accounting with tally9.0

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Module 4 FINANCIAL ACCOUNTING DEC - 20

ADCPM TALLY 9.0

~ ~ ~INDEX ~ ~ ~TOPIC PAGE

WHAT IS ACCOUNTING? .............................................................................. ............................ 02

BOOK KEEPING ............................................................................................ ............................ 02

BANKING, BANK-ACCOUNTS & CHEQUES............................................... ............................ 02 CHARACTERISTICS & BRANCHES OF ACCOUNTING ............................. ............................ 03

BASIC TERMS IN ACCOUNTING ................................................................. ............................ 04

RULES OF DEBIT & CREDIT....................................................................... ............................ 07

ACCOUNTS..................................................................................................... ............................ 08

ACCOUNTING CYCLE................................................................................... ............................ 09

MODES OF ACCOUNTING ........................................................................... ............................ 10

BOOKS OF ORIGINAL ENTRY...................................................................... ............................ 11

WHAT IS TALLY? ............................................................................................ ............................ 11

COMPANY CREATION.................................................................................. ............................ 12

SAVING, ALTERING & DELETING COMPANY........................................... ............................ 13

GATEWAY OF TALLY.................................................................................... ............................ 13

ACCOUNTS INFO., LEDERS, GROUPS & JOURNALS............................... ............................ 14 ~

VOUCHER TYPES & KEYS FOR THE VOUCHER ENTRY.......................... ............................ 18 ~

SOME KEY COMIBINATIONS....................................................................... ............................ 19

JOURNAL ENTRIES....................................................................................... ............................ 21

SOME IMPORTANT TERMS.......................................................................... ............................ 23

INVENTORY INFORMATION........................................................................ ............................ 27

VALUE ADDED TAX...................................................................................... ............................ 28

EXERCISES ON TALLY.................................................................................. ............................ 29 ~ SERVICE TAX................................................................................................. ............................ 46

TDS, FBT......................................................................................................... ............................ 47

PAYROLL ACCOUNTING .............................................................................. ............................ 48

Note: If you find any typing or printingerror/s, inform immediately to your branch o


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BLY / DEC - 2010 FINANCIAL ACCOUNTING Module

Page - 2 TALLY 9.0 ADCP

WHAT is ACCOUNTING (y[kkdu)?Accounting is the systematic recorded presentation of the financial activities of the businesEvery business has profit motive, it has transactions of financial nature such as: purchasingoods, receiving goods, incurring expenses and receiving income etc. These transactions arfinancial in nature and can affect the profit of the business. Transactions are classified asassets, liabilities, Capital, revenue and expenses. Income statements are prepared to ascertaprofit or loss of the business. The position statement is prepared to access the value of asset

and liabilities of the business. Various statements are prepared & ratios are collated to measurthe actual performance of the business. Comparison of the actual performance is compared witthe previous performance or desired performance and effective plan for future is made.

Accounting is an art of identify, classify, recording, summarizing andinterpreting business transactions of financial nature.

Book Keeping: Book-keeping is an art as well as science of recording business transactions ofinancial data related to the business operations in ordered manner with prescribed rules anregulations. All records before preparation of trial balance form are the subject-matter of bookeeping. There are many ways of classifying the systems of accounting. Popular ways are:

Single Entry System (,d fofV .kkyh): It is a system of accounting under which only onaspect (Debit or Credit) of the transaction is recorded. It is usually used by small concernwhich have very few transactions.

Double Entry System (f} fofV .kkyh): In the double entry system of book keeping complete record of both the aspects of every transaction is maintained. It states that evertransaction should always be recognized in two accounts, one as debit and other as credit.

Banking:Depositing money in banks and borrowing from banks are legal transactions. Banks are undethe control of government. Banks accept deposits from the public as well as from the businescommunity. Any one who saves money for future can deposit his savings in a bank.

Bank is a legal organisation. It accepts deposits, which can be withdrawn ondemand. It also lends money to individuals and business houses, which need it.

Bank Account:A bank account is a financial account between a customer and the bank, whemoney can be deposited or withdrawn as per customers need. Before opening a bank accounyou must consider different types of accounts:

Savings Bank Accounts (cpr [kkrk) (SB a/c):Savings accounts are the easiest and moflexible accounts, if your aim is tosave money. This popular type of account also helps yogain an interest of around four percent. Savings bank account allows its users to dramoney in form of cheques or throughAutomatic Teller Machines (ATM)in India.

Current Bank Accounts (pky [kkrk) (CA a/c): A current account is a non-interest bearinaccount which is used mainly for business transactions. This cheque-operated account opened by businessmen, companies and firms purely for business purposes.

Fixed Deposit Accounts (lkof/k tek [kkrk) (FD a/c): In this type of account customers cadeposit a fixed deposit amount for a fixed period of time at a fixed rate of interest. Monecannot be withdrawn from such accounts before the time period ends, though some bankallow withdrawal after charging a penalty fee.

Recurring Deposit (Progressive) Accounts (vkorh tek [kkrk) (RD a/c): In this type oaccount, customer has to deposit a certain fixed amount every month, till the end of accoun

Demat Accounts: Demat or dematerialized accounts are those accounts that are openefor buying or selling stocks and mutual funds in the share market.
http://www.sendmoneyindia.org/blog/how-can-i-save-money-on-a-low-income/http://www.sendmoneyindia.org/blog/how-can-i-save-money-on-a-low-income/http://www.sendmoneyindia.org/blog/how-can-i-save-money-on-a-low-income/http://www.sendmoneyindia.org/savings-bank-account.phphttp://www.sendmoneyindia.org/savings-bank-account.phphttp://www.sendmoneyindia.org/atm.phphttp://www.sendmoneyindia.org/atm.phphttp://www.sendmoneyindia.org/atm.phphttp://www.sendmoneyindia.org/atm.phphttp://www.sendmoneyindia.org/savings-bank-account.phphttp://www.sendmoneyindia.org/blog/how-can-i-save-money-on-a-low-income/


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ADCPM TALLY 9.0

Joint Bank Accounts (la;Dr [kkrk): Joint account is a bank account owned by two oindividuals, usually used for business objectives. Members can withdraw money frodeposit in account, according to the conditions defined at the time of opening of accou

What is Cheque?Cheque is an instrument in writing containing an unconditional order, addressed to a bsign by the person who has deposited money with the banker, requiring him to pay on demcertain sum of money only to or to the order of certain person or to the bearer of instrumenClassifications based on types Self Cheque:Self cheque is used to withdraw money from your own account by

self in the payee section. You can get the money across the counter using this chequ Bearer Cheque: A bearer cheque is again an uncrossed cheque that can be enc

across the counter of the drawee bank. Here the difference is that anybody whobehind the cheque can withdraw the money. The bearer cheque is payable to the pspecified therein or to any other else who presents it to the bank for payment.

Order Cheque: An order cheque is a cheque having the name of the payee (receiver) written therein, ordering the bank to make the payment directly to them. Scheque is payable to the person specified therein as the payee.

Uncrossed / Open Cheque: When a cheque is not crossed, it is known as an

Cheque or an Uncrossed Cheque. It can be cashed at the drawee banks counter.is no need for you to deposit the cheque into your account for getting the paymeopen cheque may be bearer cheque or order cheque.

Crossed Cheque: Crossing of cheque means drawing two parallel lines on top leftcornerof the cheque with or without additional words like & Co. or Account Payee oNegotiable. A crossed cheque cannot encashed across the counter; you have to depin your bank account.

Post-Dated Cheque: If a cheque bears a date which is yet to come (future date) theknown as post-dated cheque. A post dated cheque cannot be honoured earlier than thmentioned on the cheque.

Stale Cheque: If a cheque is presented for payment in a bank after six months from th

of issue, then it is called stale cheque. A stale cheque is not accepted / cleared by theCharacteristics of Accounting:

1. Reliability: The Reliability of accounting information is the degree of corresponbetween the information conveyed about the transactions and the information dispReliable information should be free from errors and biases. It should faithfully represenit is meant to.

2. Relevance: To be relevant, information must be available on time. It must help in preand feedback and it must influence the decisions of users by confirming or correctinpast evaluations.

3. Understandability: Decision makers should be able to interpret accounting informa

the sense as it is prepared and conveyed to them. A message is said to be effecommunicated when it is interpreted by the receiver in the same sense in which the shas sent it.

4. Comparability: Users of financial reports should be able to compare various aspectsentity over different periods and also with other entities.

Branches of Accounting:

Economic development and technological advancement have resulted in an increase in the


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scale of operations of business, leading to the advent of the company form of organization. Amanagement functions become complex, the importance of accounting increases. Some speciaccounting branches which are developed now days are explained below:

Financial Accounting (foRrh;&y[kkdu): The purpose of financial accounting is keep to record of all financial transactions so that:

The profit earned or loss sustained by the business during an accounting period can bworked out.

The financial position of the business at the end of the accounting period can bascertained.

The financial information required by the management and other interested parties cabe provided.

