Accounting With TallyO

FI NANCI NANCIAL AL ACCO ACCOUNTING UNTING

Module 4

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July – 2010 / BLY

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TOPIC WHAT IS ACCOUNTING? .............................................. ..................

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CHARACTERISTICS OF ACCOUNTING………………... ..................

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BRANCHES OF ACCOUNTING………………………...... ..................

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BASIC TERMS IN ACCOUNTING………………………... ..................

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ACCOUNTS ACCOUNTS ……………… …………………… ………… …………… ……………… …………… ……… … ..................

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ACCOUNTIN ACCOUNTING G CYCLE… CYCLE……… …………… …………… …………… …………… ……….. ….. ..................

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MODES OF ACCOUNTING……………………………….. ..................

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BOOKS OF ORIGINAL ENTRY…………………………… ..................

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WHAT IS TALLY? ………………………………………….. ..................

RULES OF DEBIT & CREDIT……………………………..

COMPANY CREATION………………………… CREATION……………………………………. ………….

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SAVING, ALTERING & DELETING COMPANY ………..

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GATEWAY OF TALLY……………………………………...

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ACCOUNTS ACCOUNTS INFO… INFO……… …………… ……………… …………… ………… …………… ……….. .. ..................

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LEDERS, GROUPS & JOURNALS……………………….

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FUNCTION KEYS FOR THE VOUCHER ENTRY………

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SOME IMPORTANT TERMS……………………………… ..................

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INVENTORY INFO………………………… INFO…………………………………………. ……………….

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VALUE ADDED TAX……………… T AX…………………………………… ……………………….. …..

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EXERCISE ON TALLY ...…………………………………

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SERVICE TAX ……………..………………………………

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TDS …………………………………………………………

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FBT ………………………… ..………………………………

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PAYROLL ACCOUNTI ACCOUNTING… NG……… …………… ……………… …………… ………… …….. …………….

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WHAT WHAT is ACCOUNTIN AC COUNTING? G? Accounting is the systematic recorded presentation presentation of the financial activities of the business. Every business has profit motive, it has transactions of financial nature such as: purchasing goods, receiving goods, incurring expenses & receiving income etc. These transactions are financial in nature & affect the profit of the business. Transactions are classified as: assets, liabilities, Capital, revenue & expenses. Income statements are prepared to ascertain profit or loss of the business. The position statement is prepared to access the value of assets & liabilities of the business. Various statements are prepared & ratios are collated to measure the actual performance of the business. Comparison of the actual performance is compared with the previous performance or desired performance & effective plan for future is made. Accounting is an art of identify, classify, recording, summarizing and interpre interpreting ting business busi ness transactions transactio ns of financial nature. nature. Characte Characteristics ristics of Ac Accounting counting: 1. Reliability: The Reliability of accounting information is the degree of correspondence between the information conveyed about the transactions and the information displayed. Reliable information should be free from errors and biases. It should faithfully represent what it is meant to. 2. Relevance: To be relevant, information must be available on time. It must help in prediction and feedback and it must influence the decisions of users by confirming or correcting their past evaluations. 3. Understandability: Decision makers should be able to interpret accounting information in the sense as it is prepared and conveyed to them. t hem. A mess m essage age is said to be effectively communicated when it is interpreted by the receiver in the same sense in which the sender has sent it. 4. Comparability: Users of financial reports should be able to compare various aspects of an entity over different periods and also with other entities. Branches Branches of o f Accountin A ccounting g: Economic development and technological advancement have resulted in an increase in the scale of operations of business, leading to the advent of the company form of organization. As management functions become complex, the importance of accounting increases. Some special accounting branches which are developed now days are explained below: Financial Accounting: The purpose of financial accounting is keep to a record of all financial transactions so that: The profit earned or loss sustained by the business during an accounting period can be worked out. The financial position of the business at the end of the accounting period can be ascertained. The financial information required by the management and other interested parties can be provided. Cost Accounting: The purpose of cost accounting is to analyze the expenditure to ascertain the cost of various products manufactured by the company and fix the price of the final product. It also helps in controlling the ADCPM

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WHAT WHAT is ACCOUNTIN AC COUNTING? G? Accounting is the systematic recorded presentation presentation of the financial activities of the business. Every business has profit motive, it has transactions of financial nature such as: purchasing goods, receiving goods, incurring expenses & receiving income etc. These transactions are financial in nature & affect the profit of the business. Transactions are classified as: assets, liabilities, Capital, revenue & expenses. Income statements are prepared to ascertain profit or loss of the business. The position statement is prepared to access the value of assets & liabilities of the business. Various statements are prepared & ratios are collated to measure the actual performance of the business. Comparison of the actual performance is compared with the previous performance or desired performance & effective plan for future is made. Accounting is an art of identify, classify, recording, summarizing and interpre interpreting ting business busi ness transactions transactio ns of financial nature. nature. Characte Characteristics ristics of Ac Accounting counting: 1. Reliability: The Reliability of accounting information is the degree of correspondence between the information conveyed about the transactions and the information displayed. Reliable information should be free from errors and biases. It should faithfully represent what it is meant to. 2. Relevance: To be relevant, information must be available on time. It must help in prediction and feedback and it must influence the decisions of users by confirming or correcting their past evaluations. 3. Understandability: Decision makers should be able to interpret accounting information in the sense as it is prepared and conveyed to them. t hem. A mess m essage age is said to be effectively communicated when it is interpreted by the receiver in the same sense in which the sender has sent it. 4. Comparability: Users of financial reports should be able to compare various aspects of an entity over different periods and also with other entities. Branches Branches of o f Accountin A ccounting g: Economic development and technological advancement have resulted in an increase in the scale of operations of business, leading to the advent of the company form of organization. As management functions become complex, the importance of accounting increases. Some special accounting branches which are developed now days are explained below: Financial Accounting: The purpose of financial accounting is keep to a record of all financial transactions so that: The profit earned or loss sustained by the business during an accounting period can be worked out. The financial position of the business at the end of the accounting period can be ascertained. The financial information required by the management and other interested parties can be provided. Cost Accounting: The purpose of cost accounting is to analyze the expenditure to ascertain the cost of various products manufactured by the company and fix the price of the final product. It also helps in controlling the ADCPM

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costs and providing necessary costing information to management to enable decision making. Management Accounting: The purpose of management accounting is to assist the management in taking rational policy decisions. It also helps to evaluate the impact of past management decisions and actions. Basic Terms Terms in i n Account Ac counting ing: Entity: Entity has a definite individual existence. Business entity is an identifiable business enterprise such as Super Bazaar and so on. An accounting system is always devised for a specific business entity. Transa Transact ction ion: transaction is an event involving some value between two or more entities. It can be a purchase of goods, receipt of money, m oney, payment payment to a creditor, incurring expenses expenses and so on. It can be either a cash transaction or a credit transaction. Assets: The valuable things owned by the business are called assets. Assets are the economic resource of an enterprise, which can be expressed expressed in the monitory terms. Assets are are the following types types: Fixed Assets: These assets are accrued for long-term use in the business. They are not meant for sale. These assets increase the profit earning capacity of the business. Example: land, building, furniture, vehicle etc. F loating loating Assets: A ssets: Floating assets also known as circulating, fluctuating, or current assets, which change these values constantly. Example: Cash-in-hand, Cash-at-Bank etc. Fictitious Assets: These are those assets, which do not have physical form they do not have any real value. These assets are the revenue expenditure of Capital nature, which are also termed as the f irst revenue expenditure. Intangible Assets: These assets are which are not normally purchase & sold in i n the open market. For Example: Goodwill Goodwill & Patience etc. Liquid Assets: Liquidity refers to count ability in cash. Liquid asset are those assets, which can be converted into cash at short notice. Example: Cash in hand, Cash at Bank, debtors, bills receivable etc. Capital: It is that t hat part of bill, which is used for further production. production. The Capital consists of all current assets & fixed assets. Cash in hand, Cash at Bank, Building, Plant & Machinery, Furniture etc. are the Capital of the business. Capital should not necessary to be in cash. Formula: Working Assets = Current Assets - Current Liability Liability or Equality: Liabilities are the obligation or debts by the enterprise in future in the form of money or goods. It is the profiteers & creditors clam against the assets of the business. Goods: Articles purchase for sale by the business or for use in the manufacture of certain other goods as raw material are known as goods. ADCPM

