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ISBN 978-93-505745-3-9
DISCLAIMER
While every attempt has been made to provide accurate and timely information
in this book, neither the author nor the publisher assumes any responsibility for
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Results from using the expert opinion in this book will be totally dependent on
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It makes sense to elicit advice from well informed sources before implementing
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ACKNOWLEDGEMENT
Any successful piece of work has never been possible without the support,
guidance and blessings of the near and dear ones.
We are thankful to all our guide and mentors for their immense support,
suggestions and for having faith in us. They are the ones who gave us enough
knowledge and the confidence to share the same. Our special thanks to Mr. R. P.
Singh for his guidance and support in the successful completion of the book.
We would like to specially thank Ms. Shubhra Singh, Mr. Bunny Mehra, Mrs.
Sheetal Mehra and Ms. Ashima Singh for being so supportive to us and
believing in our writing capabilities since a long time.
Without valuable inputs from Mr. Sahil Gupta (V&S Publishers) and his editorial
and DTP staff, this manuscript would not have taken the shape of a book.
On the top of all, we would like to express our heartfelt gratitude to our Parents
and Grandparents. for their blessings and support. We also offer our thanks to the
Microsoft team for providing us the best software to write on.
- Shraddha Singh & Navneet Mehra
PUBLISHER'S NOTE
After publishing a series of Computer and Youth-oriented Books on various
important subjects for readers of all ages, V&S Publishers have now published
this unique book on Tally, called the Tally. ERP 9, which is the latest ERP
version of the Tally Series.
The book is of immense value and usage for all, especially for the students with
Commerce and Accounts background. This book gives you an in-depth
knowledge of working with Tally.ERP 9 in a precise and easy to understand
language with lots of examples and illustrations. It begins with the basic
concepts of accounting so that the beginners in this field can get the desired
knowledge before laying their hands on Tally.ERP 9. All the topics from creating
a company in Tally.ERP 9 to adding Godowns, Stock Items, Ledger Accounts,
etc. are covered in detail with examples. The book also covers the Payroll
Inventory System and its related entries in an easy to understand language, and
in the end, the readers are also introduced to the basics of Tally.NET.
Hence, the book is a complete and comprehensive package on Tally. ERP 9,
which is regarded today as the Latest Business Software for Accounting. The
main aim of the author and the publisher is to simplify the subject and present it
before its readers in an easy to understand language. Hope our aim is fulfilled
and the book serves its purpose well.
CONTENTS
Dedication
Acknowledgement.
Publisher's Note
Manual Accounting
Introduction To Basic Accounting
Meaning of an Account
Meaning of an Accounting
Principles of Double Entry
Accounting Principles
Accounting Concepts
Accounting Conventions
Rules of Double Entry Accounting System
Accounting Terminology
Accounting Process
Journal
Narration
Procedure of Journalising
Solution
Ledger
Posting
Trial Balance
Final Accounts
Classification of Final Accounts
Balance Sheet
Computerised Accounting
Fundamentals of Tally.ERP 9
Features of Tally
Version Histories
Comparison between Various Versions of Tally
Improved Performance
Opening Tally.ERP 9
Components of the Tally.ERP 9 Window
Close Button
Minimise Button
Creating a Company
Company Info. Menu
Quitting Tally.ERP 9
Advanced Inventory Information in Tally.Erp 9
Stock Groups, Categories, Items and Units of Measure
Creating Single Stock Group:
Stock Categories
Stock Items
Type
Symbol
Formal Name
Number of Decimal Places
Godowns
Introducing Groups, Ledgers, Purchase Orders, Sales Orders and Invoices
Groups
Capital Account
Current Assets
Current Liabilities
Loans (Liability)
Revenue - Primary Groups
Creating a Group
Remember:
Group Behaves like Sub-ledger?
