TALLY LAB PROJECT FILE

Submitted by: DIVYANSH

Enrolment No.: 01514988820

Semester: Third

Course and shift: B.com (Hons.) {Shift 1}

Submitted to: Ms. Chetna Grewal

Maharaja Surajmal Institute

C-4, Janakpuri, New Delhi- 110058

Affiliated to

Guru Gobind Singh Indraprastha University, Delhi

 TABLE OF CONTENTS

S.No Date Units Page No.s Signature

.

Unit 1
1 3-13

2 14-44
Unit 2

3 45-55
Unit 3

4 56-63
Unit 4
 UNIT – 1
Basics of Accounting

Learning Objectives

 Basics of Accounting Principles

 Concepts and Conventions
 Different types of accounts
 Rules of journal entries
 Methods of Accounting

Accountancy

Accountancy is the process of managing the expenses and the incomes of a business.

The process of recording and summarizing financial transactions is known as “bookkeeping”.

When the data is produced in reports for the use of individuals or companies outside the
organization, the process is called “financial accounting”. It refers to the process of
measuring, summarizing and communicating the financial information produced by the
bookkeeping to classify and explain account information to relevant parties such as
shareholders and managers. The use of this information also makes it possible to forecast
future financial developments, analyze different areas of the business and evaluate business
potential.

Basics of Accounting Principles

“Principles of Accounting are the general law or rule adopted or proposed as a guide to
action, a settled ground or basis of conduct or practice.”

- American Institute of Certified Public Accountants

Accounting principles are the rules adopted by the accountants universally while recording
accounting transactions. They are the norms or rules which are followed in accounting of
various items of assets, liabilities, expenses incomes etc. For example, Inventory depreciated
over their expected useful life. Accounting principles are the basic or fundamental
propositions generally accepted by accountants as a set of accounting principles based on
which transactions are recorded and financial statements are prepared. These principles are
classified into two categories:

1. Accounting concepts
2. Accounting conventions

Importance of Accounting Principles

The purpose of having - and following - accounting principles is to be able to communicate

economic information in a language that is acceptable and understandable from one business
to another. Companies that release their financial information to the public are required to
follow these principles in preparation of their statements.

Depending on the characteristics of a company or entity, the company law and other
regulations determine which accounting principles they are required to apply. The standard
accounting principles are collectively known as Generally Accepted Accounting Principles
(GAAP). GAAP provides the framework foundation of accounting standards, concepts,
objectives and conventions for companies, serving as a guide of how to prepare and present
financial statements.
Need of Accounting Principles

Accounting information is better understood if it is prepared following the set of accounting

principles uniformly. It means the same accounting principles are followed by all entities in
preparing their final accounts. Accounting information is meaningful and useful for users of
accounting information if the accounting record and financial statements are prepared
following generally adopted accounting principles.

GAAP aims to regulate and standardise accountancy practices by providing a framework to

ensure companies and organisations are transparent and honest in their financial reporting.
Accounting principles serve as a doctrine for accountants' theory and procedures. in doing
their accounting systems.

Accounting principles ensure that companies follow certain standards of recording

how economic events should be recognised, recorded, and presented. External
stakeholders (for example investors, banks, agencies etc.) rely on these principles to
trust that a company is providing accurate and relevant information in their financial
statements.

Concepts and Conventions

Accounting concepts are the basic assumptions or fundamental propositions within

which accounting operates. They are generally accepted accounting rules based on
which transactions are recorded and financial statements are prepared. It is important
to follow the accounting concepts because it enables the users of financial statements
are prepared. It is important to follow the accounting concepts because it enables the
users of financial statements to understand them better and in the same manner.

Accounting conventions are the outcome of accounting principles or practices being

followed by the enterprises over a period of time. Conventions may undergo a change
with time to bring about improvement in the quality of accounting information.
 1. Business Entity Concept: Business is considered to be separate from its owners.
Business transactions are recorded in the books of account from the business point of
view and not the owner’s point of view. Owners being regarded as separate from the
business and are considered as creditors of the business to the extent of their capital.
2. Money Measurement Concept: transactions and events that can be measured in the
terms of money are recorded in the books of account of the enterprise. Stating
differently, money is the common denominator in recording and reporting
transactions.
3. Dual Aspect Concept: simply stated, for every debit there is a credit of equal amount
in one or more accounts. It is also true vice versa.
4. Going Concern Concept: In accounting, a business is expected to continue for a
fairly long time and carry out its commitments and obligations. This assumes that the
business will not be forced to stop functioning and liquidate its assets at "tire-sale"
prices.
5. Cost Concept: as per this concept, an asset is recorded in the books of accounts at the
price paid to acquire it and the cost is the basis for all the subsequent accounting of
the asset. NO rise or fall in market price is taken into account. The concept applies only to
fixed assets.
6. Accounting Year Concept: Each business chooses a specific time period to complete
a cycle of the accounting process—for example, monthly, quarterly, or annually—as
per a fiscal or a calendar year.
7. Matching Concept: it is necessary to match the revenues of the period with the
expenses of that period to determine correct profit or loss for the accounting period.
Profit earned by the business during a period can be correctly measured only when the
revenues earned during the period is matched with the expenditure incurred to earn
the revenue.
8. Realisation Concept: According. to this concept, profit is recognised only when it is
earned. An advance or fee paid is not considered a profit until the goods or services
have been delivered to the buyer.

Accounting Conventions

There are four types of accounting conventions in the practice of accountancy. These are as
follows:
 1. Conservatism: “do not anticipate for a profit, but provide of all possible losses.”
Stating differently, it takes into consideration all prospective losses but not the
prospective profits. When two values of a transaction are available, the lower-value
transaction is recorded. By this convention, profit should never be overestimated,
and there should always be a provision for losses.
2. Consistency: accounting practices ones selected and adopted, should be applied
consistently year after year. The concept helps in better understanding the
accounting information and makes it comparable with that of previous year.
3. Materiality: an item should be regarded as material if there is a reason to believe that
knowledge of it would influence the decision of an informed investor. All material facts
should be recorded in accounting. Accountants should record important data and leave out
insignificant information.
4. Full Disclosure: there should be complete and understandable reporting on the financial
statements of all significant information relating to the economic affairs of the entity.
entails the revelation of all information, both favourable and detrimental to a' business
enterprise, and which are of material value to creditors and debtors.