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Example: Furniture will be goods for the firm dealing in furniture but it will be assets for the firm dealing dealing in stationery. stationery. Purchase: Its return business the firm has to either purchase business goods for sell or purchase raw material for the manufacture of the articles being sold by the firm. Example: Purchase of copies, pencil, files etc. costing Rs 20,000 is termed as purchase in the business. Purchase of Assets is not the purchase in accounting terminology, as these Assets are not meant for sale. Sale: The ultimate end of the goods purchased or manufactured by the business is their sale. It includes both cash & credit sales. In accounting terminology sales means the sale of goods, never the sale of assets. The maintenance of proper & complete record of sale is necessary because the profit or loss is associated with the amount of sale. Purchase Return or Return Outward: It is that part of the purchases of goods, which is returned to the seller. This return may be due to unnecessary, excessive, & defective supply of goods. It may also result, if the supplier violets terms & condition of the order & agreement. Hence, in order to calculate net purchase, purchase return is deducted from purchases. Purchase return also known as return outwards because it is return of goods outside the business. Sales Return or Return Inward: It is that part of sales of goods, which actually returns to us by purchasers. This return may also be due to expressive, unnecessary, or defective supply of goods or violation of terms & agreement. It is also known as return inward. To calculate net sales, sale return is deducted from sales. Stock: The goods available with the business for sale on a particular date are termed as stock. It increases, decreases, or keeps on changing. In accounting, we use the term stock widely as opening stock or closing stock. Therefore, it comes under the current assets. Revenue: In accounting, Revenue means the amount realized or receivable from the sale of goods. Amount received from sale of assets or borrowing loan is not revenue. Revenue is also used to receive the amount of rent, commission, & Discount received etc. Such receipt should be revenue receipts Revenue is concerned with receipt or receivable in the day-to-day working of the business. Income is calculated by deducting expenses from revenue. Expense: Generally income is the foremost objective of every business. The firm has to use certain goods & services to produce articles, sold by it. Payment for these goods & services is called expense. Cost of raw material for the manufacture is goods or the cost of goods purchased for sale, expenses incurred in manufacturing or acquired goods such as: wages, carriage, freight, & amount spent for selling & Discount attributing goods such as salaries, rent, advertising, insurance etc are known as expenses. Expenses are of two types: Direct Expense: are those expense which are related with the factory. ADCPM

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The examples of Direct expenses are: Freight charges Carried charges Wages Installation of Machinery Indirect Expense: Are related with the office. The examples of indirect expenses are: Rent Paid Salary Paid Discount Paid Commission Paid. : The term debtors, represents the persons or parties who Debtor have purchased goods on credit from us & have not paid for the goods sold to them. For example: If goods worth 20,000 has been sold to Mahesh on credit, he will continue to remain the debtor of the business till he does not pay the full payment. Creditor : In addition, to cash purchases the firm has to make credit purchase also the sellers of goods on credit to the firm are known as creditor for goods. Creditors are the liability of the business. They will continue to remain the creditors of the firm so for the full payment is not made to them. Creditors may also be known as creditors for expense In case certain expense Such as salaries, rent, repairs etc. remain unpaid during the accounting period. It will be termed as outstanding expense Proprietor: An individual or a group of persons who undertake the risk of the business are known as proprietors. They invest their firms into the business as Capital. In case of profit, proprietor‟s Capital increases. In case of loss, the proprietor‟s Capital decreases. Drawings: Amount or goods withdrawn by the proprietor for his private or personal use is termed as drawing. The cost of using business assets for private or domestic use is also called drawing. For example: Use of business Car for domestic use. Solvent: Solvent are those persons and firms who are capable of meeting their liabilities out of their own resources. Insolvent: All business firms who have been suffering losses for the last many years and are not even capable of meeting their liabilities out of their assets are financially unsound. Profit: Profit is the excess of revenues of a period over its related expenses during an accounting year. Profit increases the investments of the owners. Gain: Gain is a profit that arises from events or transactions which are incidental to business such as sale of fixed assets, appreciation in the value of an asset. Loss: The excess of expenses of a period over its related revenue is termed as loss. It also decreases the owner equity. ADCPM

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It refers to money/money‟s worth lost without receiving any benefit in return. Discount: Discount is the deduction in the price of goods on sale. It is offered in two ways. Offering a deduction of an agreed percentage on the list of price at the time of the sale is one way of giving discount. Such a discount is called “Trade discount”. It is generally offered by manufactures to wholesalers and by wholesaler to retailer. After selling the goods on credit basis, debtors may be given a certain deduction in the amount due it they pay the amount within the stipulated period or earlier. This deduction is given at the time of payment on the amount payable. Thus, it is called “Cash discount”. Cash discount is an incentive that encourages debtors to make prompt payments. Voucher: The documentary evidence in support of a transaction is known as Voucher. For example, when you buy goods for cash you get a cash memo. When you buy goods on credit, you get an invoice. Rules of Debit & Credit Every accounting transaction involves assets, liabilities and Capital individually or collectively. There is a change in the value of assets, liabilities, Capital, due to the business transaction of financial nature. We use the term debit & credit in order to show the changes in the value of these basic accounting terms i.e. Assets, liabilities, & Capital. Debit means decrease in proprietor‟s equity, Credit means increase in proprietor‟s equity. Conventional Approach of Assets: Every business owns and possesses assets. The business makes use of these assets for earning income. The increase or decrease in the sense must be recorded systematically so that true financial position of the business may be assessed. Example: Cash in Hand, Cash at Bank, Stock of Goods, Building, Plant, Machinery, Furniture, Debtors, 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 then it 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 Capital: Debit decrease in the Capital Credit increase in the Capital Revenue & Profit: ADCPM

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Debit decrease in revenue & Profit Credit increase in revenue & Profit ACCOUNTS: Accounts are classified as personal account and impersonal account.

Personal Account: The account which related to an individual firm or company or group 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 but they works as Personal Account these a/c are related to firms, Company, Industry, factory etc. Example: Ram and son‟s a/c, Sharma and brother‟s a/c, Elfin Computer Education a/c, etc. represent Personal a/c; A Particular persons or group of persons. Representative Personal Account: This represents a particular person or group of persons such as outstanding wages a/c. Here instead of using the name of the person whose wages is pending, we used the term outstanding wages account other examples are outstanding salary a/c prepaid wages a/c etc. Example: If the salaries for the month of December are not paid to the employees than the amount payable of these employees will be added under one common title that is salary outstanding a/c. Hence, salary outstanding a/c represents the a/c of all persons to whom salaries have to pay. Therefore, this term is known as representative personal a/c other examples are prepaid expense (Current Assets). Rule of Debit & Credit in case of P ersonal a/c: Personal a/c either receive something or give something in a business, when goods are sold to them or amount pay to them, they are the receiver. In the someway, personal a/c are given, when 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 Example: Goods sold to Ram. Ram a/c receive the goods therefore it is debited and the sale is credited. ADCPM

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Key F8

Date Particular L.F. No. Debit Credit 1/4/2010 Ram a/c 250000 To Sale 250000 Example: Goods purchase from Shyam. Here the giver is Shyam so the Shyam a/c is credited and the goods are received, therefore the purchase a/c is debited. Key Date Particular L.F. No. Debit Credit F7

1/4/2010 Purchase a/c Dr. 250000 To Shyam 250000 Impersonal Account: All those a/c, which are not personal a/c, are known as impersonal a/c. These accounts may be related to Assets, Losses, Expenses, Income, & Gain. Impersonal a/c may be classified as: Real Account: This a/c is related to the property, in other words real a/c are generally those a/c, which are concerned with the things, which really exist. All those things, which can be seen, touched & have physical construction, shape form & size are Real a/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 properties, they are either purchased or sold, it means they either come into the business or go outside the business. Hence, the rule is: Debit what come in Credit what goes out Nominal Account: This a/c is just reverse to the real a/c. Real a/c general have existence but nominal a/c do not have any existence, that is these a/c do not have any form, shape & physical construction. These accounts are related to Income, Expenditure, Gain, and Losses. Example: Wage a/c, Salaries a/c, Rent a/c, Interest a/c, Discount count a/c, Advertisement a/c etc. Rule of Debit & Credit in Case of Nominal a/c: Nominal a/c is related to expenses or losses & 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 followed in recording, classifying and summarizing business transactions. It starts with identification of business transaction and ends with the adjustment entries for period and outstanding expenses. The process of accounting is given below: Recording: The first step of accounting is to identify business transactions and maintain them in appropriate books of accounts in a systematic m anner. Original recording must be done in a book called “Journal”. Summarizing: The next step is summarizing. Summarizing is the process of presenting the classified data in a manner understandable to the user. It involves the preparation of profit and loss account and balance sheet. ADCPM