Net Debit/Credit Balances for Reporting
Used for Calculation (e.g. taxes, discounts)
Method to Allocate When Used in Purchase Invoice
Creating Multiple Groups
Ledgers
Process of Creation Ledger
Orders
Enabling Order Processing
Creating Purchase Order
Creating a Sales Order
Creating Job Work Out Orders
Creating a Job Work In Order
Invoicing
Voucher Entry in Tally.ERP 9
Inventory Vouchers
Implementing Final Accounts In Tally
Display/Reports In Tally.Erp 9
Working With Trial Balance Report
Books and Registers
Working with Day Book Report
Sales Register (Sales Day Book)
Display Purchase Register
Display Cash Book
Display Bank Book
Display Journal Register
Display Post dated Vouchers
Working with Profit & Loss A/C Report
Working with Balance Sheet
Buttons
Working with Stock Summary Report
Understanding Ratio Analysis
Principal Groups and Key Figures
Principal Ratios
Payroll Accounting
Payroll Entry
Employer Payroll Tax Entry
Payroll Accounting - Gross Pay
Accrued Payroll Journal Entry
Configuring and Exploring Payroll in Tally ERP 9
Enabling Payroll in Tally.ERP 9
Creating Payroll Masters And Processing With Payroll Vouchers
Generating Payroll Reports
Employee Masters
Payroll Masters
Present Attendance Type
Absent Attendance Type
Overtime Production Type
User Defined Calendar Type
Pay Heads
Salary Details
Process Payroll and Generate Pay Slip
Accounting For Employer PF Contributions
Taxation and Tatty.Net in Tally.Erp 9
Indian Tax Structure
Configuring Income Tax
Tax Deducted at Source in Tally.ERP 9
Tax Collected at Source in Tally.ERP 9
VAT in Tally.ERP 9 163
Configuring the Tally.NET in Tally.ERP 9 TDS on Expenses-with Inventory
(Purchase Voucher)
Appendix
CD Script
MANUAL ACCOUNTING
Historically, accounting was a manual process using paper books and
documents for financial information. Therefore, recording of business
transaction has become an important feature. Manual accounting is very
detailed, because accountants need to carefully record information into physical
books.
Chapter 1
INTRODUCTION TO BASIC ACCOUNTING
Basic accounting will introduce you to some accounting concepts and
accounting terminologies. Once you become familiar with some of these terms
and concepts, you will feel comfortable navigating through the explanations and
other features of Tally. The main object of keeping the books of accounts is to
ascertain the profit or loss of business and to assess the financial position of the
business at the end of the year. The object is better served if the businessman
first satisfies himself that the accounts written up during the year are correct, or
at least arithmetically accurate. When the transactions are recorded under
double entry system, there is a credit for every debit, when an a/c is debited;
another a/c is credited with equal amount.
Meaning of an Account
An account is a summary of all relevant transactions relating to one person at
one place for a particular period. It is a statement in which the date wise details
regarding the business transactions as persons, companies, representatives,
assets-liabilities, income and expenditures and profit and loss are given. This is
also known as the condensed form of a statement. It records not only the amount
of transactions but also their effect and direction. Generally, an account is in 'T'
form. This form looks like a letter 'T', so it is called a T-account. T-account is a
convenient form to analyze accounts, because it shows both debit and credit
sides of the account.
Following is the proforma of an account.
An Account contains 8 columns and is divided into two parts. The left side of an
account is termed as the debit side whereas, right side of an account is the credit
side. Debit and credit are generally represented by Dr. and Cr.
The first four columns are of the debit side and other four columns are of the
credit side. As it is clear from the above form of account that the entire space is
divided in two equal parts and column 1 is meant for date, column 2 for
particulars, column 3 for journal folio and column 4 for amount, etc. The same
procedure is carried out in case of the other 4 columns.
Meaning of an Accounting
Accounting is generally termed as the language of business. It records all the
transactions which can be expressed either in money or money's worth and have
taken place during a particular period. 'Accounting is as old as money itself'.
Since in early ages, commercial activities were based on Barter System, so
record keeping was not a necessity.
Accounting is defined as either recording or recounting the information of the
business enterprise, transpired during the specific period in the summarised
form.
Accounting is a combination of various functions, viz.
Recording
Classifying
Summarising
Types of Accounts
For the purpose of ruling of debit and credit, under the double entry system, the
accounts are classified on the basis of two approaches. These are:
(a) American Approach
(b) English Approach
1. American Approach: As per this approach, the accounts relating to
financial transactions are classified as follows:
Assets Accounts: Under this heading, those transactions are kept which are
relating to the business assets as plant, machinery, land, building, etc.
Liabilities Account: Under this heading, those accounts are kept which are
relating to the credit purchases and outstanding expenses, loans, capital, etc.
Revenue Accounts: Revenue accounts include the transactions relating to
income, commission, interest, dividend, sales, etc.
Expenses Accounts: These include those accounts which are relating to the
expenses of business as repairs, rent, maintenance, insurance and lighting, etc.
2. English Approach: Under this approach, accounts are classified into the
following three categories:
Personal Account: It is an account which deals with a due balance either to or
from individuals on a particular period. Here those accounts are included which
are relating to persons, firms, companies, representatives and organisations such
as Ram Lal & Company's Account, etc.
Real Account: This is an account that specially deals with the movement of the
assets. It is an account that reveals the value and movement of the assets taking
place between the firm and other parties due to any transaction.