Different Types of Accounts

“Accounting is a process of recording, classifying and summarizing financial transactions.in

a significant manner and interpreting results thereof. Accounting is both science and art.”

For every type of entity, whether it is large in size or small in size, it is very important to have
a proper. system of accounting for proper management of an entity's business operations. An
accountant must have a good understanding of the terms used in accounting and types of
accounts. An account is the systematic presentation of all the transactions related to a
particular head. An account shows the summarized records of transactions related to a
concerned person or thing.

For Example: when the entity deals with various suppliers and customers, each of the
suppliers and customers will be a separate account. An account may be related to things
which can be tangible as well as intangible. For example: land, building, furniture, etc. are
things.

An account is expressed in å statement form. It has two sides. The left-hand side of an
account is called a Debit side whereas right-hand side is called as Credit side. The debit is
denoted as 'Dr' and credit is denoted as 'Cr’.
Accounts are categorised into three broad categories as per their nature and attributes. These
three categories are as follows:

1. Personal account
2. Real account
3. Nominal account

Personal Account: accounts which relate to persons, i.e., individuals, firms, companies,
debtors or creditors, etc. are personal accounts. Example: Ram and Co. account, capital
account and drawing account. There can be another sub-category in this account which is
personal representative account. For example: In the case of Salary, when it is payable to
employees, it is known how much amount is payable to each of the employee. But
collectively it is called as 'Salary payable’.

Rule of personal account: “Dr the receiver, Cr the giver:

Real Account: real accounts which are the accounts concerned with tangible and intangible
assets of a business entity. For example: land, building, investments, machinery and
goodwill, patents, trademark etc.

Rule of real account: “Dr what comes in, Cr what goes out.”

Nominal account: accounts which relate to the expenses, losses, gains, revenues etc., are
termed as nominal account. These are, interest paid account, sales account, commission
received account, purchases account. The net result of all the nominal account is profit or loss
which is transferred to the capital account at the end.

Rule of nominal account: “Dr all the expenses and losses, Cr all the incomes and gains.”

Methods of Accounting

An accounting method refers to a set of rules that a company adheres to when keeping its
financial records and reporting financial transactions. The transactions are recorded in a
manner that accurately reflects true income. The two basic methods of accounting are Cash
Accounting and Accrual Accounting.

Under the cash method, income and expenses are reported and deducted in the tax year they
are received and paid, respectively. On the other hand, under the accrual method, both
income and expenses are generally reported in the tax year when they are realized, regardless
of when they are received.

Types of accounting methods:

Cash Accounting Method: Cash basis accounting is relatively easy to implement;

hence, it is commonly used by small businesses. The cash method does not conform to the
conventions of Generally Accepted

Accounting Principles (GAAP). Under the cash method, financial transactions are not
recorded until they are actually realized.

For example, income is recorded when payment is received, while expenses are entered in
books of accounts when a bill is settled. Financial statements prepared under the cash
accounting basis contain information about the sources of cash during the tax period, how the
cash was used, as well as the cash balances at the date of reporting. Additional information
about liabilities may be contained in the notes to the financial statements.

Although the cash accounting method is most appropriate for sole proprietorships and small
businesses, it also used to manage personal finances up to a specific limit. For example, if
annual sales that a business realizes are more than $5 million, the Internal Revenue Service
(IRS) dictates that it must use the accrual method of accounting.

One notable flaw with the method is that it can offer a misleading picture of an entity's
financial health, especially when transactions, such as unpaid expenses, cash receipts, or
outstanding receivables, are not represented in the financial statements.

Advantages of Cash Basis:

 It is a simple basis of accounting an adjustment for outstanding expenses, prepaid

expenses, accrued income and income received in advance is not made.
 This approach is more objective as very few estimates and judgements are required.
 The basis of accounting is suitable for those enterprises where most of the
transactions are on cash basis.

Disadvantages of Cash Basis

  It does not give a true and fair view of the profit and loss and the financial position of
an enterprise because it ignores outstanding and prepaid expenses and accrued income
and income received in advance.
 It does not follow the Matching principle of accounting.
 This system does not distinguish between capital and revenue items and as in result,
there is no consistency in the profits of the two years.

Accrual Accounting Method: The accrual method of accounting is founded on the

matching principle, whose aim is to match income and expenses in the correct year. The
criterion is further based on a cause-and effect relationship between reported revenues and
expenses, making it a prerequisite for the matching principle.

Matching revenues and expenses help the accrual method to achieve a more accurate
measurement of periodic net income of business since transactions are recorded together in
the same period.

Under accrual accounting, profits are only recorded after they are earned, and expenses are
recorded after they are incurred. It implies that an invoice can be recognized as revenue, even
though funds are not yet received.

Similarly, expenses are recorded even though payment can be deferred. It is important to note
that when receiving an advance payment under the accrual method, the recognition of
advance payment is postponed until the following period when the revenue is earned. It is,
however, impossible to postpone beyond the next tax year. As a result, the advance payment
must be included in the income in the relevant financial reports and gross receipts for tax
purposes.

Advantages of Accrual Basis

 It is more scientific compared to cash basis of accounting and hence is preferred by

accountants.
 The basis of accounting shows a complete picture of financial transactions of the
business as well as it takes account the effect of all transactions relating to a period as
well as adjustments like outstanding expenses, prepaid expenses, accrued income and
income received in advance.
 The basis discloses correct profit or loss for a particular period and also exhibits true
financial position of the business on a particular date.
  It reflects true profit or loss during the accounting period and therefore has been
widely acceptable.
 It reflects true financial position at the end of the accounting period by adjusting
outstanding expenses, prepaid expenses, accrued income and income received in
advance, etc.

Disadvantages of Accrual Basis

 This system is not as simple as cash basis of accounting.

 The accounting process is too elaborate,
 A quick appraisal of the profit/loss is not possible because many adjustments are
required to ascertain the true financial position of the business.