Cost Accounting (ykxr&y[kkdu): The purpose of cost accounting is to analyze thexpenditure to ascertain the cost of various products manufactured by the company and fthe price of the final product. It also helps in controlling the costs and providing necessarcosting information to management to enable decision making.

Management Accounting (izcU/kdh;&ys[kkdu): The purpose of management accounting is assist the management in taking rational policy decisions. It also helps to evaluate th

impact of past management decisions and actions. Tax Accounting (dj ys[kkdu): There are many taxes, which are imposed by central or statgovernments; as: sales tax, income tax, etc. Tax accounting provides different formats fo

preparing accounts of these taxes.

Basic Terms in Accounting:

Entity (vfLrRo): Entity has a definite individual existence. Business entity is an identifiabbusiness enterprise such as Super Bazaar and so on. An accounting system is alwaydevised for a specific business entity.

Transaction (yunsu): Transaction is an event involving some value between two or morentities. It can be a purchase of goods, receipt of money, payment to a creditor, incurrin

expenses and so on. It can be either a cash transaction or a credit transaction. Assets (lEifRr):The valuable things owned by the business are called assets. Assets ar

the economic resource of an enterprise, which can be expressed in the monitory terms.

Assets are the following types:

Fixed Assets (LFkk;h ;k vpy lEifRr): These assets are tangible assets, which are folong-term use in the business. These assets are long-lived resources, which are used the production of finished goods in the business, they are not meant for direct saleThese assets increase the profit earning capacity of the business.

Example: buildings, land, equipments, machines, furniture, vehicle, fixtures, etc.

Floating Assets (vLFkk;h ;k py lEifRr): Floating assets also known as circulatingfluctuating, or current assets, which change these values constantly.

Example: Cash-in-hand, Cash-at-Bank etc.

Fictitious Assets (vokLrfod lEifRr): These are those assets, which do not have physicform; they do not have any real value. These assets are the revenue expenditure oCapital nature, which are also termed as the first revenue expenditure.

Intangible Assets (vewrZ lEifRr): Those assets which are not physical assets likequipment and machinery but are valuable because they can be licensed or so


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ADCPM TALLY 9.0

outright to others. They include cost of organizing a business, obtaining copyregistering trademarks, patents on an invention or process and goodwill. Normallyassets cannot purchase and sold in the open market.

Liquid Assets (rjy lEifRr): Liquidity refers to count ability in cash. Liquid assthose assets, which can be converted into cash at short notice.

Example: Cash in hand, Cash at Bank, debtors, bills receivable etc.

Capital (iwth):It is that part of bill, which is used for further production. The Capital coof all current assets and fixed assets. Cash in hand, Cash at Bank, Building, PlaMachinery, Furniture etc. are the Capital of the business. Capital should not necessaryin cash.

Formula:

Liability or Equality (nkf;Ro):Liabilities are the obligation or debts by the enterprise inin the form of money or goods. It is the profiteers and creditors claim against the assthe business.

Purchase (;): It returns business to the firm, either purchase business goods for purchase raw material for the manufacturing of the articles being sold by the firm.

Example: Purchase of copies, pencil, files etc. costing Rs 20,000 is termed as purchthe business. Purchase of Assets is not the purchase in accounting terminology, as

Assets are not meant for sale.

Sale (fo;): The ultimate end of the goods purchased or manufactured by the busintheir sale. It includes both cash and credit sales. In accounting terminology sales measale of goods, never the sale of assets. The maintenance of proper and complete recsale is necessary because the profit or loss is associated with the amount of sale.

Purchase Return or Return Outward (;&okilh): It is that part of the purchases of gwhich is returned to the seller. This return may be due to unnecessary, excessivdefective supply of goods. It may also result, if the supplier violets terms and conditionorder and agreement. Hence, in order to calculate net purchase, purchase ret

deducted from purchases. Purchase return also known as return outwards becausreturn of goods outside the business.

Sales Return or Return Inward (fo;&okilh): It is that part of sales of goods, which areturns to us by purchasers. This return may also be due to expressive, unnecessadefective supply of goods or violation of terms and agreement. It is also known as inward. To calculate net sales, sale return is deducted from sales.

Goods (eky):Articles purchase for sale by the business or for use in the manufaccertain other goods as raw material are known as goods.

Example: Furniture will be goods for the firm dealing in furniture but it will be assets firm dealing in stationery.

Stock (HkUMkj): The goods available with the business for sale on a particular date are tas stock. It increases, decreases, or keeps on changing. In accounting, we use thestock widely as opening stock or closing stock. Therefore, it comes under the current a

Profit (ykHk): Profit is the excess of revenues of a period over its related expenses duraccounting year. Profit increases the investments of the owners.

Gain (o`f)): Gain is a profit that arises from events or transactions which are incidebusiness such as sale of fixed assets, appreciation in the value of an asset.

Working Assets = Current Assets - Current Liability


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Loss (gkfu): The excess of expenses of a period over its related revenue is termed as loss. also decreases the owner equity. It refers to money/moneys worth lost without receiving anbenefit in return.

Discount (NwV): Discount is the deduction in the price of goods on sale. It is offered in twways. Offering a deduction of an agreed percentage on the list of price at the time of the sais one way of giving discount. Such a discount is called Trade discount. It is generaloffered by manufactures to wholesalers and by wholesaler to retailer.

After selling the goods on credit basis, debtors may be given a certain deduction in thamount due it they pay the amount within the stipulated period or earlier. This deduction given at the time of payment on the amount payable. Thus, it is called Cash discount. Casdiscount is an incentive that encourages debtors to make prompt payments.

Revenue (izkIr /ku): In accounting, Revenue means the amount realized or received from thsale of goods. Revenue is also used to receive the amount of rent, commission, anDiscount received etc. Such receipt should be revenue receipts. Revenue is concerned witreceipt or receivable in the day-to-day working of the business. Income is calculated bdeducting expenses from the revenue. Amount received from sale of assets or borrowinloan is not revenue.

Expense ([kpZ): Generally income is the foremost objective of every business. The firm hato use certain goods and services to produce articles, sold by it. Payment for these good

and services is called expense. Cost of raw material for the manufacture is goods or the coof goods purchased for sale, expenses incurred in manufacturing or acquired goods sucas: wages, carriage, freight, and amount spent for selling and Discount attributing good

such as salaries, rent, advertising, insurance etc are known as expenses.

Expenses are of two types:

Direct Expense (izR;{k [kp): These expenses are related with the production (factory).The examples of Direct Expenses are:

Freight charges

Carried charges Wages

Installation of Machinery

Indirect Expense (vizR;{k [kpZ): These expenses are related with the office.The examples of Indirect Expenses are:

Rent Paid

Salary Paid

Discount Paid

Commission Paid.

Proprietor (Lokeh): An individual or a group of persons who undertake the risk of the businesare known as proprietors. They invest their firms into the business as Capital. In case oprofit, proprietors Capital increases. In case of loss, the proprietors Capital decreases.

Solvent (lEiUu): Solvent are those persons and firms who are capable of meeting theliabilities out of their own resources.

Debtor nsunkj: The term debtors, represents the persons or parties who have purchasegoods on credit from us and have not paid for the goods sold to them.


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ADCPM TALLY 9.0

For example: If goods worth ` 20,000 has been sold to Mahesh on credit, he will contremain the debtor of the business till he does not pay the full payment.

Creditor yunkj: In addition, to cash purchases the firm has to make credit purchasthe sellers of goods on credit to the firm are known as creditor for goods. Creditors aliability of the business. They will continue to remain the creditors of the firm so for tpayment is not made to them.

Creditors may also be known as creditors for expense In case certain expense Su

salaries, rent, repairs etc. remain unpaid during the accounting period. It will be termoutstanding expense

Insolvent (fnokfy;k): All business firms who have been suffering losses for the lastyears and are not even capable of meeting their liabilities out of their assets are finaunsound.

Drawings (vkgj.k): Amount or goods withdrawn by the proprietor for his private or peuse is termed as drawing. The cost of using business assets for private or domestic also called drawing.

For example: Use of business Car for domestic use.

Voucher ([kpZ&i=): The documentary evidence in support of a transaction is knoVoucher. For example, when you buy goods for cash you get a cash memo. When yogoods on credit, you get an invoice.

Rules of Debit & Credit

Every accounting transaction involves assets, liabilities and Capital individually or collecThere is a change in the value of assets, liabilities, Capital, due to the business transactfinancial nature. We use the term debit & credit in order to show the changes in the vathese basic accounting terms i.e. Assets, liabilities, and Capital.

Debit means decrease in proprietors equity,

Credit means increase in proprietors equity.

Conventional Approach of Assets:

Every business owns and possesses assets. The business makes use of these asseearning income. The increase or decrease in the sense must be recorded systematically strue financial position of the business may be assessed.

Example: Cash in Hand, Cash at Bank, Stock of Goods, Building, Plant, Machinery, FurDebtors, etc.