Accounts which are relating to the assets and properties of the business are
counted under this heading. Assets can be real or intangible. Real assets are as
land and buildings, plant and machinery, cash and stock, etc. While intangible
assets may be as goodwill, patents and trademarks, etc.
Nominal Account: Accounts which are relating to the revenues, incomes,
expenses and losses of the business are called nominal accounts. This is an
account that deals with the amount of expenses incurred or incomes earned. It
includes all expenses and losses as well as incomes and gains of the enterprise.
This nominal account records the expenses and incomes which are not carried
forward to the near future. For example, rent, commission, interest, dividend,
etc.
Principles of Double Entry
As per the principles of the double entry system, each transaction of the business
is recorded at two places. In other words, two entries are made for every
financial transaction of the business. Double-entry implies that transactions are
always recorded using two sides, debit and credit. If someone is giving
something in the business, it has two sides - one is the giver and the other is the
receiver. The system of double entry can be understood easily by an equation
which is called accounting. Following are some transactions of the business to
explain it.
For example
1. Mr. Amit started business with cash of '10, 00,000.
In this transaction, one side cash is coming into business and in the other side
capital is being brought by Mr. Amit. Thus:
2. In the next transaction, if a plant of ' 50, 000 is purchased in cash, this
transaction will also
leave two sides. In one side, cash is going and in other side the plant is coming.
In this situation, the accounting equation will be as follows:
Accounting Principles
The entire accounting system is governed by the practice of accountancy. The
accountancy is being practised through the universal principles which are wholly
led by the concepts and conventions.
Let us understand the Accounting Concepts and Conventions one by one.
Accounting Concepts
The following are the most important concepts of accounting:
1. Money Measurement Concept: As per this assumption, only those
transactions of the business are recorded in the accounting which can be
measured in money. Those transactions/activities of the business which
cannot be measured in money are not recorded in accounting.
2. Business Entity Concept: This concept treats the owner as totally a
different entity from the business. To put into nutshell, "Owner is different
and Business is different".
3. Going Concern Concept: The concept deals with the quality of long
lasting status of the business enterprise irrespective of the owners' status,
whether he is alive or not. This concept is known as the concept of long-term
assets.
4. Matching of Cost and Revenue Concept: To compute the operational
profits/losses of the business in a year, it is necessary to find the expenses
and revenues relating to the period. Then all the revenues of that period are
matched with all the expenses/costs incurred to earn that revenue. This
matching is called the principle of matching of cost and revenue. The results
of this match are as follows:
5. Duality or Double Entry Concept: As per this concept, every financial
transaction of the
business has a dual effect and recorded at two places. Therefore, it is called the
double entry system. On the basis of this concept, it is said that every debit must
have an equivalent credit and every credit must have an equivalent debit because
every transaction of the business has two aspects.
6. Cost Concept: As per this principle, every transaction of the business should
be recorded at its historical cost and not at its market price. At the time of
recording of the transactions, their market price is not considered.
Accounting Conventions
In order to prepare the true and fair financial statements, there is a need to
Accounting Conventions.
These accounting conventions are as follows:
1. Convention of Conservation (Prudence): As per the law of conservatism, at
the time of preparing the financial statements, all the possible losses must be
kept in mind and all the anticipated profits/gains should be left out. In other
words, the accounts must follow the policy of playing safe.
2. Convention of Consistency: In order to enable the management to do the
comparison of the results of several years of business, whatever accounting
policy is adopted in a year, must be adopted in the coming years.
3. Convention of Disclosure: Convention of disclosure requires that all materials
and relevant facts concerning financial statements should be fully disclosed. Full
disclosure means that there should be full, fair and adequate disclosure of
accounting information. 'Full' refers to complete and detailed presentation of
information. 'Fair' indicates an equitable treatment of users. Thus, the convention
of disclosure suggests that every financial statement should fully disclose all
relevant information.
4. Convention of Materiality: The convention of materiality means that only that
information should be disclosed and attached with financial statements which
influence the decisions of shareholders, investors and creditors, etc. and the other
insignificant details must be ignored. Moreover, an item of information may be
material for one purpose, while that may be immaterial for the other. This is a
subjective matter.
Rules of Double Entry Accounting System
In Double Entry Accounting, both the aspects of the transaction are recorded.
Every transaction has two aspects and according to this system, both the aspects
are recorded. If the business acquires something, it must have been acquired by
giving something. While recording each transaction, the total amount debited
must be equal to the total amount credited. The terms, 'Debit' and 'Credit'
indicate whether the transaction is to be recorded on the left hand side or right
hand side of the account.