Selecting an Accounting Method

The accrual accounting method becomes valuable in large and complex business entities;
given the accurate picture it gives about a company's true financial position. A typical
example is a construction firm, which may win a long-term construction project without full
cash payment until the completion of the project.

Under the cash accounting guidelines, the company would accrue many expenses, and until
the entire revenue payment is received, it would not realize revenue. It means that the
company's book of accounts would look weak until the cash is recorded. A lender, for
example, would consider the company as not creditworthy because of its large expenses and
is in a large loss position.

Comparatively, under the accrual accounting method, the construction firm would realize a
portion of revenue and expenses that correspond to the proportion of the work completed. It
can present either a gain or loss in each financial year in which the project is still active. The
method is called the percentage of completion method.

Nevertheless, it is the cash flow statement that would give a true picture of the actual cash
coming in. Such an approach would show the prospective lender the true depiction of the
company’s entire revenue stream.
KEY DIFFERENCES

The key advantage of the cash method is its simplicity-it only accounts for cash paid or
received. Tracking the cash flow of a company is also easier with the cash method.

But a disadvantage of the cash method is that it might overstate the health of a company that
is cash-rich but has large sums of accounts payables that far exceed the cash on the books and
the company's current revenue stream. An investor might conclude the company is making a
profit when, in reality, the company is losing money.

Meanwhile, the advantage of the accrual method is that it includes accounts receivables and
payables and, as a result, is a more accurate picture of the profitability of a company,
particularly in the long term. The reason for this is that the accrual method records all
revenues when they are earned and all expenses when they are incurred.

For example, a company might have sales in the current quarter that wouldn't be recorded
under the cash method because revenue isn't expected until the following quarter. An investor
might conclude the company is unprofitable when, in reality, the company is doing well. The
disadvantage of the accrual method is that it doesn't track cash flow and, as a result, might not
account for a company with a major cash shortage in the short term, despite

looking profitable in the long term. Another disadvantage of the accrual method is that it can
be more complicated to implement since it's necessary to account for items like unearned
revenue and prepaid expenses.

Special Considerations

. The accrual method is most commonly used by companies, particularly publicly-traded

companies. One reason for the accrual method's popularity is that it smooths out earnings
over time since it accounts for all revenues and expenses as they're generated instead of being
recorded intermittently under the cash-basis method.

Both methods have their advantages and disadvantages, and each only shows part of the
financial health of a company. Understanding both the accrual method and a company's cash
flow with the cash method is important when making an investment decision.

Accrual Accounting vs. Cash Basis Accounting Example

Let's say you own a business that sells machinery. If you sell $5,000 worth of machinery,
under the cash method, that amount is not recorded in the books until the customer hands you
the money or you receive the check. Under the accrual method, the $5,000 is recorded as
revenue immediately when the sale is made, even if you receive the money a few days or
weeks later.

The same principle applies to expenses. If you receive an electric bill for $1,700, under the
cash method, the amount is not added to the books until you pay the bill. However, under the
accrual method, the $1,700 is recorded as an expense the day you receive the bill.

Cash Basis of Accounting Accrual Basis of Accounting

Definition
It is that basis of accounting where any It is that basis of accounting where any
income or expense is recognized only when income or expense is recognized when it is
there is an inflow or outflow of cash earned/ incurred, irrespective of the time
when it is paid/ collected
Nature
Cash basis is simple in nature Accrual basis is complex in nature
Accounting System Followed
Cash basis of accounting follows the single- It follows a double entry system of
entry system that records either inflow or accounting where each transaction has two
outflow of cash outcomes in the form of debit and credit
Variations in Income Statement
Income statement will show a relatively Income statement will show higher income
lower income under cash basis of levels under the accrual basis of accounting
accounting
Accuracy
Cash basis of accountancy has low accuracy Accrual basis of accounting is more
accurate than the cash basis of accounting
Auditing of Financial Statements
Under cash basis of accounting financial Financial statements can be audited only
statements cannot be audited when they are prepared using accrual basis
of accounting
Suitable for
Cash basis of accounting is suitable for Accrual basis of accounting is suitable for
micro to small businesses large corporations

UNIT – 2
Fundamentals of Tally.ERP9
Learning Objectives of the unit:
After completing this unit. the students Will be able to:
• Explain the fundamentals of the software
 Demonstrate the steps to create a company and its configuration
• Understand the creation. alteration and deletion of certain ledger accounts
• pass and delete journal entries in different accounting vouchers.
• Explain how to search different entries.
The term company in tally ERP 9 means any accounting activities for which a set of
accounting records are maintained.
COMPANY CREATION
At the company info menu click create company to get company creation screen. Enter the
basic information about the company.

Name: the company is identified and selected by this name to identify for each year one may
at financial year after the company name like (ABC ltd) 17-18) so is the next year it would be
(ABC It’d. 18-19).

MAINTAIN
(ACCOUNTS ONLY)
Under this inventory system will not be maintained.

(ACCOUNTS WITH INVENTORY)

Under this inventory system will be maintained along with accounts.
FINANICIAL YEAR FROM

Enter beginning date of financial year

example: if one enters 14 October 2014 as books beginning date, the accounting period will
be up to 31 March 2015.

DIRECTORY

At directory the default data part as set by the person at the twice of installation of tally
appears. One should normally press enter to keep the company data at this folder.
To change (press shift + tab) at name to get back directory and enter the directory name
where one like to keep company data.

SAVING THE COMPANY

After entering the particulars click: YES' at Accept 'YES-NO' button. At the bottom right to
save the company profile alternatively person ctrl + A save the company profile. Now a tally
company gets created and one get gateway of tally screen after creation of 1" tally company.
The left of GOT is the list of selected companies.

One can create multiple tally companies on the computer and maintain separate accounting
records for each of them.

TALLY VAULT PASSWORD

Data security is a matter of concern to the business owner because many businesses depend
on the secrecy of data. It keeps the confidentiality of information by encrypting the data.

MODIFICATION OF COMPANY PROFILE

Click F3(ALT+F3): company info button at GOT to get company info menu. Select enter
then select the company name from the list alternative screen.

