c & vise versa.
Recording Day to Day Transactions in Tally 6.3
It involves following:
Cash a/c to Cash a/c
Cash a/c to Bank a/c
Bank a/c to Cash a/c
Bank a/c to Bank a/c
Payment F5 Payment Voucher is used to record all payments by
Cash or Bank.
Receipt F6 Receipt Voucher is used to record all money/fund
received by cash or bank.
Journal F7 Journal Voucher is used to make adjustments in the
accounts.
Sales F8 Sales Voucher is used to record all Sales Transactions
Purchase F9 Purchase Voucher is used to record all Purchase
Transactions.
Debit Note Ctrl+F9 Debit note is used to Debit a particular party's account
for Purchase Return.
Credit Note Ctrl+F8 Credit note is used to Credit a particular party's
account for Sales Return.
2 Unconventional Voucher
These are special vouchers and are used to record provisional or non-accounting transactions.
These Vouchers does not affect the profitability or financial position of the business. These
vouchers are not part of main books of accounts, but still provides the important information.
These vouchers enable valuable reports in terms of provisional accounts and forecasting.
Memos Ctrl+FlO To Create memorandum voucher

Rev Journal F10 To Create Reversing journal voucher
Optional Ctrl+L To Make a voucher as Optional voucher
Post dated Ctrl+T To Make a Voucher as Post Dated Voucher
| VOUCHER ENTRY SCREEN COMPONENTS

The Voucher Entry screen is divided into three parts:
• The Main Voucher Entry
• Button Bar
• Calculator
Main Voucher Entry Area

o
Close
Button
Button
Bar
I. Main Voucher Entry Area

The Main Voucher Entry Area is where you enter all your transactions. This area has fields
for Date, Ledger Name and Amount etc. Following are main parts of main entry area:
1. 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.
2. 2.Voucher Number : Tally.ERP 9 automatically sets the voucher number. You can
change the voucher number manually, if required.
3. Reference : You can enter a reference of your choice. A purchase order number or an
invoice number can be entered as a reference.
4. 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 but
user can change such date.
5. 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.
6. 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.
7. Amount: Amount of transaction is recorded here.
8. Narration : Here you type whatever appropriately describes the transaction
II. Button Bar

The Button Bar area displays buttons that provide quick links to various functions and
features of Tally.ERP 9. Buttons that are relevant to the current task are enabled and the other
buttons are disabled.
III. Calculator Area

The Calculator area provides a working space where you can enter any number of
mathematical formulae for complex calculations. Press Ctrl+ N to activate the calculator area.
| DIFFERENT VOUCHER TYPES IN TALLY:
1. CONTRA VOUCHER (F4)

Contra voucher helps user to make an entry that is related to cash and bank both. Like Cash
deposited into bank account, Cash withdrawals from bank account either or transfer from one
bank account to another bank account. Contra Voucher is used for fund transfers between Cash
and Bank accounts only. 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
etc. like:
• Cash account to Cash account (Main Cash to Petty Cash)
• Cash account to Bank account
• Bank account to Cash account
• Bank account to Bank account
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Accounting Voucher Creation M/s SG Traders
Contra No.1 3J\pr-2017

Monday
Particulars Debit Credit "4: Contra
Cr Cash 10.000.00 FS Receipt)

Cur Bat 15,000.00 Dr
journal
Dr DCB Bank 10,000.00
Cur Bat 10,000.00 Dr
F9. Purchase!
Narration: 10,000.00 10,000.00

Being Cash Deposited in Bank
Accept ?
Yes v No
Q: Quit A: Accept V
1. Select "Accounting Vouchers’ at the ‘Gateway of Tally’ menu and press Enter.
2. This brings up the ‘Accounting Voucher Creation’ screen.
3. Press ‘F4’ at the ‘Accounting Voucher Creation’ screen to pass a ‘Contra Voucher’.
4. For the field ‘To’ under ‘Particulars’, press ‘C’ and select ‘Cash’ from ‘List of Ledger
Accounts’ menu and press Enter.
5. The cursor will jump to ‘Credit’ column, enter the amount and press Enter.
6. Press Enter at the field ‘By’ which will take the cursor to the ‘Particulars’ field. There,
press ‘B’ and select ‘Bank’ from the ‘List of Ledger Accounts’ menu and press Enter.
7. This will take the curser to the ‘Debit’ field. By default ‘5000.00’ appears in the debit
amount column. Press Enter.
8. This brings the cursor to the ‘Narration’ field. Here, press Enter.
2. PAYMENT VOUCHER (F5)

All transaction related to payment (by cash or bank) are recorded in payment voucher. Such
payments can be towards purchases, expenses, acquisition of fixed assets, dues to creditor,
loans/advances given by you or repayment of loans/advances taken by you earlier etc. While
creating ‘Payment Voucher’, all payment vouchers must have at least one Credit to Cash or a
Bank account.
Payment vouchers can be divided into two categories:
1. Cash Payment: Cash payments are the transactions that settle through cash. Payments
are made by cashier through immediate cash.
2. Bank Payment:These are transactions that settle through bank or by way of issuing
cheque. Normally big transactions are settled through cheque. However there is no rule
regarding this, business is free to issue cheques of any amount.
1. Select ‘Accounting Vouchers’ at the ‘Gateway of Tally’ menu and press Enter.
3. Press ‘F5’ at the ‘Accounting Voucher Creation’ screen to get a ‘Payment’ Voucher.
4. Enter Cash or Bank account from where the payment is made under the field account.
5. For the field ‘Particulars’ enter name of expenditure and press Enter.
6. In this way one by one write name of all the accounts for which payment is done.
7. For the field ‘Narration’, enter ‘as being the amount paid as conveyance’ and press
Enter.
3. RECEIPT VOUCHER (F6)

All inflow of money (in cash or through bank) are recorded through receipt voucher. Such
receipts may be towards any income or from your debtors or loans/ advances given earlier
etc. The voucher is similar to the payment voucher except that you debit cash or bank A/cs and
credit the ledger form which you receive. Receipt may be divided into two categories:
(a) Cash receipt: A cash receipt is the one in which transaction is settled through cash or
money receiving through cash, for example Cash brought by owner as capital Rs
100000.
(b) Bank receipt: Bank receipt are the amount received through bank using instruments
like Cheque, DD, Online transfer like NEFT,RTGS etc. When receiving a check or DD,
we will deposit this into our bank account, bank credit the money in our account after
collecting this money from drawer’s bank.
1. Press ‘F6’ at the ‘Accounting Voucher Creation’ screen to make a 'Receipt' Voucher.
2. Write Cash under Account option if amount is received in cash, or Bank if amount is
received through Cheque etc. and press enter
3. For the ‘Particulars’ write name of account from which amount is received like sale or
name of customer etc. and press enter
4. Write the amount against name of ledger in amount column.
5. This brings the cursor to the ‘Narration’ screen.
6. For the field ‘Narration’, enter ‘as being the amount received from sale and press Enter.
4. SALES VOUCHER (F8)

Sale is the most important part of every business. This voucher is used for recording ah
entries related to sales. Both sales of goods and services can be recorded in sales voucher. Beside
including amount of sale in this voucher, we can include other expenditures related to sales like
packing expenses, carriage etc. in this voucher. A sale can be classified into two.
(a) Cash Sale: This term does not require much explanation as its name suggests the
meaning of the term. When goods are sold on cash is called cash sale. In case of cash
sales, you receive payment immediately by cash or by cheque or credit card and since
you do not require to track outstanding.
(b) Credit sale: It is situation when goods or services are sold for Credit, that meane
consideration of sale not received at the time of selling and customer agreed to pay the
money at a later period.
Tally provides the facility to create cash and credit sales entries from Sales voucher. Yo-
have to press F8 function key to activate this type of voucher in tally accounting software. Entr
of sales is done in tally in two ways:-
1. As Voucher - It means that bill is not prepared in tally package. The sale bill is mac-
either manually or in some other software. The accountant prepares the voucher witi
the help of sales bill then he enters the voucher in tally accounting software.
2. As Invoice - It means that invoice is to be generated in tally software itself and there
is no need to generate invoice separately. Under this option Tally issues the invoice ar:
automatically record the Voucher entry also.
Recording Sales Transaction in Voucher Mode
3. Press ‘F8’ at the ‘Accounting Voucher Creation’ screen to get a ‘Sales’ Voucher.
4. Select ‘As Voucher’ option in the side Button Bar.
5. Write date of transaction in the date option
6. In By Particular Column write name of party to which goods are sold.
7. In Debit amount column write amount of the sales value and then press ‘Enter, key.
8. In To Particulars press ‘Sales Account’.
9. In Credit amount write amount of sales and press ‘Enter’ key.

10. In narration column write any narration which you think fit then press ‘Enter key’
11. Tally asks you ‘Yes’ or ‘No’. Here, you just stop for a while and check that every detail is
correct.
12. If there is no mistake than press ‘Y’ or press ‘Enter’ key.
3 Tally.ERP 9_______________________________________________________
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AccountmgVoucherAlteration(Secondary^^^^^^^^^^^^1/^»GLTYaders
Sales
Reference no.:
Particulars Debit
Dr Jain Traders 49,000.00

Cur Bat 39.000.00 Dr
New Ref 1 49,000.00 Dr
Cr Sales
Cur Bat 49.000.00 Cr
Lg 1.5ton 2 nos 24£KM>Qrnos 49,000.00
Narration: 49,000.00 49,000.00

BILL NO 1
j: Quit A: Accept D: Delete X: Cancel
Recording Sales Transaction in As Invoice

3. Press ‘F8’ at the ‘Accounting Voucher Creation’ screen to get a ‘Sales’ Voucher.
f.
4. Select ‘As Invoice’ option in the side Button Bar.
5. Write date of transaction in the date option
6. Under ‘Party’s Name’ write name of party to whom goods have been sold.
7. Under ‘Sales Ledger’ write ‘Sales Account’
8. Under ‘Particulars’ write ‘Sales Account’ if you are maintaining accounts only or name
of items if you are maintaining accounts with inventory.
9. Under ‘amount’ write amount of transaction.
10. In ‘Narration’ write any narration and press ‘Enter’
11. Now, tally will ask you ‘Yes’ or ‘No’

12. If every thing is all right then press ‘Y’
3 Tally.ERP 9 - 5:
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Accounting Voucher Alteration (Secondary) M/s SG Traders Ctrl + M 0 FI: Krlwfmis
Sales No 1 3-Apr-2017| ft; Date :

Reference no: Monday
Party A/c name Jain Traders

F4r.Contra
Current balance 39,000.00 Dr
Sales ledger Sales F5; Payment
Name of Item Quantity Rate per Amount FS: Receipt
|F7rJournar
Lg 1,5ton 2 nos 24,500.00 nos 49,000.00
F9: Purchase
J End of List
:’no'; ft-.-
S: Stock Query
iV: As Voucher
[T: Post-Dated
Narration 2 nos 49,000.00
BILLNO 1
Q: Quit A: Accept D: Delete X: Cancel
TaHtMAlN --> Gateway of Tally -> Display Menu-> Account Books-> Sales Register --> Voucl;© Tally Solutions Pvt Ltd., 1 Sat. IS Jun, 2£jl4:3W9
5. PURCHASE VOUCHER (F9)

In accounting Purchase refers to Goods purchased by business with the objective of sales or
for use in the production of goods for sales. Thus every item bought in business is not recorded in
purchase. For example purchase of furniture for the purpose of use in business is recorded in
furniture account and not under purchase account. Purchase can be made on cash basis or credit
basis. In Tally purchase can be recorded in two modes.
(a) As Voucher: ‘Voucher Mode’ is a style of recording the transaction as it is done in cas
of manual accounting system by entering Debit and Credit accounts.
(b) As Invoice : This is mode where you can enter transactions in the style of an invoic
You can choose any mode for entering transactions. Further voucher mode has tv
options that is item invoice and accounting invoice. Item Invoice is the invoice in whii
stock item can be selected and its movement can be recorded. Also item wise bills ci
be printed. In Accounting Invoice only the purchase ledger can be selected and no sta
item during voucher entry. This type is useful for entering service transactions as the:
will not be any stock item.
Following are steps for recording ‘Purchase Voucher in Tally’

3. Press ‘F9’ at ‘Accounting Voucher Creation’ screen to pass a ‘Purchase’ Voucher.
4. For the field ‘Ref.:’, press Enter. It is optional.
5. For the field ‘Name’, enter name of vendor and press Enter.
6. For the field ‘Particular’, enter Purchase Account and press Enter.
7. In the ‘Amount’ field write the amount of Transaction and press enter.
8. It will take the cursor to the ‘Narration’ field.
9. For the field ‘Narration’, enter narration of the transaction and press Enter.
10. Accept the details by pressing ‘Yes’ at the end of the screen
ID Tally.ERP 9 aw ♦ ■
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Accounting Voucher Alteration (Secondary)
I No 1
: Supplier invoice no. 101
Party A/c name

Current balance
Purchase ledger
Taily_MAlN ■■ • Gateway of Tally --> Display Menu ■> Account Books Purchase Register - V. O Tally Solutions Pvt Ltd, 1 &{ Fully charged (100%,
6. CREDIT NOTE (Ctrl+F8)

A Credit Note is a document sent by a seller to the buyer or, in other words, a vendor to a
: archaser, notifying that a credit has been made to their account against the goods returned by
me buyer. Credit note is issued for value of the goods returned by the customer. Under this a
form or letter sent by a seller to a buyer, stating that a certain amount has been credited to the
buyer's account. A credit note is issued in various situations to correct a mistake, such as when
(1) an invoice amount is overstated, (2) correct discount rate is not applied, (3) goods spoil within
guaranty period, or (4) they do not meet the buyer's specifications and are returned. It is also
called credit memo.
By default this feature is disabled in Tally. So for making entry through this voucher first,
we need to enable the feature. For enabling the feature from Gateway of Tally, press Fll or click
on Features Button from Right Side Button Menu. Accounting Features Screen will appear.
Select 'Yes' to option Use Debit / Credit Notes as shown below screen:
Compan;: SQ Tratdwrw
Accounting Fiaturaa
OWWTBII Invoicing
Maintain accounts only ? No Enable invoicing ________ ______________________ ? Yoat
Integrate accounts and inventory ?Yea (Record purchases in invoice mode Yes
Use debit and credit notes ---------------------------------
Use Income and Expenses A/c instead cf Profit and Loss A/c? No
Record credit notes in invoice mode ? Yes
Enable multi-currency ? No Record debit notes in invoice mode ? Yes
Outstanding Mainmrunl Budgrti and Scenario Management

Maintain bill-wise details ?Yea Maintain budgets and controls ? No
For non-trading accounts also ? No Use reversing journals and optional vouchers ? No
Activate interest calculation ? No
Use advanced parameters ? No Sinking Futum
CowtlProflt Ctntru Minigimint Enable cheque printing ? Yea
Maintain payroll ? No Set/aiter transaction types ? No
Maintain cost centres ? No Set/aiter banking features ? No
Use cost centre for job costing ? No Set/aiter post-dated transaction features ? No
Maintain more than onepayroll or cost category ? No
Use pre-defined cost centre allocations in transactions? No
Show opening balance for revenue items in reports ? No
QtfiorFc Bitune
Enable zero-valued transactions ? No
Maintain multiple mailing details for company and ledgers? No
Set/aiter company mailing details ? No
Enable company logo ? No
Mark changed vouchers ?EEJI
Following are steps for recoding Credit Note:

1. Go to Gateway of Tally > Accounting Vouchers.
2. Click on Ctrl+F8: Credit Note on the Button Bar or press Ctrl+F8.
3. Change the date by pressing F2 in which debit note is entered.
4. In Original Invoice No write the Invoice number of sale bill.
5. Under Original Invoice Date write the date of Sales invoice.
£ 6. In Party A/c Name write the name of party who returned the goods.
7. In Sales Ledger write the Sales Return Account or Return Inward Account.
8. In Name of Item write the name ofcommodity retuned by customer.
9. Enter amount of the commodity returned.
10. Enter narration if required.
11. Press enter and accept.
7. DEBIT NOTE (Ctrl + F9)

Debit note is a document issued by the purchaser of goods to the seller. Usually it takes place
in returning the goods that are purchased on credit basis. Debit note consists of many details
about the Goods returned. Like total number of quantity and price , any trade discounts , special
discounts allowed at the time of purchase. From accounting point of view Debit note indicates
'-hat the account of the party to whom it is being issued, is debited in the books of the sender of
iebit note. Debit note is used for reducing the receivables that we have to get from any party like
aur debtors. Following are common Reasons for which Debit Note is issued:
• By buyer, on purchase return
• By buyer, on receiving damaged goods or short quantity.
• By buyer, if he is overcharged or seller agrees to give discount.
• By seller, if he by mistake undercharged the buyer.
Following are steps for recording Debit Note
1. Select "Accounting Vouchers’ under ‘Gateway of Tally’
2. Select ‘Debit Note’ by pressing ‘CTRL F9 - Debit Note’
3. Now, select date icon or press’F2’ key.
4. Write the date of voucher then press ‘Enter’ key.
5. In Original Invoice No write the Invoice number of purchase bill.

6. Under Original Invoice Date write the date of purchase invoice.
7. In Party A/c Name write the name of party to whom return is made.
8. In Purchase Ledger write the Purchase Return Account or Return outward Account.
9. In Name of Item write the name of commodity retuned to vendor.
10. Enter amount of the commodity returned.
11. Enter narration if required.
12. Press enter and accept.
g|Tally.£RP9
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■Accounting Voucher Creation M/s SG Traders ~1; M/Wd
Debit Note I No.1 4-Apr-2017|
Originalinwiceno.: 101 Date Mpr3017 Tuesday!
Party A/c name Jindal Elctronics

F4:: Contra
Current balance 4,78,000.00 Cr
Purchase ledger : Purchase
F6; Payment
Name of Item Quantity Rate per Amount RS: Receipt

F7‘ Journal
22,000.00
F8: Sates
Lg 1.5ton 1 nos 22,000.00 nos
FS. Creditte
ra.LurSase
J End of List
S.,St«kQuay
IV: As Voucher
: :-E '
Narration: 1 nos 22,000.001
BEING GOODS RETURN

I F11: Features
Q: Quit I A: Accept: D: [FI 2: L-C’fifhjijrs
BSSlHiSI
Ta&KA1N’ -> Gateway of Tally —> Accounting Voucher Creatic :O Tally Solutions Pvt Ltd., 1 Sat 16 Jun, 2f 14 38 00
8. JOURNAL (F7)
Journal voucher entry mode is a special voucher mode in Tally where we can pass almost all
types of accounting transactions. However, there are separate voucher mode for each type c:
transactions are available in Tally such as- Contra mode for Cash and Bank transaction.
Payment mode for all Cash and Cheque payments, Receipt mode for all Cash and Cheque
receipts, Purchase mode, Sales mode, Purchase Return mode, Sales Return mode and so on. AH
these transactions can also be passed through one single voucher mode that is Journal Vouche-
mode. However, generally these transactions are recorded through specific vouchers. Normally
Journal voucher mode is used to record special transaction which cannot be recorded using
Payment, receipt, contra, sales, purchase vouchers etc. Some of the examples of such
transactions are
• Adjusting journal entries
• Outstanding Expense
• Pre-paid Expense
• Accrued Income
• Unearned Income
• Transfer journal entries
• Correcting entries
• Purchase and sale of fixed Asset on account
• Depreciation on Asset
Following are steps for recording Journal Voucher in Tally
1. Select ‘Accounting Vouchers’ under ‘Gateway of Tally’
2. Select ‘F7 — Journal’ from the list of Journals.
3. Now, select date icon or press’F2’ key.
4. First, in Dr. Particular Column, write name of account to be debited
5. In Debit amount column write amount of transaction and then press ‘Enter, key.
6. In Cr. Column name of account to be credited.
7. In Credit amount write amount of transaction and press ‘Enter’ key.
8. In narration column write any narration which you think fit then press ‘Enter key’
9. Finally, Tally asks you ‘Yes’ or ‘No’
10. If there is no mistake then press ‘Y’ and accept. ■
13Tally.ERP 9 , -r < ,
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.. ... ...**’. ~. ~~. * .......... ~~
O. Quit A: Accept = eiete] X: Cancel] * i j
TahyLfGAIN — > Gateway of Tally Accounting Voucher Creation i© Tally Solutions Pvt Ltd., 1 Sat, 16 Jun, 2(14:39:18
| LONG QUESTIONS
1. What do you mean by Voucher in Tally? Name different types of Vouchers available in
Tally.
2. What is Purchase Voucher? How transactions are recorded in Purchase Voucher? Also
give method of altering purchase voucher.
3. What is Sale Voucher? How it is Created?
4. Write a detailed note of Debit Note and Credit Note Vouchers available inTally.
5. Explain different cash vouchers available in Tally. How these vouchers can be
recorded?
6. Explain different types of non conventional vouchers available in Tally. What is the role
of these non-conventional vouchers?
7. What is Memorandum Voucher? How it is different from optional voucher? Give role of
both of these vouchers.
8. What is post dated voucher? Why this is created?
9. Write detailed note on Receipt Voucher, Payment Voucher, and Contra Voucher.
| SHORT QUESTIONS
Ql. Explain different types of Vouchers in Tally.
Ans. Tally has may predefined vouchers that can be used for recording various transactions.
These vouchers are related to record of accounts known as ‘Accounting Voucher’ and
record of Inventory known as ‘Inventory Vouchers’. Tally also has feature of Vouchers
related to Payroll.
• Accounting Voucher Types: For entering accounting data like sales, purchase,
receipt, payment etc.
• Inventory Voucher Type: For entering Inventory data, like stock journal, Material
In, rejection out etc.
Payroll Voucher Type: - For input payroll data like attendance, salary, deductions
etc.
Q2. What are conventional vouchers in Tally?
Ans. Conventional vouchers are used to record all accounting transactions. These vouchers
directly affect to your final Account. It tally we have different types of conventional
vouchers:
Types of voucher (Conventional):

