Contents

Voucher:

A voucher is a document containing the details of financial transaction. Examples include sales invoice, purchase invoice, pay slip and rent receipt and so on.

Receipt:

Transaction involving receipt of money is entering the receipt voucher.

Invoice or Bill:

When goods/ services are sold, a voucher needs to be created, which the customer (debtor) can use as proof of purchase made. This document is called “invoice”. Tally has facility to generate invoices according to the business requirement.

Journals:

A journal is a book in which business transactions are entered in chronological order. A record of a single business transaction is called a journal entry. Every journal entry is supported by a voucher, evidencing the related transaction. In a journal several entries are recorded, each of which are unrelated to the other. To know the total effect of all the transaction, each journal entry must be moved or transferred to the account it relates to.

Ledger:

A ledger is a book which contains all the accounts whether personal, real or nominal which is entered in journal or subsidiary books.

Account:

An account is a statement of transactions affecting any particular asset, liability, expenses or income. A ledger is the book in which all the accounts are maintained. A chart of accounts is a list of all account titles used by an organization. The chart of accounts of the business shows the categorization and grouping of its accounts.

Chart of Accounts:

A chart of accounts is a list of all accounts used by an organization. The chart of accounts also displays the categorization and grouping of all its accounts.

Posting:

Posting is the process by which information about transactions is transferred or moved to an account.

Accounting period:

A regular period of time, such as a quarter or a year for which a financial statement is generated is called an accounting period.

Financial statements:

Accounting on Computer

Accounting on Tally.Erp9:

Opening Tally.Erp9 Application:-

· Double click on icon on desk top

· Click on Tally option from start menu

· Use short cut key (CTRL+Alt+S) to open Tally

Company creation:

· Gateway of Tally

· Company info….

· Create company

Press Alt + F3 (To create / To shot / To select / To Alter) a company.

Fill the details to create a new company.

To delete a company:

Go to alter- select the company- press Alt + D, press Y for confirmation.

Ledger Creation: (Account)

· Gateway of Tally

· Account info

· Ledger

· Create

Accounts with related group

1. All capital account including drawing account under capital.

2. All bank related under Bank account, Bank OCC, Bank OD.

3. All assets under either Current assets or fixed assets.

4. All expenses under either direct or indirect expenses.

5. All incomes under either direct or indirect incomes.

6. All types of investments under investments.

7. All types of loans under loans (liability).

8. All types of liability under current liabilities.

9. Purchase account under purchase.

10. Sales account under sales.

11. All creditors of company under sundry creditor.

12. All debtors of company under sundry debtor.

Accounts details (Purpose of account):-

Capital account: To record owner’s total investment from own pocket.

Drawing account: The account records personal expenditures which have been taken by owner from own business.

Bank account: All types of bank account of company for primary purpose.

Bank OD: To record over draft transaction with bank.

Cash in hand: To record all cash receipt and payment.

Current assets: To record all assets that can be converted into cash within one accountings year of the business.

Current liability: To record all outstanding that has to be paid within one year.

Fixed deposits: It records all long term investments as assets.

Direct expenses: It records all expenses related to place of production.

Indirect expenses: It records all expenses apart from place of production.

Direct incomes: To record all incomes earned from operational activities.

Indirect incomes: To record all incomes earned from non operational activities.

Duties and taxes: To record all outstanding related to taxes.

Loan and liability: To record all secured and unsecured loans.

Purchase account: To record all purchases.

Sales account: To record all sales.

Sundry creditor: To record dealing with creditor’s to whom company owes money.

Sundry debtor: To record dealing with debtor’s who owes money to company.

Stock creation:

Follow the steps to create stock group/ stock item and stock units.

· Gateway of tally

· Inventory info

· Stock group/ item/ units

Voucher entry in tally:

Follow the steps to do voucher entry.

· Gateway of Tally

· Accounting Voucher

To open voucher entry page:

Press these buttons to open certain voucher entry page.

F1: to open inventory voucher page.

F4: to open contra voucher page.

F5: to open payment voucher page.

F6: to open receipt voucher page.

F9: to open purchase voucher page.

F8: to open sales voucher page.

F7: to open journal entry page.

Purchase entry:

In this transaction affected accounts are

Sundry creditor, Purchase account and stock items.

Sales entry:

In this transaction affected accounts are

Sundry debtor, sales account and stock items.

Payment entry:

In this transaction all cash payments are recorded. And affected accounts are sundry creditor and cash account of company.

Receipt entry:

In this transaction all cash receipts are recorded. And affected accounts are sundry debtor and cash account of company.