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Analysis and Interpretation: The results of financial statement like profit and loss account and balance sheet are analyzed in such way that the users can make a meaningful conclusion about the financial position of the business. Classifying: It is the process of grouping of entries of similar nature in one place. The classification is done in a book called “ledger”. Communication: The accounting information is to communicated in a proper form to the persons interested in appropriate time. Mode of Accounting: J ournals and Ledgers: Journal is a book of original entry in which transaction is first recorded in the order in which they occur. The process of recording transactions in a journal is turned as journalizing and the transactions entered in the journal are called journal entries. Posting: Posting is the process of transferring entries from journal to the ledger. In other words it is the grouping of all the transaction in respect of one particular account at one place for further accounting process. Accounting Period: A period of time, for which a financial statement is created, is called an Accounting Period. Trial Balance: The trial balance is a statement showing the balances of all ledger accounts. It is prepared to know the arithmetical accuracy of ledger accounts. If total of debit balance is equal to the total of credit balances. It is presumed that there is no mistake accounting and balancing. The format of Trial Balance is as follows. Financial Statement: A financial statement is a periodic report prepared from the accounting records of a company. Financial statement includes the profit and loss statement, balance sheet and cash flow statement. Financial statements are usually complied on a quarterly basis or annual basis. For reporting convenience, the profit and loss account is divided into: Trading Account: A trading Account is prepared to arrive at the gross profit earned by the organization over a specified period. This helps the organization to arrive at the cost of its core activity and calculate the direct profit from its operations. Profit and Loss Account: The profit and loss account gives the net earned by the company after considering expenses incurred over a period. This helps the company monitor and control the costs incurred and improve the efficiency. In other words, the profit and Loss statement shows the performance of the company in terms of profits or losses over a specified period. The Profit and Loss statement can be classified into: Gross Profit: Gross profit is arrived at after considering the core activities of the company. It is expressed as: Gross P rofit = Net Sales - Cost of Sales ADCPM

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Net Profit: Net profit is arrived at after considering the other administrative costs incurred for the period. It is expressed as: Net Profit = (Gross Profit +other Income) - (Selling and Administrative Expenses + Taxes + Depreciation + Interest + Other Expenses) Balance Sheet: Balance Sheet is a statement that summaries the assets and liabilities of a business. The excess of assets over liabilities is the net worth of a business. The balance sheet provides information that helps in assessing a company‟s: 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 balance sheet and grouped under the major heads of assets and liabilities. The balance sheet is complete when the net profit and loss is transferred from the Profit and Loss account. Books of Original Entry: Cash Book: The cash book is an accounting book which records cash receipts and disbursements. It is opened with a cash or bank balance at the beginning of the period. Day Book: Day Book shows list of vouchers in chronological order. At Gateway of Tally select Display; select Day Book to get list of all vouchers in day book for the current date. Bank Book: Bank Book shows date wise list of transaction through bank account with opening and closing balance at the end of the period. J ournal Book: Journal Book shows the date wise list of journal vouchers. Journal book shows in journal register. Select a month to get list of all journal vouchers or the select month. Click F2 period and set the period for which you like to get the journal book. Ledger Book: Ledger book shows the transaction with a particular account in chronological sequence, with opening & closing balance for the specified period. Sales Book: In this book amount realized from the sale of goods. Sales may be cash sales and credit sales. Purchase Book: In this book the total amount of goods purchased by a business concern for cash or credit for the purpose of sale or use in business is known as purchase book. Sales Return Book: In this book that part of sales of goods, which are actually returns to us by purchasers. This return may also due to unnecessary or defective supply of goods or violation of terms and agreement. It is also known as Return Inward. Purchase Return Book: In this book that part of the purchase of goods, this is returned to the seller. This return due to unnecessary, excessive or ADCPM

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defective supply of goods. It may also result if the supplier violets terms and conditions of the order and agreement. WHAT is TALLY? Tally is the most popular financial accounting software among the various financial accounting software. There are various versions of this software in the market but Tally9.0 and Tally ERP9.0 are the latest and popular version. Tally 9.0 helps to business owners to manage their business easily. Tally is software by which accounts are compute in a flicker, entries are done very faster and the balance sheet not only made but also printed, when required. To start Tally, press Start button  Program  Tally or double click on icon with name Tally present on the desktop. COMPANY CREATION: To start maintenance of accounts in Tally, first you have to create a Company in Tally. At company Info menu (on installing Tally, first you get Company Info menu. Later on click F3 Company info button to get Company Info menu, select Create Company to get company Creation Screen. Gateway of Tally Company Info Create Company Company Creation 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 & Path is displayed where Tally data would be stored (to keep data at different Directory, press up arrow, and enter the Drive & Path of the folder to keep data files 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 enter  different mailing Name as you like to print in external reports.  Address: Enter the postal address for the company. You may enter address in several lines. Press Enter at last blank line. Statutory Compliance for: Select the country from the list.  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: is displayed here. Maintain: Select Accounts only (to maintain Accounts only). Financial Year From: Enter Beginning date of Financial Year. Books Beginning From: Normally it is same of Financial Year From, unless you start accounts from middle of Financial year.

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Base Currency Information: At bottom, the various about Base Currency for India (Rs.) is displayed. You need not change it. Saving the Company Profile: Click „Yes‟ to save the information of company profile (click „No‟ to modify any data) or press CTRL+ A to save the Company profile directly. Altering the Company Profile: At Gateway, click F3: Company Info menu. Select Alter. Select the Company Name from the list to get Company Alteration Screen (similar to Company creation screen. Modify the company details. Deleting the Company: At Company Alteration screen, press ALT+D and click yes to confirm deletion. The company data would be deleted and you will not get back to company. Gateway of Tally: 1. Masters a. Account Info b. Inventory Info 2. Transaction a. Accounting Voucher b. Inventory Voucher 3. Import ADCPM

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Import of Data

4. Reports a. Balance Sheet b. Profit / Loss a/c c. Stock summary 5. Ratio Analysis a. Display b. Multi Accounts Printing 6. Quit. Account Info: After creation the list of the company is displayed. If you want to work on the company created by you then select the company and enter. Then the Gateway of Tally menu will be displayed as given before in which the first option is the Accounts Info. Ledger: A ledger is the most important book in an organization. It may be in the form of bound register or cards or separate sheet. Ledger is defined as a location of all the accounts debited or credited in journal. It contains a summarized record of all the transactions of the period. To create ledgers, at Gateway of Tally, select Accounting Info to get Menu. At Accounts Info menu, select Ledger to get Ledger menu. It should be noted that Tally automatically creates two ledger accounts cash under the cash-in-hand ADCPM

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and profit & loss account under direct primary account. Now you must create all other account. There are no restrictions in ledger creation expect that you cannot create another profit & loss account. Key F6

Key F9

Date Particular 1/1/2010 Cash a/c Dr. To Capital

L.F. No.

Date Particular 1/1/2010 Purchase a/c Dr To Mohan

L.F. No.

Debit 250000

Credit 250000

Debit 3000

Credit 3000

Display the Ledger: You can see the entire ledger which you have create under some groups. To display the ledgers you have to go: Gateway of Tally  Account Info  Ledger  Display Alter a Ledger: If you want to change the ledger from the list and enter the new, you have to click Gateway of Tally  Account Info  Ledger  Alter. Now the list of the ledger will be displayed, from here you can easily change or enter the ledger. Delete a Ledger: If you want to delete a ledger from the list of ledgers. You can do this from the Alter key. To delete the ledger you have to press ALT + D. You do not delete the accounts that have transaction. So if you want to delete an account, which has transaction, you must first delete all its voucher entries. Groups: All the ledger account can be classified into various groups based on their functions. Depending upon the group in which you place the ledger, it performs that function “There are 28 predefined groups available in Tally. Out of which 15 groups are primary and 13 groups are subgroups.” To insert Voucher entry, you will have to create Ledger. Ledger should come under particular Groups, which are already defined in the Tally Software. Some groups are shown below:  Bank Odd a/c  Bank Occ a/c  Bank a/c  Current Assets  Cash in Hand  Capital a/c  Direct Expenses  Deposits(Assets)  Current Liabilities  Fixes Assets  Duties & taxes  Direct Incomes  Investment  Indirect Incomes  Indirect Expenses  Provisions  Loan (liability)  Loan & Advances    

Purchase a/c Secured loan Sundry Debtors Retained a Name

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Reserve & Surplus Stock in Hand Suspense a/c TALLY 9.0

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Sales a/c Sundry Creditors Unsecured Loans Page - 14


