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This document serves as an introduction to accounting principles and the TallyPrime software, detailing the basics of accounting, the differences between manual and computerized accounting, and the advantages of using TallyPrime for business. It outlines key accounting concepts, the accounting cycle, and the significance of financial statements such as the Balance Sheet and Profit & Loss Account. Additionally, it emphasizes the benefits of computerized accounting, including accuracy, efficiency, and security, while highlighting Tally's features and its role in modern accounting practices.
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0% found this document useful (0 votes)
446 views20 pagesAccounting in Tally Prime Introduction For Bcom
This document serves as an introduction to accounting principles and the TallyPrime software, detailing the basics of accounting, the differences between manual and computerized accounting, and the advantages of using TallyPrime for business. It outlines key accounting concepts, the accounting cycle, and the significance of financial statements such as the Balance Sheet and Profit & Loss Account. Additionally, it emphasizes the benefits of computerized accounting, including accuracy, efficiency, and security, while highlighting Tally's features and its role in modern accounting practices.
Uploaded by
comedyshow2003Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF or read online on Scribd
/ 20
Chapter 1
INTRODUCTION — ACCOUNTING
IN TALLYPRIME
————_
INE)
After studying this chapter, you will understand:
> Basics of Accounting
> Computerized Accounting
> Differences between Computerized and Manual Accounting
Advantages of Computerized Accounting
Introduction to Tally
Features of Tally
Advantages of Tally to Business
Introduction of TallyPrime
Features of YallyPrime
Objectives of TallyPrime
Advantages of TallyPrime
Users of TallyPrime
Installation Procedure of TallyPrime
2. wee ee eV VY
Functions of ‘TallyPrime
G 1.1 INTRODUCTION TO ACCOUNTING
nelson the eflective system of accounting. Many parties
Every business success or failure deps
Use financial information's include internal users, such as a company’s managers and employees,
and external users, such as banks, investors, governmental agencies, financial analysts, and
labour unions, Accounting is a system meant for measuring business activities, processing of
information into reports and making the findings available to decision-makers. The document
which communicate these findings about the performance of an organisat
are called financial statements, Accounting is also called as language of Business. CONE ACCOM A Egy i
mh,
1.11 Definition
Aconmnaing a the arto teaonnting, classitiang, and summariain
eerms of mates, cramections atl events whieh ate in p
uneerprening the results thennnt
NK IA signitic
anti,
Tat least of a finance,
il charg y
Tas divided unto owe pants, ne.
soformaman. The procedure ot
hancial intormation generation and
application of finan,
accounting has given as below
—omeneg
+
Fig 1.1 Accounting Procedure
1.13 Objectives of Accounting
<> rounting
Following are the objectives of accounting:
# To maintain systematic record of business transactions.
+* To ascertain profitability of business
To ascertain financial position of business
~# To know the solvency position of business.
< To communicate financial ink
information to internal and external users of. accounting.
1.1.4 Accounting Cycle
— tg Cycle
identifying, recording, classifyi
series of steps begins when a transaction
tatements. Following are the steps in Introduction - Accounting in TalyPrime
* ~
Fal Acouets
"aoa
Baane Soot
* ¥
Fig, 1.2 Accounting Cycle
1.5 Accounting Principles, Conventions and Concepts
Accounting principles are the rules and guidelines that companies must follow when
reporting financial data. The common set of U.S. accounting principles is the generally accepted
accounting principles (GAAP). A number of basic accounting principles have been developed
through common usage. They form the basis upon which modern accounting is based.