GATEWAY OF TALLY

On creation of first company gateway of tally appears. This is the main entry where any part
of Tally can be accessed to perform a task.

COMPONENTS OF GATEWAY OF TALLY

1) Horizontal button bar:
a) P: Printing: Printing of Reports display screen.
b) E: Export: Exporting of Reports and in various formats.
c) H: E-Mail: To email a Tally Report.
d) O: Upload: To upload reports in your websites.
e) S: Tally shop: To shop various Tally add on products.
f) G: Language: Supports multiple language.
g) K: Keyboard: To see Tally's phonetic keyboard operating system for language.
h) K: Control Centre: To access control centre through remote login.
I) H: Support Centre: To access Tally support centre for assistance.
j) H: Help: To get local and online help.

Main Area
Tally main area contains detail of tally software and calculated area. The calculator may
invoke by Ctrl +N. The Arithmetic formula may be typed to get instant result without using
external calculators. The Tally info part may be displayed or hidden(X) and (^) handled.

Current bar (Task Bar)

At the bottom of a screen the position and part of current screen from main menu is shown.

Vertical Button Bar

At the right part a vertical button bar appears, which contained following buttons:

1) F2: Date: Current date should lie within the current period.
2) F2: Period: To set the current period press Alt +F2. This period remains applicable to all
the selected companies until one reset again.
3) F3: Company
4) F3: Company Info: to get the company info menu to select a desire task related to
company operations (like create, select, shut, alter, back up, restore etc.).
5) F4: Connect/F4: Disconnect: - This is used for connecting or disconnecting Tally net.
6) F11: Features
7) F12: Configure

Difference between Current Period and Report Period

Current period is the period for which one like to do any work in Tally.
For example-enter voucher or display print report.

One cannot do anything beyond the current period. On other hand, Report period is the period
for which one like to get that display of any report. By default, current period is carried to
report period. Click F2: Period button or the report screen to set the report period. The report
period must be in current period.

Closing and Exiting Tally

To exit from current menu, select or press<Ese> key. In other words, to finally close tally.
select quit in the main menu or type 'Q' at the gateway of tally or press<Ese> until one sees
the message.

A confirmation screen appears "Quit Yes or No", click yes or press 'Y' to exit from Tally,
else press 'N' to continue to work with tally.

COMPONENTS OF GATEWAY OF TALLY:

1) Horizontal button bar:

a) P: Printing: Printing of Reports display screen. (Atop)

b) E: Export: Exporting of Reports and in various formats. (Alt+E)

c) M: E-Mail: To email a Tally Report. (Alt+M)

d) O: Upload: To upload reports in your websites. (Alt+O)

e) S: Tally shop: To shop various Tally add on products. (Ctrl+S)

f) G: Language: Supports multiple language. (Alt+G)

g) K: Keyboard: To set Tally's phonetic keyboard operating system for language. (Alt+K)

h) K: Control Centre: To access control centre through remote login. (Ctrl+K)

i) H: Support Centre: To access Tally support centre for assistance. (Ctrl+H)

j) H: Help: To get local and online help. (Alt+H)

k) Exit from Tally: press Esc, press Quit option, press Ctrl+Q, type Q

Printing of Balance Sheet

Exporting of Balance Sheet

Email

Uploading
Tally Shop

Language
Keyboard

Control Centre
Help

Main Area: Tally main area is divided into two parts-

a) Current Status - Left part is about current period, current date, currently active and selected
companies.

b) Tally Menu - Right part shows the current Tally Menu.

Tally Product Info. Part: The button area contains details of Tally software and calculated area. The
calculator may be invoked by Ctrl + N. The Arithmetic Formula may be typed to get instant results
without using external calculators. The Tally Info Part may be displayed or hidden (X) and (^)
handles.

Current Bar (Task Bar): At the bottom of a screen the position and part of current screen from the
main menu is shown.

2) Vertical Button Bar:

At the right part a vertical button bar appears, which contained following buttons:

a) F1: Select Company

b) F1: Shut Company

c) F2: Date: Current date should lie within the current period.

d) F2: Period: To set the current period press Alt +F2. This period remains applicable to all the
selected companies until one reset again.

e) F3: Company (hidden)

f) F3: Company Info: To get the Company Info menu to select a desire task related to company
operations (like create, select, shut, alter, back up, restore etc.).

g) F4: Connect

h) F4: Disconnect: This is used for connecting or disconnecting Tally net (hidden)

i) F11: Features

j) F12: Configure
DATE

PERIOD

COMPANY FEATURES
CONFIGURE

ACCOUNTING MASTER

Introduction

These are the principle entitles represent similar transactions (accounts ledger) and similar
accounts (accounts groups) along which all transactions, data are compiled summarized and
balanced to be reflected in various accounting reports and financial statement (profit and loss
account and balance sheet).
After the creation of company account master are to be created first.

Accounting masters are entities representing transactions. For example, travelling example,
ledger contains all transactions (voucher) related to travelling expenses. The transactions of
the ledger account are seemed up (Dr and Cr) and balanced.

Accounts Groups

These are convenient and systematic grouping of ledger accounts of similar nature; account
group help to present summarized account report in systematic manner.

Reserved account groups and ledger

During company creation tally automatically creates 15 primary groups and 13 secondary
groups known as reserved groups.
Reserve account group and ledger

For a small company or individual account, the tally creates reserves accounts may be
adequate and one may not to create new groups. However, for better organization of large
number of accounts, new account groups need to be created. Apart from 28 groups, tally also
auto create to reserved ledger accounts (cash account and P&L account) hence, no new ledger
account is created for these ledger account. All other ledger accounts to be created

Account master creation

Select GOT> accounting info>groups>create under single group>account group creation

screen appears.

Enter the following transactions:

1. Account group name: at the name enter unique account group name.

Parent group: at under select the parent group from the list of groups the new group would be
placed under the selected parent group. For example, employee under indirect expenses

Multiple account group

Select create under multiple groups to get multi group creation scree. One gets a table with
columns for each field.
Account’s Ledger Creation

At accounts info menu select ledger to get account ledger menu then select create under
single ledger to get account ledger creation screen. Enter the following act in a particular
screen.
Account Ledger Name

At the name enter the unique name of the ledger one may enter opening balance if any
specifying the nature of opening balance, debit or credit.