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J OURNAL The word general has been derived from the French word “Jour”. Journal is a book of prime record for small firms. These firms record their business transactions in the Journal & post them to the concerned Ledger a/c. Business transaction of financial nature are studied & classified as asset, liabilities, Capital, revenue, & expenses accounts are debited or credited in the Journal according to the rule of debit and credit applicable to the specific a/c. Question: First, Create a Company & Create the following Ledger under their Corresponding GroupsName of Ledger Name of Group Sale Sale A/C Purchase Purchase A/C Ravi (Debtor) Sundry Debtor Mohan (Creditor) Sundry Creditor Rent Paid Indirect Expense Commission Received Indirect Expense Mahaveer (Debtor) Sundry Debtor Salary Paid Indirect Income 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 a balance sheet first of all, you have to create your company for the particular financial year. After this, create Ledgers under particular groups, with the help of the group entries and Vouchers. If your Voucher entry is correct then the balance sheet is automatically created & the left inside of balance sheet. Note: Function keys for the Voucher entry Voucher

Contra Voucher Payment Voucher Receipt Voucher Journal Voucher Sale Voucher Purchase Voucher Journal Voucher

ADCPM

Key F1 F2 F3 F4 F5 F6 F7 F8 F9 F10 Alt + F1 Alt + F2 Alt + F3

Used For Select Company Change Date Select Company (Taxation) Cash Deposit and Withdraw (Bank) Cash Payment Cash Received without Cash Entry Credit Sale Credit Purchase Reversing Shut Company Change the Period Display Company Information TALLY 9.0

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CTRL + F8 To select the Credit Note voucher CTRL + F9 To select the Debit Note voucher

Key ALT + 2

Description Creates a voucher similar to the one where you positioned the cursor. ALT +A To Add a voucher Adds a voucher after the one where you positioned the cursor. ALT + D To delete a voucher At Voucher and Master (Single) To delete a master alteration screens. Masters can be To delete a column in any deleted subject to conditions, as columnar report explained in the manual. All the reports screen which can be viewed in columnar format. ALT + E To export the report in ASCII, At all reports screens in TALLY HTML OR XML format ALT + I To insert a voucher Inserts a voucher before the one To toggle between Item and where you positioned the cursor. Accounting invoice ALT + L To select the Language At almost all screens in TALLY. Configuration ALT + K To select the Keyboard At almost all screens in TALLY. Configuration ALT + O To upload the report at your At all reports screens in TALLY. website ALT + N To view the report in automatic At all the reports where columns 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 + S To bring back a line you At all reports screens in TALLY. removed using ALT + R ALT + U To retrieve the last line which is At all reports screens in Tally deleted using Alt + R ALT+ X To cancel a voucher in Day At all voucher screens in TALLY Book/List of Vouchers ALT + R To Register Tally At almost all screens in TALLY. CTRL + B To select the Budget At Groups / Ledgers / Voucher Types / Currencies (Accounts Info) creation and alteration screen CTRL + E To select the Currencies At Groups / Ledgers / Voucher Types / Currencies (Accounts Info) creation and alteration screen CTRL + G To select the Group At Groups / Ledgers / Voucher Types / Currencies (Accounts Info) creation and alteration screen ADCPM

Used for To Duplicate a voucher

TALLY 9.0

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Module 4

CTRL + I

July – 2010 / BLY

To select the Stock Items

At Stock Group / Categories / items / Voucher Types / Units of Measure (Inventory Info) CTRL + L To select the Ledger/To mark a At Groups / Ledgers / Voucher Voucher as Optional Types / Currencies (Accounts Info) creation and alteration screen CTRL + R To repeat narration in the same At creation / alteration of voucher voucher type screen CTRL + S Allows you to alter Stock Items At Stock voucher Report and master Godown Voucher Report CTRL + U To select the Units At Stock Groups / Stock Categories / Stock Items. CTRL + V To select the Voucher Types At Groups / Ledgers / Voucher To toggle between Invoice and types Voucher Page Up Display previous voucher At voucher entry and alteration during voucher entry/alter screens Page Display next voucher during At voucher entry and alteration Down voucher entry/alter screens ENTER To accept you type into a field. You have to use this key at most To get a report with further areas in TALLY. details of an item in a report. ESC To remove typed value from a At almost all screens in TALLY. field / To come out of a screen To reject a voucher or master. CTRL + To alter a master while making At voucher entry and alteration ENTER an entry or viewing a report screens / At all reports

Question: Name of Ledger Advertisement Bad Debts Bank Account Bank Charges Capital Carriage Cash at Bank Cash in Hand Charity Closing Stock Coal & Gas Commission Given ADCPM

Name of Group Indirect Expense Indirect Expense Bank a/c Indirect Expense Capital a/c Direct Expense Current Assets Current Assets Indirect Expense Current Assets Direct Expense Indirect Expense TALLY 9.0

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July – 2010 / BLY

Commission Received Indirect Income Creditor Sundry Creditor Debtor Sundry Debtor Depreciation Indirect Expense Discount Count Given Indirect Expense Discount Count Received Indirect Income Drawing Capital a/c Electricity Charges Indirect Expense Factory Rent Direct Expense Furniture Fixed Asset Goodwill Fixed Asset Goods Current Assets Installation Direct Expense 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 Wages Direct Expense Only Cash and Profit/ Loss a/c Ledgers are already created in Tally. Quest: Create a Company with name xyz create are following Ledger. Capital Capital a/c Furniture Fixed Asset Land Fixed Asset Goodwill Fixed Asset Advertisement Indirect Expense Debtor Sundry Debtor Salary Indirect Expense ADCPM

TALLY 9.0

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Wages Freight Charges Sale Purchase Commission Received Rent Discount count Sale Return Purchase return Printing stationery Explanation of certain J ournal Entry Transaction 1: Started or commenced business with Key F6

Date Particular 1/1/2010 Cash To Capital

July – 2010 / BLY

Direct Expense Direct Expense Sale a/c Purchase a/c Indirect Income Indirect Expense Indirect Expense Sale a/c Purchase a/c Indirect Expense 20000/-

L.F. No.

Debit 20000

Credit 20000

Explanation: Business has receipt cash as Capital. Cash is an asset. This transaction is increasing the cash. Therefore cash a/c should be debited because the rule of debit & credit is: Debit the increase & Credit the decrease”. In each general entry the transaction, involve minimum two a/c. In this transaction two a/c are: Cash a/c & Capital a/c. Capital a/c should be credited because the rule is “Debit what comes in & Credit what goes out” There is also one rule “Debit the receiver & Credit the giver” Hence Cash is the receiver & Capital a/c is the giver. Transaction 2: Goods purchased for 5000/- Cash purchases for 5000/Goods purchased from Mohan for cash 5000/Key F5

Date Particular 1/4/2010 Purchase a/c Dr. To Cash

L.F. No.

Debit 5000

Credit 5000

Explanation: In this transaction of cash purchase of goods cash will decrease & credited because the cash is an asset all the assets are credited when there is decrease in them. The other a/c involves in the transaction is goods a/c that is the purchase a/c. The transaction will increase the goods & does debit. Transaction 3: Goods purchase from Mohan 3000/- Goods purchase from Mohan on credit 3000/Key F9

Date Particular 1/4/2010 Purchase a/c Dr. To Mohan

L.F. No.

Debit 3000

Credit 3000

Explanation: In the case of purchases goods will increase so the purchase a/c is to be debited. The payment for goods has not being made to Mohan. Therefore, it is still the liability of the business. Hence, Mohan is the sundry ADCPM

TALLY 9.0

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Module 4

July – 2010 / BLY

creditor of the firm. Mohan a/c as the liability of the business 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 cash 7000/Key F6

Date Particular 1/4/2010 Cash a/c Dr. To Sale

L.F. No.

Debit 7000

Credit 7000

Explanation: In this transaction the two a/c are cash a/c & goods a/c both of these a/c are assets so they will be debited for increase & credited for decrease. Hence, cash a/c is debited & the sale a/c is credited. Transaction 5: Goods sold to Mohan 4000/- Goods sold to Mohan on credit 4000/Key F8

Date Particular 1/4/2010 Mohan a/c Dr. To Sale

L.F. No.

Debit 4000

Credit 4000

Explanation: It is credit sale, it will increase debtor, an assets. Mohan a/c will be debited as assets. Sale of goods will decrease an asset; therefore, the sale a/c is credited. Transaction 6: Furniture Purchase 3000/Key F5

Date Particular 1/4/2010 Furniture a/c Dr. To Cash

L.F. No.

Debit 3000

Credit 3000

Transaction 7: Machinery sold for 12000/Key F6

Date

Particular

L.F. No.

1/4/2010 Cash a/c Dr. To Machinery

Debit

Credit

12000 12000

Transaction 8: Salary Paid for 3200/Key F5

Date Particular 1/4/2010 Salary a/c Dr. To Cash

L.F. No.