Journal entry:

In this only non cash transactions are recorded.

Contra entry:

In this transaction all types of deposits in bank, withdraws from bank, transfer of fund from one bank to other bank is recorded.

Exercise-1

Open a business with capital Rs.500000/-. Purchase 100 sets of LG TV @ 5000/- each from Bharat electronics. Purchase 500 sets of Crompton LED bulb @ 90/- each from Samsung electronics. Make half payment of total outstanding in cash.

Exercise-2

Sale 50 sets of LG TV @ 6000/- each to Electric world. And sale 250 sets of Crompton LED bulb @120/- each to Tarini electronics. Also record cash sale of 50 sets of Crompton LED bulb @110/- each. Receive 70% of total sales from Electric world in cash.

Exercise-3

Again purchase 150 sets of LG TV @4500/- each from Bajaj electronics. Make 60% payment through HDFC bank cheque and 20% by cash.

Exercise-4

Sale 100 sets of LG TV @5200/- each to Galaxy.com. Received a cheque of SBI worth 250000/- and cash Rs. 50000/- against the same bill.

Exercise-5

Company Purchased 300 pieces of Bajaj LED bulb @100/- each from Bajaj electronics. Company sold 75 pieces of Bajaj LED bulb @115/- each to Rathore enterprisers and received cash 3000/-. Payment made to Bajaj LED Rs.15000/- by SBI cheque.

Report viewing:

To see reports follow these steps:-

· Gate way of tally

· Report

· Balance sheet/ Profit & Loss a/c/ Stock summary/ Ratio analysis/ Display etc.

Balance sheet:

The balance sheet is a statement that summarizes the assets and liabilities of a business. The excess of assets over liabilities is the net worth of a business.

· A company’s long term financial strength

· A company’s efficient day to day working capital management

· A company’s Asset portfolio

· A company’s sustainable long term performance

The balance of all the real, personal and nominal (capital nature) accounts are transferred from trial balance to balance sheet and grouped under the major heads of assets and liabilities. The balance sheet is complete when the net profit/loss is transferred from the profit and loss account.

Trading Account:

The 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. The difference between the two sides of the trading account indicates either gross profit or gross loss. If the credit side total is in excess of the debit side total, the difference represents gross loss. The gross profit is expressed as

Gross profit= Net sales-Cost of sales

Profit and Loss Account:

The profit and Loss account gives the net profit earned by the company, after considering all other incomes and expenses incurred over a period. This helps the company monitor and control the costs incurred and improve its efficiency. In other words, profit and loss statement shows the performance of the company in terms of profit or losses over a specified period.

Net Profit= (Gross Profit + Other Income)-(Selling and administrative expenses + Depreciation + Interest + Taxes + Other Expenses)

A key element of the profit and loss amount, and one that distinguishes it from a balance sheet, is that the amounts shown on the statement represent transactions over a period of time, while the items represented on the balance sheet show information as on a specific date. All revenue and expenses accounts are closed once the profit and loss account is prepared. They will not have an opening balance for the next accounting cycle.

Net Profit: Net profit is arrived at, after considering the other administrative costs incurred for the period.

Trial balance:

A trial balance is a list of the balances of all ledger accounts. It is prepared after all the transactions are entered in the journal, journal entries posted to the ledger and the ledger accounts balanced. It is the sum of balances of all real, personnel and nominal accounts of the organization.

· Accounts name

· Debit balance

· Credit balance

A financial statement is period report prepared from the accounting records of a company. Financial statement include the profit and loss statement (or income statement), the balance sheet and the cash flow statement. Financial statements are usually complied on a quarterly basis or on an annual basis

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

· Trading account

· Profit and Loss account

· Balance sheet

Business Transaction:

A transaction is a financial event that takes place in the course or furtherance of the business and effects the financial position of the company. For example, when you deposit cash in the bank, your cash balance reduces and bank balance increases or when you sell goods for cash, your cash balance increases and your stock reduces.

Transactions can be classified as

· Receipts-cash or bank

· Payments-cash or bank

· Purchases

· Sales

The important aspects of accounting are to record transaction promptly and correctly to ascertain the financial status of a company as on a particular date.

GST:

Goods and services tax is a comprehensive tax levied on supply of goods and services across India. GST was made public in June 2016. There are three types of GST. They are as follow.