Parent Group

At under select parent group of the ledger from the list of groups.

Opening Balance Total

On entry of all ledger with correct opening balance the total debit and credit balance should
be equal.

Creation of new parent group using ledger

During account group or ledger account entry if one finds that the parent group is not existing
press Alt + C as under field to get account group creation screen, create a parent account
group and select the parent group at under field in group entry ledger entry as usual
ACCOUNTING VOCHERS

All business transactions are recorded and described in a voucher all transactions cash and
non-cash division of accounting tasks to various persons, the transactions are classified into
various types.

Voucher Entry

Select GOT>accounts voucher and then click the respective voucher button to get the
corresponding voucher entry system.

Voucher Type Button

According to the nature of transactions tally provides basic pre-created accounts voucher
types.

During voucher entry tally unifies the total of all debits which must be equal to total of all
credits in each voucher and does not allow to save the voucher if the total debt isn’t equal to
total credit.

Contra Voucher (F4)

This voucher is used to record transfer of funds from bank account to cash account, bank
account to bank account, cash account to bank account and cash account to cash account.
For example:

Rupees 3,000 transferred from HDFC to SBI.

SBI a/c Dr. 3,000

To HDFC a/c 3,000

Payment Voucher (F5)

This voucher is used for any sort of outflow of money from bank a/c or cash a/c such
payment can be made towards purchase expenses acquisition of fixed assets, thus to creditors
etc.

For example:

Salary rupees 5,000 paid to Director.

Receipt Voucher (F6)

This voucher is used for any sort of inflow of money from bank a/c or cash a/c, such receipts
can be made for instance commission received.
For example:

Commission received rupees 5,000.

Cash a/c Dr 5,000

To Commission Received a/c 5,000

Journal Voucher

It is used for all non-cash transactions; this is also known as adjustment voucher which is
normally used for adjustments between ledger accounts. Provision for liabilities, income
receivable, depreciation and other provision are common examples of journal voucher. This
journal voucher doesn’t involve cash a/c and bank a/c.
Example 1: The company has entered some expenditure on advertising as general office

costs.

Advertising a/c Dr. 3000

To office cash a/c 3000

Example 2: depreciation charged Rs 1500 on machinery

Depreciation a/c Dr.1500

To machinery a/c 1500

COMPONENTS OF VOUCHER ENTRY SYSTEM

Voucher Header Ledger Header Voucher Footer

Voucher type n/o To/by (dr./cr.) Cheque details
Voucher date/day Ledger amount Voucher narration
- Ledger amount Voucher amount

Voucher Header (automatic to manual step)

1. Voucher type/no.: tally normally displays voucher no. guarded in chronological

order for each voucher type.
 Example: if last voucher was 5 next vouchers would be 6. However, if one deletes or
enter a back-dated voucher then Tally sequence of date. However, one may change
automatic option to manual option at voucher type creation.
2. Voucher date: to change the voucher date press F2.

Voucher Ledger Account Details

3. Ledger sign: press B (by for dr.) or T (to for cr.). The ledger one selects at particular
column to set the ledger sign by/to - dr. or cr. Then at voucher entry screen click F12:
configure and set ‘YES’ to use dr. or cr. Instead of to/by.
4. Ledger Account: of particular fluid select a ledger account from list of ledger pop-
up.
5. Ledger Amount: type the amount in dr./cr. Column.

Voucher Narration

Enter voucher narration describing the voucher transactions briefly but writing the essential
details for future reference.

To quickly rectify or insert word while entering transactions narration use the following keys:

Home: to reach beginning of the narrator.

End: to reach end of the narrator.

Left and right arrow: to move one-character type in the direction.

Ctrl + left and right arrow: to junk one word at a time left or right.

Insert: to joggle between insert and over right mode.

Voucher Alterations and Deletion

There is no menu option for alterations and deletion of voucher. One has to do it through
display men.

Select display > date book, click F4: change voucher button and then click F2: date or F2:
period enter the voucher date or period to get the list of voucher for the sleected voucher type
for the selected date or period.

Press Alt +D to delete the voucher.

1. Sales voucher: Before creating a sales voucher, one used to create two ledgers they are:

a) Sundry debtors

b) Sales A/c

For example: domestic sales have been done.

2. Voucher: It means that the bill is not prepared I tally package the sales bill is either made
manually, the voucher with the help of sales bills three, he enters the vouchers in tally
accounting software.

3. Invoice: It means that invoice is to be generated in tally software and no separate voucher
is to be prepared for the same.

For example: Goods sold to gift house with sales invoice number 02 when local sales worth
20000 and local sales tax worth 1000, total invoice generated worth 21,000, assume sales bill
is not created through tally package and enter the voucher date, 31st March, 2021.

Gift house Ltd. A/c …Dr. 21,000

To local sales A/c 20000

To local sales tax A/c 1000

Assuming now the company bill in tally software.

Sales voucher (F8) is used for both Cr. And cash sales entries in tally software. During sales
voucher entries, one has to change the mode of voucher ctrl+v voucher to invoice mode or
vice versa.

Types of sales invoice:

1. Accounting invoice: This type of voucher is used for creating service invoice or sales
invoice for trades who do not want to keep the record or track of stock by using this mode,
one can bill income heads like professional charges, consultation fees, sales ledger, etc.

For example: An agency is charging agency fees from its client, in this case, one can bill
agency charges which come under income ledger.

Another example, an electronics goods dealer wants to bill television sales but he doesn’t
want stock to be maintained in tally docs, in such a case, one can bill a customer using his
income ledger account.

One can bill the customer using his income ledger A/c i.e. TV Sales A/c. Account’s invoice is
available in both accounts only and accounts with inventory mode of tally ERP 9
Item invoice: This type of invoice is available in companies enabled account with inventory
mode only. If a company is keeping inventory or accounts with tally software, one can build
stock for example: Samsung TV

Transaction 1: ABC Ltd. Sold 10 tyres for Rs. 45000 to Ashok Leyland on 01/07/2021. The
company doesn’t want to keep the track. So one would pass the entry as accounting invoice.