Debit 32000

Credit 32000

Explanation: Salary paid to employees is an expense of the business, according to the rule of debit & credit expense are debited for increase & credited for decrease. As salary is an expense increasing therefore salaries a/c is debited the other a/c is cash a/c, which is an asset, & its decreasing therefore cash a/c is credited. Transaction 9: Rent receipt 2000/Key F6

ADCPM

Date Particular 1/4/2010 Cash a/c Dr. To Rent TALLY 9.0

L.F. No.

Debit 2000

Credit 2000 Page - 20


Module 4

July – 2010 / BLY

Explanation: Cash a/c is increasing therefore it is debited the other a/c is rent a/c which is income for business rent a/c will be credited because income a/c are credited for increase & debited for decrease. Transaction 10: Amount receipt from Mohan 1000/- & Discount count allowed 10% Key F6

Date Particular 1/4/2010 Cash a/c Dr. Discount a/c To Mohan

L.F. No.

Debit 900 100

Credit

1000

Explanation: The transaction involves cash a/c (asset), Discount count a/c (Indirect expense) & Mohan‟s a/c (Sundry debtor). Cash is increasing so cash a/c will be debited. Discount count is an expense & increasing so it will also be debited Mohan a/c is decreasing so it will be credited. Transaction 11: Amount paid to Shyam 2000/- & allowed 20/-. Key F5

Date Particular 1/4/2010 Shyam a/c Dr. To Cash To Discount

L.F. No.

Debit 2000

Credit 1980 20

Explanation: Payment has been made to Shyam (S. Creditors) is liability so payment to them will reduce liability of the firm. Hence, the creditor‟s a/c that is the Sham‟s a/c will be debited as per rule of the liability, the debit increase in the liability. Cash a/c will be credited because it is decreasing; Discount count a/c is the revenue a/c for which the rule is Debit decrease & Credit increase. Hence, Discount count a/c will be credited. Some Important Terms: Cash Discount: This Discount count is allowed to the customer for making prompt (Cash) payment. In other words, cash Discount count is allowed only if the customer makes the payment with in a fixed period. Such Discount count motivates the customer to make the payment at the earliest. As the Discount count is allowed at the time of making payment, so the entry for cash Discount count is recorded along with the entry for the payment. Discount Paid is a Ledger under indirect expense group & the discount received group under indirect income. Cash Discount count is of two types for the business. 1. Discount count Received (Incase the business is purchase goods) 2. Discount count Paid (Incase the business is sealing its goods) Bad Debts: When the goods are sold to a customer on credit & if the amount becomes irrecoverable due to his insolvency or some other reason, the amount not recovered is called bad debts. For recording it, bad debts a/c is debited & the customer a/c is credited. Example: Ravi who owed us 10000/- is declared insolvent & 30 p in a rupee is received from his estate the Journal entry will be. Key ADCPM

Date

Particular TALLY 9.0

L.F. No.

Debit

Credit Page - 21

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July – 2010 / BLY

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 are subsequently recovered. In such cases the Journal entry will be. Key F6

Date Particular 1/4/2010 Cash a/c To Bad debts recover

L.F. No.

Debit 7000

Credit 7000

Outstanding Expenses: It is quite common for a business enterprise to be lift with some expenses which are fat to be paid at the end of the accounting fear due to one reason or the other. Such expenses are termed as outstanding expenses. These are the expenses, which should 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 & if up to 31 Dec, only 11 month salary amounting to 11000/- has been paid to him, 1000/- will be outstanding salary. The general entry will be. Key F7

Date Particular L.F. No. Debit Credit 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 personal a/c, representing the employees to whom salaries have to be paid. Trade Discount count: The Discount count allowed by sells to its customer at a fixed percentage on the listed price of goods is termed as trade Discount count no separate entry is passed for the trade Discount count 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 count for cash of the entry will be as: Key F6

Date Particular 1/4/2010 Cash a/c To Sale

L.F. No.

Debit 8000

Credit 8000

Drawing: Amount or goods withdrawal by the proprietor for his private or personal use is termed as drawing, business assets for private or domestic use is also drawing, use of business card for domestic use or use of business premises for residential purpose is also drawing. Drawing should be created as a Ledger under the group Capital that means liability of the business. A certain example of drawing is as under: 1. Amount drawn by proprietor for personal use, 2. Goods taken by the proprietor for domestic use, 3. Purpose pocket transistor for proprietor‟s some, 4. Using business vehicles for domestic use, ADCPM

TALLY 9.0

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July – 2010 / BLY

5. Using business premises for residential purpose, The Journal entry for Amount withdrawn by the proprietor for personal, domestic, or private use, Key F5

Date Particular 1/4/2010 Drawing a/c To Cash

L.F. No.

Debit 5000

Credit 5000

Explanation: In this transaction, Capital will reduce with the amount drawn, so drawing a/c will be debited as the rule goes debit the decrease of liability & credit the increase of liability. Cash is an asset & it is decreasing, so it is credited. Transaction: Goods taken by the proprietor for personal use. Key F7

Date Particular 1/4/2010 Drawing a/c To Purchase

L.F. No.

Debit 1000

Credit 1000

Prepaid Expenses: There are certain expenses which are related to the next year but have been paid during the current year in advance. These are called prepaid expenses; the benefit of such expense will be received during the next accounting year. Example: The insurance premium amounting to 1200/- is paid on 1.4.93 for 1year entry on 1.4.93 will be. Key F5

Date Particular 1/4/2010 Insurance Premium To Cash

L.F. No.

Debit 1200

Credit 1200

When the books will be closed on 31.12.93, insurance premium for three months that is from 1.1.94 to 31.3.94 will be treated as prepaid insurance & the following entry will be passed for it on 31.12.93 Key F5

Date Particular 1/4/2010 Prepaid Insurance To Insurance Premium

L.F. No.

Debit 300

Credit 300

The prepaid expense a/c is an asset, it has been debited because it is a representative personal a/c & represents those personal to whom payment has been made in advance. Depreciation: It is the permanent & containing decrease is the value of an asset. Depreciation is a nominal a/c, which presence a loss & should be debited the asset (of which the depreciation count) will be credited because it cost is decreasing. It is treated as expense. Depreciation account is a Ledger under the group indirect expense. An account of “wear & tear ” & passage of time. Depreciation on furniture 2000/- the Journal entry will be. Key F7

ADCPM

Date Particular 1/4/2010 Depreciation To Furniture TALLY 9.0

L.F. No.

Debit 2000



Module 4

July – 2010 / BLY

Interest on Capital: In order to ascertain the true efficiency of the Business, it is a normal practice to charge business with interest on proprietor‟s Capital. Profit left after charging the amount of such interest are the real profits earned by the business. Such interest is a loss from the point of view of the business & therefore according to the rule of nominal a/c, interest a/c is debited in the Journal entry. The amount of such interest is the gain from the point of view of the proprietor. His Capital is increase by the amount of interest therefore the Capital a/c is credited in the Journal entry. Example: Provide 12% interest on Capital amounting to 100000/-. Key F7

Date Particular 1/4/2010 Interest on Capital To Capital

L.F. No.

Debit 12000

Credit 12000

Interest on Drawing: If the firm allows interest on Capital, it should also charged interest on drawing made by the proprietor, such interest is an expense for the proprietor and again to the business. Hence the entry will made by Key

Date

Particular

L.F. No.

Debit

Credit

F7

1/4/2010 Drawing 1000 To Interest on Drawing 1000 debiting the drawings a/c and crediting the interest a/c. The Journal entry will be: Some Important Transaction 1. Drawing in Goods: Sometime the proprietor with draw goods from the business for his personal use. Key F7

Date

Particular

L.F. No.

1/4/2010 Drawing To Purchase

Debit

Credit

100 100

2. Goods given away as Charity: Charity is an expense of the business & the charity a/c will be debited Goods are going out of the business at cost price hence purchased (asset) is reduced hence it is credited the Journal entry will be. Key F7

Date Particular 1/4/2010 Charity To Purchase

L.F. No.

Debit 1000

Credit 1000

3. Goods Discount Distributed as Free Sample: The Journal entry will be: Key F7

Date Particular 1/4/2010 Free Sample To Purchase

L.F. No.

Debit 1000

Credit 1000

4. Loss of Goods by Theft or Loss of Goods by Fire: The Journal entry is: Key F7

ADCPM

Date Particular 1/4/2010 Loss by Theft To Purchase TALLY 9.0

L.F. No.

Debit 1000



Module 4

July – 2010 / BLY

Or Key F7

Date Particular 1/4/2010 Loss by Fire To Purchase

L.F. No.