Contra F4 Contra entry is used to transfer amount from Cash a/c
to Bank a/c & vise versa. It involves following:
Cash a/c to Cash a/c
Cash a/c to Bank a/c

Bank a/c to Cash a/c
Bank a/c to Bank a/c
Payment F5 Payment Voucher is used to record all payments by
Cash or Bank.
Receipt F6 Receipt Voucher is used to record all money/fund
received by cash or bank.
Journal F7 Journal Voucher is used to make adjustments in the
accounts.
Sales F8 Sales Voucher is used to record all Sales Transactions
Purchase F9 Purchase Voucher is used to record all Purchase
Transactions.
Debit Note Ctrl+F9 Debit note is used to Debit a particular party's account
for Purchase Return.
Credit Note Ctrl+F8 Credit note is used to Credit a particular party's
account for Sales Return.
Q3. What are conventional vouchers in Tally?
Ans. These are special vouchers and are used to record provisional or non-accounting
transactions. These Vouchers does not affect the profitability or financial position of the
business. These vouchers are not part of main books of accounts, but still provides the
important information. These vouchers enable valuable reports in terms of provisional
accounts and forecasting.
Memos Ctrl+FlO To Create memorandum voucher
Rev Journal F10 To Create Reversing journal voucher
Optional Ctrl+L To Make a voucher as Optional voucher
Post dated Ctrl+T To Make a Voucher as Post Dated Voucher
Q4. Name various accounting vouchers available in Tally.
Ans. Following are accounting vouchers available in Tally.
1. Contra
2. Payment
3. Receipt
4. Journal
5. Sales
6. Purchase
7. Debit Note
8. Credit Note
Q5. What is Debit Note.
Ans. Debit note is a document issued by the purchaser of goods to the seller. Usually it takes
place in returning the goods that are purchased on credit basis. Debit note consists of
6.18 Recording Day to Pay Transactions in Tally
many details about the Goods returned. Like total number of quantity and price , any
trade discounts , special discounts allowed at the time of purchase. From accounting
point of view Debit note indicates that the account of the party to whom it is being
issued, is debited in the hooks of the sender of debit note. Debit note is used for reducing
the receivables that we have to get from any party like our debtors. Following are
common Reasons for which Debit Note is issued:
• By buyer, on purchase return
• By buyer, on receiving damaged goods or short quantity.
• By buyer, if he is overcharged or seller agrees to give discount.
By seller, if he by mistake undercharged the buyer.
Q6. What is Credit Note?
Ans. A Credit Note is a document sent by a seller to the buyer or, in other words, a vendor to a
purchaser, notifying that a credit has been made to their account against the goods
returned by the buyer. Credit note is issued for value of the goods returned by the
customer. Under this a form or letter sent by a seller to a buyer, stating that a certain
amount has been credited to the buyer's account. A credit note is issued in various
situations to correct a mistake, such as when (1) an invoice amount is overstated, (2)
correct discount rate is not applied, (3) goods spoil within guaranty period, or (4) they do
not meet the buyer's specifications and are returned. It is also called credit memo.
PRACTICAL QUESTIONS
1. Record the following Vouchers
01 01-02-2017 Maruthi & Sons Started business with capital of? 2,00,000
02 02-02-2017 Paid into Indian bank ? 50,000
03 03-02-2017 Bought goods for cash 14,700
04 06-02-2017 Sold good to JJ Traders on Credit 7,000
05 09-02-2017 Cash Sales 19,000
06 11-02-2017 Received Commission 400
07 13-02-2017 Received seven tables from Amirtha Stores at 500 each
08 15-02-2017 Bought goods from Vignesh 2,000
09 21-02-2017 Paid cash to Amirtha Stores
10 26-02-2017 Paid rent 1,000
11 27-02-2017 Paid Salary 2,500
01 03-07-2017 Varun started business with ? 75,000
02 05-07-2017 Goods purchased 6,000
03 10-07-2017 Good sold ? 8,000
04 15-07-2017 Goods purchased from Mathew ? 21,000
05 17-07-2017 Goods sold to Sanjay ? 24,000
06 18-07-2017 Goods returned to Mathew ? 1,300

07 20-07-2017 Goods returned by Sanjay ? 500
08 23-07-2017 Opened an account with HDFC Bank ? 15,000
09 25-07-2017 Drew from Bank ? 4,000
10 25-07-2017 Furniture purchased ? 3,500
11 27-07-2017 Sanjay settled his account
12 28-07-2017 Settled Mathew’s Account
13 29-07-2017 Insurance Premium paid ? 350
14 29-07-2017 Electric Charges paid ? 250
15 30-07-2017 Drew for Personal use ? 1,300
16 31-07-2017 Salary paid ? 1,500
01/04/2017 Received capital by cash 2,00,000
01/04/2017 Cash Deposited in HDFC Bank 50,000
04/04/2017 Credit purchases from Kiran Traders 20,000 (Inv.No. 122)
04/04/2017 Credit purchases from Pooja Traders 20,000 (Inv.No. 433)
11/04/2017 Credit purchases from Kiran Traders 20,000 (Inv.No. 144)
11/04/2017 Credit purchases from Pooja Traders 20,000 (Inv.No. 444)
11/04/2017 Returned Goods to Kiran Traders 5000 (Inv.No. 122)
13/04/2017 Returned Goods to Pooja Traders 5000 (Inv.No. 444)
16/04/2017 Credit Sales to Ram & Ram 50,000 (Inv.No. 1)
16/04/2017 Credit sales to Kavitha & co 50,000 (Inv.No. 2)
16/04/2017 Cash Sales 20,000 (Inv.No. 3)
18/04/2017 Credit Sales to Ram & Ram 50,000 (Inv.No.4)
18/04/2017 Credit sales to Kavitha & co 50,000 (Inv.No. 5)
18/04/2017 Goods returned by Ram & Ram 5,000 (Inv.No. 1)
18/04/2017 Goods returned by Kavitha & co 5000 (Inv.No. 5)
21/04/2017 Payment made by cheque to Kiran Traders 30,000 Ch. No. 161122
21/04/2017 Payment made by cheque to Pooja Traders 30,000 Ch. No. 161123
f21/04/2017 Received cheques from Ram & Ram 75000 Ch. No. 320321
21/04/2017 Received cheques from Kavitha & co 75000 Ch. No. 112310
4. Record the following Cash Vouchers:
Payment Made by cash:
26/04/2004 Paid to Petty cash by cash 1,000
26/04/2004 Furniture purchased 20,000
26/04/2004 Salaries paid 10,000
26/04/2004 Rent 4,000
26/04/2004 Electricity charges 3,000

26/04/2004 Telephone charges 3,500
26/04/2004 Cash Purchases 5,000
Payments Made by Petty Cash:
30/04/2004 Conveyance 150
30/04/2004 Postage 100
30/04/2004 Stationeries 200
30/04/2004 Staff Welfare 100
30/04/2004 Stationeries purchased from Jain & Co 1500 on Credit
30/04/2004 Depreciation on Furniture 10%
5. Enter the following transactions by creating relevant accounts and groups and show
sales register and purchase register.
1. Purchased goods from Ram ?10,000
2. Purchased goods from Roshan ?5,000
3. Purchased goods from Mohan ?20,000
4. Sold goods to Leela ?25,000
5. Sold goods to Praveena ?30,000
6. Sold goods to Praveen ?20,000.
□ □□
RECEIVABLES AND
PAYABLES MANAGEMENT
IN TALLY
CONTENTS
□ RECEIVABLES MANAGEMENT;
□ PAYABLES MANAGEMENT;
□ BILL WISE DETAIL IN TALLY;
| RECEIVABLES MANAGEMENT
Introduction to Receivable Management

Working capital management is one of the important area of financial management,
mventory, Cash, Receivables and Payables are main components of working capital. Receivables
lanagement is one of the crucial area of working capital management. It constitutes a
substantial portion of current assets of a firm as substantial amounts are involved in it. Proper
management of receivables is very important for effective management of working capital.
The term ‘receivables’ refers to debt owed to the firm by the customer resulting from sale of
:~jods or services in the ordinary course of business. These are the funds blocked due to credit
sales. Receivables are also known as trade receivables, accounts receivables, book debt, sundry
sebtor and bills receivables etc. According to Robert N. Anthony, "Accounts receivables are
imounts owed to the business enterprise, usually by its customers. Sometimes it is broken down
mto trade receivables and accounts receivables; the former refers to amounts owed by customers,
sad the latter refers to amounts owed by employees and others". Management of receivables is
7.2 Receivables and Payables Management In Tally
also known as management of trade credit. It is the money receivable on some future date for the
credit sale of goods and services made at present.
In today’s competitive business most of business transactions are made on credit basis.
Business firms use credit sales as an important tool for sales promotion. Offering goods on credit
not only increase sales volume but also increase profitability as normally credit sale price is
higher than cash sale price. However, this comes at a cost and also increase the risk factor
associated with the business. In credit sale there is a time gap between date of sale and date of
amount collection. As these late payments stretch out over time, they may cause substantial drop
in a company's profit margin. Further there are chances of bad debts also. There are many
customers who fails to pay the money resulting into huge losses. Besides this firm have to make
efforts for collection of the debts. On basis of this we can say that the receivable management is
the aspect of a firm's working capital management, which is concerned with determining
optimum credit policy of the business.
Objectives of Receivable Management

The receivables management is one of the most crucial area of working capital management.
It is a multi-dimensional concept. However, the main objective of firm's receivable management
is to determine credit policy of the firm that leads to effective management of working capital. It
must ensure maximization of profits and must contribute to the maximization of value of the
firm.
Following are some of the main objectives of Receivable management:
1. Increase in Sales:- Credit policy of any firm has direct bearing on the sales made by
the firm. So, the main objective of receivables management is to increase the total sal-
volume of the business. Offering goods on credit attract those customers who are no:
having ready cash for making the cash purchases. So, it this way it can increase the
sales.
2. Increase in Profits:- Selling goods on credit basis increase the sales on one hand bu:
also increase cost on the other hand. Offering goods on credit not only results intc
blockage of funds leading to financial costs but also results into losses due to bad debts.
The main objective of receivables management is to ensure maximization of profits
earned by the business.
3. Retaining Customers:-In today’s competitive business world, almost every busines?
concern is offering goods on credit basis. So, Goods are sold on credit to protect the
current sales against emerging competition. If a business fails to sold goods on credi:
the customer may shift to the competitor who allow credit facility to them.
4. Reducing Administrative Costs:- When a firm sells goods or services on credit, i:
has to bear some administrative costs. These cost include cost of making collection froc
the customers and cost of maintaining records of the customers like additional stafi
accounting records, stationery etc. Company also incurs some cost on acquiring
information about the credit worthiness of the customer. One of main objective afl
Receivables management is to minimize these costs.
5. Minimizing Capital Investment:- There is a time gap between sales of goods and it.-
collection from the customers. Meanwhile, the firm has to pay for purchase, wage?
salary and other expenses. Therefore, the firm needs additional funds, which may be
Receivables and Payables Management In Tally 7.3
arranged either from external sources or from retain earnings. Offering huge credit
may lead to high capital investment in receivables. So, one of the key objective of
Receivable Management is to minimize such capital investment.
6. Minimizing Default cost:-Despite all the effort by the management, the firm may not
be able to recover full amount due from the customers. Such dues are known as bad
debts or default cost. Receivables management aims at minimizing such default cost by
proper analysis of credit worthiness of the customer.
7. Maximizing Shareholder’s Wealth:- Credit policy of a firm directly affects its
goodwill and hence value to share in the market. So, one of the key objective of the
receivables management it to maximize the wealth of the shareholders.
Cost of Maintaining Receivables

Receivables are one of the major component of working capital management. Trade
receivables on one hand increase sale revenue but on the other hand, these are subject to certain
direct and indirect costs. More will be the amount of receivables, higher will be the cost
associated with maintain receivables.
Following are some of the direct and indirect costs associated with receivables: -
1. Administrative Cost: Administrative costs are mainly associated with record
maintenance of debtors and amount incurred on collection of amount from debtors.
Whenever credit sales takes place, firm has to maintain full records of the customer for
amount due from them. They have to send reminders to customers for making timely
payment. This needs additional accounting staff and also increase cost of stationery etc.
Further investigation into creditworthiness of the customer is required before making
the sale. As a result the firm is required to analysis a large number of accounts either
through outside specialist agencies or form its own staff involving certain cost.
2. Capital Cost: There is a time gap between the date of sale of goods to the customer
and the date of payment made by the customer. This time gap leads to blockage of its
financial resources of the firm. As a consequence, a firm is liable to make arrangements
for meeting such additional obligations from sources other than sales. These funds are
subject to certain costs like payment of interest. Thus, a firm allowing receivables is
subject to additional capital costs.
3. Production and Selling Cost: These costs are directly proportionate to the increase
in sales volume. In other words, production and selling cost increase with the very
expansion in the quantum of sales. In this respect, a firm confronts two situations;
firstly when the sales expansion takes place within the range of existing production
capacity, in that case only variable costs relating to the production and sale would
increase. Secondly, when the production capacity is added due to expansion of sales in
excess of existing production capacity. In such a case incremental production and
selling costs would increase both variable and fixed costs.
4. Delinquency Cost: Many a time it happens that the period of payment becomes due
(i.e., after the expiry of the credit period) but amount is not received from the
customers. In such case a firm have to incur certain additional costs known as
delinquency cost. It includes blocking up of funds/cost of financing for an extended
period; and cost of extra steps to be taken to collect the over-dues, e.g., reminders, legal
charges etc.
5. Default Cost: Similar to delinquency cost is default cost. Delinquency cost arises as a
result of customers delay in payments of cash or his inability to make the full payment
from the firm of the receivables due to him. Default cost emerges a result of complete
failure of a defaulter (customer) to pay anything to the firm in return of the goods
purchased by him on credit. When despite of all the efforts, the firm fails to realize the
amount due to its debtors because of him complete inability to pay for the same. The
firm treats such debts as bad debts, which are to be written off, as cannot be recovers in
any case.
Factors Affecting Size of Receivables

There are a number of factors that influence the size of receivables of a firm. The following
are some of the factors that affect the size of receivables.
1. Size of credit sales:- The volume of credit sale is the first factor which increase or
decrease the size of receivables. The higher the ratio of credit sales to total sales,
figures of receivables will also be higher.
2. Credit policy:- A firm may have strict or liberal credit policy. Strict credit policy
means firm is not allowing much credit to the customers. On the other hand, liberal
credit policy means offering more credit to the customers. A firm with conservative
credit policy will have a low size of receivables while a firm will liberal credit policy will
be having more receivables.
3. Terms of Trade:- The size of receivables also depends upon the term of trade. The
period of credit allowed and terms and conditions of payments offered to customers are
linked with receivables. If credit Period allowed is more than receivables will be alsc
more.
4. Expansion Plans:- When a concern wants to expand its activities, it will have to enter
new market. To attract more customers, it will give incentives in the form of credit
facilities. So, during the early stages of expansion more credit to customer will result
into increase in size of receivables.
5. Relation with profits:- The amount of credit allowed to customer depends upon the
amount of profit margin available to the firm. In case firm is working on high profit
margin, they have more scope of offering credit to the customers. On the other hand
firms working on low profit margin can’t offer more credit due to costs associated with
credit sale.
6. Credit Collection Efforts:-Size of receivables depends upon the efforts put in by the
business for collection of credit given to the customers. The collection of credit should be
streamlined. The customers should be sent periodical reminders if they fail to pay in
time. If firm is putting more efforts in collection of customers, its receivables will be less
or otherwise it will be more.
7. Habits of Customers:- The paying habits of the customers also affects the size
receivables. The customer may be in the habit of delaying payments even though the;
are financially sound. The concern should remain in touch with such customers anr
should make them realize the urgency of their needs.
•y
8. Seasonal nature of Sales:- Some business have stable sale throughout the year and
some business have seasonal nature of sale. Stability of sales refers to the elements of
continuity and consistency in the sales. In other words the seasonal nature of sales
violates the continuity of sales in between the year. So, the sale of such a business in a
particular season would be large needing a large a size of receivables.
9. Cash Discount:- Cash discount refers to the amount offered as deduction by the
business to customers for making payment before the due date. Cash discount attracts
the customers for payments before the lapse of credit period and reduces the working
capital requirements of the concern.
10. Bills Discounting and Endorsement:- Sometime firm opts for discounting its bills,
with the bank or endorsing the bills to the third party, for meeting its obligations. In
such circumstances, it would lower the level of receivables required in conducting
business.
11. Other Factors:- There are certain general factors such as price level variations,
attitude of management type and nature of business, availability of funds and the lies
that play considerably important role in determining the quantum of receivables.
Different Aspect of Receivables Policy

A firm’s credit policy has a great bearing on working capital management of the business.
Liberal credit policy increases the vol-ume of sales but at the same time it also increases the
investment in receivables. Therefore, examination of costs and benefits associated with credit
policy is one of the important tasks of a finance manager. The total volume of accounts receivable
depends on the credit sale made by the concern and debt collection policy of the concern. The size
of accounts receivable depends on the level of sales, credit policy, terms of tirade, efficiency of
collection, etc. A larger size of accounts receivable increases profitability and reduces liquidity
and vice versa. Therefore, accounts receivable need to be maintained at an optimum size.
Receivables Management policy of any business involves following main aspects:-
• Forming Credit policy
• Executing Credit policy
• Formulating and executing Collection Policy
1. Forming Credit Policy: The first aspect of effective Receivables policy is to formulate
Credit policy of the business. This is very crucial aspect and has a long term impact on the
working capital management of the business. Credit policy has significant impact on the
profitability of a concern but it should be ensured that the profit on additional sales arising out of
liberal credit policy is sufficiently higher than the cost involved for maintaining additional
receivables.
Formulation of credit policy includes the decision relating to following matters:
(a) Credit standards: The first part of credit policy is to decide credit standard. A firm
has a wide range of choice in this respect. On one side firm may decide not to extend
credit to any customer even if that customer is enjoying very high creditworthiness. At
? at the other end, firm may decide to grant credit to all customers without considering
their credit rating. However, in reality both policies are wrong. Granting no credit may
lead to lower sales and granting credit to everybody may lead to very high bad debts. So
a firm must very carefully decide the credit standard.
(b) Credit period: After deciding credit standard i.e. decision regarding customers tc
whom credit is to be granted, firm must decide credit period. Credit period refers to the
length of time customers are allowed to pay for their purchases. In most of cases this
period is between 15 days to 60 days. Longer credit period pushes sales up by inducing
existing customers to purchase more and attracting additional customers. This is.
however, accompanied by a larger investment in receivables and a higher incidence of
bad debt loss. Shortening of the credit period would have opposite influences.
(c) Cash discount and discount period: The cash discount is granted by the firm to its
debtors, in order to induce them to make the payment earlier than the expiry of credi*
period allowed to them. Cash discount is expressed is a percentage of sales. A cash
discount term is accompanied by (a) the rate of cash discount, (b) the cash discount
period, and (c) the net credit period. For instance, a credit term may be given as "1/10
Net 30" that mean a debtor is granted 1 percent discount if he settles his accounts
within 10 days of purchasing the goods, otherwise the credit period is 30 days. Change
in cash discount can have both positive or negative implication on the credit policy. Any
increase in cash discount would directly increase the volume of credits sale but at the
same time it will negatively affect the profit margin per unit of sale due to reduction of
prices.
2. Executing Credit policy: After a firm formulates its credit policy, next step is t:
implement such policy. It is the stage when firm actually decides the credit to be offered t:
particular party.
It involves following steps:
(a) Collecting credit Information:- The first step in implementing credit policy is t
collect information about the customer to check his creditworthiness. Such information
may be availed from financial statements, credit rating agencies, reports from bank
firms own record etc. However, such information can be collected upto a limit as
collecting such information is time consuming task and also involves cost on collectio:
of information. Firm must compare the cost incurred in collecting the information an:
the benefits from reduced bad debts for deciding level of information to be collected.
(b) Credit Analysis:- After collecting the required information, the finance manage:
should analyse such information to find out the credit worthiness of potential
customer’s and also see whether customer satisfies the credit standards laid by the firm
or not. The credit analysis will determine the degree of risk associated with the
customer.
(c) Credit Decision:- After determining creditworthiness of the applicant, finance
manager has to decide whether or not credit facilities should be provided to him. For
this purpose, the creditworthiness of the applicant is matched against establishe:
credit standards. Customers not satisfying the standard is refused to grant creek*
facilities. There is another possibility that the firm may insist on strong and reliable
third party guarantee against risky applicant. This will provide protection to the fire:
against risk of any loss caused by the customer’s default to make payment.
(d) Financing Investments in Receivables:- Accounts receivables block a part fl
working capital. Efforts should be made that funds are not tied up in receivables f:r
longer periods. The finance manager should make efforts to get receivables financed -til
i I
Receivables and Payables Management In Tally________________________________7.7
that working capital needs are met in time. A firm may get it bills receivables
discounted with bank. Besides banks, there are some other agencies that can buy
receivables and pay cash for them. This facility is known as factoring. Factoring are of
two types i.e. with or without recourse. In without recourse factoring any bad debt loss
is taken up by the factor but if it is with recourse factoring then bad debts losses will be
recovered from the seller.
3. Collection Policy: The collection of amounts due from the customers is very important.
The collection policy may be termed as strict or lenient collection policy. A strict policy of
-X. collection will involve more efforts on collection. Such a policy has both positive and negative
effects. This policy will enable early collection of dues and will reduce bad debt losses. The money
collected will be used for other purposes and the profits of the concern will go up. On the other
hand a rigorous collection policy will involve increased collection costs. It may also reduce the
volume of sales. A firm may take various steps for ensuring timely collection of dues from
m customers.
he
Some of these steps are:
(a) sending a reminder for payments
(b) Personal request through telephone etc.
(c) Personal visits to the customers
(d) Taking help of collecting agencies and lastly
(e) Taking legal action. The last step should be taken only after exhausting all other means
because it will have a bad impact on relations with customers.
ok
| PAYABLES MANAGEMENT
Introduction to Payable Management