Accounting Principles are mainly divided in three categories, which are as follows:
# Atcounting Principles
# Kecounting Conventions
‘Accounting Concepts
{+ Foundation of
modem
‘accounting
‘Accounting Fundamentals Computerized Recounting & Fig
ota,
6 Brief Summary of Accounting Principles, Conventions and Concepts
11. " anes ais
“Accounting Principles, Conventions
Nand Concepts
Entity Concept
| Explanation
Based on the concept that business enterprise as
identity from its owner wre
‘Money Measurement Concept Recording of only those transactions which can be Tea
in terms of money
Periodicity Concept Based on the concept that life of the entity is indefinns
‘Accrual Concept Transactions and events are recognised on Tercane
basis, i.e.. on the occurrence of event or transaction,
‘Matching Concept Based on the concept that all expenses matched with»
revenue of that period
Going Concem Concept Business will operate continuously in future
Cost Concept Yalue of Asset to be determined on the basis of hisony
cost
Realisation Concept Change in value of an asset to be recorded only wis
business realises it
Dual Aspect Concept Based on the concept that every transaction or event has.
two aspects, j.9., debit and credit
Conservatism Consider all possible losses but not anticipated income
Consistency Accounting policies to be followed Consistently from one
Period to another
‘Materiality Any transaction or event not having material effect to be
ignored |
1.1.7 Accounting Equation
aang Equation
1 represents the relationship between the assets, Nabilities, and owner's equity of a person
OF business. Following are the accounting equations mentioned below:
% Assets = Capital + Liabilities
% Capital = Assets-Liabilities
% Liabilities = Assets—Capital
@ ‘Total Assets = Fixed Assets + Current Assets + Investments + Loans & Advances
+ Kiet Assets
% Liabilities = Secured Loans + Unsecured Loans + Current Liabilit
"3 & Provisions
1.1.8 Types of Accounts
utinly three types of accounts in accounting wh
Hemtioned diagram, hare depicted through the Introduction ~ Accounting in TallyPrime. 7
Real Accounts ‘Nominal Accounts,
Fig. 1
|: Accounts Types
1.9 Golden Rules of Accounting
‘The following are the rules of debit and credit of a transaction, which guide the system of
accounts, These rules are known as the “Golden rules of Accounting”
[Aspect Real Accounts Personal Accounts _| Nominal Accounts
Debit What Comes in The Receiver ‘All Expenses and Losses
Credit What Goes out The Giver All Incomes and Gains
There are some other rules of accounting which are given as below.
‘Aspect ‘Assets Liabilities __| Capital Expenses _| Incomes
Debit Increase Decrease [Decrease __| Increase Decrease
Credit Decrease __| Increase Increase Decrease _| Increase
1.1.10 Examples of Accounts
Following are the examples of real, nominal and personal accounts.
Real Accounts Nominal Accounts Personal Accounts
and & Building Sales Mohan
Fumiture Purchases Sohan
Cash Carriage Inwards State Bank of India
Plant & Machinery Carriage outwards Life insurance Corporation
Tools Salary Sundry Debtors
Car Wages Sundry Creditors
Motorcycle Office Expenses Outstanding Expenses
‘Computer ‘Advertisement Expenses _| Outstanding Salary
Books Electricity Expenses Prepaid Expenses
Printer Office Rent Tata Motors Computerized Accounting & EFiling
Tang
1.1.11 Trading and Profit & Loss A/c
Ue displays Gross P
Gross Loss and Net Profit/ Net Loss earned
contains two sides, ¢., one is debit side and another is credit side
and expenses) appears in Trading and Profit
salaries, other expenses appe
during the
All nominal acon
ning stock, purchaey,
Ing stock appears in thy. ne
profit and excess of debiy
and Loss A/c. Oper
ars in the debit side and sales, closi
side. Excess of credit side over debit side shows gross profit / net
over credit side shows gross loss / net loss.
Following is the fo
of Trading, Profit & Loss A/c of M/s
for th
ended 31st March, 2021. the ve
Particulars a Particulars .
