1 1 . basic accounting
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Accounting Packages
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Accounting Software
• It is a system that carries out mechanical operations in accounting process.
• It does not have any accounting knowledge.
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Accounting for Software
• Income • Expenditure
Liability Asset
Debit Credit
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Types of Accounts
• Personal
• Real
• Nominal
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Personal Accounts
Accounts representing persons or group of persons.
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Real Accounts
Accounts related with real things in this world.
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Nominal AccountsAccounts related with unreal things in the world.
All Expenses and Incomes
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Accounting Theme
Credit Debit
Income (Nominal)
Expenses(Nominal)
Liability(Personal)
Asset(Personal or Real)
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Rules of Accounting
Type of Account
Debit Credit
Personal The Receiver The Giver
Real What Comes In What goes out
Nominal All Expenses & Losses
All Incomes & Gains
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Basic Question
• What do you mean by Debit ?
Any Guess ?
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Basic Question
• What do you mean by Debit ?
Left Hand Side of a Ledger Account
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Flow of Accounting Understanding the Transaction
Voucher Entry
Posting
Balancing
Trial Balance
P & L Account Balance Sheet12
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Structure of Accounting Ledger Accounts
Income
Credit Debit
Liability AssetExpenditure
Balance Sheet
P & L Account
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Ledger Grouping
• Income Groups
• Liability Group
• Expenditure Groups
• Asset Group
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Profit & Loss Account Group
• Income :– Direct Income – Indirect Income – Sales Accounts
• Expenditure :– Direct Expenses– Indirect Expenses– Purchase Accounts
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Balance Sheet Group • Liabilities :
– Capital – Bank OCC/Bank OD– Current Liabilities– Duties & Taxes– Loans (Liability)– Provisions– Reserves & Surplus – Retained Earnings – Secured Loans– Sundry Creditors – Suspense– Unsecured Loans
• Assets :– Bank Accounts – Cash in Hand – Current Assets – Deposit (Assets)– Fixed Assets – Investments – Loans & Advances
(Asset)– Misc. Expenses (Asset)– Sundry Debtors
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Accounting Software
• It is a system that carries out mechanical operations in accounting process.
• It does not have any accounting knowledge.
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What is buying a software ?
• We actually never buy a software• Demo copy of all software is available free• We buy license to use the software
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Legal/Demo/Pirated Software
• Legal software - Full functional software without any restrictions.
• Demo Software - Used for demo purpose with all major features but with a very few restrictions.
• Pirated software - Cracked software, nearly full functional, but illegal.
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Demo / Educational Version
• This is a full functional software except a very few restrictions.
• This can be very well used for learning purpose.
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Software License
• License to use is to bought at the time of buying a software.
• This includes a unique Serial No. and a key for that particular serial number.
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Software Versions
• Version are used to differentiate same software according to stages of development.
• This is a totally new software with some major changes.
• E.g. Tally 4.5, 5.4, 6.3, 7.2, 8.1, 9, ERP9
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Software Release
• Releases are like editions of a book.• Software of same version with a new
release will be having minor changes.• Changes / updations are made in every
software on continuous basis. • Updations may be related to rectification of
mistakes, addition of new features, statutory changes, etc.
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Types of Licenses• Single User • Multi User • In case of Tally, there is no limit on
number of users. • In some cases, licensing may be
according to the number of user, i.e. for every five users, or per user, etc.
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Comparison of softwares pricesSoftware Single User
Rs. Multiuser
Rs.
Busy 11,880 29,770(Unlimited Users)
Miracle 13,500 27,000(Unlimited Users)
Focus 33,000 2,500 per user
Tally 13,500 40,500(Unlimited Users)
Wings 15,000 25,000 (five user)Rs. 10,000/five
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Why to learn Tally only ?
Tally is king of accounting packages in India.
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Tally Versions• Tally 4• Tally 4.5• Tally 5• Tally 5.4• Tally 6.3• Tally 7.2• Tally 8.1• Tally 9• Tally.ERP 9
Basic Accounting Basic Accounting Window Based Inventory Hardware Lock VAT, Service Tax, TDS Multilanguage, FBT, Excise International Taxation, Payroll Excise for Manufacturers,
Remote Login 27
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Operating Systems
• Upto Tally 4.5, it was using DOS. • From Tally 5 onwards, all versions are
windows based.
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DOS & WindowsFeature DOS Windows
Speed More Less
Printing Cost Less More
Reliability More Less
User Friendliness Less More
Presentation Poor Excellent
Facilities Less More
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Leaders in Generalised Accounting Softwares
• Tally (Tally India Pvt. Ltd., Bangalore)• Busy (Busy Infotech Pvt. Ltd., New Delhi)• Wings (Wings Infonet Ltd., Hyderabad)• Focus (Softline Software Services Pvt. Ltd.,
Hyderabad)
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Company
• “Company” in Tally means any accounting unit.
• It includes Limited Company, Partnership Firm, Trust, Society, College, School, Proprietorship, etc.
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What is Accounting Data ?
• Masters • Vouchers
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Masters
• Heads that are to be set only once. • This is the standing data. • Not expected to change frequently• Forms integral part of accounting data.
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Vouchers • This is a place where transactions
are recorded. • This will contain links to masters.• This may include other information
like date, narration, quantitative details, reference, etc.
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How data is stored ?
• In masters, independently • In vouchers along with link to
masters
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Types of Masters • Accounting Masters • Inventory Masters • Payroll Masters • Statutory Masters
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Basic Menu Style
• Masters • Transactions • Reports • Configurations/Settings
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Masters
• Creation• Alteration – Group, Name, Contact
Details, • Deletion
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Vouchers
• Used only for entering transactions in software.
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Reports • For viewing information• For alteration of transactions • For printing
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Voucher Types in Tally
• F4 : Contra• F5 : Payment • F6 : Receipt • F7 : Journal • F8 : Sales • F9 : Purchases
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F4 : Contra
• Cash deposited in bank • Cash withdrawn from bank• Cash to cash transfer• Bank to bank transfer
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F5 : Payment
• All types of payments are entered through this voucher type. (Cash and Bank)
• Credit item of a payment voucher shall be either Cash or Bank Account only.
• There can be two modes, Single Entry Mode or Double Entry Mode.
• Voucher can be with Dr. and Cr. or with To and By as prefixes.
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F6 : Receipt • There can be only two types of receipts. • Cash Receipt and Bank Receipt.• Both these receipts has to be entered here.• Debit item of Receipt Voucher will always
be either Bank or Cash• There can be two modes, Single Entry
Mode or Double Entry Mode.• Voucher can be with Dr. and Cr. or with To
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F7 : Journal
• This voucher is used for non cash transactions.
• E.g. Depreciation, provisions, trasnfer entries, purchase of fixed assets on credit.
• Journal voucher should not be used for credit sales or credit purchases.
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F8 : Sales
• This is used for cash sales as well as credit sales.
• There can be two modes, “As Invoice” or “As Voucher”.
• Party’s A/c Name means ledger to be Debited, write Cash in case of Cash Sales
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F9 : Purchases
• This voucher type is used for both types of purchases, Credit as well as Cash
• There can be two modes, “As Invoice” or “As Voucher”.
• Party’s A/c Name means ledger to be credited, Write Cash in case of Cash Purchases.
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Reports in Tally
• Balance Sheet • Profit & Loss Account • Ratio Analysis • Display
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Display • Trial Balance • Day Book • Accounts Books• Statements of Accounts • Inventory Books • Statement of Inventory • Cash Flow • List of Accounts • Exception Reports
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