Debit 1000

Credit 1000

5. The Debtor (*) Returned Goods Sold to him: The Journal entry will be: Key F7

Date

Particular

L.F. No.

1/4/2010 Sale Return To X

Debit

Credit

1000 1000

6. Proprietor Return the Goods to Sushil: The Journal entry will be: Key F7

Date Particular 1/4/2010 Purchase Return To Sushil

L.F. No.

Debit 1000

Credit 1000

Some Important Option: 1. If you want to delete Voucher entry Go to balance sheet  go to the Voucher & then press 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  F11  F2 (inventory) and in the option separate discount column 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 percentage allowed then this entry will be done using these function keys. F5  Cash Purchase F6  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 ADCPM

TALLY 9.0

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July – 2010 / BLY

F9  Cash & Credit Purchase In Cash Sale & Purchase, party account should be cash. Stock Groups: Stock items can be grouped together under Stock Groups to reflect their classification based on some commonality. Grouping would enable easy location and reporting of stock items in statements. Hence, items of a particular brand can be grouped together so that you can extract stock of all items of their brand. To create stock group: Gateway of Tally  Inventory Info  Stock Groups. Stock Categories: Stock Categories offers particular classification of items. To create the Stock Category: Gateway of Tally  Inventory Info  Stock Items. Stock Items: Stock items are the primary entity. You can use stock items while recording their receipts and issues. This is lowest level of information about your inventory. Each item that is required to be accounted for need to be created. In fact you have to create a stock ledger for each item and Tally calls this account “Stock Item”. VAT (Value Added Tax) Vat is a consumption tax which is enforced at each stage of production based on the value added to the product at that stage. Vat was launch on April 1, 2005 at the rate of 12.5%. Vat is multi point sales tax with set off for tax paid on purchases. It is basically a tax on the value 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 present position, every States will have a separate VAT Act with different provision not corresponding with each other. It can be stated that the proposed VAT Act is the primary stage of VAT. It is proposed that there would be two taxes rate slabs on which tax would be enforced. The first one would be 4% and would cover all essential items. The second one is 10% and all luxury items would be covered. In addition special rate slabs are also proposed which are 1% for bullion and jewellery, 20% for Non Essential Goods and exemption to certain goods like agricultural produce etc. Petroleum products are not included in VAT. VAT is a system of indirect taxation. It is the Tax paid by the producers, manufactures, users, retailers or many other dealers who add value to the goods and that is ultimately passed on to the consumers. The essence of VAT is in providing set off for input tax and this is applied through the concept of input credit. This input credit in relation to any period means setting off the 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 accounting with inventory feature. 2. Go to accounting Vouchers  F11  F3  select all the entries containing VAT word. Select Yes. Then it further asks for the state. Then select for U.P., and then give “regular” and then enter the “financial year”. Example: 01-04-2009. ADCPM

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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% (for U.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 & credit sale will be done using Function key F8 and all the entries for credit purchase & cash purchase Voucher entry will be done using F9. b. In case of cash purchase and credit purchase. First of all, give all the item information. If you have enter all the item information then press enter twice and then select VAT 12.5%, the VAT amount will be calculated automatically. c. In case of cash, sale and credit sale give all the entries then press enter twice and then select VAT 4%. The VAT amount will be calculated automatically. Quest: 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/Key F6 F5 F9 F5 F8 F6 ADCPM

Date

Particular

1/4/2010 Cash To Capital Purchase To Cash Purchase To Ajay Furniture To Cash Manish To Sale Cash

L.F. No.

Debit

Credit

250000 250000 25000 25000 7000 7000 5000 5000 5500 5500 3500 TALLY 9.0

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Module 4

Key

Date

F5 F5 F5 F5

Particular To Sale Purchase To Ravi Machinery To Cash Rent To Cash Salary To Cash

L.F. No.

July – 2010 / BLY

Debit

Credit 3500

2000 2000 11000 11000 9000 9000 1200 1200

Quest: 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 50000/- for cash 10. Rent receipt 2000/11. Goods given as charity 7,500/Key F6 F5 F5 F5 F9 F5

F5

ADCPM

Date

Particular

1/4/2010 Cash To Capital Purchase To Cash Furniture To Cash Machinery To Cash Purchase To Suraj Suraj To Cash To Bank Salary To Cash

L.F. No.

Debit

Credit

500000 500000 50000 50000 45000 45000 80000 80000 200000 200000 200000 100000 100000 2000 2000 TALLY 9.0

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Module 4

Key F8 F6 F6 F7

Date

Particular Man Mohan To Sale Cash To Machinery Cash To Rent Receive. Purchase To Charity

L.F. No.

July – 2010 / BLY

Debit 80000

Credit 80000

50000 50000 2000 2000 7500 7500

Quest: Delhi Furniture Mart 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 the list of 2000/- he allowed 10% trade Discount count 6. 7. Furniture costing 500/- was used in furnishing the office. 8. Sold furniture to Naresh of the list price of 1000/- & allowed him 5% trade Discount count 9. Received a check from Naresh for 950/10. Paid wages 350/- & Rent 200/Key F6 F4 F5 F5 F9 F7 F8 F6 ADCPM

Date Particular 1/4/2010 Cash To Capital Bank To Cash Machinery To Cash Installation To Cash Purchase To Naveen Furniture To Purchase Naresh To Sale Naresh TALLY 9.0

L.F. No.

Debit 50000

Credit 50000

9000 9000 5000 5000 100 100 1800 1800 500 500 950 950 950 Page - 29


Module 4

Key F5 F5

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Date

Particular To Bank Wage To Cash Rent To Cash

L.F. No.

July – 2010 / BLY

Debit

Credit 950

350 350 200 200

Started business with cash 10000/- & goods 5000/Paid into current a/c 4000/Sold goods to Mohan 2000/Goods purchase from Shyam 3000/Purchase goods for Ram of 10000/- & he allowed 10% trade Discount count Amount receipt from Mohan & Discount count allows 5% Amount paid to Shyam & Discount count allows is 10% by him. Rent paid 12000/-. Furniture costing 500/- purchased for office use. Salary paid 3000/-

Key F6

F4 F8 F9 F9 F6

F5

F5 F5

ADCPM

Date Particular 1/4/2010 Cash Goods To Capital Cash To Bank Mohan To Sale Purchase To Shyam Cash To Ram Cash Discount Paid To Mohan Shy am To Cash To Discount Received Rent To cash Furniture To Cash TALLY 9.0

L.F. No.

Debit 10000 5000

Credit

15000 4000 4000 2000 2000 3000 3000 900 900 1900 100 2000 3000 2700 300 1200 1200 500 500 Page - 30


Module 4

Key F5

Date

Particular

L.F. No.

Salary To Cash

July – 2010 / BLY

Debit 3000

Credit 3000

Quest: 1. The Company is starting creating the a/c for next financial year & the closing a/c of previous year is Assets: Cash 15000/Bank balance 5000/Stock 40000/Furniture 3600/Debtors: 24000/- (X 6000/-, Y 8000/- Z 10000/-) Liabilities: 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 count of 10% & Cash Discount count of 20% paid 60% amount immediately. 3. LD goods to X for 9000/4. Receipt 14800/- from X in full settlement of his a/c 5. Cash deposited into the Bank 10000/6. Cheque received from Y for 7850/- in full settlement of his a/c 7. 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 & paid by cheque 8000/12. Sold goods to buy for cash & allowed Discount count 5% 2000/13. Paid salary to Motilal by cheque 2000/14. Received Rent 1500/Key F6

ADCPM

Date Particular 1/4/2010 Cash Bank a/c Stock Furniture X Y Z To Bank loan To Ajay TALLY 9.0

L.F. No.

Debit 15000 5000 40000 3600 6000 8000 10000

Credit

10000 5000 Page - 31


Module 4

Key

F5

F8 F6

F4 F6

F6 F4 F5 F6 F6 F5 F6

F5 F6

Date

Particular To Vijay To Capital Purchase To Cash To Discount Recd To Kailash X To Sale Cash Discount Paid To X Bank To Cash Cash Discount Paid To Y Cash To Z Bank To Z Ajay To Bank Cash To Mice income Cash To furniture Purchase To Bank Cash Discount paid To Sale Salary To Bank Cash To Rent

L.F. No.

