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<p>Accounting is a Finance support system, that: y y y y y y Records transacations Classifies transactions and events Expresses transactions in monetary terms Helps to monitor the financial performance and condition of the business Helps to evaluate the business Helps to establish control the business</p> <p>The main objective of any business is to make profit. Profit is difference between the price at which the trader purchases goods and sells the same.</p> <p>1. Need for Accounting y y y y y y y y y To know the true profit or loss of the business for a particular period. To have a permanent record for all metcantile transactions taken place in the business To know the financial position of the business at any point of time. To know the amounts due to suppliers from whom the goods are bought on credit. To know the amounts due from the customers to whom the goods sold on credit. To keep all the changes in the values of assets and liabilities on any date. To know whether the line of business is profitable or not, if not, reasons for the same. To keep a watch on expenses with a view to minimize the same. To provide relevant information for legal and tax purposes when required.</p> <p>2. Accounting Definition: Accounting is called as Language of Business . Accounting has been defined as The art of recording, classifying and summarizing in a significant manner and in terms of money transactions and events which are of financial character and interpreting the results.</p> <p>Analysis of Definition: Accounting is the art of Recording transactions. Classifying Summarizing Interpreting : The first stage of accounting which deals with the recording/journalizing the</p> <p>-</p> <p>: Classifying into expenses, income, assets, liabilities : Summarizing the data into trial balance for preference of Financial Statements</p> <p>3. Types of Accounts:</p> <p>1)Personal Account: Rule: 2)Real Account: Rule:</p> <p>Deals with person (artificial / natural) Credit- The giver</p> <p>Debit The receiver;</p> <p>Deals with properties Debit- What comes in; Credit- What goes out. Deals with expenses, losses, incomes and gains.</p> <p>3)Nominal Account: Rule:</p> <p>Debit All expenses and losses; Credit- All incomes and gains</p> <p>INTRODUCTION TO TALLY Introduction: y y y y y y Late Shri S S Goenka was the founder of the company Peutronics Pvt. Ltd. Set up tally software business in 1986. Tally is the undisputed kind of all financial accounting packages available in India. Capable of handling all kinds of transactions. A post transaction system follows the traditional method of accounting, i.e the payment is first made on the basis of existing accounting methods, and that information is fed into Tally. Covers a wide area can be used by the owner, financial controller, accountant, manager or an auditor. Is both accurate and convenient to use even if we are not well versed with the accounting, we can still use and at the same time become known to accounting methods.</p> <p>Tally versions: Version 1. 2. 3. 4. 5. 6. Tally 4.5 (1988) Tally 5.4 (1995) Tally 6.3 (2000) Tally 7.2 (2005) Tally 8.1 (2006) Tally 9.0 (2007) Based on MS DOS MS Windows Internet MS Windows MS Windows MS Windows Features Single user tally silver. Multi user tally Gold. Online filing, auditing, import and export of files. VAT, TDS, &amp; Service Tax. FBT &amp; Excise Duty. Payroll, Multi language and extra formatting.</p> <p>Starting with tally: Step 1: Select company (F1): Or Create company: y y y Company Information Menu. The right half of the Gateway of Tally area displays the company info. Menu This menu has the following three options: i) Select Company ii) Create Company iii) Quit In order to create a new company for accounting, following screen will appear: To select the particular company which is already Existed/Created.</p> <p>y</p> <p> Name: Give the name of the company Mailing name, address etc. Email Maintain : Accounts / Accounts with inventory (as required) Financial year: Give the financial year Books beginning year: Give the start date of the books Tally Vault password: Leave the option blank and never put and vault password. Security Control: If required Accept/Reject: Accept the screen. Alter the company: A created company details can be modified at a later time through keys Alt + F3, or choosing the alter option from the company info tab on the right hand bar on the screen. A company has been created with the above information. Short cut keys: F1 Alt + F1 F2 Alt + F2 F3 Alt+F3 Ctrl + A : : : : : : : Select company Shut Company Change current date Change current period Change current company Company Info Save</p> <p>Ctrl + N : Ctrl + M : Ctrl + Q/esc: Altr + D : F11 : F12 : Step 2:</p> <p>Calculator Gateway of tally Exit from Tally screen Delete Company Features (Accounting, Inventory &amp; Taxation Features) Company Configuration</p> <p>Creation of Accounts (Ledgers) After company creation comes to Gateway of Tally Select Accounts Info Select Ledger Create When we create a company, Tally automatically creates 2 accounts: 1. Cash accounts 2. Profit &amp; Loss Account Enter the name of ledger/account in the name column, select the group from the list of groups and enter the opening balance in opening balance column and accept the ledger.