Trade credit is an important external source of working capital financing. It is a short-term
credit extended by suppliers of goods and services in the normal course of business, to a buyer in
order to enhance sales. Trade credit arises when a supplier of goods or services allows customers
to pay for goods and services at a later date. Cash is not immediately paid and deferral of
rbt- payment represents a source of finance. Accounts payable are just reverse to accounts receivable.
Accounts payable emerge due to credit purchase. This is also called ‘buy-now, pay-later’. The
ox account payables of a company can placed in the short-term liabilities section of its balance
Far sheet, and it mostly consist of the short-term financings of inventory purchases, accrued
■Kmc
expenses etc.
■«XK
ahi* Account Payables Management refers to the set of policies, procedures, and practices
employed by a company with respect to managing its trade credit purchases. In short accounts
payable policy consist of seeking trade credit, acquiring favorable terms of purchase, and
managing the flow and timing of purchases so as to efficiently control the company’s working
capital. A company that employs best practices with regards to payables management can reap
:he benefits of stable operating cycles that provide a stable source of operating cash flows and
place it in a good liquidity position with respect to its competitors.
7.8 Receivables and Payables Management In Tail>
Features of Trade Credit

The features of trade credit are given below:
1. There are no formal legal instruments/acknowledgements of debt.
2. It is an internal arrangement between the buyer and seller.
3. It is a spontaneous source of financing.
4. It is an expensive source of finance, if payment is not made within the discount period.
Advantages of Trade Credit:

The advantages of trade credits are:
1. It is easy and automatic source of short-term finance.
2. It reduces the capital requirement.
3. It helps the business focus on core activities.
4. It does not require any negotiation or formal agreement.
Evaluating the Performance of Payables Management

Accounts payable are one of the main components of working capital. It is very crucial item
We have to make a balance in timing of making the payment to account payables. In case ■
company makes payment before due date, they will be losing the opportunity to use finance f>-
stipulated period. Similarly if they will be making late payment, it will result into loss :f
Goodwill. An appropriate balance must be struck, whereby the advantage of deferring ca.-:
outlays using trade credit is weighted against the risk of excessive short-term credit. It h
therefore important to maintain optimal utilization of credit lines and timing of payments, an:
create a balance between the need for cash, working capital, and liquidity. A number short-term
financial ratios can be used to evaluate the performance payables management.
1. Payables Turnover Ratio: Management can use this ratio to measure the average
number of times a company pays its suppliers in a particular period. A higher numba
than the industry average indicates the company pays its suppliers at a faster raa
than its competitors, and is generally conducive to short-term liquidity.
2. Days in Payables Outstanding (DPO): Measuring the average length of time it takes ■
company to pay for its short-term purchases in a period, the DPO can be used :
management to determine an optimal timing of payments for its payables.
3. Net Working Capital (NWC): NWC is the difference between current assets and curre:
liabilities. High levels are desirable for short-term liquidity. A decreasing pattern
trend in NWC can be attributed to increasing levels of payables, and thus can serve :
a warning sign of excessive short-term credit. A negative NWC (particularly wh-
persistent) is a red flag for a lack of liquidity or potential insolvency.
4. Current and Quick Ratio: These ratios can be used to assess the impact of increasing
payables on short-term liquidity. Current Ratio measures ratio between Current Assea
and Current Liabilities whereas Quick Ratio measures ratio between Quick Asses
(Current Asset - Inventory) and Current Liabilities.
Receivables and Payables Management In Tally________________________________7.9
BILL WISE DETAIL IN TALLY

Tally provides a very useful option to maintain bill wise detail. Every business man buy and
sell goods on credit. So, he has to maintain detail of all the debtors and creditors from whom
amount is due or to whom amount is payable. However, he is not only interested in knowing total
amount due to or from a person but is also interested in detail of such amounts. For example a
business man has a supplier Mr. A, who is regularly supplying goods to him on one month credit.
So, if goods worth 50,000 are supplied on 1st January, the amount of such bill is due on 1st
February. Similarly goods worth 30,000 supplied on 15th January are due to be paid on 15th
February. Now though total amount due is ? 80,000 but business man is also interested in
knowing the detail of bills so that he can make payment of each bill on time so as to avoid late
payment interest.
In this case tally helps to maintain detail of each bill. Bill Wise Details in Tally.ERP 9 is a
function that helps you track the details of a voucher entry i.e. Credit Sales or Credit Purchases
so you can know important information about that particular voucher or bill. In this case,
: usiness man can easily track the the days and the amount remaining to pay as well as against
which bill he have to pay the amount to supplier. During voucher entry we can give bill
mformation of respective transaction. This feature only applicable sundry creditors and sundry
debtors groups.
Following are the uses of this feature.
• Keep our bills systematically
• Any time we can find out our pending bills details
• Avoid duplicate bill entry
• Help us to track the bill payment date.
These are the reasons why this functionality is very much useful in case of credit sales or
iredit purchases.
| ACTIVATING BILL WISE DETAIL IN TALLY

The Bill-wise facility is made functional by setting this option to Yes. By activating the Bill
wise feature, the ledger masters under Sundry Debtors and Sundry Creditors automatically
displays an additional option called Maintain balances bill-by-bill. On setting this option to Yes,
in additional option Default Credit Period is displayed. When you enter details of sales and
rirchases with the Bill-wise option activated, Tally.ERP 9 prompts you to identify the invoice
*.th an appropriate reference number. The reference can then be used to allocate payments to
-ne' correct invoice to maintain an accurate account of outstanding. However, tally maintain this
nformation for trading accounts only such as purchase account, sales account, purchase return
■:. Sometime business man is also interested in knowing bill wise detail of non-trading account
iuch as machinery account etc. Bill wise Details for Non-Trading Accounts is useful in those
-es where one needs to track either an installment to be paid or a loan amount to be received
ver a certain period of time. If you want to maintain bill wise details for Non-Trading Accounts
=--o, set this option to Yes.
Following are steps of activating bill wise detail in Tally.
1. Enable the feature maintain bill wise detail by selecting the features of Company >
7.10 Receivables and Payables Management In Talh
Press Fll then accounting feature >F1 and then set value YES in Maintain Bill Wise
Detail and accept the settings.
Gateway of Tally..
Company Features
Accounting Features
Statutory & Taxation
Add-On Features
Quit
4
General Irtmicinq
HkNM KMft Oriy ? Yes BiaH* rtrtteiq f Ho
RocenS pwsiwm w ww» arts ? No
taegwe #rt Iwwrtw ? So
0» iSMSffi# «l EstpMMg Afe trrstarf tf Mt #Btf l8» M ? Ho te ttM art erii »t» d«
Retard e«« «t» io Ma aid* ? No
6r»bl» BWlMWiKI f ih Rstcrt Mrt n«« is «« Wd» ? No
Outoodiita ttoMaomm Budgets and Scenario Ntaiwsemont

dstids ?Qg| I- ■ Misritifft iwl)»i »tf€MfS«lS ? No
^Sr n6S-TrrttijMiS?aH*4M-—— i Ha
te wwrswg jwwts *rt Ofiietrt wwtoti J No
Astwt* rtwwl C8tarte«i» T «9
? Ho B&uMtHt 1
Eft^bb £ jwfe| ? No
CottProfil M«iMq«ra»m
? Ho S#aWr«»»«!»tyHs ? No
Setftfer taMbg fciats ? No
? Ho
: U’,« OS t«f* to js MSI*) ? He SoWd»r pesMMed trwwebea tews ? No
Murtosn m«» ihw! wa pprti was cstrsjwj » He
te pfiMtefert CMt Cgrtre sfcKSlMM » tHMWtWR ? Ho O»h»r feattw
Spiw-j blilKf fcf OSMil fttOf Ht ftfHWU ? Ho '? No
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MUM nûtepb dtUilS fe €®1piriy 8Bd ? Nt
SetWW swfa$ ? Nt
E$$bb cop ?Ne
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2. Create/alter party ledger account under the group ‘Sundry Debtors’ for Receivable,
while creating/altering these ledger accounts activate the option ‘Maintain Balances bill
by bill’. Here we can set credit period for the party under ‘Default Credit Period’ option.
PrFnnt IfeEwiM:
E-Ma ) 0: Upk-uc i8:M Shop| G: langua K: Keyboard K: CoMtaW H: H: Help
| Ledger AfttFitisfi «/» SG Traders Ctrl. N a
Name KHANNA ELECTRONICS TeW Opining Bdmet
(alias}
3,16,200.00 Dr
3,15.200.00 Cr
Millng Dibit
Under Sundry Debtors Name KHANNA ELECTRONICS
(Current Assets) Address
Maintain balances biiiby-biil ■‘gTM 1
Default credit period
ChS£kiorcf»Si^sto**3w«-i>«fsivy? No
inverse ry values are affected ? No
Country India
State Punjab Plneede
ProMde bank details ? No
Tai Registredon Cass

PANATNo.
Opining Bilsne* (oM-Aor-MiT;•
3. Now enter the opening balance of the amount due in the column at the end of the
screen.
Opening Balance (on 1-Apr-2017) : 70,000.00|

u
4. Press enter, a new screen appears, enter the bill-wise details of opening balance of that
particular customers. In the screen you can find the following options.
rr
• Date: Enter the date on which invoice was issued.

• Name: Here name refers the bill number.
rrrrf
• Due date or credit days: Enter bill due date or total credit period. In case credit
period is given, the system will automatically calculate the due date and display
just below of credit days.
• Amount: Write the amount due of the bill.
Bill-wise Breakup of : KHANNA ELECTRONICS

Upto. ? 70,000.00 Dr
Date Name Due Date, or Amount Dr/
Credit Days Cr
15/3/2017 Bill No 397 15-Apr-2017 35,000.00 Dr
18/3/2017 Bill No 418 18-Apr-2017 35,000.00 Dr
70,000.00 Dr
On Account:_________________
70,000.00 Dr
5. Press enter and save both the screen.

6. Go to Gateway of Tally>accounting Vouchers > Sales (f8). While entering the sales
transaction, when selecting customer, Tally display a warning message if the customer
bill is overdue (if the effect of activating ‘Check for credit days during voucher entry' in
the ledger creation screen).
Tally.ERP 9
Narration:
unit •• Accept
Receivables and Payables Management In Tally______________________________ 7.13
| DIFFERENT TYPES OF BILL WISE DETAIL AVAILABLE IN TALLY

Bill wise detail feature in Tally maintains details of all pending credit bills of customers and
suppliers. The various details include a) Original date of each bill b) due date of each bill c)
adjusted amount against each bill d) pending amount of each bill e) no. of overdue days etc. At
the time of raising the invoice terms and conditions of sale and payment are decided with the
customer/ supplier. When there are pending bills from a customer and he makes payment this
amount should be adjusted against the pending bills according to the terms and conditions
settled with the customer.
Tally provide various types of ‘Reference’ in this regard:
1. New Reference: This reference is used whenever a new sale or purchase transaction
take place. If you mark the bill as a new reference, it is add to the list of outstanding.
Suppose we have purchased goods from Supplier A against Bill NO. 101 than such bill
no. can be used as new reference or we can create any other number as new reference.
In the field, you can give the voucher number, the reference number, or any
alphanumeric set of characters that would identify the reference and help set it off later
using against reference. You are not allowed to give the same name for two new
references. In other words, new references must be unique.
2. Against Reference: Select this when adjusting against a previous reference is done.
For example we are making payment to supplier ‘ A’ for purchase made against Bill
Number 101. Now at the time of making payment we will use ‘Against Reference’ in bill
wise detail so that such amount can be adjusted against Bill No. 101. In case here we
use ‘New Reference’, than such payment will not be adjusted against Bill No. 101.
When selecting against reference, a list of pending references (bills) for the party comes
up from which you select. You may adjust the whole bill or part of it. The rest of the bill
remains unadjusted. You can use Against Reference even to adjust advance with an
invoice. This you would do when entering a purchase or sales voucher. If there are no
pending bills, the option will not be available.
3. Advance: This is relevant where you receive or pay monies in advance. For example we
are making payment in advance to supplier ‘A’ from whom goods are yet to be
purchased. In such case we will use reference ‘Advance’ while recording the transaction.
When later purchase is made, advance amount will be adjusted against such purchase.
4. On account: On Account is selected when you are unable to mark a payment or a
receipt against specific pending references. Some time we are making payment to
£ supplier but not against particular bill. Typically, you would do this in cases of lump
sum payments where a number of bills are pending but you are not instructed against
which bill the money should be adjusted.
| ENTERING BILL WISE DETAILS FOR 'NEW REFERENCE'

Bill wise detail ‘New Reference’ is made when a new transaction of sale or purchase is being
entered in the system. For example we have purchased goods from M/s. Subash Traders worth
? 5,00,000 on 1st July on a credit of 30 days against invoice no. 501. As this is a new purchase
transaction, ‘New Reference’ will be used in the bill wise detail while recording the transaction.
Following are the steps:

1. Create supplier account under Sundry Creditors with Maintain balances bill-by-bill set
to Yes first if it is not already created.
2. Create Purchase Voucher :Go to Gateway of Tally > Accounting Vouchers > F9:
Purchase
3. Select as Voucher mode.
4. Enter 501 in the Reference field below the Purchase voucher number.
5. Bill-wise details have to be given when M/s Subash Traders account is credited.
6. On selecting New Ref, 501 is displayed automatically in the field and not the voucher
number.
Bill-wise Details for: M/s SUBASH TRADERS

Upto: ? 5,00,000.00 Cr
Type of Ref __Name Due Date, or Amount Dr/
Method of Adj. (Sredit Days Cr
if 1-Jul-2017)
Advance
New Ref Agst Ref 5,00,000.00 Cr
New Ref
On Account
5,00,000.00 Cr
Q: Quit | A: Accept [____________ I ____ I____________ I
Tally MAIN —> Gateway of Tally—> Accounting Voucher Creation —> Bill-wise Details
7. In the Credit period field enter 15, which is 15 days from the effective date of the
invoice. The Bill-wise Details screen in the Purchase voucher is displayed as shown
below:
Receivables and Payables Management In Tally______________________________ 7.15
8. Accept the bill-wise allocation, and type the details of the transaction in the Narration
field.
9. Press Y or Enter to accept the voucher. The completed Purchase Voucher appears as
shown below:
| ENTERING BILL WISE DETAILS FOR 'AGAINST REFERENCE'

This reference is used when some bill is already entered in the Tally. For example we have
uready made purchase from the supplier M/s Subash Traders against Reference no. 501 for
which transaction is already recorded in Tally. Now we want to make payment of T 3,00,000
against this reference number. We will use ‘Against Reference’ is bill wise detail in Tally because
such reference is already recoded and payment is against that reference no. 501.
1. Go to Gateway of Tally > Accounting Vouchers > F5: Payment > select Bank Payment.
2. In the Account field, select Bank Account from where cheque is issued.
3. Under Particulars, select M/s Subash Traders.
4. Enter ? 3,00,000 in the amount column.
5. In the Bill-wise details screen, select Agst Ref and press Enter
6. Tally.ERP 9 displays list of pending bills. The screen appears as shown below:
1. Select 501 and keep pressing Enter until the Narration field is highlighted.
2. In the Narration field, type Cheque Number.
3. The Bank payment voucher appears as shown below:
4. Press Y or Enter to accept the voucher.
| ENTERING BILL WISE DETAILS FOR ÂDVANCE'

This reference is used when we are making or receiving some advance payment. As no bill is
due at the time of making or receiving payment, Reference ‘Advance’ will be used at the time of
payment/receipt. Later when some purchase or sale will be made, such advance will be adjusted.
For example we are making advance payment to the supplier SS Electronics ? 1,00,000 on
reference no. ADV-1 against which goods will be purchased later on. We will use ‘Advance ’ is bill
wise detail in Tally because no reference exists at the time of making payment.
3. Under Particulars, select SS Electronics.
4. Enter ? 1,00,000 in the amount column.
5. In the Bill-wise details screen, select ‘Advance’ and press Enter
6. Tally.ERP 9 screen appears as shown below:
Receivables and Payables Management In Tally
- -1
7. Select ADV-1 and keep pressing Enter until the Narration field is highlighted.
9. The Bank payment voucher appears as shown below:
<l!
£
| ENTERING BILL WISE DETAILS FOR 'ON ACCOUNT'

This reference is used when we are making or receiving some payment against the total
imount due not against particular bill. For example we have made three purchases of ? 30,000,
Rs, 15,000 and ? 25,000 against invoice number 201, 202 and 203 respectively from supplier
■lunish Bros. The total amount due is ? 70,000. Out of this we are making a payment of? 50,000.
It we use reference ‘On Account’, such payment will be adjusted against total amount due and
not against particular bill.
3. Under Particulars, select Munish Bros.
4. Enter ? 50,000 in the amount column.
5. In the Bill-wise details screen, select ‘On Account’ and press Enter
6. Tally.ERP 9 screen appears as shown below:
2 Tally.ERP 9
Bill-wise Details for: Munish Bros

Upto: ? 50,000.00 Dr
■oe of Ref Due Date, or Amount Dr/

Method of Adi. freditDays Cr
4 5-Jut20171
Advance
Agst Ref
New Ref
On Account
Quit A: Accept
Ta /MAINGateway of Tally ~> Accounting Voucher Creation Bill-wise Details © Tally Solutions Pvt Ltd, 1988-2011 f 14:03:05
7. Press Enter until the Narration field is highlighted.