Rules of Debit & Credit

Debit increase in the assets

Credit decrease in the assets

It means when the assets is increasing then it should be debited and when is decreasing

should be credited.Expenses & Losses:

Debit increase in expenses & losses

Credit decrease in expenses & losses

Liability:

Debit decrease in the Liability

Credit increase in the Liability


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Capital:

Debit decrease in the Capital

Credit increase in the Capital

Revenue & Profit:

Debit decrease in revenue & Profit

Credit increase in revenue & Profit

ACCOUNTS ([kkrs):Accounts are classified as personal account and impersonal account.

Personal Account (O;fDrxr [kkrk): The account which related to an individual firm or company ogroup of persons, are called personal account.

Personal accounts are further classified into:

Natural Personal Account: It represents human beings such as Ram a/c, Shyam a/c etc.

Artificial Personal Account: Persons do not have Physical Contrasting as human being bthey works as Personal Account these a/c are related to firms, Company, Industry, factoretc.

Example: Ram and sons a/c, Sharma and brothers a/c, Elfin Computer Education a/c, etrepresent Personal a/c; A Particular persons or group of persons.

Representative Personal Account: This represents a particular person or group of personsuch as outstanding wages a/c. Here instead of using the name of the person whose wageis pending, we used the term outstanding wages account other examples are outstandinsalary a/c prepaid wages a/c etc.

Example: If the salaries for the month of December are not paid to the employees than thamount payable of these employees will be added under one common title that is salaroutstanding a/c. Hence, salary outstanding a/c represents the a/c of all persons to whomsalaries have to pay. Therefore, this term is known as representative personal a/c otheexamples are prepaid expense (Current Assets).

Rule of Debit & Credit in case of Personal a/c:

Personal a/c either receive something or give something in a business, when goods are sold tthem or amount pay to them, they are the receiver. In the someway, personal a/c are givenwhen goods are purchased from them or amount is received from them.

Hence for personal a/c the rule of debit & credit

Debit the receiver, Credit the giver


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ADCPM TALLY 9.0

Example: Goods sold to Ram. Ram a/c receive the goods therefore it is debited and the scredited.

Key Date Particular L.F. No. Debit Cred

F8 1/4/2010 Ram a/c 250000

To Sale 250

Example: Goods purchase from Shyam. Here the giver is Shyam so the Shyam a/c is cr

and the goods are received, therefore the purchase a/c is debited.Key Date Particular L.F. No. Debit Cred

F7 1/4/2010 Purchase a/c Dr. 250000

To Shyam 250

Impersonal Account (vO;fDrxr [kkrk): All those a/c, which are not personal a/c, are knoimpersonal a/c. These accounts may be related to Assets, Losses, Expenses, Income, andImpersonal a/c may be classified as:

Real Account (okLrfod [kkrk): This a/c is related to the property, in other words real agenerally those a/c, which are concerned with the things, which really exist. All those

which can be seen, touched and have physical construction, shape form and size ara/c. Real a/c are also concerned with intangible asset, Goodwill, Patience, Trademark.

Example: Cash a/c, Building a/c, Plant a/c, Furniture a/c, Machinery a/c.

Rule of Debit & Credit in Case of Real a/c: Real a/c is related to lifeless propertiesare either purchased or sold, it means they either come into the business or go outsidbusiness. Hence, the rule is:

Debit what come in

Credit what goes out

Nominal Account (vokLrfod [kkrk): This a/c is just reverse to the real a/c. Real a/c ghave existence but nominal a/c do not have any existence, that is these a/c do not hav

form, shape and physical construction. These accounts are related to Income, ExpenGain, and Losses.

Example: Wage a/c, Salaries a/c, Rent a/c, Interest a/c, Discount a/c, Advertisement a

Rule of Debit & Credit in Case of Nominal a/c: Nominal a/c is related to expenlosses & income or gains. Hence the rule is

Debit all expenses or losses

Credit all income or gain

Accounting Cycle:

The term Accounting Cycle refers to the sequence of accounting procedures follow

recording, classifying and summarizing business transactions. It starts with identificatbusiness transaction and ends with the adjustment entries for period and outstanding expe

The process of accounting is given below:

Recording: The first step of accounting is to identify business transactions and maintain tappropriate books of accounts in a systematic manner. Original recording must be donbook called Journal.

Classifying: It is the process of grouping of entries of similar nature in one placeclassification is done in a book called Ledger.


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Summarizing: The next step is summarizing. Summarizing is the process of presenting thclassified data in a manner understandable to the user. It involves the preparation of profit anloss account and balance sheet.

Analysis and Interpretation: The results of financial statement like profit and loss account anbalance sheet are analyzed in such way that the users can make a meaningful conclusion abothe financial position of the business.

Communication: The accounting information is to communicate in a proper form to the person

interested in appropriate time.Mode of Accounting:

J ournals (jktukepk):Journal is a book of original entries in which transactions is first recorded in the order in whicthey occur. The process of recording transactions in a journal is turned as journalizing and thtransactions entered in the journal are called journal entries.

Accounting Period:A period of time, for which a financial statement is created, is called an Accounting Period.

Posting ([krkSuh):Posting is the process of transferring entries from Journal to the Ledger. In other words it is thgrouping of all the transaction in respect of one particular account at one place for furtheaccounting process.

Trial Balance (ryiV):The trial balance is a statement showing the balances of all General/Ledger accounts. It prepared to know the arithmetical accuracy of ledger accounts. If total of debit balances is equato the total of credit balances, it is presumed that there is no mistake in accounting and bookkeeping. It provides a summary for all business transaction and provides help in preparinfinancial statement. The format of Trial Balance is as follows:

Financial Statement (foRrh; fooj.k):A financial statement is a periodic report prepared from the accounting records of a companFinancial statement includes the profit and loss statement, balance sheet and cash flostatement. Financial statements are usually complied on a quarterly basis or annual basis.

For reporting convenience, the profit and loss account is divided into:

Profit and Loss Account: The profit and loss account gives the net earned by the companafter considering expenses incurred over a period. This helps the company monitor ancontrol the costs incurred and improve the efficiency. In other words, the profit and Losstatement shows the performance of the company in terms of profits or losses over specified period. The Profit and Loss statement can be classified into:

Gross Profit (ldy ykHk): Gross profit is arrived at after considering the core activities othe company. It is expressed as:

Gross Profit = Net Sales - Cost of Sales

Net Profit (k) ykHk): Net profit is arrived after considering the other administrative cosincurred for the period. It is expressed as:

Net Profit = (Gross Profit +other Income)

- (Selling and Administrative Expenses + Taxes

+ Depreciation + Interest + Other Expenses)


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ADCPM TALLY 9.0 P

Trading Account (O;kikfjd [kkrk): A Trading Account is prepared to arrive at the grossearned by the organization over a specified period. This helps the organization to arthe cost of its core activity and calculate the direct profit from its operations.

Balance Sheet (foRrh;&fLFkfr fooj.k): Balance Sheet is a statement that summaries the aliabilities and owners equity of a business. It gives you the overall picture of the finactivities of a company. The excess of assets over liabilities is the net worth of a busTwo common ending periods to create a balance sheet are the end of a month and th

of the year. The balance sheet provides information to assess a companys: Long term financial strength

Efficient day to day working capital management

Asset portfolio

Sustainable long term performance

The balance of all the real personal and nominal accounts are transferred from trial basheet and grouped under the major heads of assets and liabilities. The balance shcomplete when the net profit and loss is transferred from the Profit and Loss account.

Books of Original Entry:

Cash Book (jkdM cgh): The cash book is an accounting book which records cash reand disbursements. It is opened with a cash or bank balance at the beginning of the pe

Day Book: Day Book shows list of vouchers in chronological order. At Gateway oselect Display; select Day Book to get list of all vouchers in day book for the current da

Bank Book: Bank Book shows date wise list of transaction through bank accounopening and closing balance at the end of the period.

J ournal Book: Journal Book shows the date wise list of journal vouchers. Journashows in the journal register. Select a month to get list of all journal vouchers or the month. Click F2(period) and set the period for which you like to get the journal book.

Ledger Book: Ledger book shows the transaction of a particular account in chronosequence, with opening and closing balance for specified period.

Sales Book (fo; cgh): In this book amount realized from the sale of goods are recSales may be cash sales or credit sales.

Purchase Book (; cgh): In this book the total amount of goods purchased by a buconcern on cash or credit for the purpose of sale or use in business is recorded.

Sales Return Book (fo; okilh cgh): In this book that part of sales of goods, whicactually returns to us by purchasers is recorded. This return may also due to unnecessdefective supply of goods or violation of terms and agreement, also known as Return In

Purchase Return Book (; okilh cgh):In this book that part of the purchase of goods,is returned to the seller, is recorded. This return may occur due to unnecessary, exces

defective supply of goods. It may also result, if the supplier violets terms and conditithe order or agreement.

WHAT is TALLY?

Tally is the most popular financial accounting software among the various financial accosoftwares. There are various versions of this software in the market but Tally9.0 andERP9.0 are the latest and popular version. Tally is software by which accounts are compuflicker, entries are done very faster and the balance sheet not only made but also printedrequired. Tally 9.0 helps to business owners to manage their business easily.