· CGST (central GST)

· SGST (state GST)

· IGST (integrated GST)

GST classification: (hierarchy of GST classification)

There are six different level GST can be created in tally. Those are as follow

1. Company Master level (It is suitable if company is dealing with single type of GST rate product or services)

2. Accounting group level (It is suitable for sales group and purchase group)

3. Accounting ledger level (It is suitable if in a single invoice all the stock items are having the same GST rate)

4. Stock group level (It is suitable if stock having same HSN code GST rate in one go )

5. Stock item level ( It overrides company level and stock group level GST setting )

6. Transaction level (Independent GST) ( It is the most useful as it overrides all above GST settings and suitable for all types of transactions)

Independent GST classification creation:

Gate way of tally-accounts info- statutory info-GST classification-create.

Note: - While on GST classification screen press F12: configure and enable the following options also to yes.

Let’s fill in the details as below.

1. Classification name: Item name

2. HSN/ SAC Description: Item name

3. HSN/SAC: type code

4. Nature of transaction: set as not applicable.

5. Taxability: set as “Taxable”

6. Integrated Tax: Type percentage “5%/ 12%/ 18%/ 28%” etc.

Note:

Transaction level GST classification selection that specifies during transaction will be taken as first priority by tally .erp9.

GST ledger creation:

IGST creation: follow steps.

Account info-

Ledger-

Create.

Fill the columns given as in picture.

Follow the same to create CGST and SGST ledger too.

Set GST rate for tax analysis:

Company level: on gate way of tally- F11- Statutory & Taxation- Set/Alter GST details to ‘Yes’ two times that comes during process. Fill details as shown in picture.

Stock Group level: on gate way of tally- Inventory info- Stock Group-Ledger- single. Fill details as shown in picture.

Stock Item level: on gate way of tally- Inventory info- Stock Item-Ledger- single. Fill details as shown in picture.

Transaction Level:

On voucher entry (purchase or sale) screen- Press F12- set single GST rate for current voucher entry.

(If all options do not appear, press F12 again and set all options to ‘YES’)

Note:

Transaction level overrides all other tax settings. Stock level overrides stock group level tax settings. Stock group level overrides company level tax rate settings.

Practical:

1. Purchase 5 pieces of Vivo cell phone worth 15000/- each from Motilal & sons with GST 28%. Make payment for transporting, Rs. 500/-, pay office building rent Rs. 10000/- by cash. Make half of payment by SBI cheque to Motilal & sons against cell phone purchase.

2. Sale 3 pieces of Vivo cell phone for 18000/- each with GST 28% for cash. Receive cash 10000/- and HDFC cheque worth 8000/-. Receive house rent 50000/- from Ganesh Bazar.

3. Purchase 100 pieces of T Shirts from Peter England @ 100/- each with GST 12%. Make cash payment. Deduct cash discount 10% on payment

4. Sale 50 pieces of T shirts to Ambani Bros. for 120/- each with GST 12%. Receive Rs. 3000/- cash and deposit the received amount in Canara Bank.

5. Add capital worth 250000/- to business. Get HDFC bank loan worth 500000/- on flat interest 15% p.a. Invest Rs. 300000/- on land purchase. Paid insurance premium Rs. 12000/- to LIC.

6. Return 10 pieces T shirts to Peter England for color defect. Prepare Debit Note. Receive 1 piece Vivo from customer and exchange with new one for defect hand set. Receive 8 pieces of T shirts for color defect from Ambani Bros. and prepare Credit Note.

7. Deposit bank interest 10% for 2 month on HDFC bank loan. Return Rs. 200000/- against bank loan. Purchase 200 pens for cash Rs. 7/- each to distribute among children on children’s day. Pay honorary Rs. 1000/- to chief guest on Independence Day. Deposit cash Rs. 5000/- for scrap selling. Mention 2% depreciation on machinery worth 70000/- for one year.

8. Purchase timber for table manufacture worth 50000/- for cash. Pay wages Rs. 2000/-, factory lighting Rs. 500/- and water plus tea Rs. 1000/- for labors of manufacturing unit.

9. Pay overhead expenses Rs. 2500/- towards manufacturing of table. Add office and administrative expenses Rs. 1500/-. Pay manager’s salary Rs. 6000/-.

10. Sales 5 tables @3500/- per piece to Singham & Co with GST 5%. Receive cash 10000/- against tables sale.

Report generation:

· Study profit and loss account. Understand effect of all transaction on it.

· Look at Balance Sheet and know the financial status of the company.

· Find out the stock reports. Study the stock summary.

· Know the outstanding amounts (receivable and payable).

· Study cash in hand, cash inflow and cash outflow, fund inflow, fund outflow.

· Analysis tax difference.