I
7.20 Receivables and Payables Management In Tali'
jiw
I
Ib
| VIEWING RECEIVABLE REPORT IN TALLY
I
Using the account receivable report we can analyse outstanding receivables. We can view
Pending hills, view overdue bills only, view age-wise analysis report of receivables, view ledger
wise pending bills, view Group wise outstanding summery.
Steps to view the Account Receivable reports:
1. Gateway of Tally >Display>Statement of Accounts>Outstanding>Receivable
Display Menu....
Statements ofAccounts....
Payables
Ledger
Group
Quit
2. Select the Group from the list:
M/s SG Traders
Name of Group
3. Change the period of Report by pressing F2. This is a typical Bill-wise outstanding
Report of Receivables. In this report we can view bill date, number customer name,
pending amount, Due date and also showing over due by days. That is how many days
passed after due day is over.
2]Tal!y.ERP9
[ E: Export M: E-Mail 0: Upload
- ^_MA1N Gateway of Tally --> Display Menu —> Statements of Accounts --> Outstandings --I© Tally Solutions Pvt Ltd., 1 Sat. 16 Jun, 2021:02:11
4. To check the detail of bills press Alt+Fl or Detailed button on left side panel then
detailed report shown.
0 Taily.ERP 9 1 o-jjSb»»»
K: Control Centre H; SupportCenlre H: Help E Condense:
Bills Outstanding M/s SG Traders Ctrl + M |F2 Period
Bills Receivable 1-Apr-2017 to 31-May-2017
Date Ref. No. Party's Name Pending Due on Overdue |F4 Payable
Amount by days IF6 Age wise
Sf-PatjHR
3-Apr-2O17 1 Jain Traders 14,500.00 3-Apr-2017

3-Api-2O17 Sales 49,000.00 Dr
2 nos Lg 1.5ton 24,500.00/nos
3- Apr-2QI7 Receipt 10,000.00 Cr
4- Apr-2O17 Credit Note 24,500.00 Cr
1 nos Lg 1.5ton 24,500.00/nos
8-Apr-2017 3 SONIA ELECTRONICS 3,24,000.00 8-Apr-2017

Mpf-2017 Sales 3,24,000.00 Dr
3 nos Voltas 1.5ton 28,000.00/nos
5 nos Sony 32" 37,000.00/nos
2 nos Samsung 1.5ton 27,500.00/nos
M-Apr-2017 4 TUSHAR ELECTRONICS 24,500.00 10-May-2017

fO-Apr-W Sales 4 24,500.00 Dr
1 nos Lg 1.5ton 24,500.00/nos
2fl-Apr-2O17 5 KHANNA ELECTRONICS 1,73,500.00 20-May-2017

2Mpr-2Q17 Sales 5 2,18,500.00 Dr
1 nos Lg 1.5ton 24,500.00/nos F8: T
FS: iKSyfer
1nos Voltas1.5ton 28,000.00/nos
3 nos Sony 32" 37,000.00/nos ROcfeE
1 more F12:Cafegj
5,36,500.00
F12: Ranoej
Q: Quit |R:llMMlin|U: ' U: ~ Space:?
5. We can view Age-wise analysis report Click on Age wise Button on the right butter
panel. On clicking the button we will get a screen where we can define the ageirr
methods.
Ageing Analysis Ageing Methods
Mejhod of Ageing Ageing by Bill Date

Ageing by Due Date
There are two option

• Ageing by bill date : Bill age calculated from bill date
z • Ageing by Due Date: Bill age calculated from Due date
6. We can view party-wise outstanding report by clicking Bill-party wise button on right
button panel or F7 from this report.
Q Tally.ERP 9 _ . r, ■ :
I . . ’ --- ”2 S * 2. .'U
P: Print E: Export M: E-Mail ; O: Upload 8: TallyShopf G. Language. K ■ 1 K. CWHUMe H SuppoltCeiite; H Help
Bills Receivable 1-Apr-2017 to 23-May-2017

Date Ref. No. Party's Name Pending Due on OvenJue
Amount by days
Jain Traders
3-Apr-2017 1 14,500.00 3-Apr-2017
14,500.00
KHANNA ELECTRONICS
20-Apr-2017 5 1,73,500.00 20-May-2017
1,73,500.00
SONIA ELECTRONICS
8-Apr-2017 3 3,24,000.00 8-Apr-2017
3,24,000.00
TUSHAR ELECTRONICS
H-Apr-2017 4 24,500.00 10-May-2017
24,500.00
5,36,500.00
H2; Range
TallyJMAIN — > Gateway of Tally --> Display Menu —> Statements of Accounts —> Outstandings -■ © Tally Solutions Pvt Ltd., liSat, 16 Jun, 2( 21:08:13
| VIEWING PAYABLE REPORT IN TALLY

Using the account Payable report we can analyse outstanding payables.
Steps to view the Account payable reports:
1. Gateway of Tally >Display>Statement of Accounts>Outstanding>Payable
Display Menu....
Statements of Accounts
Outstandings
Receivables
Payables
Ledger
Group
Quit
2. Select the Group from the list:
M/s SG Traders
Name of Group
J All Items
Sundry Creditors
Sundry Debtors
3. Change the period of Report by pressing F2. This is a typical Bill-wise outstanding
Report of Payable. In this report we can view bill date, number, customer name,
pending amount, Due one and also showing over due by days. That is how many days
passed after due day is over.
@ Tally.ERP 9
P: Print E: Export M: E-Mail 0: Upload S: TallyShop G:
Bills Payable
1-Apr-2017 101 Jindal Elctronics

3-Apr-2017 140 SACHDEVA ELECTRONICS 11,95,000.00 3-Apr-2017
5-May-2O17 550 Jindal Elctronics 7,25,000.00 4-Jun-2017
21,60,000.00
Q: Quit R: tawtRs U ittt i Space: ,fei
TallyJjfAIN Gateway of Tally Display Menu --> Statements of Accounts --> Outstandings -I© Tally Soluticj© Tally Solutions Pvt LtdJ2588^2018[
4. To check the detail of bills press Alt+Fl or Detailed button on left side panel then
detailed report is shown.
Receivables and Payables Management In Taliy 7.25
@ Tally.ERP 9
P: Print E: Export M: E-Mail 0: Upload S: TallyShop G: Language :• I FI: Condensed

Bills Outstanding M/s SG Traders CtrUMg period‘~
Bills Payable
Date Ref. No. Party's Name Pending Due on Overdue |F4: Recwatte
Amount Ay days [FSc Age wise
1-Apr-2017 101 Jindal Elctronics 2,40,000.00 l-May-2017

1-Apr-2OI7 Purchase 1 4,78,000.00 Cr
5 nos Samsung 1.5ton 25 000.00lnos
4 nos Lg 1.5ton 22,000.00lnos
10 nos Voltas 1.5ton 25,500.00fnos
ZHty-2017 Payment 2 2,38,000.00 Dr
3-Apr-2017 140 SACHDEVA ELECTRONICS 11,95,000.00 3-Apr-2017
3Apr-20f7 Purchase 2 11,95,000.00 Cr
10 nos Samsung 32" 32,000.00/nos
25 nos Sony 32" 35,000.00/nos
5-May-2017 550 Jindal Elctronics 7,25,000.00 4-Jur-2C17
5-May-20/7 Purchase 3 7,25,000.00 Cr
5 nos Hitachi 45,000.00/nos
10 nos Voltas 1.5ton 26,500.00/ncs
5 nos Lg 1.5ton 22,000.00/nos
Mm
|F11: Features
21,60,000.00 F12: Cctfiaure

F12: Range
Q: Quit : R: Reiraeunsj U
_TallyMAIN
_____ -> Gateway of Tally —> Display Menu --> Statements of Accounts —> Outstandings -IO Tally Solutions Pvt Ltd, 1 iSat, 16 Jun, 2(121:20:11
5. We can view Age-wise analysis report Click on Age wise Button on the right button
panel. On clicking the button we will get a screen where we can define the ageing
methods.
Ageing Analysis Ageing Methods
Method of Ageing Ageing by Bill Date

Ageing by Due Date
There are two option

• Ageing by bill date : Bill age calculated from bill date
• Ageing by Due Date: Bill age calculated from Due date
6. We can view party-wise outstanding report by clicking Bill-party wise button on right
button panel or F7 from this report.
g Tally.ERP 9
P: Print : E: Export M: E-f 0: Upload S: TallyShop G: Language : i K: Control CentreH: SuppoitCentre- H: Help
| Bills Outstanding M/s SG Traders Ctrl + M E IK! Period
Bills Payable 1-Apr-2017 to 31-May-2017
Date Ref. No. Party’s Name Pending Due on Ove/due F4: ReceAt
Amount hydays pfrAgewfe
P7<HII-wi-
Jindal Elctronics
t-Apr-2017 101 2,40,000.00 l-May-2017
Mpr-20/7 Purchase 1 4,78,000.00 Cr
4 nos Lg 1.5ton 22,000.00/nos
10 nos Voltas1.5ton 25,500.00fnos
W2W? Payment 2 * 2,38,000.00 Dr
S-May-2017 5 50 7,25,000.00 4-Jun-2G17
5-May-2M Purchase 3 7,25,000.00 Cr
5 nos Hitachi 45,000.00/ncs
10 nos Voltas1.5ton 25,500.00lnos
5 nos Lg 1.5ton 22,000.00/nos
9,65,000.00
SACHDEVA ELECTRONICS
3-Apr-2017 140 11,95,000.00 3-Apr-2017 58
3-Apr-2017 Purchase 2 11,95,000.00 Cr
10 nos Samsung 32" 32,000.00/nos
25 nos Sony 32'' 35,000.00/nos
11,95,000.00
21,60,000.00
■ Gateway of Tally --> Display Menu --> Statements of Accounts Outstandings -I© Tally Solutions Pvt Ltd, 1 Sat, 16 Jun, Spea.e;
CHANGE IN ACCOUNTING PERIOD:-

A financial year is a period for which accounts are prepared in the business. At end c:
financial year books of accounts are closed by preparing final accounts and results of
business are calculated. At beginning of new financial year, again new set of books is star;-. i.
many countries there are laws regarding financial year for the purpose of accounting
taxation. When you reach the end of an accounting period, you need to "close the books
India, Financial Year is duration from 1st April of current year to 31st March of the folic
year. When you are using a manual accounting system, the easiest way to change Financial•
is simply start new books of accounts. In Tally for changing financial year Press Alt+F2 key
enter the New Financial Year Period. Continue voucher entry for new Financial Year as we
previous Financial Year. Tally.ERP 9 will update Ledger Closing/Opening Balance. This w...
bring the ability to see the comparative reports of different Financial Year together.
Press “Alt-F2” to change the period for which accounting is to be done.
| LONG QUESITONS
1. What is Receivable management. Give its objectives? What are costs associated with
Receivables?
<•
2. Explain various factors affecting quantum of Receivables.
r
3. Explain various aspects of Receivable Management policy of a business.
4. Write a detailed note on Payable management.
5. Explain different types of Bill wise detail available in Tally.
6. Explain process of activating bill wise detail in Tally.
7. Explain process of entering ‘New Reference’ in Tally.
8. Explain process of entering ‘Against Reference’ in Tally.
9. Explain process of entering reference ‘Advance’ in Tally.
10. Explain process of entering reference ‘On Account’ in Tally.
11. Explain the process of viewing outstanding receivables and payables in Tally.
| SHORT QUESTIONS
Ql. What are objectives of Receivable Management?
Ans: The receivables management is one of the most crucial area of working capital
management. It is a multi-dimensional concept. However, the main objective
of firm's receivable management is to determine credit policy of the firm that leads to
effective management of working capital. It must ensure maximization of profits and
must contribute to the maximization of value of the firm. Following are some of the main
objectives of Receivable managment:
1. Increase in Sales:- Credit policy of any firm has direct bearing on the sales made
by the firm. So, the main objective of receivables management is to increase the
total sale volume of the business. Offering goods on credit attract those customers
who are not having ready cash for making the cash purchases. So, it this way it
can increase the sales.
2. Increase in Profits:- Selling goods on credit basis increase the sales on one hand
but also increase cost on the other hand. Offering goods on credit not only results
into blockage of funds leading to financial costs but also results into losses due to
bad debts. The main objective of receivables management is to ensure
maximization of profits earned by the business.
3. Retaining Customers:-In today’s competitive business world, almost even-
business concern is offering goods on credit basis. So, Goods are sold on credit to
protect the current sales against emerging competition. If a business fails to sold
goods on credit, the customer may shift to the competitor who allow credit facility
to them.
4. Reducing Administrative Costs:- When a firm sells goods or services on credit,
it has to bear some administrative costs. These cost include cost of making
collection from the customers and cost of maintaining records of the customers like
additional staff, accounting records, stationery etc. Company also incurs some cost
on acquiring information about the credit worthiness of the customer. One of main
objective of Receivables management is to minimize these costs.
5. Minimizing Capital Investment:- There is a time gap between sales of goods
and its collection from the customers. Meanwhile, the firm has to pay for purchase,
wages, salary and other expenses. Therefore, the firm needs additional funds,
which may be arranged either from external sources or from retain earnings
Offering huge credit may lead to high capital investment in receivables. So, one o:
the key objective of Receivable Management is to minimize such capital
investment.
6. Minimizing Default cost:-Despite all the effort by the management, the firm
may not be able to recover full amount due from the customers. Such dues are
known as bad debts or default cost. Receivables management aims at minimizing
such default cost by proper analysis of credit worthiness of the customer.
7. Maximizing Shareholder’s Wealth:- Credit policy of a firm directly affects ii_-
goodwill and hence value to share in the market. So, one of the key objective of the
receivables management it to maximize the wealth of the shareholders.
Q2. What are factors affecting Receivable Management?
j? Ans: There are a number of factors that influence the size of receivables of a firm. The
following are some of the factors that affect the size of receivables.
1. Size of credit sales:- The volume of credit sale is the first factor which increase c«j
decrease the size of receivables. The higher the ratio of credit sales to total sales
figures of receivables will also be higher.
2. Credit policy:- A firm may have strict or liberal credit policy. Strict credit pohcJ
means firm is not allowing much credit to the customers. On the other hanL
liberal credit policy means offering more credit to the customers. A firm win
conservative credit policy will have a low size of receivables while a firm wJ
liberal credit policy will be having more recivables.
3. Terms of Trade:- The size of receivables also depends upon the term of trade. The
period of credit allowed and terms and conditions of payments offered to customers
are linked with receivables. If credit Period allowed is more then receivables will
be also more.
4. Expansion Plans:- When a concern wants to expand its activities, it will have to
enter new market. To attract more customers, it will give incentives in the form of
credit facilities. So, during the early stages of expansion more credit to customer
will result into increase in size of receivables.
5. Relation with profits:- The amount of credit allowed to customer depends upon
the amount of profit margin available to the firm. In case firm is working on high
profit margin, they have more scope of offering credit to the customers. On the
other hand, firms working on low profit margin can’t offer more credit due to costs
associated with credit sale.
6. Credit Collection Efforts:-Size of receivables depends upon the efforts put in by
the business for collection of credit given to the customers. The collection of credit
should be streamlined. The customers should be sent periodical reminders if they
fail to pay in time. If firm is putting more efforts in collection of customers, its
receivables will be less or otherwise it will be more.
7. Habits of Customers:- The paying habits of the customers also affects the size of
receivables. The customer may be in the habit of delaying payments even though
they are financially sound. The concern should remain in touch with such
customers and should make them realize the urgency of their needs.
8. Seasonal nature of Sales:- Some business have stable sale throughout the year
and some business have seasonal nature of sale. Stability of sales refers to the
elements of continuity and consistency in the sales. In other words the seasonal
nature of sales violates the continuity of sales inbetween the year. So, the sale of
such a business in a particular season would be large needing a large a size of
receivables.
9. Cash Discount:- Cash discount refers to the amount offered as deduction by the
business to customers for making payment before the due date. Cash discount
attracts the customers for payments before the lapse of credit period and reduces
the working capital requirements of the concern.
10. Bills Discounting and Endorsement:- Sometime firm opts for discounting its
bills, with the bank or endorsing the bills to the third party, for meeting its
obligations. In such circumstances, it would lower the level of receivables required
in conducting business.
lX- Other Factors:- There are certain general factors such as price level variations,
/
attitude of management type and nature of business, availability of funds and the
lies that play considerably important role in determining the quantum of
receivables.
Q3. What is Payable Management?
Ans: Account Payables Management refers to the set of policies, procedures, and practices
employed by a company with respect to managing its trade credit purchases. In short
accounts payable policy consist of seeking trade credit, acquiring favorable terms of
purchase, and managing the flow and timing of purchases so as to efficiently control the
company’s working capital. A company that employs best practices with regards to
payables management can reap the benefits of stable operating cycles that provide a
stable source of operating cash flows and place it in a good liquidity position with respect
to its competitors.
FEATURES OF TRADE CREDIT:

The features of trade credit are given below:
1. There are no formal legal instruments/acknowledgements of debt.
2. It is an internal arrangement between the buyer and seller.
3. It is a spontaneous source of financing.
4. It is an expensive source of finance, if payment is not made within the discount
period.
Q4. What is ‘New Reference in Tally?
Ans: New Reference: This reference is used whenever a new sale or purchase transaction take
place. If you mark the bill as a new reference, it is add to the list of outstanding. Suppose
we have purchased goods from Supplier A against Bill NO. 101 than such bill no. can be
used as new reference or we can create any other number as new reference. In the field,
you can give the voucher number, the reference number, or any alphanumeric set of
characters that would identify the reference and help set it off later using against
reference. You are not allowed to give the same name for two new references. In other
words, new references must be unique.
Q5. What is ‘Against Reference in Tally.
Ans: Against Reference: Select this when adjusting against a previous reference is done. For
example we are making payment to supplier ‘ A’ for purchase made against Bill Number
101. Now at the time of making payment we will use ‘Against Reference’ in bill wise
detail so that such amount can be adjusted against Bill No. 101. In case here we use
‘New Reference’, than such payment will not be adjusted against Bill No. 101. When
selecting against reference, a list of pending references (bills) for the party comes up from
which you select. You may adjust the whole bill or part of it. The rest of the bill remains
unadjusted. You can use Against Reference even to adjust advance with an invoice. This
you would do when entering a purchase or sales voucher. If there are no pending bills,
the option will not be available.
Q6. What is Reference ‘Advance’ in Tally?
Ans. Advance: This is relevant where you receive or pay monies in advanceFor example we
are making payment in advance to supplier ‘A’ from whom goods are yet to he purchased.
In such case we will use reference ‘Advance’ while recording the transaction. When later
purchase is made, advance amount will be adjusted against such purchase.
Q7. What is Reference ‘On Account, in Tally.
Ans. On account: On Account is selected when you are unable to mark a payment or a receipt
against specific pending references. Some time we are making payment to supplier but
not against particular bill. Typically, you would do this in cases of lump sum payment
where a number of bills are pending but you are not instructed against which bill the
money should be adjusted.
□□□
MIS Reports In Tally
CONTENTS
□ INTRODUCTION TO MIS;
□ MIS REPORTS IN TALLY;
□ MODIFICATION OF ACCOUNTING REPORTS IN TALLY;
□ TRIAL BALANCE IN TALLY;
□ BALANCE SHEET IN TALLY;
□ PROFIT AND LOSS ACCOUNT IN TALLY
□ FUNDS FLOW AND CASH FLOW IN TALLY
□ RATIO ANALYSIS IN TALLY
□ BOOKS AND REPORTS IN TALLY
| INTRODUCTION TO MIS
Management Information System, commonly referred to as MIS is a phrase consisting of
three words: management, information and systems. Looking at these three words, it’s easy to
define Management Information Systems as systems that provide information to management.
Management information system can thus be analyzed as follows:
• Management: Management covers the planning, control, and administration of the
operations of a concern. The top management handles planning; the middle management
concentrates on controlling; and the lower management is concerned with actual
administration.
• Information: Information, in MIS, means the processed data that helps the
management in planning, controlling and operations. Data means all the facts arising
out of the operations of the concern. Data is processed i.e. recorded, summarized,
compared and finally presented to the management in the form of MIS report.
8.2 MIS Reports In Tally
• System: Data is processed into information with the help of a system. A system is made
up of inputs, processing, output and feedback or control.
Thus MIS means a system for processing data in order to give proper information to the
management for performing its functions. Management Information System or MIS' is a planned
system of collecting, storing, and disseminating data in the form of information needed to carry
out the functions of management.
Components Of MIS
To effectively deliver the information needed to decision makers, Management Information
Systems need to have the necessary components to collect, process, store and retrieve the
information whenever it is needed.
Following are basic components of MIS:
1. Capturing Data: Capturing contextual data, or operational information that will
contribute in decision making from various internal and external sources of
organization.
2. Processing Data: The captured data is processed into information needed for
planning, organizing, coordinating, directing and controlling functionalities at strategic,
tactical and operational level. Processing data means:
• making calculations with the data
• sorting data
• classifying data and
• summarizing data
3. Information Storage: Information or processed data need to be stored for future use.
4. Information Retrieval: The system should be able to retrieve this information from
the storage as and when required by various users.
5. Information Propagation: Information or the finished product of the MIS should be
circulated to its users periodically using the organizational network.
Types of Information Systems