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To start Tally 9.0 double click on icon named Tally9 present on the desktop, or pressStart button All Program Tally 9

COMPANY CREATION:

To start maintenance of accounts in Tally, first you have to create a Company in Tally. Ostarting Tally at Company Info menu, select Create Company to get Company Creation Screen

Gateway of Tally Company Info Create Company Company CreationYou can get Company Info. Screen by pressing shortcut key ALT + F3.

Company Creation screen is divided in two main sections.

Company Particulars: At top part, Company Information is to be entered as under:

Directory: Tally default data Drive and Path is displayed whereTally data would be stored (to keep data at different Directory, pressup arrow, and enter the Drive and Path of the folder to keep datafiles for the Company). Tally skips this field.

Name:Enter the name for the company.

Mailing Name:Normally it should be same as Name. You may enterdifferent mailing Name as you like to print in external reports.

Address:Enter the postal address for the company. You may enteraddress in several lines. Press Enter at last blank line.

Statutory Compliance for: Select the country from the list.


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ADCPM TALLY 9.0 P

State: Select State from the list.

Pin Code: Specify the Pin Code of the specified Address.

Telephone Number:Enter Telephone Number.

E-mail Address: Enter the E-mail address for the company.

Currency Symbol: Rs. is displayed in Tally, (`) is used in this book. Maintain:Select Accounts only/Accounts with Inventory (According to your requireme

Financial Year From: Enter Beginning date of Financial Year. Books Beginning From: Normally it is same of Financial Year From, unless yo

accounts from middle of Financial year.

Base Currency Information:

At the bottom, Base Currency symbol: Rs. (for India) is displayed. You dont need to chan

Saving the Company Profile:

Click Yes to save the information of company profile (click No to modify any data) orCTRL + A to save the Company profile directly.

Altering the Company Profile:

At Gateway of Tally, click ALT + F3 for Company Info

Alter

Select the Company frolist to get Company Alteration Screen (same as Company creation), modify the company d

Deleting the Company:

At Company Alteration screen, press ALT + D and click yes to confirm deletion. The co

data would be deleted and you will not get back to company.

Gateway of Tally:


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1. Masters

Accounts Info.

2. Transaction

Accounting Voucher

3. Import

Import of Data

4. Reports Balance Sheet

Profit / Loss a/c

Ratio Analysis

5. Display

Multi Accounts Printing

6. Quit.

Accounts Info:

After creating the company, if you want to work on the company created by you then select th

company name and press enter, the Gateway of Tally menu will be displayed as given above, which the first option is the Accounts Info. After selecting the Accounts Info. this screen displayed.

Ledger (cgh[kkrk):Ledger is the principal book of the accounting system of any organization. It may be in the formof bound register or cards or separate sheets. Ledger is defined as a location of all the accountdebited or credited in journal. In a ledger the transaction of the same nature are classified angrouped together in one place in the form of account.

To create ledgers, at Gateway of Tally, select Accounting Info to get Menu. At Accounts Inmenu, select Ledger to get Ledger menu. In Tally, you pass all accounting vouchers usin

Ledgers. However, all Ledgers have to be classified into Groups. It should be noted that Talautomatically creates two ledger accounts cash under the cash-in-hand and profit & loss accouunder direct primary account. Now you must create all other account. There are no restrictions ledger creation expect that you cannot create another profit & loss account.

Key Date Particular L.F. No. Debit Credit

F6 1/1/2010 Cash a/c Dr. 250000

To Capital 250000


F9 1/1/2010 Purchase a/c Dr 3000To Mohan 3000

Display the Ledger:

You can see the entire ledger which you have create under some groups. To display the ledgeryou have to go:

Gateway of Tally Account Info Ledger Display

Alter a Ledger:


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ADCPM TALLY 9.0 P

If you want to change the ledger from the list and enter the new, you have to click GatewTally Account Info Ledger Alter. Now the list of the ledger will be displayed, fromyou can easily change or enter the ledger.

Delete a Ledger:

If you want to delete a ledger from the list of ledgers, then you can do this from the Alter kdelete the ledger you have to press ALT + D. You do not delete the accounts thattransaction. So if you want to delete an account, which has transaction, you must first del

its voucher entries.Groups:

All the ledger account can be classified into various groups based on their functions. Depeupon the group in which you place the ledger, it performs that function

There are 28 predefined groups available inTally. Out of which 15 groups arprimary and 13 groups are subgroups.

Bank a/c Bank Occ a/c Bank Odd a/c

Capital a/c Cash in Hand Current Assets

Current Liabilities Deposits(Assets) Direct Expenses

Direct Incomes Duties & taxes

Fixed Assets Indirect Expenses Indirect Incomes Investment

Loan & Advances Loan (Liability) Provisions

Purchase a/c Reserve & Surplus Sales a/c

Secured loan Stock in Hand Sundry Creditors

Sundry Debtors Suspense a/c Unsecured Loans

Retained a Name

To insert Voucher entry, you will have to create Ledger. Ledger should come under parGroups, which are already defined in the Tally Software. Some groups are shown above:

J OURNAL (jktukepk)The word Journal has been derived from the French word Jour. Journal is a book ofrecord of all transactions conducted by the business. The Journal is the first place, whtransaction is recorded; it is called the book of original entry.

Each transaction is first recorded in the journal and then posted the appropriate entconcerned accounts in the G/L. The advantage of the journal is that it shows all the acthat are affected by a transaction, and the amounts the appropriate accounts are debitecredited, all in one place. Business transaction of financial nature are studied and classifasset, liabilities, capital, revenue, and expenses. Accounts are debited or credited in the Jaccording to the rule of debit and credit applicable to the specific a/c.

Question: Create a Company and then create the following Ledgers under their correspoGroup:

Name of Ledger Name of Group

Sale Sale A/C

Purchase Purchase A/C

Ravi (Debtor) Sundry Debtor

Mohan (Creditor) Sundry Creditor


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Rent Paid Indirect Expense

Commission Received Indirect Income

Mahaveer(Debtor) Sundry Debtor

Salary Paid Indirect Expense

Wages Direct Expense

Furniture Fixed Asset

Freight Charges Direct Expense

Tally is an accounting software, which is use to create balance sheet of a company. To create balance sheet first of all, you have to create your company for the particular financial year. Aftethis, create Ledgers under particular groups, with the help of the group entries and Vouchers. your Voucher entry is correct then the balance sheet is automatically created.

Question:

Name of Ledger Name of Group

Advertisement Indirect Expense

Bad Debts Indirect Expense

Bank Account Bank a/c

Bank Charges Indirect Expense

Capital Capital a/c

Carriage Direct Expense

Cash at Bank Current Assets

Cash in Hand Current Assets

Charity Indirect Expense

Closing Stock Current Assets

Coal & Gas Direct Expense

Commission Given Indirect Expense


Creditor Sundry Creditor

Debtor Sundry Debtor

Depreciation Indirect Expense

Discount Given Indirect Expense

Discount Received Indirect Income

Drawing Capital a/cElectricity Charges Indirect Expense

Factory Rent Direct Expense


Goods Current Assets

Installments Direct Expense


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ADCPM TALLY 9.0 P

Insurance (Factory) Direct Expense

Interest on Bank over Draft Indirect Expense

Interest of Capital Indirect Expense

Investment Fixed Assets

Land & Building Fixed Assets

Loan Current Liability

Machinery Fixed Assets

Power Lighting Direct Expense

Printing& Stationery Indirect Expense

Purchase Purchase a/c

Purchase Return Purchase a/c

Rent Indirect Expense

Repair(Office) Indirect Expense

Sales Sale a/c

Sale Return Sale a/c

Salary Indirect Expense


Note: Cash and Profit & Loss a/c Ledgers are already created in Tally.

Question: Create a Company with name xyz create are following Ledger.

Capital Capital a/c


Land Fixed Asset

Advertisement Indirect Expense

Debtor Sundry Debtor

Salary Indirect Expense


Freight Charges Direct Expense

Sale Sale a/c

Purchase Purchase a/c


Rent Indirect Expense

Discount Indirect Expense

Sale Return Sale a/c

Purchase return Purchase a/c

Printing stationery Indirect Expense


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Vouchers:

Accounting is based on the vouchers. These form the main input for the computerizeaccounting. These outputs are in the form of reports. Tally9.0 recognizes a number of voucherswhich can be used to enter the data (Data-Entry). Some of them are listed below with thekeyboard shortcuts:

Vouchers Types:

Keys Voucher Types

F5 Payment Voucher

F6 Receipt Voucher

F4 Contra Voucher

F8 Sales Voucher

a. Sales Order

b. Sales Voucher/Invoice

c. Delivery Notes

d. Rejection In

F9 Purchase Voucher

a. Purchase Order

b. Purchase Voucher

c. Good Receipt notes

d. Rejection Quit

F7 J ournal Voucher

CTRL + F8 (F7) a. Credit Note

CTRL + F9 (F7) b. Debit Note

c. Journal

F10 Memo Voucher

a. Reversing Journal

ALT + F7 Stock J ournal

F10 Physical J ournal

Vouchers and their Use:

Payment Voucher (F5):In this voucher all the entries related to payments will be done. Receipt Voucher (F6): All the entries of Receipt (such as capital) will be done in th

voucher. Contra Voucher (F4): This voucher is used when the company withdraws cash from th

bank or transfer funds from one bank account to another. Memo Voucher (F10):This is a non accounting voucher and the entries made using it w

not affect your accounts. Reversing J ournal (F10): This is special journal that is automatically reverse after

specified date. They exist only till that date and are effective only when called for in reportlike the balance sheet.