To opening stock By seles t
‘To purchases less: retums.
fess: returns By closing stock
To camage inward
Towages
To 9ross profit ols By gross loss cid
{a case of gross proft) (in case of gross loss)
To gross loss ld By gross profit bs
(case of gross loss) (i case of goss prot)
To salaries By intrest eared
To cariage outward By divdend earned |
Torates and taxes 28y rerteamed
To insurance 8y ciscount received |
To depreciation By prot onsale of fixed assets
To bad debts By profi onsale of investments
To advertising
To imerest pac |
To raveling expenses |
To discount alowed
To1oss on sale of xed assets
Toloss on sale of investments |
Totoss by tre
Tonal prof transered to B/S By et oss transfered to B/S |
(i case of net prot) (in case of nt oss) {|
Fig. 1.5: Trading, Profit and Loss A/C
1.1.12 Balance Sheet
the Balance Sheet isone of the fundam
wodelling and accounting. A bala
finane on. ‘This report shows,
The balanice sheet displays th
I financial statements and is key to both financial!
sheet is a final
ement that reports a company’s
© between the assets and liabilities of a firm
Ay’s total assets and total liabilities, It shows the financial
I posi Introduction ~ Accounting in TallyPrime
position of business. So, itis called as "Position Statement’. Generally, 11s prepared at the end
of the period. - -
Taher 5
tis the most important Financial Statement that shows the company position on the date
of report. It has two sides, ¢., Assets and Liabilities side. Asset side and liability side represent
what the company owns and owes respectively. Both sides of Balance Sheet are equal. [1 follems
double entry system and accounting equation. All real and personal accounts appear in Balance
sheet
Following is the format of Balance Sheet of M/s ason 31st March, 2021
Liabilities ‘Amount (®) Assests ‘Amourt (7)
‘Share capital Fixed assets
‘Add: net profivless: net loss Land and building
Less: drawings Plant and Machinery
Long-term lables: Fumiture and fietures
Debentures Vehicles
Loans and advances from banks Goodwill
Other loans and advances Investments
Current abilities: Current assets, loans and advances
Sundry creditors Sundry debtors
Bils payable ve | Cash in hand
Bank overdraft ‘Cash at bank
Outstanding expenses Bills receivable
Income received in advance 7 Prepaid expenses
Closing stock
Provisions:
For taxation
For dividend
Fig. 1.6: Balance Sheet
7 1.2 COMPUTERISED ACCOUNTING- INTRODUCTION
unting has been done manually from last so many-decadcs when the advent of fast
computers and easy-to-use, accurate and reliable software started. Traditional accounting shifted
to computerised accounting when need and scope of accounting increased and it felt that use of
technology is required for preparation of business records, >
Goth manual and computerized system is based on the same principles, conventions and
concept of accounting. However, they differ only in thei’ mechanisup, in the sense that manual
accounting uses pen and paper, to record transactions, whereas computerized accounting makes
use of computers and.internet, to enter transactions electronically.
1.2.1 Meaning of Computerised Accounting
(Computerized accounting is simply accounting performed using acomputer and specialized
accounting software. ‘The computerized accounting function may be included as a module in an Computerized Accounting & €: Filing of,
2H
ERP (Enterprise Resource Planning) systeny
Computerized Accounting involves making use of computers and
revord, store and analyze financial data..A computerized accounting syst
“lvantages that are. not available to-manual accounting system.
1 1.3 DIFFERENCE BETWEEN MANUAL ACCOUNTING AND COMPUTE,
ACCOUNTING
In accounting, the
financial statements
cial transactions are recorded, processed and presented to
that are useful to the readers, in making decisions. ‘Traditionally, ac,
is done manually, by the professional accountants. In manual accounting, registers,
accounting softy
em brings with
Risey
Beneray,
COUnting
+ ACEO,
books. vouchers ete are prepared. But with the emerging technology, now a days, computerin,
accounting is in practice, due to its accuracy, convenience, speed and security. Computeriss,
accounting is also instant accounting; it provides statements whenever journal entry work ,
completed. Trial Balance, Profit and Loss Account, Balance Sheet and other statements can by
prepared and seen any time when it is required.
Following are the key differences between Manual Accounting and Computerised
Accounting System:
Recording
Calculation
isting entries
ial Balance
Financial Statement
IS FOR COMPARISON
MANUAL ACCOUNTING
fEnual Accounting ie a
system of accounting that
uses physical registers and
account books, for keeping
financial records.
ifding is possible through
book of original entry.
the calculations are
performed manually.
cess of preparation of
manual accounting is‘slow>
‘made for rectification of
errors.