There are different types of information systems used in the business. The type of system to
be used in business depends upon size of organization, information need, quantum of data,
complexity of data, resources available etc.
£ Following are some of the main information systems used by the business:
1. Transaction Processing Systems. These systems have been designed to collect,
process and store transactions that occur in the day to day operations of a company.
The system can also be used to cancel or modify transactions done in the past if the
need arises. One property of this system that enables them to work effectively is the
ability to accurately record multiple transactions even if the different transactions take
place simultaneously. These systems are capable to handle large volumes of
transactions. Examples include stock control systems, payroll systems, order processing
systems etc.
MIS Reports In Tally_______________________________________________________ 8.3
2. Decision Support Systems. These systems help decision makers to make the best
decisions by generating statistical projections from analyzed data. Although it does not
eliminate the need for the manager’s judgment, it significantly improves the quality of
the decision by offering forecasts that help determine the best course of action. These
systems compile information from several sources for purposes of aiding in decision
making. Examples of these systems include computer supported cooperative work,
group decision support systems, logistics systems and financial planning systems.
3. Executive Information Systems. These systems are also known as Executive
Support System. These systems provide quick and easy to use reports that are
presented in graphical displays that are easy to compare. They can be taken as
specialized decision support systems because they provide information necessary to
help improve the quality of decisions. Owing to the high expectations from system,
these systems need to be highly individualized hence they are usually custom made for
specific clients.
4. Management Information Systems. These systems make use of information
technology to help managers ensure a smooth and efficient running of the organization.
Information collected by these systems is structured so that the managers can easily
evaluate the company’s current performance vis-a-vis previous outputs. Some of the
common types of Management Information Systems include process control systems,
human resource management systems, sales and marketing systems, inventory control
systems, accounting and finance systems and management reporting systems.
Advantages of MIS
Effective management information systems are needed by all business organization due to
increased business complexity and change in business environment. By using management
information system, managers can have an overall brief look at the company. They can use these
statistics to compete in the market. Company owners can make actions in quick time. Also, they
can make better communication within the company. So the company can better manage
different departments, and it also improves coordination within company.
Following are some of advantages of MIS:
1. With help of MIS the instant messaging, emails, voice and video calls becomes quicker,
cheaper and much efficient.
2. It facilitates planning. MIS improves the quality of plans by providing relevant
information for sound decision making
3. Ip minimizes information overload. MIS change the larger amount of data in to
summarize form and there by avoids the confusion which may arise when managers are
flooded with detailed facts.
4. MIS encourages decentralization. Decentralization of authority is possible when there
is a system for monitoring operations at lower levels. MIS is successfully used for
measuring performance and making necessary change in the organizational plans and
procedures.
5. It brings Co-ordination. MIS facilities integration of specialized activities by keeping
each department aware of the problem and requirements of other departments. It
connects all decision centers in the organization.
6. It reduces the risk in decision making by providing accurate information for decision
making.
7. It provides information about the various aspects of business.
8. It helps the executives to avail the information regarding the functional areas like
marketing, finance, human resource etc quickly.
9. The database helps in inducting research. The data stored are used as secondary data.
10. It provides sound information regarding the financial health of business organization.
11. It helps in preparing corporate report.
12. It helps the HRD manager in finding out the requirement of the human resource, their
wages and salary, performance appraisal, training, promotion, absenteeism and
employee’s turnover, which is useful in drafting sound HRD polices.
13. The data regarding production helps the production manager in deciding about capacity
utilization, number of rejections per batch, frequency of break down, status of shipment
of processed order and product, region wise.
14. It provides information regarding inventory position, and ensures that the chances of
inventory out of stock may be minimized.
15. It provides information regarding product, price, promotion, segmentation, demand,
sale etc. to marketing manager instantly and ensures smooth functioning of that
department.
| MIS REPORTS IN TALLY

Tally packs enormous power to generate numerous reports for management information that
assists management in taking correct & timely decisions. This enables rapid growth and better
control of business. The primary concern for Management Information System of a business is tc
ensure that the knowledge necessary to drive critical business processes is available at the right
place and time.
Following are the main MIS reports available in Tally:
• Accounting Reports: The main objective of any business enterprise is to earn incom-
and maximize the wealth. The most important objective of accounting is to ascertain the
profits of a business enterprise. For this purpose business prepares profit and lose
account or the income statement. Profit and loss account is generally considered to be o
greatest interest and importance to end users of accounting information. The profit an
loss account enables all concerned to find out whether the business operations have bee:
profitable or not during a particular peridd. Usually the profit and loss account is
accompanied by the balance sheet as on the last date of the accounting period for whici
the profit and loss account is prepared. A balance sheet shows the financial position of s
business enterprise as on a particular date. It contains a list of the assets, the liabilities
and the capital of a business entity usually at the close of the year. In manual accountii
system we have to prepare all accounting reports manually at end of the financial ye:
but in accounting package Tally we need not to prepare these reports, as these a:
generated automatically after every transaction is recorded in the system. Though the:
MIS Reports In Tally 8.5
are a number of accounting reports that can be generated in Tally, most important of
these are Income Statement, Financial Position Statement and Trial Balance.
• Financial Reports: Financial Report is a set of documents of the financial activities of a
business, person, or other entity at the end of an accounting period. Financial Report
generally contains summary of accounting data for that period. It highlights the financial
state of any company. Financial Report features the detailed explanation of financial
data which comprises income from all sources and the outlays, assets and liabilities as
well. Financial Report renders the financial status or performance of a company. In tally
main financial reports include Funds Flow Statement, Cash Flow Statement, Accounting
Ratios etc.
• Inventory Reports: In business, the inventory may be defined as the goods held for sale
in the ordinary course of business or the goods that are used to manufacture goods to be
sold. Inventories usually make up a large part of the total current assets of a company.
The proper reporting and accounting of inventory increase the usefulness of financial
statements for potential and actual investors. There are many reports and documents
available in Tally, that can all be used in a variety of ways. The reports can be used to
determine optimum inventory level by displaying information such as: inventory analysis
by product, sales history by a specific customer, inventory information by lot or serial
number, inventory reorder reports that display all products needing to be reordered
• Management Control Reports: Tally.ERP 9 provides the capability to generate
various management control reports, thereby facilitating better management, effective
control and well informed decisions. Following are some of the common control reports
that can be generated in Tally. Receivables Turnover (Payment performance of debtors),
Branch Accounting Flexible Period Accounting, Budgeting and Control, Cost centers I
Profit centers with multiple Cost Categories, Scenario Management etc.
Gateway of Tally displays only the Balance Sheet and Profit & Loss Account directly as these
statements are considered the most important. All the other Tally reports are classified into two
broad categories, namely Accounting reports and Inventory reports. User can view basic
accounting reports in the first screen to Tally that is gateway of Tally:
| DISPLAY MENU IN TALLY

Tally’s Display of information is designed to allow a user get the maximum benefit of the
data that is entered. The display screens of Tally are dynamic and interactive. It shows various
reports like accounting reports, inventory reports, cash flow statement, funds flow statement etc.
To view the Display Menu: Go to Gateway of Tally> Display
0 Talfy.ERP 9 !
haliy MAIN Gateway of Tally-> Display Menu Tally Solutions Pvt Ltd., 1988-2C Sun, 17 Jun, 2018^21:42:43
J* .. . , , ~
1. 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. In other words, the Trial balance displays a collection of main
groups and their closing balances.
2. The Day Book lists all transactions made in a particular day and by default displays
the last voucher entry date of a regular voucher. It could also be set up to list all the
transactions made over a certain period. Transactions include all financial vouchers,
y reversing and memorandum journals as well as inventory vouchers.
3. Accounting book contains different book maintained by the business like cash book etc.
the main purpose of the books and registers is to compile all similar transactions at one
place so that meaningful information can be extracted.
4. Statements of Accounts are derived from the transactions recorded in the books of
accounts. Statement of Accounts pertains to outstanding analysis. It also shows the
various statistics of the business.
5. Inventory books show the information related to inventory of the business. It shows the
detail of various stock groups, stock items etc. It also shows the movement of the
inventory and ageing analysis of the inventory.
6. Statement of Inventory is helpful for stock query. It shows the statement of stock-in-
hand on a particular date and gets updated every transaction so as to provide the
current stock position. It also shows inventory statistics.
7. Cash Flow statement is historical statement of cash moving in and out of business. It
explains all the changes in cash resulting from various operating, investing and
financing activities. Fund Flow statement on the other hand considers the movement of
working capital. It exhibits the detail of increase and decrease in inventory, creditors
and debtors etc.
8. Receipts and payments shows summary of movement of cash of the business. It shows
all the receipts and payments of a particular period in a summarized form.
9. The List of Accounts gives the tree structure of all your masters, namely, Groups,
Ledgers, Stock items, Cost Centers, Currencies, etc.
Exception Reports are those reports that track unusual transactions or balances. It shows
items like negative stock, negative ledgers, memorandum vouchers, optional vouchers, post
dated vouchers etc.
| MODIFICATION OF ACCOUNTING REPORTS IN TALLY

Accounting reports can be modified in Tally according to the requirement of the user.
For this purpose use buttons on the button bar. |F1: Detailed
ijp2: Period
1. (Alt + Fl) Fl: - Detailed/Condensed: This button adds the detail in the
report selected. It adds a further level of detail to the report, or
F7: Valuation
condenses the report to a higher level of detail. fs: Schedule vT
2. F2 Period: It allows the selection of period for which reports are

required. It enables the user to change the period of the report by
specifying new from/to dates.
3. F3 Company: If there is more than one company selected, this button
enables the user to change companies to display the new company
data in the current screen format.
4. F4 to F10: These buttons depends upon the type of report selected.
These have different role in different reports. The functions performed
by these buttons vary from report to report.
5. Fll Company Features: This button is not related to displaying
reports but to selecting options that affect voucher entry. sC:. New Column •••
iA: Alter Column .
6. F12 Configure: This is one of the most important buttons. It is used
for displaying reports and enables user to define the report-specific (H: Auto Column .
options. For example, user can define that whether report should be
in horizontal or vertical format, show percentages, show gross profit,
|Rb Inventory Reports
show opening and/or closing balances, change the periodicity, change |riO; A/c Reports
the sorting method, and so on. sill: Features
7. F12 Range: This button enables you to filter the information you see |F12: Configure
displayed based on monetary value. For example, you can specify you jF1?-^Range
[piiTvalue
only want closing balances greater than ?20,000.
8. F12 Value: This button enables you to filter which vouchers you wish to be used in the
calculations. For example, you can specify you only want vouchers having a narration
containing the expression ‘Kalyani Publishers’.
9. New Column: This button enables you to add another column to the report to display
comparable information for another company, or for a different period for the same
company, all on the same screen.
10. Alter Column: This button enables you to alter the details of a new column you have
previously created, for example, the date range. You select the column to alter by
positioning the cursor in it prior to selecting the button.
11. Del Column: You use this button to delete columns you no longer wish to see in the
report.
12. Auto Column: You use this button to add multiple columns to a report, for example,
columns for each month, or to accommodate several companies. You can also have a
total column for the total of each item across all columns.
| TRIAL BALANCE IN TALLY

According to the dual aspect concept, the total of debit balance must be equal to the cred::
balance. It is a must that the correctness of posting to the ledger accounts and their balances be
verified. This is done by preparing a trail balance. Trial balance is a statement prepared with the
balances or total of debits and credits of all the accounts in the ledger to test the arithmetical
accuracy of the ledger accounts. As the name indicates it is prepared to check the ledger
balances. If the total of the debit and credit amount columns of the trail balance are equal, it :-
assumed that the posting to the ledger in terms of debit and credit amounts is accurate. The
agreement of a trail balance ensure arithmetical accuracy only, A concern can prepare trail
balance at any time, but its preparation as on the closing date of an accounting year is
compulsory.
“Trail balance is a statement containing the balances of all ledger accounts, as at any given
date, arranged in the form of debit and credit columns placed side by side and prepared with the
object of checking the arithmetical accuracy of ledger postings”.
OBJECTIVES OF PREPARING A TRAIL BALANCE
Trial balance is prepared to check arithmetic accuracy. Following are main objectives of
preparing Trial Balance.
£) It gives the balances of all the accounts of the ledger. The balance of any account can be
found from a glance from the trail balance without going through the pages of the
ledger.
(ii) It is a check on the accuracy of posting. If the trail balance agrees, it proves that both
the aspects of each transaction are recorded and that the books are arithmetically
accurate.
(iii) It facilitates the preparation of profit and loss account and the balance sheet.
(iv) Important conclusions can be derived by comparing the balances of two or more than
two years with the help of trail balances of those years.
Features of Trial Balances

Following are the main features of Trial balance.
(i) A trial balance is prepared as on a specified date.
(ii) It contains a list of all ledger accounts including cash account.
(iii) It may be prepared with the balances or totals of Ledger accounts.
(iv) Total of the debit and credit amount columns of the trial balance must tally.
(v) It the debit and credit amounts are equal, we assume that ledger accounts are
arithmetically accurate.
(vi) Difference in the debit and credit columns points out that some mistakes have been
committed.
(vii) Tallying of trail balance is not a conclusive proof of accuracy of accounts.
Display of Trial Balance in Tally

A Trial Balance is a summary of all ledger balances to check whether the figures are correct
and balanced. Considering that the journal entries are error-free and posted correctly to the
general ledger, the total of all debit balances should equal the total of all the credit balances. In
Tally.ERP 9, the matching of the Trial Balance is a foregone conclusion since all voucher entries
are in Debit - Credit format and must balance at the entry points. Trial Balance is not directly
shown in ‘Gateway of Tally’, rather it is shown under the ‘Display’ menu available in ‘Gateway of
Tally’.
• Open Tally program.
• Select your Company.
• Select ‘Display’ under gateway of tally.
• Select ‘Trial Balance’
• Press ‘Enter key’
After you select ‘Trial Balance, a screen will appear as under:
In case of above Trial Balance ‘Group Wise’ detail of items is given. In case user want to
know ledger wise detail of the Trial Balance, it is also possible. For this purpose a button
‘Ledger-wise’ is provided in the side button bar.
By pressing this button (F5) user can get ledger wise detail of the Trial Balance. In such
case Trial Balance will appear like this:
3Tally.ERP9___________________________________________________________________________________ ; = ■
?: Print E: Export M: E-Mail
£
Grand Total 44,96,200.00 44,96,200.00;
Q: Quit Ft: RemwelineL Space: Select j
A Ctrl + N L
Tally MAIN --> Gateway of Tally--> Display MenuTrial Balance © Tally Solutions Pvt Ltd., 1988-201E 122:1136
Configuration of Trial Balance in Tally

User can configure the Trial Balance in Tally according to his requirement. Press ‘F12’ tc
change the configuration of the default Trial Balance Screen. The Configuration Screen is showr
here.
Tally MIS Reports In Tally 8.11
int to
utxon
such
1. For the field ‘Show Opening Balances’, enter ‘Yes’ and press Enter to view the ‘Trial
Balance’ with ‘Opening Balances’. In case ‘No’ is selected, opening balance will not be
shown in Trial Balance.
2. For the field ‘Show transactions?’ enter ‘Yes’ and press Enter to view the transactions
in ‘Trial Balance’. Once entered, a new field comes up as ‘Net transactions only?’, enter
‘No’ and press Enter. In case of Show Transaction, Trial Balance will show both Debit
and Credit Balance of Transactions and also the Net balance of Transactions, as shown
in following Screen:
1. For the field ‘Show Closing Balances’, enter ‘Yes’ and press Enter to view the Closing
Balances in ‘Trial Balance’.
2. For the field ‘Show Percentages’, enter ‘Yes’ and press Enter to view the Percentages in
‘Trial Balance’.
3. For the field ‘Appearance of Names’, select ‘Name Only’ from ‘Display Name Style’ and
press Enter as it is selected by default.
4. For the field ‘Scale Factor for Values’, select ‘Default’ from ‘Scale Factors’ and press
Enter.
5. For the field ‘Sorting Method’, select ‘Alphabetical (Increasing)’ from ‘Sorting Methods’
and press Enter.
6. For the field ‘Expand all levels in Detailed Format’, enter ‘Yes’ and press Enter.
| BALANCE SHEET IN TALLY

In addition to finding out profit earned by him during the year, the businessman is also
anxious to know his financial position as at the end of the year. For this purpose he prepares a
statement known as Balance Sheet. Balance sheet is a statement that shows the financial
position of the business as on a given date. It is rightly called as “mirror” of the business wherein
the business can see its face i.e., its true position.
According to Antony, “Balance sheet is a statement which reports the property values owned
by the enterprise and the claims of the creditors and owners against the properties. It shows the
status of the business as at a given moment of time, in so far as a counting of figures can show its
status.”
The assets and liabilities can be put down in this statement, assets on one side and liabilities
on the other. The total of assets must be equal to a total of liabilities and capital. If the total of
assets does not agree with the total of liabilities and capital there is definitely something wrong.
Classification of Assets
A Clear and correct understanding of the basic divisions of the assets and liabilities and the
meanings which they signify and the amounts which they represent is very essential for a proper
perspective of financial position of a business concern. Assets are classified on the basis of their
nature. The various types of types are as under
(t) Fixed assets: Fixed Assets are the assets which are acquired and held permanently and
used in the business with the objective of making profits. Land and building, Plant and
machinery Furniture and Fixtures are examples of fixed assets.
(ii) Current assets: The assets of the business in the form of cash, debtors, bank balances,
bill receivable and stock are called current sets as they can be realized within an operating cycle
of one year to discharge liabilities.
(iii) Tangible assets: Tangible assets have definite physical shape or identity and
existence; they can be seen, felt and have volume such as land, cash, stock etc. Thus tangible
assets can be both fixed assets and current assets.
(iv) Intangible assets: The assets which have no physical shape which cannot be seen or
felt but have value are called intangible assets. Goodwill, patents, trade marks and licenses are
examples of intangible assets. They are usually classified under fixed assets.
(v) Fictitious assets: Fictitious assets are not real assets. Past accumulated losses or
expenses which are capitalized for the time being, expenses for promotion of organizations
(Preliminary expenses), discount on issue of shares, debit balance of profit and loss account etc,
are the examples of fictitious assets.
(vi) Wasting assets : These assets are also called depleting assets. Assets such as mines,
Timber forests, quarries etc, which become exhausted in value by way of excavation of the
minerals, cutting of wood etc, are known as wasting assets. Such assets are usually natural
resources with physical limitations.
(vii) Contingent assets: Contingent assets are assets, the existence, value and possession
of which is based on happening or otherwise of specific events. For example, if a business firm
has filed a suit for a particular property now is possession of other persons, the firm will get the
property if the suit is decided in it favour. Till the suit is decided, it is a contingent asset.
Classification of Liabilities
A liability is an amount which a business firm is ‘liable to pay’ legally. All the amounts which
are claims by outsiders on the assets of the business are known as liabilities. They are credit
balances in the ledger. The capital and liabilities of the business are shown on the left hand side
in the balance sheet. Liabilities are classified into four categories as given below.
(i) Owner’s capital : Capital is the amount contributed by the owners of the business. In
addition to initial capital introduced, proprietors may introduce additions capital and withdraws
some amounts from business over a period of time. Owner’s capital is also called ‘net worth’.
(ii) Long term Liabilities : Liabilities repayable after specific duration of long period of
time are called long term liabilities. They do not become due for payment in the ordinary
‘operating cycle’ of business or within a short period of time. Examples are long term loans and
debentures. Long term liabilities may be secured or unsecured, though usually they are secured.
(iii) Current liabilities : Liabilities which are repayable during the operating cycle of
business, usually within a year, are called short term liabilities of current liabilities. They are
paid out of current assets or by the creation of other current liabilities. Examples of current
liabilities are trade creditors, bills payable, outstanding expenses, bank overdraft, taxes payable
and dividends payable.
(iv) Contingent liabilities : Contingent liabilities will result into liabilities only if certain
events happen. Examples are bills discounted and endorsed which may be dishonored, unpaid
calls on investments.
BALANCE SHEET
AS ON OR AS AT............................
Particular Amount Particulars Amount
Current Liabilities: Current Assets:

Bank Overdraft Cash in Hand
Bill Payable Cash at Bank
Sundry Creditors Bills Receivable
Outstanding Expenses Short Term Investments
Unearned Income Sundry Debtors
Fixed Liabilities: Closing Stock

Long Term Loans Prepaid Expenses®
Reserves: Accrued Income
Capital: Fixed Assets:
Add: Net Profit Furniture
Less: Drawings Loose Tools
Less: Income Tax Motor Vehicle
Less: Life Insurance Premium Long Term Investments
Plant and Machinery
Land and Buildings
Patents
Goodwill
Display of Balance Sheet in Tally

A Balance Sheet is a financial statement that reports a firm's financial position at a specific
time. The term balance sheet implies that a report shows the balance between two figures. It
shows a balance between the assets and liabilities of a firm and the owner's funds. The
fundamental accounting equation applicable is therefore, Assets = Liabilities + Owner's Equity.
In Tally Balance Sheet is automatically generated and shown in the ‘Gateway of Tally’.
To view the Balance Sheet in Tally:
• Select ‘Balance Sheet’. After you select ‘Balance Sheet’ then the screen shall appear as
under
STaliy.ERP9
P: Print E: Export M: E-Mail I0: Upload |S; TallyShop G: Language R : K: Control Centre H: Support Centre H: Help [FT Detailed 'i
"©Huy ...
M/s SG Traders M/s SG Traders
Liabilities asat30-Jun-2017 Assets as at 30-Jun-2017 1st?- V
|S: Cchedue Vi
Fixed Assets 2,45,000.00

Loans (Liability) Current Assets 24,81,970.00
Current Liabilities 23,41,000.00
r;.... ...............
Profit & Loss A/c 70,770.00
Opening Balance
Current Period 70,770.00
ptNe^Cximn
h'-’ AdtO LOkilT f
'f «' T it:

pi’
Total ConfigiTv
27,26,970.00 Total 27,26,970.00
p12 Range
Q: Quit : i ; R: Remove Line u -V . -Space: Select
f !« V-rflUcz
Tally MAIN Gateway of Tally —> Balance Sheet :© Tally Solutions Pvt Ltd., 1988-201EL. 3 22:13:14
MIS Reports In Tally__________________________________________________ 8.15
r
If you see the Balance Sheet in above format, you will find that all the ledger accounts are
shown in groups. For example Fixed Assets, Investments etc. Now if you want to see the
Balance Sheet in more detailed form then click the ‘Detailed’ button on side button tool bar. Now
the Balance Sheet will appear like this:
LC
[r
ie
r.
Schedule VI (Schedule III of Companies Act 2013) Balance Sheet in