July – 2010 / BLY

Debit

Credit 7500 65100

18000 10584 216 7200 9000 9000 14800 200 15000 10000 10000 7850 150 8000 2000 2000 2000 2000 5000 5000 50 50 750 750 8000 8000 1900 100 2000 2000 2000 1500 1500

Quest: Following Transactions shows the position of Harish as on 01.01.04 ADCPM

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Module 4

July – 2010 / BLY

1. Cash-in-hand

2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

10000/Cash-at-Bank 16800/Furniture 8000/Stock 50000/Debtor - Ram 8000/Suresh 2000/Shyam 12000/Creditor - Anil 4000/Sunil 5000/Received a cheque from Ram in full settlement of his a/c after deducting 5% Discount count and deposited the above cheque into the Bank, Goods purchase for 20000/- at 10% trade Discount count & 5% cash Discount count payment is done by cheque. Received a cheque from Shyam for 3860/- & Discount count allowed to him 240/- cheque deposited into the Bank on the same day. Suresh become insolvent & 40p in a rupee could be received from his estate. Cash paid to Anil after deducting 2% cash Discount count. Received 2000/- from Subhash, which was written off as bad debts in the previous year Old furniture sold for 800/Salaries paid 10000/Salaries due to clerk 5000/Out of the Rent paid this year, 1000/- is related to the next year. Commission received 800/-.

Key F6

F6

F4 ADCPM

Date Particular 1/4/2010 Cash Bank Furniture Stock Ram Suresh Shyam To Anil To Sunil To Capital Cash Discount paid To Ram Bank TALLY 9.0

L.F. No.

Debit 10000 16800 8000 50000 8000 2000 12000

Credit

4000 5000 97800 7600 400 8000 7600 Page - 33


Module 4

Key F5

F6

F6

F5

F6 F6 F5 F7 F5 F6

Date

Particular To Cash Purchase To cash To Discount received Bank Discount paid To Shy am Cash Bad debt To Suresh Anil To cash To Discount recd Cash To Bad debt rec. Cash To furniture Salary To Cash Salary To outstanding Prepaid Rent To cash Commission To Cash

L.F. No.

July – 2010 / BLY

Debit

Credit 7600

18000 17100 900 3860 240 4100 800 1200 2000 4000 3920 80 2000 2000 800 800 10000 10000 5000 5000 1000 1000 800 800

Quest: 500000/- & paid from the Bank 400000/- & 1. Started business with furniture of amount 5000/2. Purchase goods for 140000/- in all, out of which half the goods were on credit from Mr. Sudhir. 3. Purchased building for 200000/- by cheque & paid registration charges 24000/-, which were paid in cash. 4. Sold goods to Arun for 200000/- Arun paid ¼ amounts in cash. 5. A cheque of 148000/- is receipt from Arun in full settlement & the cheque is immediately deposited into the Bank. 6. Provide 10% depreciation on furniture costing 5000/-. 7. Provide 8% interest on Capital amounting to 500000/-.

ADCPM

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Module 4

8. Paid office expense

July – 2010 / BLY

500/- from personal cash & stationery expenses

180/- from office cash. 9. Paid for office cleaning 200/10. Received a sum of 2500/- being rent for a position of the building let out 11. Paid for advertisement in the Hindustan Times 2000/Key F6

F5

F5 F5 F6

F6

F7 F7 F5 F5 F5 F6 F5

Date Particular 1/4/2010 Cash Bank Furniture To Capital Purchase To Cash To Sudhir Building To Bank Registration To Cash Cash Arun To Sale Bank Discount paid To Arun Depreciation To furniture Interest on Capital To Capital Office exp To Cash Stationery To cash Office cleaning To Cash Cash To Rent paid Advertisement To Cash

L.F. No.

Debit 100000 400000 5000

Credit

505000 140000 70000 70000 200000 200000 24000 24000 50000 150000 200000 14800 200 15000 500 500 4000 4000 500 500 180 180 200 200 2500 2500 2000 2000

Quest: ADCPM

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Module 4

1. Shyam Sundar started business with cash

2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17.

July – 2010 / BLY

7500/-

Goods 35000/Furniture 5000/Sold goods to Bhushan of the list price of 10000/- at a trade Discount count of 10% Bhushan return goods worth 1000/Received from Bhushan 8000/- in full settlement of his a/c Purchase furniture for 6000/-. Purchase goods from Naveen for 25000/- less trade Discount count 12% Returned goods to Naveen goods of the list price of 2000/Cleared the a/c of Naveen by paying cash under the Discount count of 5% Sold goods to Ajay 10000/- & Vijay 16000/Received cash from Ajay 9800/- in full settlement of his a/c Paid insurance premium of 750/Paid for Shyam sunder life insurance premium 1200/Purchase goods for 8000/- for cash trade Discount count 10% & cash Discount count of 2% Received cash for Vijay at the cash Discount count of 5% in full settlement of his a/c Paid Rent 800/-, Advertisement 1000/-, Salary 4000/-. Received commission 500/Old costing 4000/- of which a sale price 5000/- destroyed by fire. Salaries paid 4000/- Due 1000/Goods costing 800/- taken by the proprietor for personal use

Key F6

F8 F7 F6 F5 F9 F7 ADCPM

Date Particular 1/4/2010 Cash Goods Furniture To Capital Bhushan To Sale Sale return To Bhushan Cash To Bhushan Furniture To Cash Purchase To Naveen Purchase return TALLY 9.0

L.F. No.

Debit 75000 35000 5000

Credit

115000 9000 9000 1000 1000 8000 8000 6000 6000 22000 22000 2040 Page - 36


Module 4

Key F5 F8 F8 F6

F5 F5 F5

F6

F5 F5 F5 F6 F5 F7 F7

Date

Particular To Naveen Naveen To cash Ajay To Sale Vijay To sale Cash Discount paid To Ajay Insurance premium To Cash Drawing To Cash Purchase To Cash To Discount Received Cash Discount Paid To Vijay Rent To Cash Advertisement To Cash Salary To Cash Cash To Commission rec. Salary To Cash Salary To Outstanding Drawing To Purchase

L.F. No.

July – 2010 / BLY

Debit

Credit 2040

20900 20900 10000 10000 16000 16000 9800 200 10000 750 750 1200 1200 7200 7056 144 15200 800 16000 800 800 1000 1000 4000 4000 500 500 4000 4000 1000 1000 800 800

Quest: Following balances appeared in the books of Radhika Traders as on 01.01.94 1. Assets: Cash 8000/ADCPM

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Module 4


July – 2010 / BLY

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 less 15% trade Discount count & 2% cash Discount count & paid 40% price at the same time. 3. Received a draft from Mohan in full settlement & deposited it into the Bank 9750/4. Purchase goods from Suresh on list price of 8000/- at 20% trade Discount count & paid him by cheque. 5. Sold goods & 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 & send to the Bank 7800/- Discount count allowed 20% 10. With draw from the Bank for office 2000/- & for private, use 4000/-. 11. Send a cheque to X in full settlement of his a/c 4900/-. 12. Cheque of Mohan returned by the Bank as discount hounded. 13. Danish was declared insolvent & 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 & paid 50/- carriage on these goods. 18. Give as charity cash 500/- & goods 2000/-. 19. Provide 10% depreciation on furniture costing 5000/-. Key Date Particular L.F. No. Debit Credit F6 1/4/2010 Cash 8000 Bank 7000 Stock 30000 Mohan 10000 Mohan 12000 Danish 14000 Furniture 5000 ADCPM

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Module 4

Key

F5

F6

F5 F6 F4 F6 F5 F6

F5

F5

F5 F6

F6

ADCPM

Date

Particular Building To X To Y To Capital Purchase To Cash To Discount Recd To Khans Bank Discount paid To Mohan Purchase To Bank Cash To Sale Cash To Bank Bank To Mohan Drawing To Cash Bank Discount Paid To Mohan Office Drawing To Bank X To Cash To Discount received Mohan To Bank Cash Bad debt To Danish Bank To Interest TALLY 9.0

L.F. No.

July – 2010 / BLY

Debit 25000

Credit 5000 6000 100000

5100 1999.2 40.8 3060 9750 250 10000 6400 6400 25000 25000 25000 25000 4000 4000 5600 5600 7800 200 80000 2000 4000 6000 5000 4900 100 4000 4000 8400 5600 14000 350 350 Page - 39


Module 4

Key F5 F5 F5 F5 F5

F7

Date

Particular Rent To Bank Travel expense To Bank Purchase To Cash Carriage To Cash Charity To Purchase To cash Deprecation To furniture

L.F. No.