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ADCPM TALLY 9.0 P

Sales Voucher (F8):All the sales transactions of the company including cash salentered using this voucher.

Purchase Voucher (F9): All purchase transactions are entered in purchase voincluding cash purchase.

Receipt Note Voucher (F9):This voucher is used to records receipt of new stocksuppliers.

Rejection In (F9): It is used to record a goods received back that was rejected

customer. Delivery Notes (F8):It records the delivery of goods to customers. Rejection Out/Quit (F8): It is used for recording of goods that are rejected and retur

the suppliers. Stock J ournal (ALT + F7):It is used to transfer material or stock from one location. Physical Stock (F10):This voucher is used to record actual stock as physically veri

counted. If you have configured your inventory vouchers to ignore physical stock diffethus physical stock vouchers will really before recorded purposes only.

Credit Note (CTRL + F8): If you set YES to the option Use Debit/Credit Notefeature, you can select this voucher on clicking F7 or CTRL + F8 buttons. It is aentered to credit customers account. When a customer returns the goods get credit

value of the goods returned. A credit note is sent to him intimating that his a/c hascredited with the value of the goods returned.

Debit Note (CTRL +F9):If you setYES to the option Use Debit/Credit Note in F11 feyou can select this voucher on clicking F7 or CTRL + F9 buttons. It is entered tosuppliers account. When the goods are returned (purchase return) to the supplier, supplier has granted credit to you on account of rate difference or discount. A debit sent to him indicating that his a/c has been debited with the amount mentioned in thenote.

Function keys and their combinations:

Key Used for Description

F1 Select Company Select the company from the list.

F2 Change Date Changes the date of the voucher.

F3 Statutory &Taxation At Company Features screen.

ALT + F1 Shut Company Close the company at all screens.

ALT + F2 Change the Period Changes the period of the accounting yea

ALT + F3 Display Company Information It opens Company Information screen.

ALT + A To Add a voucher Adds a voucher after the one wherepositioned the cursor.

ALT + D To delete a voucher

To delete a master

To delete a column in anycolumnar report

At Voucher and Master (Single) alte

screens.

Masters can be deleted subject to conditioexplained in the manual.

All the reports screen which can be viewcolumnar format.


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ALT + E To export the report in ASCII,HTML OR XML format

At all reports screens in TALLY

ALT + I To insert a voucher

To toggle between Item andAccounting invoice

Inserts a voucher before the one where yopositioned the cursor.

ALT + L To select the LanguageConfiguration

At almost all screens in TALLY.

ALT + K To select the KeyboardConfiguration


ALT + O To upload the report at yourwebsite

At all reports screens in TALLY.

ALT + N To view the report in automaticcolumns

At all the reports where columns can be added

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 + R To Register Tally At almost all screens in TALLY.

ALT + S To bring back a line you removedusing ALT + R

At all reports screens in TALLY.

ALT + U To retrieve the last line which isdeleted using Alt + R

At all reports screens in Tally

ALT + X To cancel a voucher in DayBook/List of Vouchers

At all voucher screens in TALLY

ALT + 2 To Duplicate a voucher Creates a similar voucher where you positionethe cursor.

CTRL +ENTER

To alter a master while making anentry or viewing a report

At voucher entry and alteration screens / At areports

CTRL + B To select the Budget At Groups / Ledgers / Voucher Types Currencies (Accounts Info) creation an

alteration screen

CTRL + E To select the Currencies At Groups / Ledgers / Voucher Types Currencies (Accounts Info) creation an

alteration screen

CTRL + G To select the Group At Groups / Ledgers / Voucher Types Currencies (Accounts Info) creation an

alteration screen

CTRL + I To select the Stock Items At Stock Group / Categories / items / VoucheTypes / Units of Measure (Inventory Info)

CTRL + L To select the Ledger/To mark a At Groups / Ledgers / Voucher Types Currencies (Accounts Info) creation an


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ADCPM TALLY 9.0 P


Voucher as Optional alteration screen

CTRL + R To repeat narration in the samevoucher type

At creation / alteration of voucher screen

CTRL + S Allows you to alter Stock Itemsmaster

At Stock voucher Report and Godown VoReport

CTRL + U To select the Units At Stock Groups / Stock Categories / Items.

CTRL + V To select the Voucher Types

To toggle between Invoice andVoucher

At Groups / Ledgers / Voucher types

Page Up Display previous voucher duringvoucher entry/alter

At voucher entry and alteration screens

Page Down Display next voucher duringvoucher entry/alter

At voucher entry and alteration screens

ENTER To accept you type into a field.To get a report with further detailsof an item in a report.

You have to use this key at most areTALLY.

ESC To remove typed value from afield / To come out of a screen Toreject a voucher or master.


Explanation of certain J ournal Entry

Transaction 1: Started or commenced business with ` 20000/-Key Date Particular L.F. No. Debit Cred

F6 1/1/2010 Cash 20000

To Capital 20

Explanation: Business has receipt cash as Capital. Cash is an asset. This transacincreasing the cash. Therefore cash a/c should be debited because the rule of debit & creDebit the increase & Credit the decrease.

In each general entry the transaction, involve minimum two a/c. In this transaction two aCash a/c and Capital a/c. Capital a/c should be credited because the rule is Debit what in & Credit what goes out There is also one rule Debit the receiver & Credit the giver Cash is the receiver and Capital a/c is the giver.

Transaction 2: Goods purchased for` 5000/- Cash purchases for` 5000/- Goods purcfrom Mohan for cash ` 5000/-


F5 1/4/2010 Purchase a/c Dr. 5000

To Cash 5

Explanation: In this transaction of cash purchase of goods cash will decrease and credited


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because the cash is an asset all the assets are credited when there is decrease in them. Thother a/c involves in the transaction is goods a/c that is the purchase a/c. The transaction wincrease the goods and does debit.

Transaction 3: Goods purchase from Mohan ` 3000/- Goods purchase from Mohan on credit3000/-


F9 1/4/2010 Purchase a/c Dr. 3000

To Mohan 3000

Explanation: In the case of purchases goods will increase so the purchase a/c is to be debitedThe payment for goods has not being made to Mohan. Therefore, it is still the liability of thbusiness. Hence, Mohan is the sundry creditor of the firm. Mohan a/c as the liability of thbusiness will be credited because liability a/c is credited when there is an increase in the liability

Transaction 4: Cash sale for` 7000/- Goods sold for cash ` 7000/- Goods sold to Ajay for cas` 7000/-


F6 1/4/2010 Cash a/c Dr. 7000

To Sale 7000

Explanation: In this transaction the two a/c are cash a/c and goods a/c both of these a/c arassets so they will be debited for increase and credited for decrease. Hence, cash a/c is debiteand the sale a/c is credited.

Transaction 5: Goods sold to Mohan ` 4000/- Goods sold to Mohan on credit ` 4000/-Key Date Particular L.F. No. Debit Credit

F8 1/4/2010 Mohan a/c Dr. 4000

To Sale 4000

Explanation: It is credit sale, it will increase debtor, an assets. Mohan a/c will be debited aassets. Sale of goods will decrease an asset; therefore, the sale a/c is credited.

Transaction 6: Furniture Purchase ` 3000/-Key Date Particular L.F. No. Debit Credit

F5 1/4/2010 Furniture a/c Dr. 3000

To Cash 3000

Transaction 7: Machinery sold for` 12000/-Key Date Particular L.F. No. Debit Credit

F6 1/4/2010 Cash a/c Dr. 12000

To Machinery 12000

Transaction 8: Salary Paid for` 3200/-Key Date Particular L.F. No. Debit Credit

F5 1/4/2010 Salary a/c Dr. 32000

To Cash 32000


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ADCPM TALLY 9.0 P

Explanation: Salary paid to employees is an expense of the business, according to the debit & credit expense are debited for increase and credited for decrease. As salary expense increasing therefore salaries a/c is debited the other a/c is cash a/c, which is an and its decreasing therefore cash a/c is credited.

Transaction 9: Rent receipt ` 2000/-Key Date Particular L.F. No. Debit Cred

F6 1/4/2010 Cash a/c Dr. 2000

To Rent 2

Explanation: Cash a/c is increasing therefore it is debited the other a/c is rent a/c wincome for business rent a/c will be credited because income a/c are credited for increasdebited for decrease.