Ashok Leyland A/c …Dr. 45,000

To Tyre sales A/c 45,000

Step 1: Go to accounts info>ledger>single>create

Step 2: Create necessary ledger accounts:

a. Ashok Leyland A/c under Sundry A/c

b. Tyre Sales A/c under Sales A/c

Save the necessary voucher>press F8 for sales voucher.

Step 3: at GOT, select accounting voucher>press F8 for sales voucher.

Step 4: Switch over to voucher mode by pressing ctrl+v.

Step 5: Enter the necessary transactions under accounting invoice as the company doesn’t
keep the record of stock items.

Step 6: Enter the narration and save a particular voucher by pressing ctrl+A.

Transaction 2: A company wants to enter service charge invoice and charging consulting fee
from Ashok Leyland worth Rs. 1500.

Ashok Leyland A/c …Dr. 1500

To consulting fee A/c 1500

Steps:

Step 1: Accounts info>Ledger>Single>Create

Step 2: Create necessary ledger accounts.

a) Ashok Leyland A/c under Sundry debtors.

b) Consulting fee A/c under Sales A/c.

Save the ledger by pressing Ctrl+A.

Step 3: GOT>Accounting voucher>Press F8 for sales voucher with reference no.6>Press F2

for the date i.e. 01-08-2021.

Step 4: Click voucher mode by pressing Ctrl+V.

Step 5: Enter the transaction related to service charge invoice.

Step 6: Enter the narration & save a particular voucher by pressing Ctrl+A.

Transaction 3: (Item Invoice)

A company sold 1 number good year Duraplus for cash Rs. 40,000 on 01/09/2021. The
company wants to keep stock item in tally.

Cash A/c …Dr. 40,000

To Good year Duraplus 40,000

Steps:

Step 1: Accounts info>Ledger>Single Create

Step 2: Create necessary ledger accounts.

Sales A/c under Sales A/c.

Save the ledger by pressing Ctrl+A.

Step 3: GOT>Inventory Info>Stock Item>Create

Step 4: Stock item creation screen appears. Create 1 no. Good year Duraplus & save it by
pressing Ctrl+A.

Step 5: GOT>Accounting voucher>Press F8 for sales voucher with reference no. 6>Press F2
for date i.e., 01-09-2021.
Step 6: Enter the transactions in Invoice mode and thereby narration & save by pressing
Ctrl+A.

Purchase Voucher: It is used to record all purchase transaction of a company on cash or on

credit.

Transaction 1:

Ram, a creditor purchases 10 pieces of hard disk at a rate of Rs. 200 each. Pass the entry
under item invoice through invoice mode.

Steps:

Step 1: Account info>ledger>Single>Create

Step 2: Create necessary ledger accounts

a) Ram A/c under sundry debtors.

b) Purchase A/c under Purchases A/c.

Save the ledger by pressing Ctrl+A.

Step 3: GOT>Inventory Info>Stock item>Single>Create

Step 4: Stock item creation screen appears. Create hard disk & save it by pressing Ctrl+A.

Step 5: GOT>Accounting Voucher>Press F9 for purchase voucher.

Step 6: Enter the transaction in Invoice mode and as Item invoice thereby narration & save by
pressing Ctrl+A.

Transaction 2: Maintain Accounts Only.

Purchase of timber from Rajesh Timber worth Rs. 10,000. (Voucher mode)

Steps:

Step 1: Accounts Info>Ledger>Single>Create.

Step 2: Create necessary ledger accounts.

a) Timber purchase A/c under Purchases A/c.

b) Rajesh Timber A/c under Sundry Creditor A/c.\

Save the Ledger by pressing Ctrl+A.

Step 3: GOT>Accounting voucher>Press F9 for purchase voucher.

Step 4: Enter the transaction in Voucher mode and thereby narration & save by pressing
Ctrl+A.
CREDIT NOTE VOUCHER (F8)

One can record the goods returned from the customers. One needs to create a salesreturn
ledger A/c and for that, one can use Credit Note Voucher.

Credit notes are issued by seller for goods received back from the customer.

DEBIT NOTE VOUCHER (F9)

This is created to record supplementary debit to the party. Normally debit notes are issued by
the customers for goods returned to suppliers, claims for damage of defective goods
 UNIT-3
FEATURES OF
TALLY.ERP9

After the completion of the unit, the students will be able to:

 Learn how to reconcile bank accounts,

 Understanding importing and exporting of data from/to MS-Excel

 Different types of order processing, re-order levels.

 Interpret ratios, interest calculation, back-up and restores.

BANK RECONCILATION STATEMENT:

Bank Reconciliation Statement is an explanation of the difference between bank balance as

per cash book and bank balance as per Passbook (Bank statement). Sometimes, the bank
balance as per cash book and pass book do not tally with each other, then we can know the
difference between them by preparing the bank reconciliation statement.

The process of checking the differences between a bank column of the cash book and the
bank statement or passbook is called Bank reconciliation process in accounting terms. The
person preparing BRS Statement has to check all the transaction recorded in the cash book
with transactions recorded in passbook by the bank.

Why we prepare bank reconciliation statement?

If a trader or business organization uses the bank for the transaction, then we use this option.
Nowadays all merchants do all their business transactions through the bank and to keep the
details of these transactions, cash book and bank book are maintained. When the merchant
deposits money in the bank, then it is entered into the cash book and bank book
simultaneously.

Therefore, both the books remain balanced or reconciled most of the times, but sometimes
these two books shows differences, and the statement which is prepared to match the
differences between these books is called Bank Reconciliation Statement.

How to activate auto bank reconciliation in Tally.ERP 9?

Starting Point: Gateway of Tally

Destination: Banking Configuration

Step 1: Open the bank ledger (in case the Bank ledger is not opened) by creating a bank
ledger or use the option "alter the ledger" (if bank ledger is already created in Tally).

Step 2: Under banking configuration, set 'Yes' to use this feature of Auto bank reconciliation
in Tally. ERP 9.