July – 2010 / BLY

Debit 1500

Credit 1500

500 500 5000 5000 50 50 2500 2000 500 500 500

Quest: 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/Debit Ram 8000/-, Shyam 12000/Creditor: Anil 4000/-, Sunil 5000/2. Withdraw from the Bank for office 2000/- & for private use 500/3. Paid for furniture repair to Bahadur Singh 100/4. Sold goods to Ramesh of the list price of 10000/- at a trade Discount count of 10% 5. Ramesh returned goods 1000/6. Received a cheque from Ramesh after deducting 2% cash Discount count, cheque was deposited into Bank. 7. Bank charge 100/- for the Bank charges 8. Paid income tax 4500/9. Received cash from Ram in full settlement of his account 7600/10. Furniture purchase for cash 2000/11. Goods costing 2000/- of which the sale price is 2500/- given away as charity. 12. Bought machinery for 20000/- & carriage paid on it 400/13. Shyam is declared as insolvent & Received 40p/Rupee from his estate, 14. Goods stolen of amount 4000/15. Harish borrowed 100000/- from Nitin ADCPM

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Module 4


July – 2010 / BLY

16. 17. 18. 19.

Purchased 100/Salary unpaid 2000/- & Rent due to landlord 3000/Provide interest on Capital 50000/- at the rate of 5% Paid fire insurance premium on building by cheque 1000/- & Harish life insurance premium by cheque 800/20. Provide 10% depreciation costing 8000/21. Charge interest on drawing 800/Key F6

F5

F5 F8 F7 F6 F5 F6

F5 F7

ADCPM

Date Particular 1/4/2010 Cash Bank Building Furniture Stock Ram Shyam To Anil To Sunil To Capital Office Drawing To Bank Furniture To cash Ramesh To sale Sale return To Ramesh Bank To Ramesh Drawing To cash Cash Discount Paid To Ram Furniture To Cash Charity To purchase TALLY 9.0

L.F. No.

Debit 10000 16800 50000 8000 50000 8000 12000

Credit

4000 12000 138800 2000 500 2500 100 100 9000 9000 1000 1000 8820 8820 4500 4500 7600 400 8000 2000 2000 2000 2000 Page - 41


Module 4

Key F5 F5 F6

F7

F5 F7 F7 F7 F5 F5 F7 F7

Date

Particular Machinery To cash Carriage To cash Cash Bad debt To Shyam Loss by theft To Purchase Cash To Nitin Loan Purchase To Cash Salary To outstanding Rent To outstanding Interest on Capital To Capital Insurance of building To Bank Drawing To Bank Depreciation To furniture Capital To interest on drawing

L.F. No.

July – 2010 / BLY

Debit 20000

Credit 20000

400 400 4800 7200 12000 4000 4000 100000 100000 100 100 2000 2000 3000 3000

1000 1000 800 800 800 800 800 800

Quest: 1. Business started with cash 20000/Building 100000/Furniture 10000/Capital 300000/Stock: Stationery: a. Sharpener 10 Pieces @ 2/b. Eraser 90 pieces @ 50/c. Pencil 200 pieces @ 1/d. Box 100 pieces @ 10/Home product: ADCPM

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Module 4

2.

3.

4.

5.

6. 7.

July – 2010 / BLY

a. A.C. 5 pieces @ 18000/b. Fridge 18 pieces @ 7000/c. Cooler 15 pieces @ 3000/Purchase goods from Bhanu for cash & Discount count allowed 10% Sharpener 20 pieces 2.50 Eraser 40 pieces @ 75/Pencil 50 pieces @ 1.25 Fridge 10 pieces @ 7500/Cooler 12 pieces @ 2500/Purchase goods from Raja A.C. 5 pieces @ 19000/Fridge 15 pieces @ 8000/Cooler 20 pieces @ 4000/Sold goods to Rajesh for cash A.C. 7 pieces @ 25000/- Discount 5% Fridge 15 pieces @ 12000/- Discount 8% Cooler 20 pieces @ 8000/- Discount 10% Pencil 200 pieces @ 3/Eraser 120 pieces @ 2/Box 80 pieces @ 15/Sold goods to Ram Pencil 50 pieces @ 3/Box 20 pieces @ 20/Sharpener 20 pieces @ 3/ A.C. 2 pieces @ 30000/Fridge 10 pieces @ 15000/Interest on drawing 3000/Commission Received 10000/-

Key F6

F5

F9 F8

ADCPM

Date

Particular

1/4/2010 Cash Building Furniture To Capital Purchase To Cash To Dies received Purchase To Raja Cash

TALLY 9.0

L.F. No.

Debit

Credit

20000 100000 10000 130000 105142.50 94628.25 10514.25 295000 295000 477890 39150 Page - 43


Module 4

Key

Date

F8 F7 F6

Particular To Sale Ram To Sale Drawing To Interest on Drawing Cash To Commission received

July – 2010 / BLY

L.F. No.

Debit

Credit 517040

210610 210610 3000 3000 10000 10000

SERVICE TAX: Service tax is a form of indirect tax enforced on some specified services, called “taxable services”. Service tax cannot be charged on any service which is not come under the list of taxable services. Service tax is charged on the value paid for any taxable service. It is included in the gross amount charged by the service provider. Service tax comes into existence on 1 July 1994. At present, the service tax is charged @ 10%, which was reduced from 12% on Feb. 24, 2009. Service tax is indirect tax on Service provided. Service tax is paid by buyer of service to seller of service, who in turn, deposits the tax with government. Some Taxable Services which are come under the Service tax: Port

Telex

Architects

Stockbroker

Internet Café

Photography

Convention

Telegraph

Facsimile

Sound Recording

Broadcasting

Cargo Handling

Event Management

Dredging Services

Cleaning Services

Packaging Services

Cable Operators

Airport Services

Video-Tape Production

Franchise Services

Beauty Parlors

Fashion Designer

Rail Travel Agents

Telephone/Cell Phone

General Insurance

Advertising Agencies

Courier Agencies

Consulting Engineers

Dry Cleaning Services

Custom House Agents

Steamer Agents

Air Travel Agents

Tour Operators

Management Consultants Mandap Keepers

Interior Decorators

Education Cess: To give a boost to primary education in the country, on July 2004 Finance Minister proposed to charge an Education Cess of 2% on Income tax, Corporation tax, Excise and Customs duties and Service tax. The education Cess is charged only on the total payable tax, not on the total income. To Calculate the Service Tax: 1. Press F11 > F3 Service tax option > yes 2. Gateway of Tally > Account info > create single ledger. 3. Gateway of Tally > Inventory info > Create Group & item 4. Gateway of Tally > Accounting Voucher in F9 & F8. ADCPM

TALLY 9.0

Page - 44

Module 4


July – 2010 / BLY

TAX DEDUCTED AT SOURCE (TDS): TDS in Tally provides on easy to use interface with complete flexibility. It helps you to handle any intricate case and to the income tax Department. Tax deducted at source is one of the modes of collecting income tax from the taxpayers. Such collection of tax is affected at the source when income arises or accurse. Hence where any specified type of income arises or accrues to any one, the Income Tax act enjoins the prayers of such income to deduct a stipulated percentage of such income by way of income tax pay only the balance amount to the receiver of such income. Features of TDS in Tally: 1. Simple and user friendly. 2. Quick and easy to set up and use. 3. Partial or Full payment of tax deducted 4. Auto and Manual calculation of T.D.S amount. 5. Generated TDS Challan and Exception reports. 6. Complete tracking of each transaction from deduction to payment. 7. Challan management & printing ensures prompt and accurate filing of tax. 8. The Auto allocation feature prevents error-prone data entry and helps to track the transactions faster. Steps to create the TDS: 1. Create company Alt + F3. 2. Press F11 and F3 and than TDS option > yes. 3. Gateway of Tally > Account info > Ledger > single ledger create. 4. Gateway of Tally > Account Voucher > create journal entry in journal voucher. FRINGE BENEFIT TAX (FBT): FBT is a tax, which is charged on bonus or fringe benefits. It is a tax which is provided by an employer to his employee. Fringe benefit means “any consideration for employment provided by way of any privilege, service, facility or amenity provided by the employer to the employee”. Fringe Benefit tax is to be charged on the employer in respect of fringe benefits provided by the employer to his employees during any financial year. Features of FBT: 1. Fringe Benefit Tax payable by an employer is in respect of freebie or fringe benefit provided to have been provided by the employer to his employees in addition to the cash salary or wages paid during the year. 2. Fringe Benefit tax is levied in addition to the Income Tax charged. To calculate the FBT: 1. Press F11 > F3 And FBT option > yes 2. Gateway of Tally > Accounting info > create single ledger 3. Gateway of Tally > Accounting info > Voucher Type. 4. Voucher Type > create FBT voucher 5. Gateway of Tally > Accounting Voucher F8. ADCPM

TALLY 9.0

Page - 45

Accounting With TallyO

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