Transaction 10: Amount receipt from Mohan`1000/- and Discount allowed 10%Key Date Particular L.F. No. Debit Cred

F6 1/4/2010 Cash a/c Dr. 900

Discount a/c 100

To Mohan

Explanation: The transaction involves cash a/c (asset), Discount a/c (Indirect expenseMohans a/c (Sundry debtor). Cash is increasing so cash a/c will be debited. Discount

expense and increasing so it will also be debited Mohan a/c is decreasing so it will be cred

Transaction 11: Amount paid to Shyam ` 2000/- and allowed discount ` 20/-.Key Date Particular L.F. No. Debit Cred

F5 1/4/2010 Shyam a/c Dr. 2000

To Cash

To Discount Explanation: Payment has been made to Shyam (Sundry Creditors) is liability so paymthem will reduce liability of the firm. Hence, the creditors a/c that is the Shyams a/cdebited as per rule of the liability, the debit increase in the liability. Cash a/c will be crbecause it is decreasing; Discount a/c is the revenue a/c for which the rule is Debit decreaCredit increase. Hence, Discount a/c will be credited.

SOME IMPORTANT TERMS:

Cash Discount (udn NwV): This Discount is allowed to the customer for making promptpayment. In other words, cash Discount is allowed only if the customer makes the paymein a fixed period. Such Discount motivates the customer to make the payment at the earlie

the Discount is allowed at the time of making payment, so the entry for cash Discorecorded along with the entry for the payment.

Discount Paid is a Ledger under indirect expense group

Discount Received is a Ledger under indirect income group

Cash Discount is of two types for the business.

1. Discount Received (Incase the business is purchase goods)

2. Discount Paid (Incase the business is selling its goods)


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Bad Debts (vikI; _.k): When the goods are sold to a customer on credit and if the amounbecomes irrecoverable due to his insolvency or some other reason, the amount not recovered called bad debts. For recording it, bad debts a/c is debited and the customer a/c is credited.

Example:Ravi who owed us ` 10000/- is declared insolvent and 30p in a rupee is received frohis estate the Journal entry will be.


F6 1/4/2010 Cash a/c 3000

Bad debts 7000

To Ravi 10000

Being Ravi is declared as an insolvent so received 30 p in a rupee.

Bad Debt Recover: Sometimes it so happens that the bad debts previously written off arsubsequently recovered. In such cases the Journal entry will be.


F6 1/4/2010 Cash a/c 7000

To Bad debts recover 7000

Outstanding Expenses (cdk;k&[kpZ): It is quite common for a business enterprise to be lift witsome expenses which are fat to be paid at the end of the accounting year due to one reason othe other. Such expenses are termed as outstanding expenses. These are the expenses, whicshould have been paid during the current year but which have not been paid.

Example: If an employee has paid salary at the rate of ` 1000/- per month and up to 31 Deonly 11 month salary amounting to ` 11000/- has been paid to him, ` 1000/- will be outstandinsalary. The general entry will be.


F7 1/4/2010 Salary a/c 1000

To Outstanding Salary 1000

Outstanding salary a/c is a liability; it has been credited, because, it is a representative personaa/c, representing the employees to whom salaries have to be paid.

Trade Discount (O;kikfjd NV): The Discount allowed by sells to its customer at a fixepercentage on the listed price of goods is termed as trade Discount no separate entry is passefor the trade Discount as it is deducted from the cash memo or invoice of the goods.

Example: If a Trader sales goods of the list price of` 10000/- at 20% trade Discount for cash othe entry will be as:


F6 1/4/2010 Cash a/c 8000

To Sale 8000

Drawing (vkgj.k): Amount or goods withdrawn by the proprietor for his private or personal use termed as drawing.

Business assets for personal or domestic use is also called drawing, use of official car fodomestic use or use of business premises for residential purpose is also termed as drawing.


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ADCPM TALLY 9.0 P

Drawing should be created as a Ledger under the group Capital that means liability business. A certain example of drawing is as under:

1. Amount drawn by the proprietor for personal use,

2. Goods taken by the proprietor for domestic use,

3. Purchase pocket transistor for proprietors son,

4. Using business vehicles for domestic use,

5. Using business premises for residential purpose,

The Journal entry for Amount withdrawn by the proprietor for personal, domestic, or private


F5 1/4/2010 Drawing a/c 5000

To Cash 5

Explanation: In this transaction, Capital will reduce with the amount drawn, so drawing abe debited as the rule goes debit the decrease of liability and credit the increase of liabilityis an asset and it is decreasing, so it is credited.

Transaction: Goods taken by the proprietor for personal use.

Key Date Particular L.F. No. Debit CredF7 1/4/2010 Drawing a/c 1000

To Purchase

Prepaid Expenses: There are certain expenses which are related to the next year bubeen paid during the current year in advance. These are called prepaid expenses; the bensuch expense will be received during the next accounting year.

Example: The insurance premium amounting to ` 1200/- is paid on 1.4.93 for 1-year en1.4.93 will be.


F5 1/4/2010 Insurance Premium 1200

To Cash

When the books will be closed on 31.12.93, insurance premium for three months that is1.1.94 to 31.3.94 will be treated as prepaid insurance and the following entry will be passeon 31.12.93


F5 1/4/2010 Prepaid Insurance 300

To Insurance Premium

The prepaid expense a/c is an asset, it has been debited because it is a representative pea/c and represents those personal to whom payment has been made in advance.

Depreciation (ewY;&l@voeY;u): It is the permanent and containing decrease in the valueasset. Depreciation is a nominal a/c, which presence a loss and should be debited the aswhich the depreciation count) will be credited because its cost is decreasing, it is treaexpense. Depreciation account is a Ledger under the group indirect expense, it is an accowear & tear & passage of time.


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Depreciation on furniture ` 2000/- the Journal entry will be.Key Date Particular L.F. No. Debit Credit

F7 1/4/2010 Depreciation 2000

To Furniture 2000

Interest on Capital: In order to ascertain the true efficiency of the Business, it is a normapractice to charge business with interest on proprietors Capital. Profit left after charging th

amount of such interest are the real profits earned by the business. Such interest is a loss fromthe point of view of the business and therefore according to the rule of nominal a/c, interest a/c debited in the Journal entry. The amount of such interest is the gain from the point of view of thproprietor. His Capital is increase by the amount of interest therefore the Capital a/c is creditein the Journal entry.

Example: Provide 12% interest on Capital amounting to ` 100000/-.Key Date Particular L.F. No. Debit Credit

F7 1/4/2010 Interest on Capital 12000

To Capital 12000

Interest on Drawing: If the firm allows interest on Capital, it should also charged interest odrawing made by the proprietor, such interest is an expense for the proprietor and again to thbusiness. Hence the entry will made by debiting the drawings a/c and crediting the interest a/cThe Journal entry will be:


F7 1/4/2010 Drawing 1000

To Interest on Drawing 1000

Some Important Transaction

1. Drawing in Goods: Sometime the proprietor withdraw goods from the business for h

personal use.


F7 1/4/2010 Drawing 100

To Purchase 100

2. Goods given away as Charity: Charity is an expense of the business and the charity a/c wbe debited Goods are going out of the business at cost price hence purchased (asset)

reduced hence it is credited the Journal entry will be.


F7 1/4/2010 Charity 1000To Purchase 1000

3. Goods Discount Distributed as Free Sample: The Journal entry will be:


F7 1/4/2010 Free Sample 1000

To Purchase 1000


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ADCPM TALLY 9.0 P

4. Loss of Goods by Theft or Loss of Goods by Fire: The Journal entry is:


F7 1/4/2010 Loss by Theft / Fire 1000

To Purchase

5.The Debtor (*) Returned Goods Sold to him: The Journal entry will be:


F7 1/4/2010 Sale Return 1000

To X

6. Proprietor Return the Goods to Sushil: The Journal entry will be:


F7 1/4/2010 Purchase Return 1000

To Sushil

Some Important Option:

1. If you want to delete Voucher entry Go to balance sheet go to the Voucher anpress Alt + D

2. To change the date period: type anywhere Alt + F2

3. Company creation:Alt + F3

Inventory Information

The different steps to do inventory are:

1. Create a company with the feature accounts with inventory.

2. Go to Accounting Vouchers F11F2 (inventory) and in the option separate discolumn on invoices click Yes and exit from the accounting Vouchers.

3. Insert inventory information

a. First of all, create group if any.

Example: Electric or household under primary.

b. Then insert units.

Example: Pieces, Meter, Kg., etc.

c. Then insert items information with their opening balance.

4. Now create Ledgers.

5. Now enter the accounting Vouchers.

a. If the discount is given per invoice that is called all the items single discount perceallowed then this entry will be done using these function keys.

F5 Cash PurchaseF6 Cash Sales

F8 Credit Sales

F9 Credit Purchase

b. If the discount is given per item then the Voucher entry is done only by F8 or F9.

F8 Cash & Credit Sale

F9 Cash & Credit Purchase


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In Cash Sale & Purchase, party account should be cash.

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

To create stock group:

Gateway of Tally Inventory Info Stock Groups

Stock Items: Stock items are the primary entity. You can use stock items while recordintheir receipts and issues. This is lowest level of the information about your inventory. Eacitem that is required to be accounted should be created as stock. In fact you have to create stock ledger for each item and Tally calls this account Stock Item.