</p> <p>To View reports: After ledger creation comes to Gateway of Tally Select Display Trial Balance Press Alt + F1 (To view full details)</p> <p>Creation of Groups: After company creation, come to Gateway of Tally Accounts Info Select Group Create</p> <p>Type the group name and select the under option and accept the group.</p> <p>Reports: To view the details of the Groups created, come to Gateway of Tally Select Display Select Accounts Books Select Group Summary Select Particulars under Groups Press Alt + F1 (to view full details)</p> <p>VOUCHER ENTRYA voucher is the primary document for recording the financial transactions. Recording and analysis process in tally is a very easy process for different types of transactions because tally provides 16 different predefined voucher formats. Theses predefined vouchers fulfill our daily transaction needs. Tally voucher are of two types: y Accounting Vouchers y Inventory Vouchers Accounting Vouchers: Accounting vouchers are classified into 8 types of vouchers, but we mostly use 6 types. 1. Contra Voucher (F4): Contra voucher is used for Cash transactions with Banks i.e Cash withdrawls &amp; Cash Deposits. Eg: i) Cash withdrawn from bank for office use; ii) Cash deposits into bank To View the contra voucher entry screen and pass contra entries, Go to Gateway of Tally Accounting Voucher F4: Contra from the button bar (or) Press F4. 2. Payment Voucher (F5): Payment voucher is used for Cash/Bank payments. When we pay cash/cheque to the party for expenses, this type of voucher is used. By default, the payment entry screen appears in Single Entry Mode. To view the Payment Voucher Entry Screen and pass payment entries. Go to Gateway of Tally Accounting Voucher F5: Payment from the button bar (or) Press F5. 3. Receipt Voucher (F6): This voucher is used for Bank/Cash receipts. When we receive cash/cheque from the party/income, this voucher is used.</p> <p>To view the Receipt Voucher Entry Screen and pass r3ceipt entries. Go to Gateway of Tally Accounting Voucher F6: Receipt from the button bar (or) Press F6. 4. Journal Voucher (F7): Journal Voucher is used for entries other than Cash/Bank and Purchase of goods/Sale of Goods. For Eg. There may be outstanding salaries or Interest or prepaid insurance etc., for these transactions Journal Voucher is used. To view the Journal Voucher entry screen: Go to Gateway of Tally Accounting Voucher F7: Journal from the button bar (or) Press F7. 5. Sales voucher (F8): This voucher is used for Cash/credit sales. It means when we sell goods to the party for cash or credit, we record the entry though sales voucher. To view the Sales Voucher Entry Screen and pass sales entries. Go to Gateway of Tally Accounting Voucher F8: Sales from the button bar (or) Press F8. 6. Purchase Voucher (F9): This voucher is used for Cash/Credit Purchases. It means when we purchase foods from any supplier for cash or credit then we record entry through purchase voucher. To view the Purchase Voucher Entry Screen and pass Purchase entries. Go to Gateway of Tally Accounting Voucher F9: Purchase from the button bar (or) Press F9. Reports: To view the details of transactions after recording, come to Gateway of Tally Select Display Select Day Book Press Alt + F2 (only to change current period)</p> <p>PURCHASE RETURNS &amp; SALES RETURNSWhen we receive the goods from customer and the same return the same return the goods to the supplier is called sales return, purchase return. When we want to enter this type of transaction in Tally, we must activate this feature in tally. F11 Company features- F1 accounting features Use debit/credit note yes accept the screen Ctr+A</p> <p>Debit note is used for purchase return transactions and credit notes is used for sales return transactions. Theses transaction are also entered into vouchers. Debit Note (Ctrl + F9) Debit: The Creditor (party name); Credit: The purchase return ledgers. Credit Note (Ctrl + F8) Debit: The sales returns ledger; Credit: The debtor (party name)</p> <p>BANK RECONCILIATION STATEMENTReconciling the company s Bank accounts with the banker s statement is a regular task if accounting. In Tally, Reconciling of Bank account facilitates the following: Ability to check back the correctness of reconciliation Tally uses date to mark against the voucher. For instance, if we issue a cheque on 8th April, and our bank clears it on 19th April, we would set the Bank date for the voucher as 19th April. This means that when we need to check back later, whether the entry made by us is correct, we will only need to verify the bank statements of the 19th April. Recovering the reconciliation of any date The bank reconciliation plays an important role in auditing and verification of the correctness of accounts at the year end. However, it is not a real-time task means auditors do not do it on the first day of the next year.