Step 3: Select the relevant bank from the 'List of Banks'.

Step 4: After selecting the bank from the list of banks, In the next dialogue box, Set ' 'Yes' to
'Activate Auto Reconciliation'.

Step 5: Accept the change by selecting "Yes" in the next screen.

Using auto Bank Reconciliation in Tally. ERP 9

After enabling the Auto Bank Reconciliation option, now one can go ahead and
reconcile the bank statement with the company's books following these directions:

Step 1:

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

Step 2:

Select the required bank which has to be reconciled from the ‘List of Bank’.

Step 3:

On the ‘Bank Reconciliation’ screen, press ‘B: Bank Statement’ or ‘Alt+B’.

Step 4:

Specify the ‘Directory’, where you have saved the downloaded bank statement.

Step 5:

In case you need to change the ‘File Type’, you can press ‘Backspace’ to select the
appropriate ‘File Type’ for the bank statement to be imported.

Step 6: Once you’ve selected the required ‘File Type’, select the required bank statement file
from the 'List of Files', and reconciliation will happen automatically. Once the reconciliation
happens, a 'Success!!' notification will be displayed with details like 'Total Entries in Bank
Statement', number of entries reconciled and 'Additional Bank Entries'.

Step 7: Now press any key and the Bank Reconciliation Statement with Imported bank
statement details will appear. Now the screen will show the reconciled list of entries from the
bank statement under ‘Amount not reflected in Company Books’.

Step 8: Begin the reconciliation process for the entries under amounts not reflected in
company books by verifying with the Bank Statements obtained from the bank or the Bank
book maintained by you.
Shortcut key for bank reconciliation in Tally.ERP 9

Steps:

 Go to gateway of Tally>Display>Account books>Cash/Bank book

 Select the required bank account and press enter on the required month (or press F2
function button on the keyboard and specify the required period from which date you
want to reconcile your bank account)

 Now press "F5"-the short cut key for bank reconciliation in Tally. ERP 9 function key
from the keyboard and Bank reconciliation statement screen will open

 Enter the date of clearing from the bank statements into Bank Date column next to
voucher type column to reconcile the statements and finally press Yes to accept/ save the
reconciliation statement prepared.

How to undo bank reconciliation in Tally.ERP 9?

To undo bank reconciliation in tally, follow these simple steps:

Step 1: Go to gateway of Tally>Display>Account books>Cash/Bank book

Step 2: Select the required bank account and press enter on the required month for which
reconciliation has already been done and for which you have to undo the reconciliation which
is already been done.

Step 3: Press "F5" - short cut for bank reconciliation in Tally. ERP 9.

Step 4: Now press "F12" - Configuration and a dialogue box will appear.

Step 5 : Select "Yes "against the dialogue - Show also reconciled transactions.

Step 6: The reconciled transactions for the period with bank dates will reopen and now one
can alter or undo bank reconciliation in Tally by feeding the correct inputs.
ORDER PROCESSING:

Order processing is a process by which a trader purchase/sale goods form/to any party. There
are 2 types of order processing:

1. Purchase order processing- It is a process used to purchase goods at consists of following

facts:

Purchase order (alt+4)

Receipt note (alt+f9)

Rejection out (alt+f6)

Purchase (f9)
Transaction: - a company purchased 50 pcs. of the HCL computer from ABC company on 1/
4 /19 but received only 40pcs. of computer. Due to damage 10 pcs. returned to supplier and
finally received only 30pcs. of computer.

Activation of purchase order

At GOT, press f11>press f2(inventory features) and activate order processing, tracking order
number and rejection inward or outward nods press ctrl+A to save.

Create stock item

GOT > inventory info. > stock item>create

Create multiple ledgers

a) Purchase a/c under purchase a/c

b) ABC under sundry creditors a/c

At GOT > inventory voucher>purchase order(alt+f4)

Press alt+f9 to open receipt note of 40 HCL computers.

Press alt+f6 to open rejection out.

Goods received 40pcs.rejected 10pcs. so actual purchase is 30pcs. which is shown in

purchase voucher(f9).

Purchase order outstanding

GOT > display > statement of inventory > purchase order outstanding > stock item > HCL

2. Sales order processing

This process is used to sale goods to any party it consists of following facts:
a) Sales order(Alt+F5)

b) Delivery note(Alt+F8)

c) Rejection invoice(Ctrl+F6)

d) Sales a/c(F8)

Transaction: a company made a sale order of 60pcs.of chair to Rahul Furnitures on 1/5/19
but delivered only 50pcs. of chair. However, 10pcs. were returned from the customer and
finally sold 40pcs. of chair.

Stock-ups

From GOT, go to company info. Screen by clicking alt+f3.

One will find the option of back-up in the company info menu, select that.

 Select the companies one want to back-up in tally. One can also select the option. All
items to select all the companies at once.

 After one has selected the companies for backup, one can see the list on the left hand side
of the screen ready to be backed up. Select the destination source which can be any drive
and then press enter to tape the tally data backup.
Restore data:

From GOT, go to company info menu.

Restoring data backup in tally is very easy if has taken the tally data backup correctly.

Select the company one want to restore and press enter. If the same company number exists
tally will ask to overwrite the info. Press center to overwrite and data will be restored in tally.

BANK RECONCILATION STATEMENT

It shows the entries as per the a/c book of the company and bank accounts. There are 2
approaches of bank reconciliation in tally automatic.

Manual approach: it is useful only if one is passing entries daily or these are limited number
of entries to be passed.

2 entries are passed in a payment voucher.

Bank charges dr. from SBI a/c

Payment to INB avenues through cheque

Bank charges a/c Dr. 11.25

To SBI a/c 11.25

INB avenues a/c Dr. 1000

To SBI a/c 1000

There is a need of reconciliation after passing voucher entry.

Steps: - GOT > banking > bank reconciliation > select a particular bank from the list of
ledger > a bank reconciliation statement appears (one can see the entries which are not
reconciled in tally)

Bank date is entered to reconciled bank statement. As bank charges are automatically
deducted from bank a/c. thus, there is no question of different dates being entered in the
books and the bank statement.