To create the Stock Item:

Gateway of Tally Inventory Info Stock Items

VAT (VALUE ADDED TAX)

Vat is a consumption tax which is enforced at each stage of production based on the valuadded to the product at that stage. Vat was launch on April 1, 2005 at the rate of12.5%.

Vat is multi point sales tax with set off for tax paid on purchases. It is basically a tax on the valu

addition on the product. The burden of tax is ultimately born by the consumers of goods.

Now, all the States are drafting their separate Value Added Tax Act and as per the presenposition, every States will have a separate VAT Act with different provision not correspondinwith each other. It can be stated that the proposed VAT Act is the primary stage of VAT. It proposed that there would be two taxes rate slabs on which tax would be enforced. The first onwould be 4% and would cover all essential items. The second one is 10% and all luxury itemwould be covered. In addition special rate slabs are also proposed which are 1% for bullion an

jewellery, 20% for Non Essential Goods and exemption to certain goods like agricultural producetc. Petroleum products are not included in VAT.

VAT is a system of indirect taxation. It is the Tax paid by the producers, manufactures, user

retailers or many other dealers who add value to the goods and that is ultimately passed on tthe consumers. The essence of VAT is in providing set off for input tax and this is appliethrough the concept of input credit. This input credit in relation to any period means setting othe amount of input tax by a registered dealer against the amount of his output tax.

If you want to use VAT facilities, then create balance sheet using VAT feature. The steps are:

1. Create a company with Accounts with Inventory feature.

2. Go to accounting Vouchers F11 F3 select all the entries containing VAT worSelect Yes. Then it further asks for the state. Then select for U.P., and then give regulaand then enter the financial year.

Example: 01-04-2009.

3. Now create the Ledgers.a. Create Ledger with name VAT under the group duties & taxes, type of duties others.

b. Create a purchase Ledger. Used in VAT return Yes purchase % will be 12.5% (foU.P.).

c. Create the sale Ledger used in VAT return Yes and sale % will be 4% (for U.P.).

4. Then enter Voucher entries

a. All the entries related with cash sale and credit sale will be done using Function key F8


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ADCPM TALLY 9.0 P

and all the entries for credit purchase and cash purchase Voucher entry will be doneF9.

b. In case of cash purchase and credit purchase. First of all, give all the item informayou have enter all the item information then press enter twice and then selec12.5%, the VAT amount will be calculated automatically.

c. In case of cash, sale and credit sale give all the entries then press enter twice anselect VAT 4%. The VAT amount will be calculated automatically.

Question:1. Business started with cash ` 250000/-2. Purchase goods for cash ` 25000/-3. Purchase from Ajay ` 7000/-4. Purchase furniture for cash ` 5000/-5. Sold goods to Manish ` 30000/-6. Purchase goods from Ravi for cash ` 5500/-7. Purchase goods from Ravi ` 3500/-8. Sold goods to Suresh for cash ` 2000/-9. Bought Machinery for cash ` 11000/-

10. Rent paid ` 900/-11. Salary paid ` 1200/-


F6 1/4/2010 Cash 250000

To Capital 250

F5 Purchase 25000

To Cash 25

F9 Purchase 7000

To Ajay 7

F5 Furniture 5000

To Cash 5

F8 Manish 5500

To Sale 5

F6 Cash 3500

To Sale 3

F5 Purchase 2000

To Ravi 2

F5 Machinery 11000

To Cash 1

F5 Rent 9000

To Cash 9

F5 Salary 1200

To Cash


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Question:

1. Business started by Deepak for Cash ` 500000/-2. Purchase goods for cash ` 50000/-3. Purchase furniture for cash ` 45000/-4. Purchase Machinery for cash ` 80000/-5. Purchase goods from Suraj ` 200000/-6. Paid to Suraj half amount by cash half amount by cheque.

7. Salary to Akhilesh ` 2000/-8. Sold goods to Man Mohan ` 80000/-9. Sold machinery for cash ` 50000/-10. Rent receipt ` 2000/-11. Goods given as charity ` 7,500/-


F6 1/4/2010 Cash 500000

To Capital 500000

F5 Purchase 50000To Cash 50000

F5 Furniture 45000

To Cash 45000

F5 Machinery 80000

To Cash 80000

F9 Purchase 200000

To Suraj 200000

F5 Suraj 200000To Cash 100000

To Bank 100000

F5 Salary 2000

To Cash 2000

F8 Man Mohan 80000

To Sale 80000

F6 Cash 50000

To Machinery 50000

F6 Cash 2000

To Rent Receive. 2000

F7 Purchase 7500

To Charity 7500

Question: Delhi Furniture Mart


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ADCPM TALLY 9.0 P

1. Started business with cash ` 50000/-2. Deposited into the Bank ` 9000/-3. Purchased machinery for ` 5000/-4. Paid instillation charges of machinery ` 100/-5. Purchase timber from Nuveen of ` 2000/- allowed 10% trade Disco6. Furniture costing was used of ` 500/- in furnishing the office.7. Sold furniture to Naresh at list price of

`1000/- allowed him 5% trade Dis8. Received a cheque from Naresh for ` 950/-

9. Paid wages ` 350/-and Rent ` 200/-


F6 1/4/2010 Cash 50000

To Capital 50

F4 Bank 9000

To Cash 9

F5 Machinery 5000

To Cash 5

F5 Installation 100

To Cash

F9 Purchase 1800

To Naveen

F7 Furniture 500

To Purchase F8 Naresh 950

To Sale

F6 To Bank 950

Naresh

F5 Wage 350

To Cash

F5 Rent 200

To Cash

1. Started business with cash ` 10000/-Stock ` 5000/-

2. Paid into current a/c ` 4000/-3. Sold goods to Mohan ` 2000/-4. Goods purchase from Shyam ` 3000/-


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5. Purchase goods from Ram of ` 10000/- on 10% Trade Discount6. Amount receipt from Mohan and 5% Discount allowed

7. Amount paid to Shyam and 10% Discount allowed by him.

8. Rent paid ` 12000/-.9. Furniture purchased for office use of ` 500/-

10. Salary paid ` 3000/-Key Date Particular L.F. No. Debit CreditF6 1/4/2010 Cash 10000

Stock 5000

To Capital 15000

F4 Cash 4000

To Bank 4000

F8 Mohan 2000

To Sale 2000

F9 Purchase 3000

To Shyam 3000

F9 Cash 9000

To Ram 9000

F6 Cash 1900

Discount Paid 100

To Mohan 2000

F5 Shyam 3000

To Cash 2700

To Discount Received 300

F5 Rent 1200

To cash 1200

F5 Furniture 500

To Cash 500

F5 Salary 3000

To Cash 3000Question:

1. The Company is starting creating the a/c for next financial year and the closing a/c previous year is

Assets: Cash `15000/-Bank balance `5000/-Stock `40000/-


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ADCPM TALLY 9.0 P

Furniture `3600/-Debtors: `24000/- (X`6000/-, Y`8000/- Z`1000Liabilities: Bank loan `10000/-Creditors: `12500/- (Ajay`5000/-, Vijay`7500/-)Following transactions to place during Jan 1994:

2. Bought goods from Kailash for ` 20000/-at a trade Discount of 10% and Cash Discount of 2% paid 60% amount immediately.

3. Sold goods to X for ` 9000/-4. Receipt from X in full settlement of his a/c ` 14800/-5. Cash deposited into the Bank ` 10000/-6. Cheque received from Y for ` 7850/- in full settlement of his a/c7. Received a cheque from Z ` 2000/-8. Cheque received from Z deposited into the Bank.

9. Amount due to Ajay paid by cheque.

10. Old newspaper sold ` 50/-Old furniture sold ` 750/-

11. Purchase goods from Gopal ` 8000/- and paid by cheque12. Sold goods bought for cash ` 2000/- and allowed Discount 5%13. Paid salary to Motilal by cheque ` 2000/-14. Received Rent ` 1500/-


F6 1/4/2010 Cash 15000

Bank a/c 5000

Stock 40000

Furniture 3600

X 6000

Y 8000

Z 10000

To Bank loan 10

To Ajay 5

To Vijay 7

To Capital 65F5 Purchase 18000

To Cash 10

To Discount Received

To Kailash 7

F8 X 9000


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To Sale 9000

F6 Cash 14800

Discount Paid 200

To X 15000

F4 Bank 10000To Cash 10000

F6 Cash 7850

Discount Paid 150

To Y 8000

F6 Cash 2000

To Z 2000

F4 Bank 2000

To Z 2000

F5 Ajay 5000

To Bank 5000

F6 Cash 50

To Mice income 50

F6 Cash 750

To furniture 750

F5 Purchase 8000

To Bank 8000

F6 Cash 1900

Discount paid 100

To Sale 2000

F5 Salary 2000

To Bank 2000

F6 Cash 1500

To Rent 1500Question: Following Transactions shows the position of Harish as on 01.01.04

1. Cash-in-hand ` 10000/-Cash-at-Bank ` 16800/-Furniture ` 8000/-Stock ` 50000/-Creditor - Anil ` 4000/-


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ADCPM TALLY 9.0 P

Sunil ` 5000/-Debtor - Ram ` 8000/-

Suresh ` 2000/-Shyam ` 12000/-

2. Received a cheque from Ram in full settlement of his a/c after deducting 5% Discoudeposited the above cheque into the Bank,

3. Goods purchase for` 20000/- at 10% Trade Discount and 5% cash Discount paymdone by cheque.

4. Received a cheque from Shyam for` 3860/- and Discount allowed to him ` 240/- cdeposited into the Bank on the same day.