</p> <p>A quick experiment with Reconciliation will show what it all means. Here it is how we go about it. Take the monthly summary of any bank book. We can choose a Bank book from Balance Sheet or Trial Balance or Come to Gateway of Tally Display Account Books Cash/Bank Books Bring the cursor to the first month (i.e April), and press enter. This brings up the vouchers for the month of April. Since this is a Bank Account, we can click on additional button; F5: Reconcile on the button bar to the right or Press F5. Display goes to the Reconciliation Mode , which can be edited. The cursor automatically blink at Bank Date. The screen shows at the bottom: i. Balance as per company Books ii. Amounts not reflected in Bank iii. Balances as per Bank The balance as per company books reflects the balance as on the last date. The amount not reflected in Bank are the debit and credit sums up all those vouchers, whose Bank date is either blank or later that 30-Apr (i.e these vouchers have not yet been reflected in the bank statement). The balance as per bank is the net effect of the book balance and the amounts not reflected in the bank which must be equal to the balance in the bank statements. As we mark the individual vouchers by setting the bank date, we will notice that the reconciliation at the bottom if the screen keeps updatizng the changes. Once this process is complete, press Ctrl + A. or enter as many times as necessary to skip over the unmarked vouchers and accept the screen. The nect time when we opt for reconciliation, the screen displays only those vouchers that remain unreconciled. We can also display vouchers that are already marked as reconciled in case we need to edit the marking by using F12: Configure. Set show reconciled vouchers also to yes to see the reconciled vouchers. Set Allow back dated Reconciliation to Yes to enter bank date which is earlier than the voucher date. We can also display vouchers that are already marked as reconciled, in case we need to edit the marking, by using F12: Configure Press Alt + P or click on the print button to print your reconciliation report.</p> <p>Bill Wise Details: Bill Wise details are affected only for party accounts. For ledger accounts classified under sundry debtors, sundry creditors, activate Bill Wise details to track each invoice, and adjust the bull payments Bill by Bill. When we make sales or purchase voucher with Bill Wise details, tally prompts to identify the invoice with an appropriate reference number. The reference can be used to allocate payments to the correct invoice to maintain an accurate account of outstanding. Bill Wise details, sub screen comes up for party accounts during receipt/payment voucher entry or purchase/sale voucher entry. To activate Bill Wise Details: Set Maintain Bill Wise Details to Yes in F11: Feature Accounting Feature. Bill Reference are of four types: 1. Advance 2. New Ref. Advance This can be selected when the money is received or paid in advance. We can adjust this advance amount while making the sale or purchase entry. New Reference We select this for new transactions for a new bill raised on our customer or raised on us by our supplier. If we mark the bill as a new reference; it is added to the list of outstandings. Against Reference Select this when adjusting a previous reference. Mark a bill as new reference and adjust its payment by marking the payment against reference. When selecting against reference, tally gives a list of pending reference (bills) for the party from which we select the relevant. On Account On account is selected when we are unable to mark a payment or a receipt against specific pending references. Maintaining Bill Wise details helps us to obtain information on Pending bills, bills due, overdue bills etc. and reports such as outstanding analysis and ageing analysis. To view reports: Gateway of Tally Display Statement of Accounts Outstanding</p> <p>3. Against Ref. 4. On Account</p> <p>COST CENTRESA cost centre is a unit to which transactions (generally, revenue) can be allocated. When only costs or expenses are allocated to these units, they are referred to as cost centres. When profits are also allocated to these units, they become Profit Centre. We can now obtain a Profit &amp; Loss Account of each such Profit Centre. Cost Centre in Tally allows us an additional dimentsion to a transaction where a legder account indicates the nature of the transaction. It does not readily disclose which part of the organization was involved in the transaction. By providing Cost centre, a transaction can be allocated to it, which would enable extraction of all transactions for a cost centre. Tally gives us the cost centre break up of each transaction as well as details of transactions for each cost centre. Cost Centre in our Organization: SIPL HO Erode Madurai Trichy Adharam Energy IFMR Employee of the company, who work in each cost centre act as a sub cost centre, which affect the co...</p>