However, one paid to the creditors on 1/4/19 but bank credited the cheque in the account of
creditors on 2/4/19. As dates are different there is a need for bank reconciliation.
After this save the screen and view a report by taking a printout in tally by pressing alt+P.

First press N to change the options and set yes show reconciled items also. After press enter
all the details are clearly printed in bank reconciliation statement.

Interest calculation

to activate interest calculation, go to GOT > f11 > accounting features > enable the options
"activate interest calculated by typing yes and maintain bill-list details".

It is important to set use advanced parameters to NO.

For simple interest calculations: -

Example: - one 1/5/19 X Ltd. Sold goods to CMC Ltd for rs.50000 for a credit period of 30
days. Agreed are interest of 20% per year on delayed payment CMC made payment or 31/7/
19. Calculate interest.

One need to create customer ledger account with interest activated there go to GOT >
accounts info > ledger > create.

Set the following options: -

Default credit period of 30 days and also activate interest calculation yes and then press enter
key.

Therefore, one will get are interest parameters screen and then activate "calculate interest
transaction by transaction" yes.

After activating the above option, a new popup would be ask. "overwrite parameter for each
transaction" activating this option will help to change the parameter i.e., the rate and interest
style.
Rate: enter the rate as decided that is 20%

Per: 365 -day year.

Enter sales voucher in voucher mode

CMC Ltd. a/c …Dr. 50,000

To sales a/c 50,000

Accept and save the sales voucher.

Reorder level

It implies the quantity of an item(stock) in hand after reaching which one must place orders
for the suppliers. Its importance arises from the need to have sufficient stocks to service.

Customer orders but not to unnecessarily accumulate stock, to enable reorders level go to
GOT inventory info > enable purchase order processing: yes.

Bill of material:

 At GOT select accounting voucher >press f9: purchase voucher.

 At GOT>inventory info>stock items>create>press f12 to enable BOM>enable component

details assuming units to be manufactured.

 Create a voucher class by selecting inventory info>voucher type>computer

manufacturing under journal" yes".
 UNIT – 4
Generating Basic
Reports

After the completion of the unit, the students will be able to:

Understand how to generate basic reports like

 Financial Statements

 Accounting Books

 Exception Reports

 Printing Cheques and Vouchers

Profit and loss a/c:-

This a/c shows the heads of all nominal a/c's income and expenses and the Net profit or loss
for the specifically period resulting in the performance of the enterprise.

Display of profit and loss a/c:-

Select GOT>P&L a/c to get the statement for a specified period. One can click F 12 to get
statement configuration screen to set the configurations options: -

Show vertical P&L

Show percentage

1. Show with gross profit

2.Show with percentage

If one wants to view income and expenditure statement for the same period then one can go
to accounting feature screen and activate the option.

Use income and expense a/c instead of p&l a/c and then save.
P&L appropriation a/c :-

One may transfer funds form P&L to capital a/c or reserve ace through general voucher.

Create a general entry for adjustment of net profit and loss to capital reserve account.

Profit and loss account Dr.

To-capital account

After passing the entry in Journal voucher one can view the balance sheet in which it, has
been witnessed that net profit has been transferred to capital account.

Balance sheet

It is the final statement which shows the financial position of the company.

Gateway of Tally>Better balance sheet and then press alt+P to print the balance sheet
Exception reports

One can view exception reports through non-accounting vouchers.

Memorandum voucher: it is an accounting voucher whose entries do not affect the accounts
at all. The entries in voucher are not posted in ledger instead they are stored in a separate
memo.

A memo voucher can be converted in regular voucher which is to be included in the books of
accounts.
Press f1 >use reversal journal and optional voucher and set the option 'yes' and save by
pressing ctrl+A.

Go to GOT>accounting voucher>press f10 to activate.

Memorandum voucher:-

Transaction I: advance amount given to A for meeting office expenses worth 1000rs.

Employee A a/c Dr. 1000rs.

To cash a/c 1000rs.

Employee A a/c should be made suspense a/c or office expense a/c.

Reversing journal voucher :- these are special journal's that are automatically created and
crosses after the date of journal. They exist only for a day and are effective on the date of
resolving journal.
Example:- it is 31st march and one want to view B/S as of today but march salaries is not due
for payment. There is therefore a large liability which would be affected.

Salary a/c dr. 5000

To cash a/c 5000

Post dated voucher: - while entering vouchers one can post date these and these and the
software user not update the ledger itself the date in question. This is most useful for entering
transactions that take place on a regular basis.
Optional voucher:- An existing voucher such as a payment voucher or a receipt voucher can
be marked as optional. It is not a separate voucher type, press Ctrl+L or click or optional
from the bottom bar.

Cheque printing: - there are certain steps to be followed while doing cheque printing. Click
on "select the company' and then click on f1>go to banking features>enable cheque
printing>edit banking features.

Go to accounts info>click on ledgers>single ledger>create.

Create the ledger of ICICI bank under bank a/c.

Enter a/c no. IFS code and other bank details.

Set cheque printing configuring 'yes'. Once it is selected a screen will pop-up for cheque
printing. Press Ctrl+C to get the sample format describing the dimensions of the cheque.
Dimensions are the default but it can be changed if required. Press Ctrl+L to save.

The print preview screen will appear. Click Alt+P to print.

Accounts books: -

 Cash or bank book: - this is a special composite journal book sum ledger book.
 Journal book: - it contains complete record of transactions entries that is voucher in
chronological sequence.

 Ledger book: - it shows opening balance of cash or bank a/c, the details of all receipt
and payment during the period and closing balance of cash or bank a/c.

 At GOT select display>account books>cash and bank book.

 Bank a/c: - journal books show list of non-cash voucher. it includes journal register,
purchase register, sales register etc.

 Sales register: - is chronological list of sales vouchers.

 At GOT>select display>account books>select sales register.

 Purchase register: - like sales register. purchase register is chronological list of

purchase vouchers.

 At GOT>select display>select account books>purchase register.

 Debit and credit note register: - display or print the Dr. or Cr. Note register by
selecting account books journal register>select Dr. note register or Cr. Note register as
per the case.