5. Suresh become insolvent and 40p in a rupee could be received from his estate.

6. Cash paid to Anil after deducting 2% cash Discount.

7. Received ` 2000/- from Subhash, which was written off as bad debts in the previous 8. Old furniture sold for ` 800/-9. Salaries paid ` 10000/-

10. Salaries due to clerk ` 5000/-11. Rent paid this year for the next year. ` 1000/-12. Commission received ` 800/-


F6 1/4/2010 Cash 10000

Bank 16800

Furniture 8000

Stock 50000

Ram 8000

Suresh 2000

Shyam 12000

To Anil 4

To Sunil 5

To Capital 97

F6 Cash 7600

Discount paid 400

To Ram 8

F4 Bank 7600

To Cash 7

F5 Purchase 18000

To cash 17

To Discount received


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F6 Bank 3860

Discount paid 240

To Shy am 4100

F6 Cash 800

Bad debt 1200To Suresh 2000

F5 Anil 4000

To cash 3920

To Discount received 80

F6 Cash 2000

To Bad debt received 2000

F6 Cash 800

To furniture 800

F5 Salary 10000

To Cash 10000

F7 Salary 5000

To outstanding 5000

F5 Prepaid Rent 1000

To cash 1000

F6 Commission 800

To Cash 800

Question:

1. Started business with Cash ` 500000/-Bank ` 400000/-Furniture of ` 5000/-

2. Purchase goods for ` 140000/- in all, out of which half thgoods were on credit from Mr. Sudhir.

3. Purchased building for ` 200000/- by chequePaid registration charges ` 24000/- which were paid in cash.

4. Sold goods to Arun for ` 200000/- Arun paid amounts in cash.5. Received cheque from Arun of ` 148000/- in full settlement and th

cheque is immediately deposited into the Bank.

6. Provide 10% depreciation costing ` 5000/- on furniture7. Provide 8% interest on Capital ` 500000/-8. Paid office expense from personal cash ` 500/-


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ADCPM TALLY 9.0 P

Stationery expenses from office cash ` 180/-9. Paid for office cleaning ` 200/-

10. Received rent of ` 2500/- for a portion of building le11. Paid for advertisement in the Hindustan ` 2000/-


F6 1/4/2010 Cash 100000

Bank 400000

Furniture 5000

To Capital 505

F5 Purchase 140000

To Cash 70

To Sudhir 70

F5 Building 200000

To Bank 200

F5 Registration 24000

To Cash 24

F6 Cash 50000

Arun 150000

To Sale 200

F6 Bank 14800

Discount paid 200

To Arun 15

F7 Depreciation 500

To furniture

F7 Interest on Capital 40000

To Capital 40

F5 Office exp 500

To Cash

F5 Stationery 180

To cash

F5 Office cleaning 200

To Cash

F6 Cash 2500

To Rent paid 2

F5 Advertisement 2000

To Cash 2


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Question:

1. Sundar started business with cash ` 75000/-Stock ` 35000/-Furniture ` 5000/-

2. Sold goods to Bhushan at list price of ` 10000/- at a trade Discount of 10%Bhushan return goods worth ` 1000/-

3. Received from Bhushan ` 8000/- in full settlement of his a/c4. Purchase furniture for ` 6000/-.5. Purchase goods from Naveen for ` 25000/- less trade Discount 12%

Returned goods to Naveen of ` 2000/- at the list price6. Cleared the a/c of Naveen by paying cash under the Discount of 5%

7. Sold goods to Ajay ` 10000/- and Vijay ` 16000/-8. Received cash from Ajay ` 9800/- in full settlement of his a/c9. Paid insurance premium of ` 750/-

10. Paid for Sunder life insurance premium ` 1200/-11. Purchase goods for

`8000/- for cash trade Discount 10% and cash Discount of 2%12. Received cash for Vijay at the cash Discount of 5% in full settlement of his a/c

13. Paid Rent ` 800/-, Advertisement ` 1000/-, Salary ` 4000/-.14. Received commission ` 500/-15. Old costing ` 4000/- of which a sale price ` 5000/- destroyed by fire.16. Salaries paid ` 4000/- Due ` 1000/-17. Goods costing ` 800/- taken by the proprietor for personal use


F6 1/4/2010 Cash 75000

Stock 35000Furniture 5000

To Capital 115000

F8 Bhushan 9000

To Sale 9000

F7 Sale return 1000

To Bhushan 1000

F6 Cash 8000

To Bhushan 8000

F5 Furniture 6000

To Cash 6000

F9 Purchase 22000

To Naveen 22000

F7 Purchase return 2040

To Naveen 2040


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ADCPM TALLY 9.0 P


F5 Naveen 20900

To cash 20

F8 Ajay 10000

To Sale 10

F8 Vijay 16000

To sale 16

F6 Cash 9800

Discount paid 200

To Ajay 10

F5 Insurance premium 750

To Cash

F5 Drawing 1200

To Cash

F5 Purchase 7200

To Cash 7


F6 Cash 15200

Discount Paid 800

To Vijay 16

F5 Rent 800

To Cash

F5 Advertisement 1000To Cash

F5 Salary 4000

To Cash 4

F6 Cash 500

To Commission received

F7 Loss by Fire 5000

To Purchase 5

F5 Salary 4000To Cash 4

F7 Salary 1000

To Outstanding

F7 Drawing 800

To Purchase


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Question: Following balances appeared in the books of Radhika Traders on 01.01.94

1. Assets: Cash ` 8000/-Bank ` 7000/-Stock ` 30000/-

Debtors: Mohan ` 10000/-Mohan ` 12000/-Danish ` 14000/-Furniture ` 5000/-Building ` 25000/-

Liabilities: Creditors: X ` 5000/-Y ` 6000/-

2. Bought goods of the list price of ` 6000/- from Khanna Brothers les15% trade Discount and 2% cash Discount, paid 40% price at the same time.

3. Received a draft of` 9750/- from Mohan in full settlement and deposited it into the Bank.4. Purchase goods from Suresh of ` 8000/- on list price at 20% Trad

Discount and paid him by cheque.

5. Sold goods and Received a cheque of ` 25000/-6. Deposited the above cheque into the Bank

7. Mohan deposited in our Bank a/c ` 4000/-8. Paid income tax ` 5600/-9. Received a cheque from Mohan and send to the Bank ` 7800/- Discount allowed 20%

10. Withdraw from the Bank for office ` 2000/- and for private use ` 4000/-.11. Send a cheque to X ` 4900/- in full settlement of his a/c.12. Cheque of Mohan returned by the Bank as discount hounded.

13. Danish was declared insolvent and a payment of 60 p in a rupee received from his estate

14. Bank allowed interest ` 350/-.15. Paid for Rent by cheque ` 1500/-16. Paid for travelling expense by cheque ` 500/-17. Purchase goods for` 5000/- for cash and paid ` 50/- carriage on these goods.18. Give as charity cash ` 500/- and goods ` 2000/-.19. Provide 10% depreciation costing ` 5000/- on furniture


F6 1/4/2010 Cash 8000

Bank 7000Stock 30000

Mohan 10000

Mohan 12000

Danish 14000

Furniture 5000


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ADCPM TALLY 9.0 P


Building 25000

To X 5

To Y 6

To Capital 100

F5 Purchase 5100

To Cash 19


To Khannas 3

F6 Bank 9750

Discount paid 250

To Mohan 10

F5 Purchase 6400

To Bank 6

F6 Cash 25000

To Sale 25

F4 Cash 25000

To Bank 25

F6 Bank 4000

To Mohan 4

F5 Drawing 5600

To Cash 5

F6 Bank 7800Discount Paid 200

To Mohan 80

F5 Office 2000

Drawing 4000

To Bank 6

F5 X 5000

To Cash 4

To Discount received F5 Mohan 4000

To Bank 4

F6 Cash 8400

Bad debt 5600

To Danish 14


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F6 Bank 350

To Interest 350

F5 Rent 1500

To Bank 1500

F5 Travel expense 500

To Bank 500

F5 Purchase 5000

To Cash 5000

F5 Carriage 50

To Cash 50

F5 Charity 2500

To Purchase 2000

To cash 500

F7 Deprecation 500

To furniture 500

Question: Following was the position of Harish as on 1.4.94

1. Cash in hand ` 10000/-Cash at the Bank ` 16800/-Building ` 50000/-Furniture ` 8000/-Stock ` 50000/-Debtors: Ram ` 80

accounting with tally9.0

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