The following are the key rules of debiting and crediting under the Double Entry
System of accounting:
1. In case of traditional type of accounts
(a) Personal Account: If in a transaction, a person receives something in
cash or goods, it is debited and if that person gives, that is credited. The
debit account is denoted by 'Dr.', while the credit account is denoted by 'Cr.'
In brief, the rule of personal account is:
(b) Real Account: If in a transaction, the assets are coming into business, they
are debited and if those are going outside from business, they are credited. Thus
these rules are as below:
(c) Nominal Account: The rules of debiting and crediting of nominal account
are-the expenses and losses of the business are debited and the gains and profits
of the business are credited. In brief, the rules are:
2. In case of modern classification of account also known as classification based
on accounting equation:
We also know that if there is a change on one side the other side is bound to be
affected. This change occurs because of the concept of dual aspect. Both debit
and credit result, either an increase or decrease depending upon the nature of an
account.
Golden Rules of Accounting
Accounting Terminology
Account: An account is a record used to properly classify the activity recorded
in the General Ledger. Accounting: Accounting is recording and reporting of
financial transactions, including the origination of the transaction, its
recognition, processing, and summarisation in the financial statements.
Accrual Basis:Accrual basis is a method of accounting that recognises the
revenue when earned, rather than when collected and expenses when incurred
rather than when paid. The college uses the accrual basis for its accounting.
Asset: An asset is anything of value that can be converted into cash. For
example- land, property, buildings, equipment, cash in bank accounts, other
investments and accounts receivable.
Credit: A credit is an entry on the right side of a double-entry accounting
system that represents the reduction of an asset or expense or the addition to a
liability or revenue.
Debit: A debit is an entry on the left side of a double-entry accounting system
that represents the addition of an asset or expense or the reduction to a
liability or revenue.
Double-Entry Accounting:The Double-entry accounting is a method of
recording financial transactions in which each transaction is entered in two or
more accounts and involves two-way, self-balancing posting. Basically, the
total debits must equal to be total credits.
Expense: An expense or expenditure is an outflow of money to another person
or group to pay for an item or service, or for a category of costs. For a tenant,
rent is an expense.
Chapter 2
ACCOUNTING PROCESS
As and when any transaction or event takes place, it is recorded in the books of
business if it is expressed in terms of money. The recording of transactions is
done on the basis of some documentary proofs, which are called the source
documents. As the number of transactions is increasing day by day, it is very
much necessary to record the transactions in such a way, which can give the
users the useful and significant information. Recording of accounting
transactions is a process which generally includes five steps. The sequence of
five steps in recording and reporting transactions is as follows:
Accounting is the art of recording, classifying and summarising the business
transactions of the financial nature. Under the recording process of accounting
journal and subsidiary books are maintained, and under classification of
transactions the ledger is maintained, while in the summarising process and the
trial balance and final accounts (P&L A/c and Balance Sheet) are prepared.
Journal
Simple Journal Entry
The 'Journal' word is derived from the French word, 'Jour' which means a day
book. Journal is a primary book of original entries for accounting data. In the
journal, the business transactions are recorded chronologically and that is called
Journalising. Thus the accounting data are recorded first time in this book. A
journal entry is called 'balanced' when the sum of the debit side amounts or
equals to the sum of credit side amounts.
The proforma of a Journal is given hereunder:
Proforma of a Journal
As per the above proforma of the Journal, the first column is kept for date,
means the date of transaction is recorded, second wide column for particulars of
business transactions in which the related accounts are showed along with their
narrations. The third column is for the ledger folio number where the journal
entry is posted in a ledger. The fourth and fifth columns are kept for debit
amount and credit amount.
Narration
A narration is a description of the journal entry. It is customary to start the
statement with the word
'Being' or 'For' denoting the reason for which entries have been passed. It is also
customary to
write the narration in small brackets.
Procedure of Journalising
The procedure is very simple which is as follows:
1. Ascertain which account is to be debited or credited. Once this is clear, one
can proceed with the actual journalisation, i.e., passing of the Journal entry.
2. After passing the Journal entry, write down the brief summary of the
transaction which is known as narration.
3. After narration, one simple line is drawn to indicate that the transaction is
fully journalised and is over.
Examples of Journal Entries
Transaction: Company A sold its products at Rs 500 and received the full
amount in cash.
Step 1: What did Company A receive?
Answer: Cash.
Step 2: If Company A received cash, how would this affect the cash balance?
Answer: Receiving cash increases the cash balance of the company.
Step 3: Which side of cash account represents the increase in cash?