Jot possiole
It is prepared when it is
required.
itis prepared at the end of the
Period, i.¢., quarterly, yearly
‘COMPUTERIZED ACCOUNTING]
‘Computerized Accounting ie
an accounting system that!
uses accounting software, for!
recording of financial transactions
electronically.
Data content is recorded in
customized database.
Only data input _is_ required
the calculations performed by
‘computer system automatically.
Comparatively_more faster than
manual accounting.
It cannot be made for rectification
of errors.
Entries of transactions can be
saved in computers and backed
up.
Trial Balance can be generated 2
any time. It can be seen instantly
whenever required.
It is provided at the click of ‘button. Introduction - Accounting in TallyPrime i
11 1.4 ADVANTAGES OF COMPUTERISED ACCOUNTING
Computerized accounting has so many benefits over manual accounting, such as increased
efficiency and therefore cost-effectiveness, greater accuracy, higher reliability, better scalability,
casieraccessand mobility, stronger security; backup and I customizability
Computerised accounting provides financial stateme
‘overy, automation
is any time.
Following are some majo
advantages of Computerised Accounting:
\tAccuracy: ‘This accounting system is de
‘Once the data is entered
igned to be accurate to the minutest detail
into the system, all the calc
subtractions, are done automatically by software
AE Data_Access: Using accounting software it becomes much easier for different
individuals to access accounting data outside of the office, securely. This is particularly
true if an online accounting solution is being used.
1% Reliability: Since the calculations are so accurate, the financial statements prepared
by computers are highly reliable. The chances of errors in computerized accounting
are reduced to minimum,
cluding additions and
4. Scalable: When your company grows, the amount of accounting entries not only
increases but becomes more complex. With computerized accounting, everything is
kept straight forward because sifting through data using software is easier than sifting
through a bunch of papers.
Using accounting sofiware, the entire process of preparing accounts becomes
faster. Furthermore, statements and reports can be generated instantly at the click of
a button. Managers do not have to wait for hours, even days, to lay their hands on an
important report. ~~
6. Security: The latest data c:
natural and man-made disasters like earthquakes, fires, floods, and terrorist attacks
In case ofa disaster or natural calamities, the system can be quickly restored on other
computers. Data backup also provides security in maintenance of accounting records.
CF Cost-effective: Since using computerized accounting is more efficient than paper-
‘dased accounting then naturally, work will be done faster andl tine will be saved. Ics
‘more economical as compared to manual accounting.
ced and stored in offsite locations so it is safe from.
8. Visuals: Viewing your accounts using a computer allows you (o take advantage of
the options to view your data in different formats, You can view data in tables and
different types of charts. All statements can be seen with the help of tables, graphs and
charts, ‘This facility is not available wal accounting.
1.5 TALLY- INTRODUCTION
Cially is one of the most popular accounting sofware used in India. Knowledge of Lally. is
one of the basic requirements for muuny accounting jobs in Lndia,, Lally is used for maintenance
ion of financial statements. ‘Lally is-an_ accounting software
jous accounting tasks quickly with perfection, this sofivare handles. Computerized Accounti
. ip Unt HEF
Fb
7 inventory management, tax management, payroll ete. [t is a Prominen
Jeciuard te make business accounting or bookkeeping procedures more eff, jem, Mn,
‘le tal isasofiware developed by Tilly Solutions Pvt, Limited in L988. Jtis primari esi,
to compile, store and_ manipulate accounting records clectronically. But now ity seny,#
ved. It ranges (rom entering day to day transactions, maintaining inv
varie » preparing budgets, financial management tools like
flow ete, auto tax calculation, and embedded audit tools and so on, Greatest ad
tally is ease of use. Even a layman with negligible accounting knowledge can
and enter accounting vouchers. So, itis captioned ax“Power of Simplicity”. >
eMOry to,
Cash flow, 4
Vantage of
USE this sofy.!
generate various repor
——
Tally is used as:
\S_-Pally Accounting
<3 Thcome and Position finalization statement
&Taventory maintenance
S