Tally
Tally provides the option of displaying Balance Sheet according to Revised Schedule VI of
Companies Act 1956, which is similar to the schedule III of New Companies Act 2013. For this
purpose there is a button on the side button panel of Balance Sheet of Tally. By clicking this
button ^Balance Sheet automatically get converted into Revised Schedule VI performa.
0 Tally.ERP 9 I—. j£t_ J
P: Pnnt E: Export M: E-Mail 0: Upload i 8: TallyShop G Language K: Control Centre H: Support Centre H: Help I FI: Detailed
SB Sheet
Schedule-VI Balance
|F2; Period
Balance Sheet as at 31-Mar-2018 In ? (Rupees)
Particulars Note No. Mis SG Traders F3 : Compare (
asat31-Mar-2018
FB; Note No:
EQUITY AND LIABILITIES

SEWS 3,86,970.00
(a) Share Capital 3.15,200.00
70,770.00 u: classify Helper

(b) Reserves and Surplus
i: New Head
(c) Money Received Against Share Warrants
Share Application money pending allotment
Non-Current Liabilities
(a) Long-Term Borrowings
(b) Deferred Tax Liabilities (Net)
(c) Other Long-Term Liabilities
(d) Long-Term Provisions
Current Liabilities 23,26,000.00
(a) Short-Term Borrowings
(b) Trade Payabies 23,26,000.00
(c) Other Current Liabilities
(d) Short-Term Provisions
Ungrouped Equity and Liabilities
Total
Q: Quit Enter: OissSeh I: I Il R- Rename Head
Tally MAIN Gateway of Tally--> Balance Sheet--> Schedule-VI Balance Sheet © Tally Solutions Pvt Ltd., 1988-201?IS- . -uxu 122:14:16
Configuration of Balance Sheet in Tally

User can configure the Balance Sheet in Tally according to his requirement. Press ‘F12’ to
change the configuration of the default Balance Sheet. The Configuration Screen is shown here.
3 Tally.ERP 9 __________________________________________ ______ ________________________________________ 10 ___ i
i E: Expert i iM: E-Mail I ion . S: TallyShop K: Keyboard K: Control Centre H: Support Centre H: Help
Configuration
Show Vertical Balance Sheet
Show Percentages 7 No
Show Working Capital figures ? No
Method of showing Balance Sheet 9 Liabilities / Assets

Exclude Particulars With Zero Closing Balance •? No
Appearance of Names Name Only
Scale factor for values Default

Show base currency symbol ? No
Q: Quit
Tally MAIN --> Gateway of Tally--> Balance Sheet--> Configuration

1. For the field ‘Show Vertical Balance Sheet?’ type ‘No’ and press Enter. The default
Balance Sheet is in the horizontal format. If the user enters ‘Yes’ then, the Balance
Sheet will be in the form of ‘Sources of Funds’ and ‘Application of Funds’ as shown
follows:
2. For the field ‘Profit or Loss, both as Liability?’ enter ‘No’ and press Enter. If ‘Yes’ is
chosen, both the Profit or Loss will be shown as ‘Liability’. In case of loss it will be
shown as deduction from liability side.
3. For the field ‘Show Percentages?’ type ‘No’ and press Enter. If ‘Yes’ is chosen, the
groups will display percentages along with the balances.
4. For the field ‘Show Working Capital Figure?’ type ‘No’ and press Enter. Set this option
to ‘Yes’ when ‘Working Capital Analysis’ is required.
5. For the field ‘Method of showing Balance Sheet?’ select ‘Liabilities/Assets’ from the
‘Type of Balance Sheet’ and press Enter. Usually, in Balance Sheet ‘Liabilities’ will be
shown on the left side of a Balance Sheet and ‘Assets’ on the right side. By setting
‘Assets/Liabilities’ the display will be interchanged. ‘Assets’ will appear on the right
side and ‘Liabilities’ will appear on the left side
6. For the field ‘Appearance of Names?’ select ‘Name Only’ from the ‘Display Name Style’
and press Enter. This will display only the names everywhere.
7. For the field ‘Scale Factor for Values?’ select ‘Default’ and press Enter. If the user does
not wish to present the actual figures in the ‘Balance Sheet’, the user may ‘round them
off to the nearest ‘Scale Factor’ like ‘Crores’, ‘Hundreds’, ‘Lakhs’, ‘Millions’, ‘Ten Lakhs’,
‘Ten Million’, ‘Ten Thousands’ and ‘Thousands’.
| PROFIT AND LOSS ACCOUNT IN TALLY

It is quite natural that the businessman is interested in knowing whether his business is
running on Profit or Loss. The main aim of accounting is to inform the Proprietor, about the
business profits or losses at the right time and in the right way. For ascertaining the profit or
loss made by the business, we prepare income statement. Income statement shows all incomes
and expenditures of business for a particular period. Income statement is further divided into
two parts i.e. Trading Account and Profit & Loss Account.
Trading Account
A concern which purchase goods and sell the same is known as merchandising concern. To
know to trading results of the business an account is prepared at end of the accounting period
which is called as trading account. Trading account is a nominal account, therefore expenses will
appear on debit side and incomes will appear on credit side .
Items shown on the debit side of Trading Account:
(i) Opening stock : The stock at the beginning of the year is called opening stock. It may
include raw materials, work-in-progress and finished goods. Opening stock is the closing stock as
per the last balance sheet, and it is available from the current year trial balance. This item is
usually shown as to first item on the debit side of the Trading account.
*1 (ii) Purchase : Any materials and goods made buy during the year which is meant for resale
is known as purchase. Purchased goods returned to the suppliers due to any reason are deducted
from purchase.
(iii) Direct expenses : Expenses which are incurred to make the goods saleable, is known
as direct expenses. Factory rent, wages, fright on purchase, octroi, import duty, customs duty,
clearing and forwarding charges, dock dues, motive power, oil, grease, waste, wages and salaries.
ft) Carriage inward and royalty on production. These all direct expenses are shown on the debit side
of trading account.
Items appearing on the credit side of trading account:
(i) Sales : Sales made during to year is called Gross sales, it includes both cash and credir
sales of goods. If sales return subtracted from the gross sales the balance is known as net sales.
(ii) Closing stock: The unsold goods which are lying in the godown at the end of the
accounting year is known as closing stock. It may include raw materials, work-in-progress and
finished goods at end of the year.
The balance of this account shows gross profit or gross loss. If credit side total is more, the
difference is gross profit and if debit side total is more, the difference is gross loss. Following is
the sample format of Trading Account.
TRADING A/C
DR. (FOR THE YEAR ENDED..................... ) CR.
To Opening Stock By Sales

To Purchases Less: Sales Returns
Less: Purchase Returns or
or Returns inwards
Returns outward By Closing Stock
*L
To Wages By Gross loss

To Wages & Salaries (if any) transferred to Profit
To Direct Expenses and Loss AJc
To Carriage, or (Balancing- Figure)
To Carriage inwards, or
To Carriage on Purchase
To Gas, Fuel and Power
To Freight, octroi and cartage
To Manufacturing Expenses, or
Productive Expenses
To Factory Expenses, such as:
Factory Lighting
Factory Rent etc.
To Dock Charges and Clearing
charges
To Import Duty or Custom duty
To Royalty
To Gross Profit
Transferred to P & L AJc
(Balancing Figures
Profit and Loss Account

Profit and loss Account is an account prepared to ascertain to net profit earned or net loss
incurred by the business concern for an accounting period. This account starts with gross profit
brought down form trading account on the credit side. It is debited with the all indirect expenses
both operating and non- operating expenses and losses and credited with all revenue incomes
and profits. The balance of this account is net profit or net loss
Items shown in the debit side of Profit and Loss Account
(i) Gross loss (if any) is the first item appearing on the debit side of profit and loss
account.
(ii) Operating expenses : These expenses are incurred to operate the business efficiently.
They are incurred in running the organization. Operating expenses include
administration, selling, distribution, depreciation and maintenance expenses.
(iii|. Non operating expenses : These expenses are not directly associated with day to day
operations of the business concern. They include loss on sale of assets, extraordinary
losses, etc.
Items shown in the credit side of Profit and Loss Account
(i) Gross profit: It is the first item appearing on the credit side of profit and loss account.
(ii) Operating incomes : These incomes are incidental to business and earned from usual
business carried on by the concern. Examples: discount received, commission received.
(iii) Non operating incomes : These incomes are not related to the business carried on by
the firm. Examples are profit on sale of fixed assets, refund of taxes etc.
PROFIT AND LOSS A/C

DR. (FOR THE YEAR ENDING................ ) CR.
To Gross Loss b/d (if any) By Gross Profit b/d

(Transferred from Trading (Transferred from Trading A/c)
A/c) By Rent from Tenant
Office Expenses: By Rent (Cr.)
To Salaries By Discount received
To Salaries & Wages or discount (Cr.)
To Rent, Rates & Taxes By Commission Received
To Printing & Stationery By Interest on Investments
To Postage & Telegram By Dividend on Shares
To Lighting By Bad-Debts Recovered
To Insurance Premium By apprentice Premium*
To Telephone Charges By Profit on sale of Assets
To Legal Charges By Income from other Sources
To Audit Fees By Miscellaneous Receipts
To Travelling Expenses By Net Loss (if any)
To Establishment Expenses Transferred to Capital
To Trade Expenses A/c
To General Expenses
Selling and Distribution
Expenses:
To Carriage Outwards, or
Carriage on Sales
To Advertisement
To Commission
To Brokerage
To Bad-debts
To Export Duty
Packing charges
To Delivery Van Expenses
To Stable Expenses
Miscellaneous Expenses:
To Discount
To Repairs
To Depreciation
To Interest (Dr.)
To Bank Charges
To Entertainment Expenses
To Conveyance Expenses
To Donation and Charity
To Loss on Sale of Assets
To Net Profit:
Transferred to Capital A/c
Display of Profit and Loss Account in Tally

Profit and Loss Account or Income Statement is a periodic statement, which shows the net
result of business operations for a specified period. The profit and loss account in Tally.ERP 9
displays the information based on the default primary groups. It is updated instantly with every
transaction/ voucher that is entered and saved. No special processing is required to produce a
profit and loss account in Tally.ERP 9.
• Select ‘Profit & Loss Account’. After you select ‘Profit & Loss Account’ then the screen
Tally MAIN -> Gateway of Tally --> Profit & Loss A/c © Tally Solutions Pvt Ltd. 1988-2011. . 72:15:32
Configuration of Profit and Loss Account in Tally

Tally give option of configuration of Profit and Loss Account according to need to the user.
There is an icon on gateway of tally i.e. ‘Configuration’. Select the same or pres F-12. After you
select configuration:
Show Vertical Profit & Loss If you want to see P&L in vertical form (Statement Form) then write ‘yes’.
Account In our you want to see in horizontal form (T Form) then select ‘No’.
Show Percentage Select ’No’.
Show with Gross Profit Select ‘Yes’ if you want to see trading account separately.
Appearance of Name Select ‘Names only’
Scale Factor for Values Select ‘Default’
Now your screen shall appear as under:-
After you press enter on last command then format of your profit and loss account will
change into parts i.e. it will show trading account and profit & loss account in two parts. Now.
you can see gross profit and net profit separately. This screen will appear as under:-
Tally MAIN --> Gateway of Tally --> Profit & Loss A/c © Tally Solutions Pvt Ltd., 1988-201F . 72:15:59
If you see the Profit & Loss Account in above format, you will find that all the ledger
accounts are shown in groups. For example — direct expenses, indirect expenses etc. Now’ you
want to see the profit and loss account in more detailed manner then you just select ‘Detailed’ on
screen. Now, your screen shall appear as under:-
@ Tally.ERP 9
?: Print E; Export : Mi E-Mail 0: Upload S: TallyShop G: Language ; K; Control Centre H: Support Centre: H: Help Ft Condensed I
iiliiE ? Period
M/s SG Traders MfsSG Traders
Particulars 1-Apr-2017to30-Jun-2017 Particulars 1-Apr-2017 to 30-Jun-2017 F7' valuation
S: Schedule VI'
Sales Accounts 16.40,000.00

Air-Conditioner Sates (6,40,000.00
Refrigerator Closing Stock 19,33.000.00
Television Air-Condttloner f3,03,0OO.OO
Purchase Accounts 34,65,000.00 Refrigerator 2,25,000.00
Purchase 34,66,000.00 Television 4,05,000.00
Grass Profit do 1,07,000.00

35,73.000.00 36,73.000.00
Indirect Expenses 36.230.00 Gross Profit bff 1,07,000.00

Staff Welfare Exps Indirect Incomes
ftfiOcf 6,230.00
Income C: New Column j
SALARV 30,000.00
A: Alter Column I
Nett Profit 70,770.00
FS: SWiSS
F10: A/c'Pepcrts|
Fill features”]
FIX. Configure 1
Total 1,07,000.00 Total 1,07.000.00
FIS:Range 7]
Q: Quit ft. Remove Line u • : Space: Select FIS: Value • ”1
Tally MAIN -> Gateway of Tally --> Profit & Loss A/c .© Tally Solutions Pvt Ltd., 1988-201E1 22:16:29
SCHEDULE VI (SCHEDULE III OF COMPANIES ACT 2013) PROFIT
I & LOSS ACCOUNT IN TALLY

Tally provides the option of displaying Profit and Loss account according to Revised Schedule
VI of Companies Act 1956, which is similar to the schedule III of New Companies Act 2013. For
this purpose there is a button on the side button panel of P&L account of Tally. By clicking this
button, P&L account automatically get converted into Revised Schedule VI performa.
Click on S: Schedule VI button or press Alt+S to view Schedule VI Profit & Loss A/c
The Schedule VI Profit & Loss A/c is displayed as shown

@ Tally.ERP 9
Q: Quit I 0: Copy Classify^ Er.ter: :: •, l - - | >?: ~ ' • R: Rename Head
Tally MAIN --> Gateway of Tally --> Profit & Loss A/c--> Schedule VI- Statement of Profit & Loss Tally Solutions Pvt Ltd., 1988-2015L
Following are some of the features of Schedule VI P&L account of Tally:

• Sales & Income Groups are mapped to Schedule VI incomes by default.
• Expenses & Purchase Groups are automatically mapped to Schedule VI expenditure.
• Tally provides option to rename income & expenditure.
• In Tally there is flexibility to regroup items within income & expenditure
• Tally provides flexible Schedule numbering.
• There is facility of export to Excel for further formatting if required.
| FUNDS FLOW AND CASH FLOW IN TALLY
Cash Flow Statement

/•.' A cash flow statement concentrates on the transactions that have a direct impact on cash. It
deals with the inflow and outflow of cash between two Balance Sheet dates. That is, it explains
the changes in cash position between the two periods. Here the term cash stands for cash, bank
balances and cash equivalents. Every enterprise has to prepare a Cash Flow Statement to report
cash flows during the period classified by Operating, Investing and Financing activities in a
manner which is most appropriate to its business. An enterprise can report cash flows using
either
1. Direct method - Where the major classes of gross cash receipts and gross cash payments
are disclosed.
2. Indirect method - Where the net profit or loss is adjusted for the effects of transactions
of a non-cash nature, any delays or accruals of past or future operating cash receipts or
payments, and items of income or expense associated with investing or financing cash flows.
Following are the steps for viewing Fund Flow Statement.
1. Go to Gateway of Tally
2. Go to Display Menu
3. Enter on Cash I Funds Flow
4. Press Enter on Cash Flow Menu
5. Now Select any month for which you want to view Cash Flow Statement
6. Then Press Enter
[3 Tally.ERP 9
P: Print E: Export M. E-Mail 0: Upload S . TallyShop G: Language >■ K: Control Centre H: Support Centre H: Help

Inflow 1-May-2017 to 31-May-2017 Outflow 1-May-2017 to 31-May-2017 [F4: Daily Flow
IL: liicladePost-da&d
I Current Assets Current Liabilities 5,15,000.00

Sundry Debtors 1,00,000.00 Provisions 15,00000
Sundiy Creditors 5,00,00000
Indirect Expenses 1,820.00
Frt & Oct 1,820.00
1C: New Column:

i A- After Column
|N: Auto Column:
[FS - - . "
fnÂtPeports-
1 more... 1 more... „ [F?1; Features i
Total 1,00,000.00 Total 5,16,820.00
|F12; Configure j
Net! Inflow : (-)4,16,820.00
[FI 2: Range •
0. Quit ■ ! ! R: Remove Line U. Space - Select
|F12; Value
Tally MAIN —> Gateway of Tally — > Display Menu —> Cash/Funds Flow — > Cash Flow —> Cash Flow Summary © Tally Solutions Pvt Ltd., 1988-201EC 22:17:56
Funds Flow Statement

A fund flow statement is useful tool for analysis of funds The basic purpose of this statement
if is to indicate the source and application of funds for a given period. It is a financial statement
which reveals how a particular business has been financed and how resources were used between
the opening and closing balance sheet date. Thus a funds flow statement is a report that explains
the movement of funds during a particular accounting period. It consists of two parts.
• Source of funds
• Application of funds .
The difference between these two shows the net change in the working capital for a
particular period. It shows all those transaction which effect the net working capital of the firm.
Following are the steps for viewing Fund Flow Statement.
2. Go to Display Menu
3. Enter on Cash I Funds Flow
4. Press Enter on Funds Flow Menu
5. Now Select any month for which you want to view Fund Flow Statement
6. Then Press Enter
| RATIO ANALYSIS IN TALLY

The term ‘ratio’ simply means one number expressed in terms of another. It shows the
quantitative relationship between two numbers. In accounting ratio analysis refers to the
analysis and interpretation of the figures appearing in the financial statements (i.e., Profit and
Loss Account, Balance Sheet and Fund Flow statement etc.). Khan and Jain define the term
ratio analysis as “the systematic use of ratios to interpret the financial statements so that the
strengths and weaknesses of a firm as well as its historical performance and current financial
conditions can be determined.” According to J. Batty, the term ‘accounting ratio’ is used to
describe significant relationships between figures shown on a Balance Sheet, in a Profit and Loss
Account, in a Budgetary Control System or in any other part of the accounting organization.
Nowadays ratio analysis is used by all business and industrial concerns in their financia.
analysis. It enables the users like shareholders, investors, creditors, Government, and analysts
etc. to get better understanding of financial statements.
The following are the four steps involved in the ratio analysis:
(i) Selection of relevant data from the financial statements depending upon the objective of
the analysis.
(ii) Calculation of appropriate ratios from the above data.
(iii) Comparison of the calculated ratios with the ratios of the same firm in the past, or the
ratios developed from projected financial statements or the ratios of some other firms or
the comparison with ratios of the industry to which the firm belongs.
(iv) Interpretation of the ratios.
Types of Ratios
The use of ratio analysis is not confined to financial manager only. There are different
parties interested in the ratio analysis for knowing the financial position of a firm for different
purposes. In view of various users of ratios, there are many types of ratios which can be
calculated from the information given in the financial statements.
(a) Classification According to Sources:

Accounting ratios can be further classified into following three groups:
1. Balance Sheet Ratios: These ratios are also known as financial ratios. These ratios
deal with relationship between two items or group of items which are both available in
Balance sheet. Balance Sheet Ratios are those ratios the components of which are
taken from Balance Sheet values/figures as appeared in a balance sheet of a firm, i.e.
assets and liabilities. Examples of these ratios are: Current ratio, Liquid ratio, Debt-
Equity ratio, Capital bearing ratio, Proprietary ratio, etc.
2. Profit and Loss Account Ratios: These ratios deal with the relationship between two
items or group of items which are usually taken out from the profit and loss account.
Examples of these ratios are: Gross profit ratio, Net profit ratio, Operating ratio,
Operating profit ratio, Interest coverage ratio etc.
3. Inter-statement Ratios or Combined Ratios:These ratios deal with the
relationship between items, one of which is drawn from profit and loss account and
other is from balance sheet. Examples of these ratios are: Stock turnover ratio, Debtors
turnover ratio, Creditors turnover ratio, Assets turnover ratio. Return on capital
employed, etc.
(b) Classification According to Nature:

Under this classification, ratios are grouped as:
1. Liquidity Ratios: The terms liquidity and short-term solvency are synonymously
used. The liquidity ratios indicate the liquidity position of the enterprise. These ratios
analyse the ability of the firm to meet its current liabilities out of current assets. Liquid
ratios are of help in ascertaining the effectiveness of the working capital management.
Examples of these ratios are: Current ratio, Quick ratio etc.
2. Leverage Ratios: It refers to those financial ratios which measure the long-term
solvency and capital structure of the firm. They show the mix of funds provided by the
owners and lenders and also the risk involved in debt financing. Examples of these
ratios are: Debt-Equity ratio, Capital gearing ratio, Fixed assets to Net worth ratio,
Interest coverage ratio etc.
3. Turnover or Activity Ratios: These ratios measure the efficiency with which the
funds have been employed in the business. They indicate frequency of sales with
respect to its assets. These are computed with reference to sales or cost of goods sold
and expressed in terms of times or rates. Examples of these ratios are: Stock Turnover
ratio, Debtors Turnover ratio, Creditors Turnover ratio, Fixed Assets Turnover ratio,
etc.
4. Profitability Ratios: Profitability is an indication of the efficiency with which the
operations of the business are carried on. Profitability ratios show the effect of business
transactions on the profits. A lower profitability ratio may arise due to lack of control
over business expenses. Examples of these ratios are: Gross profit ratio, Net profit
ratio, Operating ratio, Operating profit ratio, Return in capital employed, etc.
Different Ratios in Tally

Following ratios can be viewed in Tally
(i) Current Ratio - (Current Assets : Current Liabilities) - Current Ratio shows the
liquidity position of a business and may be defined as the ratio of current assets to
current liabilities. It is also known as Working Capital Ratio. The ideal ratio is 2 under
normal business conditions.
(ii) Quick Ratio - (Current Assets - Stock in Hand : Current Liabilities) - Liquid Ratic
may be defined as the ratio of liquid assets to liquid liabilities or current liabilities. It is
concerned with the relationship between liquid assets and liquid or current
liabilities.The other terms used for liquid ratio are ‘Quick ratio’ and ‘Acid Test Ratio'
This ratio is useful in planning future cash requirements.
(iii) Debt Equity Ratio - (Loans (Liabilities) : Capital + Net Profit) - This ratio measures
the claims of outsiders and the owners, i.e. shareholders against the assets of the firm.
It is also known as External-Internal Equity Ratio. In short, it expresses the relation
between the external equities and internal equities, or the relationship between
borrowed capital and owner’s capital. It is a measure of long-term solvency of the
business.
(iv) Gross profit % (Gross Profit: total Turnover) - It is the ratio of gross profit to net sales
expressed as a percentage. It expresses the relationship between gross profit margin
and sales. The basic components are gross profit and sales. Net Sales means total sa.es
minus sales returns. Gross profit would be the difference between net sales and cost f
goods sold. This ratio is useful, where an enterprise produces more than one product, ii
identifying the order of profitability and making decisions such as increasing
production capacity, continuance of a product etc.
(v) Net Profit % (Net Profit : Total Turnover) - This is the ratio of net income or profe
after taxes to net sales. Net Profit as used here, is the balance of Profit and Los*
Account, which is arrived at after considering all non-operating income such as interest
on investments, dividends received, etc., and all non-operating expenses like loss on
sale of investments, provision for contingent liabilities, etc. This is useful in identifying
the overall profitability of the enterprise.
(vi) Operating Cost (Operating Cost: Turnover) - This is the ratio of operating cost to net
sales. The term ‘operating cost’ refers to cost of goods sold plus operating expenses. This
is closely related to the ratio of operating profit to net sales. For example, if the
operating ratio is 80%, then the operating profit ratio would be 20% (i.e., 1 - operating
cost ratio).This ratio is useful in making decisions in the areas of cost control, cost
reduction etc.
(vii) Receivables Turnover - This ratio is an analysis of debtor wise payment
performance and a useful tool in identifying the most preferred and least preferred
customers or agents and planning the receivables collection process. This ratio indicates
the efficiency of the credit and collection policies of the firm.
(viii) Return on Investment - It is referred to as a percentage of net profit I capital + net
profit. Return on Investment is considered to be the best measure of profitability in

order to assess the overall performance of the business. A comparison of the ratio with
similar firms, with the industry average and over time would provide sufficient insight
into how efficiently the long-term funds of owners and creditors are being used. The
higher the ratio, the more efficient use of the capital employed.
(ix) Return on working capital - It is referred to as the percentage of net profit to
working capital (current assets — current liabilities).
(x) Working capital turnover ratio - It indicates how effectively working capital is used
in terms of turnover it can help to generate. It is a useful tool in identifying the level of
deployment of funds with respect to sales.
(xi) Inventory turnover ratio (turnover : inventory) - It is also known as Stock Turnover
Ratio. Normally, it establishes a relationship sales during a period and inventory held
in that period. This ratio indicates whether investment in inventory is within proper
limit or not. Inventory turnover ratio indicates the efficiency of inventory management.
It shows how fast inventory is used/sold. It is an effective tool to measure the liquidity
of inventory and thereby to avoid any danger of over-stocking.
Display jRatio Analysis Report in Tally

Ratio analysis is a powerful tool for financial analysis. A meaningful analysis of a financial
statement is made possible by the use of ratios. 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. Tally automatically calculates many ratio for the
purpose of analysis.
Following are the steps to view the Ratio Analysis report in Tally:
• Go to Gateway of Tally> Ratio Analysis
• The Ratio Analysis screen is displayed as shown.
gj Tally.ERP 9 =?;i igji jaor.SjWi
g: Quit
Rally MAIN Gateway of Tally Ratio Analysis
| BOOKS AND REPORTS IN TALLY
Day Book
For recording the business transactions, first of all, the vouchers are prepared by
accountants. As we know that different types of vouchers are prepared for different type of
transactions. After preparation of vouchers, now, question arises for entering the vouchers in
proper day books. Day Book means a register where all the vouchers of same nature are recorded
date-wise or in proper order . From the help of day book the summary of all the vouchers can be
seen at one place. In absence of day book, no one can get further details easily. So the day book is
a proper way to enter the transactions from voucher and further, to make the entries from day
book to the ledgers. The Day Book is a list of all transactions for a particular day, by default the
current date. It can also list all the transactions for a period. Transactions include all financial
vouchers, reversing and memorandum journals as well as inventory vouchers.
In Tally.ERP 9, the Day Book is by default displayed for the current date (as on the last date
of voucher entry). However, user may specify the required period, as per your requirement.'
Following are the steps to view the Day Book:
2. Then go to Display Menu
3. Then press enter on Day Book Menu
4. Now you can change period by pressing Alt+F2 Button.
5. Now Specify the required period to view transactions entered for that particular da;-
week and year or for any specified period.
| RECEIPT AND PAYMENT ACCOUNT

A receipt and payment account is a summarized cash book (cash and bank) for a given
period. This is simply a summary of the cash transactions as in the cash book, analyzed and
classified under suitable headings, including the opening and closing balances. Non-profit
organizations (also called non-trading concerns) prepare a receipt and payment account at the
end of year. With the help of this account and some additional information, an income and
expenditure account is prepared to disclose the true results of non-profit organizations. Receipt
and payment account cannot disclose the true result of non-trading concern. All the information
necessary for the preparation of this account is available from cash book. Various cash receipts
and cash payments during the whole year find place in this account in a classified manner. Its
closing balance indicates cash in hand and cash at bank at the year end.
Characteristics of Receipt and Payment Account:
1. It is abridged addition of cash book - it is, in effect, a summary of cash book.
2. All cash receipts during the whole year are recorded on its left hand (i.e., debit) side.
While all the cash payments during the whole year written on its right hand
(i.d., credit) side, arranged in a classified form.
3. Cash receipts and cash payments of both capital and revenue nature are recorded here.
4. Only cash transactions are recorded in this account.
5. It generally shows a debit balance. In case of bank overdraft balance, however, its net
balance may be credit. Again, it may also show nil balance but such occasion is rare.
6. Its closing balance indicates closing cash in hand and closing cash at bank.
7. It is not an account within the double entry system - it is a statement only.
8. It is prepared on the last day of the accounting year in manual accounting. However, in
Tally, it is readily available.
Tally.ERP 9 has Receipts and Payments report that displays the cash flow summary of an
organization with Cash and Bank balance for a specified period. This report begins with the
opening Cash and Bank balance at the commencement and ends with the closing Cash and Bank
balance, in contrast to the Cash Flow report that does not consider the Opening Balance of cash.
The Receipts and Payments report shows only the realized amount of organization’s Incomes and
Expenses for the specified period but not the outstanding receivables and payables. On the
report, the receipts are presented on the debit side while payments are on the credit side. Most
importantly, the report displays up to date information from the date of opening the Cash Book
till the last entry of the date specified.
• To view Receipts and Payments report in Tally.ERP 9:
• Enter into Display
• Click Receipts and Payments.
• The Receipts and Payments Account is displayed.
• Press F2: Period to change the period as required.
• Select the required group and press Enter to go to Receipts and Payments Summan
reports
[3 Tally.ERP 9 ________________________________ ‘ ~ r'5tn|t|"
P: Pnnt E: Export M: E-Mat ; 0: Upload •S: TallyShop G: Language ;K: K: Control Centre H: Support Centre H: Help

Receipts 1-Apr-2017 to30-Jun-2Q17 Payments 1-Apr-2017to 30-Jun-2017
Opening Balance 1,40.200.00 Current Liabilities 5,15,000.00

Bank Accounts 1,05,20000
Provisions 15,00000
Sundry Creditors 5,00,00000
Cash-in-Hand 35,00000
Indirect Expenses
Current Assets 425,000.00
Frt & Oct 6,23000
Sundry Debtors 4,25,00000
Closing Balance
Bank Accounts 30,200.00
Cash-in-Hand 13,770.00
Total 5,65,200.00 Total 5,65,200.00

Q: Qurt R: PemcveLine- U~-.. U: Space: Select
Tally MAIN --> Gateway of Tally --> Display Menu --> Receipts and Payments © Tally Solutions Pvt Ltd, 1988-201ES
I SALE REGISTER
Sales Register displays the monthly summary of sales transactions and closing balances. T™
list of transactions pertaining to each month can be viewed by selecting that month and viewing;
its details. Tally.ERP 9 permits you to change the display according to the information requirer
The period of the report and the content details can be modified. Columnar periodic reports chi.
be generated using Alt+N: Tally.ERP 9 also allows you to compare similar data of two or more
companies stored in the same data directory.
Following are some of the uses of Sales Register:
1. The periodic turnover can be analysed using the F2: Period button.
2. The periodic taxes on such turnovers can be easily computed.
3. Errors made while recording the transactions can be easily traced.
4. Sales returns during the year can be analysed and timely action can be taken to remove
the undesirable causes.
5. Performance analysis of godown, salesperson, sales area etc. can be done with the help
of cost centre and cost category report
Following are steps of checking sales register in Tally:
• Go to Gateway of Tally.
• Then go to Display Menu.
• Then go to Account Books Menu.
• Then Sale Register Menu.
• Now Press Enter on the required month to view Sale Transactions for a month.
• Now all entries will be display for the required month.
QTafly£RP9 beairifkMKlMl
| PURCHASE REGISTER
A Purchase Register displays the information on the periodic purchases of a business
concern. Purchase register helps in analyzing the details of movement of purchased goods to
various godowns, on the basis of which the stock movement at each godown is determined. It alos
gives detail of the goods purchased and returned during the year. A business could get item wise
detail or party wist detail in the purchase register.
Following are steps of checking Purchase register in Tally:
• Then go to Account Books Menu,
v Then Purchase Register Menu.
• Now Press Enter on the required month to view Purchase Transactions for a month.
V
J )A
J
| BILLS RECEIVABLE AND BILLS PAYABLE
/ A bill of exchange can be either bills receivable or bills payable. When a drawee accents a bill
and sends it back to the drawer, it becomes a bills receivable to the drawer as money is
receivable on the bill. Therefore, it becomes an asset to him. On the other hand, it becomes a bills
payable to the drawee if money is payable by him on the bill, in which case it is a liability for
him.
Displaying Bills Receivable

Bills receivable is a bill of exchange on which payment is expected to be received at a later
date. Bills receivable report in Tally.ERP 9 displays all the outstanding receivables during a
specified period.
To view the Receivables screen

• Click Display
• Click Statements of Accounts
• Then click Outstandings
• Press Receivables.
• Then Select Group. The Bills Receivable screen is displayed as shown below:
Talty.ERP 9
F1 Detailed
F2. Period
F4 Payable |
F6 Age wise
F?
|F9
[niTA^Repoits
jn 1. Features
[F12:Configjre i
■F12: Range
Tally MAIN --> Gateway of Tally --> Display Menu --> Statements of Accounts --> Outstandings --> Bills Outstanding ______________ /'WZ'SS
© Tally Solutions Pvt Ltd., 1938-201E, j
This report displays all outstanding receivables invoice-by-invoice, till date. This report takes
into consideration only those party ledgers for which the option Maintain balances Bill-by-Bill
option is enabled.
• Date : This is the Effective date of the invoice and not the actual date. Credit period is
calculated from the effective date.
I• Reference Number : This is the bill reference number entered in the Bill-wise Details
screen.
• Party's Name : The party ledger name appears in this field.
• Pending Amount : This is the outstanding balance on a particular invoice. To see the
breakup, press Shift + Enter. To view the complete breakup of all the bills, press the FI :
Detailed button. This view toggles with the button FI : Condensed.
• Due On : This is the due date of the bill (with reference to the Effective date) specified
during voucher entry.
Displaying Bills Payable

Bills Payable is a bill of exchange on which payment is expected to be made at a later date.
Bills Payable report in Tally.ERP 9 displays all the outstanding payable during a specified
period.
To view the Payable screen
• Click Display
• Press Payables.
• Select Group, the Bills Receivable screen is displayed as shown below:
* | LONG QUESTIONS_____________________________________
1. What are the various types of Accounting reports available in Tally.
2. Explain the concept of Balance Sheet. How Balance Sheet can be prepared in Tally.
3. Explain various steps of configuration of Balance Sheet in Tally.
4. Explain the various steps of modification of Accounting Reports in Tally.
5. What is Trading and Profit and Loss Account? Give various items covered in Trading
and Profit and Loss Account.
6. Explain the process of preparing Trading and Profit and Loss Account in Tally.
7. Explain the process of Preparing Balance Sheet and Profit & Loss Account according to
revised Schedule VI of the Companies Act 1956 (Schedule III of the Companies Act
2013).
8. What is Trial Balance. Why it is prepared?
9. How Profit and Loss Account is prepared in Tally? Explain various steps of
configuration of Profit & Loss Account in Tally.
10. Explain various steps involved in generating Trial Balance in accounting package
Tally.
11. What is Fund Flow Statement and Cash Flow Statement? How these can be viewed in
Tally?
12. What is Ratio Analysis? Which Ratios are available in Tally? How these can be viewed?
13. Explain the process of viewing Sales and Purchase Register in Tally.
| SHORT QUESTIONS
Ql. List the names of various accounting reports available in Tally.
Ans: In Tally user can prepare a number of accounting reports. These reports are generated
automatically in Tally. User need only to record voucher entry in the Tally, generation of
reports is automatic in Tally. User can generate Balance sheet, Profit and Loss a/c, Trial
Balance, Day Book, Statement of Accounts, Cash and Fund Flow Statement, Ratio
Analysis, List of Accounts, Exception Reports, Cash/Bank Books, Receivables and
Payables, Statutory Reports and, Bank Reconciliation Statement in tally.
Q2. Explain steps of preparation of Profit and Loss account in Tally.
Ans. The profit and loss account in Tally.ERP 9 displays the information based on the default
primary groups. It is updated instantly with every transaction/ voucher that is entered
and saved. No special processing is required to produce a profit and loss account in
Tally.ERP 9.
• Select ‘Profit & Loss Account’. Profit & Loss Account screen will appear.
Q3i Explain the steps of generation of Balance Sheet in Tally.
Ans: A Balance Sheet is a financial statement that reports a firm's financial position at a
specific time. In Tally Balance Sheet is automatically generated and shown in the
‘Gateway of Tally’.
To view the Balance Sheet in Tally:
• Select ‘Balance Sheet’. After you select ‘Balance Sheet’ then the screen will appear
automatically.
Q4. Write steps of configuration of Balance Sheet in Tally.
Ans: User can configure the Balance Sheet in Tally according to his requirement. Press ‘F12'
to change the configuration of the default Balance Sheet.
1. For the field ‘Show Vertical Balance Sheet?’ type ‘No’ and press Enter. The default
Balance Sheet is in the horizontal format. If the user enters “Yes’ then, the Balance
Sheet will be in the form of‘Sources of Funds’ and ‘Application of Funds’.
2. For the field ‘Profit or Loss, both as Liability?’ enter ‘No’ and press Enter. If “Yes’ is
chosen, both the Profit or Loss will be shown as ‘Liability’. In case of loss it will be
shown as deduction from liability side.
3. For the field ‘Show Percentages?’ type ‘No’ and press Enter. If “Yes’ is chosen, the
groups will display percentages along with the balances.
4. For the field ‘Show Working Capital Figure?’ type ‘No’ and press Enter. Set this
option to ‘Yes’ when ‘Working Capital Analysis’ is required.
5. For the field ‘Method of showing Balance Sheet?’ select ‘Liabilities/Assets’ from the
‘Type of Balance Sheet’ and press Enter. Usually, in Balance Sheet ‘Liabilities’ will
be shown on the left side of a Balance Sheet and ‘Assets’ on the right side. By
setting ‘Assets/Liabilities’ the display will be interchanged. ‘Assets’ will appear on
the right side and ‘Liabilities’ will appear on the left side
6. For the field ‘Appearance of Names?’ select ‘Name Only’ from the ‘Display Name
Style’ and press Enter. This will display only the names everywhere.
7. For the field ‘Scale Factor for Values?’ select ‘Default’ and press Enter. If the user
does not wish to present the actual figures in the ‘Balance Sheet’, the user may
‘round them off to the nearest ‘Scale Factor’ like ‘Crores’, ‘Hundreds’, ‘Lakhs’,
‘Millions’, ‘Ten Lakhs’, ‘Ten Million’, ‘Ten Thousands’ and ‘Thousands’.
Q5. Explain the steps of generation of Trial Balance in Tally.
Ans: A Trial Balance is a summary of all ledger balances to check whether the figures are
correct and balanced. Trial Balance is not directly shown in ‘Gateway of Tally’, rather it
is shown under the ‘Display’ menu available in ‘Gateway of Tally’.
• Select ‘Trial Balance’
• Press ‘Enter key’
Q6. Explain steps of configuration of Trial Balance in Tally.
Ans: User can configure the Trial Balance in Tally according to his requirement. Press ‘F12’ to
change the configuration of the default Trial Balance Screen.
1. For the field ‘Show Opening Balances’, enter ‘Yes’ and press Enter to view the
‘Trial Balance’ with ‘Opening Balances’. In case ‘No’ is selected, opening balance
will not be shown in Trial Balance.
2. For the field ‘Show transactions?’ enter ‘Yes’ and press Enter to view the
transactions in ‘Trial Balance’. Once entered, a new field comes up as ‘Net
transactions only?’, enter ‘No’ and press Enter. In case of Show Transaction, Trial
Balance will show both Debit and Credit Balance of Transactions and also the Net
balance of Transactions.
3. For the field ‘Show Closing Balances’, enter ‘Yes’ and press Enter to view the
Closing Balances in ‘Trial Balance’.
4. For the field ‘Show Percentages’, enter ‘Yes’ and press Enter to view the
Percentages in ‘Trial Balance’.
5. For the field ‘Appearance of Names’, select ‘Name Only’ from ‘Display Name Style’
and press Enter as it is selected by default.
6. For the field ‘Scale Factor for Values’, select ‘Default’ from ‘Scale Factors’ and press
Enter.
7. For the field ‘Sorting Method’, select ‘Alphabetical (Increasing)’ from ‘Sorting
Methods’ and press Enter.
8. For the field ‘Expand all levels in Detailed Format’, enter ‘Yes’ and press Enter.
Q7. Explain the steps to display the Day Book in Tally.
Ans: The Day Book is a list of all transactions for a particular day, by default the current date.
It can also list all the transactions for a period. Transactions include all financial
vouchers, reversing and memorandum journals as well as inventory vouchers.
In Tally.ERP 9, the Day Book is by default displayed for the current date (as on the last
date of voucher entry). However, user may specify the required period, as per your
requirements. Following are the steps to view the Day Book:
(i) Go to Gateway of Tally
(ii) Then go to Display Menu
(iii) Then press enter on Day Book Menu
(iv) Now you can change period by pressing Alt+F2 Button.
(v) Now Specify the required period to view transactions entered for that particular
day, week and year or for any specified period.
Q8. What do you mean by Sale Register? Explain the steps to display the Sales
Register in Tally.
Ans: £ Sales Register displays the monthly summary of sales transactions and closing balances.
The list of transactions pertaining to each month can be viewed by selecting that month
and viewing its details. Tally.ERP 9 permits you to change the display according to the
information required. The period of the report and the content details can be modified.
Columnar periodic reports can be generated using Alt+N: Tally.ERP 9 also allows you to
compare similar data of two or more companies stored in the same data directory.
Following are steps to view sales register in Tally:

• Then Sale Register Menu.
• Now Press Enter on the required month to view Sale Transactions for a month.
Q9. What do you mean by Purchase Register? Explain the steps to view the
Purchase Register in Tally.
Ans: Purchase Register displays the information on the periodic purchases of a business
concern. Purchase register helps in analyzing the details of movement of purchased goods
to various godowns, on the basis of which the stock movement at each godown is
determined. It alos gives detail of the goods purchased and returned during the year.
Following are steps to view Purchase register in Tally:
• Then Purchase Register Menu.
• Now Press Enter on the required month to view Purchase Transactions for a month.
Q10. Explain the steps to view the Bills Receivable in Tally.
Ans: Bills receivable is a bill of exchange on which payment is expected to be received at a
later date. Bills receivable report in Tally.ERP 9 displays all the outstanding receivables
during a specified period. To view the Receivables screen following are steps:
• Click Display
• Press Receivables.
• Then Select Group. The Bills Receivable screen is displayed.
Qll. Explain the steps to view the Bills Payable in Tally.
Ans: Bills Payable is a bill of exchange on which payment is expected to be made at a later
date. Bills Payable report in Tally.ERP 9 displays all the outstanding payable during a
specified period. To view the Payable screen following are steps:
• Click Display
• Press Payables.
• Select Group, the Bills Receivable screen is displayed.
PRACTICAL QUESTIONS
1. From the following balance prepare various ledgers in Tally under relevant groups with
respective amounts as opening balance and prepare Profit and Loss Account and
Balance Sheet.
Drawings 45,000 Capital Account 6,09,000
Goodwill 90,000 Bills Payable 41,400
Land and Building 1,80,000 Sundry Creditors 91,500
Plant and Machinery 1,20,000 Purchase Returns 7,950
Loose tools 9,000 Sales 3,45,000
Bills Receivable 6,000
Stock Closing 1,20,000
Purchase 1,53,000
Wages 60,000
Carriage Inwards 3,600
Carriage Outwards 4,500
Coal and Gas 16,800
Salaries 12,000
Rent, Rates and Taxes 8,400
Discount allowed 4,500
Cash at Bank 75,000
Cash in Hand 4,200
Sundry Debtors 1,35,000
Repairs 5,400
Printing and Stationery 1,500
Bad Debts 3,600
Advertisements 10,500
Sales Returns 6,000
Furniture and Fittings 3,600
General Expenses 15,750
2. From following balances generate a Trial Balance in Tally.
Capital 15,000 Land & Building 15,600
Bank overdraft 2,500 Cash in hand 680
Stock in Trade as on 1.1.04 6,000 Advertisement 210
Rent & Taxes 160 Interest & Discount received 300
Debtors 6420 Purchases 7 ,200
Provision for bad debts 370 Sales 17,000
Wages 1250 Salaries 700

Insurance 40 Discount allowed 300
Repairs to building 210 Creditors 4,100
General Expenses 500
3. From following balances generate Trial Balance in Tally and also prepare final
accounts.
Capital 4,90,000 Loan 1,57,600
Drawing 40,000 Sales 13,07,200
General Expenses 50,000 Purchases 9,40,000
Buildings 2,20,000 Motor Car 40,000
Machinery 1,86,800 Prov. for Bad Debts 18,000
Opening Stock 3,24,000 Commission (Cr.) 26,400
Coal and Power 44,800 Car Expenses 36,000
Taxes and Insurance 26,300 Bills Payable 77,000
Wages 1,44,000 Cash in Hand 1,600
Debtors 1,25,600 Bank Overdraft 66,000
Creditors 50,000 Donation 2,100
Discount (Dr.) 11,000
4. Record following vouchers in Tally and generate Balance Sheet.
July 1 Ram commenced business with cash 10,000
a
r.
July 3 Paid to bank 8,000

July 3 Bought goods for cash 500
July 5 Bought office furniture 400
July 10 Drew from bank for office 1,000
July 13 Goods sold to Shyam 2600
July 15 Bought goods from Krishan 410
July 18 Trade expenses paid 100
July 19 Received cash from Shyam 590 allowed him discount 10
July 25 Wages paid 50
July 29 Krishan paid off in full settlement of his account 400
July 31 Rent paid 100
July 31 Interest due on Capital 500
5. From following data create various ledgers with balances shown as follows and prepare
Balance Sheet and P&L Account as per revised schedule VI (Schedule III of Companies
Act 2013).
Closing Stock 30,000 Equity share capital 1,00,000
Rates and Taxes 6,000 5% debentures 25,000
Purchases 60,900 Sales 1,75,000
MIS Reports In Talty__________________________________________________________ 8,43
Wages 55,200 Creditors 8,000

Discount 1,500 Bank overdraft 12,000
Fuel 2,570 Discount 2,200
Building 70,000 Transfer fee 100
Carriage Inward 1,175 Returns outward wo
Sundry Debtors 20,000
Goodwill 28,000
Plant & Machinery 25,000
Loose Tools 6,000
Advertisement 3,000
General Expenses 4,400
Bad Debts 1,030
Debenture Interest 625
Insurance 3,000
Miscellaneous Expenses 1,000
Cash & Bank Balances 3,000
6. Record the following Transaction jn Tally and generate Profit and Loss Account and
Balance Sheet.
01-5-2017 Gopi Started business with ? 12,00,000/-
02-5-2017 Purchase goods for pash ? 2,00,000/-
03-5-2017 Purchase goods by cheque ? 3,00,000/- Ch no: - 125412.
04-5-2017 Purchase goods from Rama Pevi ? 2,25,000/-
05-5-2017 Sales goods to cash ? 15,00,000/-
06-5-2017 Purchase Machinery by cheque ? 1,00,000/- Ch no: - 812359.
07-5-2017 Rent paid ? 55,000/-
12-5-2017 Commission received ? 9,350/-
12-5-2017 Purchase computers ? 3,50,000/-
12-5-2017 Salaries paid by cheque ? 35,000/- Ch Up: - 502239.
11- 5-2017 Sales goods to Gopal ? 30,000/-
12- 5-2017 Cash deposited at hank ? 6,00,000/-
□□□
■
Appendix
Power Shortcuts for Transactions in Tally.ERP9
Tally.ERP 9 has powerful shortcuts for a faster and smoother recording of transactions.
These shortcut keys can be used while creating or altering vouchers and also while viewing
reports that showtransactions.
Power Shortcuts for Voucher Creation and AlterationScreen

1. Alt +C: To create any master (e.g. ledger, stock item) on a voucher creation or
alterationscreen
For example, on the Sales Voucher screen, put the cursor at ‘Party’s A/c Name’ and
press ‘Alt + C’ to open the ledger creationscreen.
Once, the ledger creation is done, accept the screen and you will go back to the previous
Sales Voucher screen with the newly created ledgername.
2. Ctrl + Enter: To alter any master item on a voucher creation or alterationscreen
For example, select a particular ledger or stock item on the Sales Voucher screen and
press ‘Ctrl + Enter’.
3. Ctrl + R: To repeat narration on avoucher

While you are creating or altering a voucher, go to the Narration field and
press ‘Ctrl +R’.
2 Appendix
This will copy the ‘Narration’ from the last opened transaction in the same vouchertype.
4. Ctrl + Q: To cancel or quit the screen without saving any of the changesmade
On a voucher screen, press ‘Ctrl + Q’ to quit or cancel the transaction and come out of
the screen.
This does not save any changes you havemade.
5. Ctrl + D: To delete a line in avoucher
For example, on a voucher alteration or creation screen, highlight the required line and
press ‘Ctrl + D’ to deleteit.
Accounting Voucher Alteration (Secondary) ABC Company

Sates |No 2
Ret:
Post-Dated
Party's A/c Name XYZ Company
Current Balance 13,550.00 Cr
Sales Ledger Sales Account
Name of Item
Software CD
Ctrl + D
Cardboard
1 Plastic Case
J End of List
Appendix 3
6. Alt + D: To delete a voucher from its alteration screen, you can press ‘Alt +D’
Power Shortcuts for Reports displayingTransactions

These are handy shortcuts we can use in reports like Day Book, Ledgers A/cs and
Sales/Purchase Registers etc. that showtransactions.
7. Alt + A: To add a voucher right after the cursor position in a list of vouchers For
example:
• Go to ‘Gateway of Tally > Display > DayBook
• Select one voucher and press ‘Alt + A’ to insert a voucher right after the highlighted
voucher in the list
8. Alt + I: To insert a voucher before the cursor position in the vouchers list For example,
Go to Gateway of Tally > Display > Account Books > Purchase Register >
Press'Enter’
• Press ‘Alt + I’ to insert a voucher directly before the highlighted voucher in thelist
NOTE: The same keys can also be used to toggle between voucher and invoice mode on
the sales and purchase invoice creationscreen.
9. Alt + D: To delete a voucher from the DayBook
For example, in a Day Book or other reports showing the list ofvouchers,
Select or highlight the voucher to delete > Press ‘Alt +D’.
4 Appendix
10. Alt + 2 : To duplicate avoucher

While viewing a list of vouchers inreports:
• Select the voucher of which you want to make the duplicate > Press ‘Alt +2’.
Day Book For 22 -Dee-2011
Date Particulars Vch Type Vch No Debit Amount Credit Amount

Inwards Qty Outwards Qty
22-12-2011 Indus Traders Sales 1 94,256.00

2242-3811 Innova Steel Traders Purchase 1 1,16,145 90
Alt+ 2
X: Cancel "he Dentate ] Ac Add Vch T. Insert Vch I ft: Remove Lne; J' - * - ’’
- Delete Space: Select Spacec SthcAl
Now the voucher creation screen with the similar details or information on the selected
voucher will be opened.
Appendix 5
11. Alt + Enter: To view the ‘Voucher Display’ To dothis:

• Select the required voucher on from the list of vouchers > Press ‘Alt +Enter’.
• The ‘Voucher Display’ screen will appear as shownbelow:
Hence, you can use these power shortcuts to help save time and enhance the usage
experience in Tally. ERP9.
Shortcut keys in Tally

Tally provides a number of short cut keys. Whenever doing any operation in Tally either we
can use various screens available in Tally or we can use short cut keys for performing the
function. The shortcut keys appear in button names in the button bar (right side of the Tally
screen).
The buttons have a function key before the button names ( Eg : FI: Select Cmp) which means
you need to press FI key (Function Key) to select the 'Select Company' screen
The buttons have an underlined character ( Eg: F3:Cmp Info), which means you need to
press ALT + F3 to select the 'Company Info' screen.
6 Appendix
Some buttons have a doublemnderlined character (tig: As Voucher) which means you heed to
press CTRL + V to select the 'Voucher' in voucher mode.
The shortcut keys available in Tally are listed iri the below table:
Function Key Combination

Windows Functionality Availability
Fl To select a company At all masters menu screen
To select the Accounts Button and At the Accounting / Inventory Voucher
Inventory buttons creation and alteration screen
F2 To change the menu period At almost all screehs in TALLY
F3 To select the company At almost all screens in TALLY
F4 To select the Contra voucher At Accounting / Inventory Voucher
creation and alteration screen
F5 To select the Payment voucher At Accounting Z Inventory Voucher
F6 To select the Receipt voucher At Accounting Z Inventory Voucher
F7 To select the Journal voucher At Accounting / Inventory Voucher
F8 To select the Sales voucher At Accounting Z Inventory Voucher
F8 To select the Credit Note voucher At Accounting / Inventory Voucher
(CTRL+F creation and alteration screen
8)
F9 To select the Purchase voucher At Accounting / Ihventory Voucher
F9 To select the Debit Note voucher At Accounting / Ihventory Voucher
(CTRL+F creation and alteration screen
9)
F10 To select the Reversing Journal At Accounting Z Ihventory Voucher
voucher creation and alteration screen
Fit) To select the Memorandum voucher At Accounting Z Inventory Voucher
Fll To select the Functions and At almost all screens in TALLY
Features screen
F12 To select the Configure screen At almost all screens in TALLY
Special Key Combination

Appendix 7
ALT+ 2 To Duplicate a voucher At List ofVouchers — creates a voucher

similar to the one where you positioned
the cursor and used this key
combination
ALT + A To Add a voucher At List of Vouchers - adds a voucher
after the one where you positioned the
cursor and Used this key combination.
ALT + C To create a master at a voucher At voucher entry and alteration

screen (if it has not been already screens, at a field where you have to
assigned a different function, as in select a master from a list. If the
reports like Balance Sheet, where it necessary account has not been created
adds a new column to the report) already, Use this key combination to
create the master without quitting from
the voucher screen.
ALT + D To delete a voucher At Voucher and Master (Single)
To delete a master alteration screens. Masters can be
(if it has not been already assigned deleted subject to conditions, as
a different function, as explained explained in the manual.
above)
ALT + E To export the report in ASCII, SDP, At all reports screens in TALLY
HTML OR XML format
ALT + I To insert a voucher At List ofVoUchers - inserts a voucher

before the one where you positioned the
cursor and used this key combination.
ALT + O To Upload the report at your At all reports screens in TALLY

website r
ALT + M To Email the report At all reports screens in TALLY
ALT + P To print the report At all reports screens in TALLY
ALT + R,,- To remove a line in a report At all reports screens in TALLY
ALT + S To bring back a line you removed At all reports screens in TALLY
uslhg ALT + R
ALT+V Prom Invoice screen to bring Stock At Invoice screen -> Quantity Field
Journal screen Press Alt + V to select the Stock
Journal.
ALT + W To view the Tally Web browser. At all reports screens in TALLY
8 Appendix
ALT + X To cancel a voucher in Day At all voucher screens in TALLY

Book/List of Vouchers
ALT + R To Register Tally At Licensing Menu in TALLY
CTRL + A To accept a form - wherever you At almost all screens in TALLY, except
use this key combination, that where a specific detail has to be given
screen or report gets accepted as it before accepting.
is.
CTRL + B To select the Budget At Groups/Ledgers/Cost Centres/
Budgets/Scenarios/Voucher Types/
Currencies (Accounts Info) creation and
alteration screen
CTRL + C To select the Cost Centre At Groups/Ledgers/Cost Centres/
To select the Cost Category Currencies (Accounts Info) creation and
alteration screen
At Stock Groups/ Stock Categories/
Stock Items/ Reorder Levels/ Godowns/
Voucher Types / Units of Measure
(Inventory Info) creation/alteration
screen
CTRL+ E To select the Currencies At Groups/Ledgers/Cost Centres/
alteration screen
CTRL + G To select the Group At Groups/Ledgers/Cost Centres/
alteration screen
CTRL +1 To select the Stock Items At Stock Group/ Stock Categories/ Stock
Items/ Reorder Levels/ Godowns/
screen
CTRL + L To select the Ledger At Groups/Ledgers/Cost Centres/
alteration screen
CTRL + 0 To select the Godowns At Stock Group/ Stock Categories/ Stock
Items/ Reorder Levels/ Godowns/
screen
Appendix 9
CTRL + Q To abandon a form — wherever you At almost all screens in TALLY.

use this key combination, it quits
that screen without making any
changes to it.
CTRL + Rewrite data for a Company From Gateway of Tally screen
Alt + R
CTRL + S Allows you to alter Stock Item At Stock Voucher Report and Godown
master Voucher Report
CTRL + U To select the Units At Stock Groups/ Stock Categories/

Stock Items/ Reorder Levels/ Godowns/
Voucher Types / Units of Measure (
Inventory Info) creation/alteration
screen
Ctrl + V To select the Voucher Types At Groups/Ledgers/Cost Centres/
alteration screen
Special Function Key Combination

ALT + FI To close a company At all the menu screen

To view detailed report At almost all report screen
To explode a line into its details At almost all screens in TALLY
ALT+ F2 To change the system period At almost all screens in TALLY
ALT + F3 To select the company info menu At Gateway of Tally screen

To create/alter/shut a Company
ALT + F4 To select the Purchase Order At Accounting / Inventory Voucher

Voucher Type creation and alteration screen
ALT + F5 To select the Sales Order Voucher At Accounting / Inventory Voucher

Type creation and alteration screen
To view monthly and quarterly At almost all report screens in TALLY
report
ALT + F6 To select the Rejection Out At Accounting / Inventory Voucher
To change the Sales Order
Voucher Type
10 Appendix
ALT + F7 To select the Stock Journal At Accounting / Inventory Voucher

To accept all the Audit lists At TallyAudit Listing screen
ALT+ F8 To select the Delivery Note At Accounting / Inventory Voucher
To view the Columnar report At Ledger Voucher screen
ALT + F9 To select the Receipt Note At Accounting / Inventory Voucher
ALT + F10 To select the Physical Stock At Accounting / Inventory Voucher
ALT + F12 To filter the information based on At almost all report screens
monetary value
CTRL + Advanced Config At Gateway of Tally

ALT + F12
Key Combination used for navigation

PgUp Display previous voucher during At voucher entry and alteration screens
voucher entry/alter
PgDn Display next voucher during At voucher entry and alteration screens
voucher entry/alter
ENTER To accept anything you type into a You have to use this key at most areas
field. in TALLY
To accept a voucher or master At the receivables report — press Enter
To get a report with further details at a pending bill to get transactions
of an item in a report. relating to this bill (e.g., original sale
bill, receipts and payments against this
bill, etc)
ESC To remove what you typed into a At almost all screens in TALLY.
field
To come out of a screen
To indicate you do not want to
accept a voucher or master.
SHIFT + Collapse next level details At Voucher Register screen and Trial
ENTER Balance report
A-
Appendix 11
SHIFT + To explode a line into its details In almost all Reports:

ENTER At a Group/Stock Group/Cost
Category/Godown/Stock Category -
displays Sub Groups and Ledgers/Stock
Items/Cost Centres/Secondary
Godowns/Secondary Stock Categories
At a Voucher - displays its entries and
narration
At a Stock Item- displays its godowns
and batch details
At Voucher Register screen - displays
the next level details
At Trial Balance report - displays the
next level details
CTRL + To alter a master while making an At voucher entry and alteration screens
ENTER entry or viewing a report At all reports
□ □□
I

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>1 5?

Dr. Neeraj Goyal

Dr. Rohit Sachdeva

10 + 230 = 240 Pages 20" x 30" 30 Formes

KPP O 26428 2 0-26637 2

Unit II: Maintaining Stock Keeping Units (SKU):

Unit III: Recording Day-To-Day Transactions in ERP:

Unit IV: Accounts Receivable and Payable Management:

Unit V: MIS Reports:

1. Introduction To Computerized Accounting 1.1 - 1.24

2. Introduction To Tally.ERP 9 2.1-2.14

3. Creation And Configuration Of Company In Tally 3.1-3.26

4. Chart Of Account, Groups And Ledger Creation 4.1 - 4.30

5. Stock Maintenance In Tally 5.1-5.28

6. Recording Day To Day Transactions In Tally 6.1 - 6.20

7. Receivables And Payables Management In Tally 7.1-7.30

8. MIS Reports In Tally 8.1 - 8.43

| ACCOUNTING INFORMATION SYSTEM

| MANUAL ACCOUNTING SYSTEM

Introduction to Manual Accounting

Following are some of the important characteristic of Manual Accounting System:

Advantages of Manual Accounting System

Limitations of Manual Accounting System

| COMPUTERIZED ACCOUNTING SYSTEM

History of Computerized Accounting Features of

Meaning of Computerized Accounting

le for Meaning of Computerized Accounting

Figure - Computerized Accounting System

Features of Computerized Accounting System

8. Maintenance of Stock Accounts; Area in wh

Components/Subsystems of Computerized Accounting System 1- Tran:

8. Tax accounting sub system : This system implemented in large organizations to

Area in which computerized accounting is commonly used :

Problems Faced In Computerized Accounting System

| DIFFERENT TYPES OF ACCOUNTING SOFTWARE

Advantages of Spreadsheet Software

| PREPACKAGED (READYMADE) ACCOUNTING PACKAGE

Advantages of Pre-Packaged Accounting Software

, CUSTOMISED ACCOUNTING SOFTWARE

Advantages of a Customised Accounting Package

Limitations of a Customised Accounting Package

| ENTERPRISE RESOURCE PLANNING (ERP)

advantages of ERP System

Limitations of ERP system

DIFFERENCE BETWEEN COMPUTERIZED ACCOUNTING AND

Basis of Difference Manual Accounting Computerized Accounting

1. Definition Manual accounting is the In this system of accounting, we

2. Calculation In manual accounting, all In computerized accounting, our

3. Ledger Accounts In manual accounting, we check Computerized accounting system i

4. Adjustment Both adjustment journal Only adjustment entries will pass

7. Rate of In manual accounting there is In computerized accounting, rate

12. Modification of Modification of original entry is Any modification in original entry

Q4. What are problems in computerized accounting?

Basis of Difference Manual Accounting Computerized Accounting

13. Definition Manual accounting is the In this system of accounting, we

14. Calculation In manual accounting, all In computerized accounting, our

15. Ledger Accounts In manual accounting, we check Computerized accounting system 1

19. Rate of In manual accounting there is In computerized accounting, rate

24. Modification of Modification of original entry is Any modification in original entry

Q6. What are Readymade Accounting Packages?

| DESIGN PRINCIPLES OF TALLY

8. "Scenario" management - Tally can do business forecasting and planning. Business

6. Concurrent multi-lingual capability : Tally.ERP 9 offers the exclusive capability of