Debit side (Left side).
Step 4: What is the account name to record the sales of products?
Answer: Sales.
Step 5: Which side of the sales account represents the increase in sales?
Answer: Credit side (Right side).
Step 6: Does the sum of the debit side amounts equal to the sum of the credit
side amounts? In other words, does this journal entry balance?
Answer: Yes.
' 500 = ' 500
Journal entry to record transaction:
Solution:
Journal Entries
Compound Journal Entry
When two or more transactions take place in the business relating to a same
account on the same date, in the place of passing many entries for the same
account, a single journal entry is passed which is called a compound journal
entry. Compound entry can be of the following three types:
(a) Single debit account and more than one credit account
(b) Single credit account and more than one debit account
(c) More than one debit account and more than one credit account
For example, if a debtor is allowed cash discount and he makes the payment,
then the accounts involved are three, i.e., (1) Cash A/c, (2) Discount A/c, and (3)
Debtors A/c.
The following compound entry is to be passed:
Thus, we see that all the transactions are recorded in the journal and that too in a
chronological (date wise) order. That is why the journal is known as the book of
original entry. All such transactions which take place in the business are
recorded which have documentary proof. Such documents are known as
vouchers, cash memos or debit or credit-note orpay-in-slip, etc.
Opening Journal Entry
The closing balances of accounts of one year are transferred to the next year. In
the next year, these balances become the opening balances. After recording the
opening balances, the transactions of the year are recorded. To record the
opening balances, a Journal Entry is passed which is called the Opening entry.
Ledger
The journal of a business is very useful but it does not reply the different queries
as how much amount is due from debtors, how much is to be paid to creditors
and what is the balance of a particular account, etc. For, the reply of all these
queries, the ledger is prepared from the Journal entries. Basically, a Ledger is the
set of accounts in which all types of account (personal, real or nominal) are kept.
Sub-division of Ledger: It is not possible to have one ledger for all the accounts
in big businesses. It is possible only for a small businessman. Thus, the ledger is
sub-divided as per the convenience of the trade. The following are the subdivisions of a ledger:
1. General Ledger: It is meant for all the accounts other than debtors and
creditors. In other words, it records all the transactions for real and nominal
accounts. It is also known as Impersonal Ledger or Main Ledger.
2. Debtors' Ledger: It is meant for all the debtors to whom goods are sold on
credit. It is also known as sold ledger or sales ledger.
3. Creditors' Ledger: It is meant for all the creditors from whom goods are
bought on credit. It is also known as bought ledger or purchase ledger.
4. Private Ledger: It is meant for personal account of the proprietor, i.e. the
capital account, drawing account, current account and final a/c (Trading and
profit and loss a/c) and a balance sheet.
Posting
The process of transferring the entries from Journal to Ledger accounts is called
posting. In other words, account wise selection of debit or credit items and
recording them into the relevant side of the relevant account is called posting.
The process of posting is done after a period as week, fortnight or a month.
For example: If rent as an expense is shown in the debit in Journal, this will be
posted in the debit side of the Rent (Expenses) A/c in the Journal. The proforma
of a Ledger account is given below:
Proforma of an Account
Name of the Account ......
In the above proforma of an account, there are two sides of an account. The Left
hand side is known as debit side and the right hand side is the credit side. In both
the sides, the first column is for date and second column for details, the third
column for the Journal folio number and in the last column, the amount of the
transaction is recorded.
Balancing of an Account in Ledger
There can be several transactions relating to a particular account in different
places in the Journal. Such transactions are collected and recorded in the
concerned account. At the end of the accounting period, the businessman
becomes interested to know the position of these accounts. The position of an
account is determined by calculating the net balance of the account for which the
debit and the credit sides of the account are totalled separately. If the total of
debit side is greater than the total of the credit side, the difference is written in
the credit side of the account and that is carried to the next year. And if the total
of the credit side is greater than the total of the debit side, the difference is
written in the debit side and carried to the next year. Thus, the total of both the
sides become equal and the account is closed.
Illustration:
Prepare the account of ABC & Co. from the following:
2013
Feb 1
Feb 3
Feb 4
Feb 6
Feb 9
Feb 10
Balance due from ABC & Co.
1,000
Cash sales to ABC & Co.
700
Bought furniture from ABC & Co. 250
Murthy returned goods to us
200
ABC & Co. Purchased goods from us 1,200
Return of goods from ABC & Co.
150
Feb 20
ABC & Co. settled his account by
cheque and received discount
20
Solution:
ABC & Co. Account
Illustration
(Journal and Posting in Ledger)
Record the following transactions in the Journal and post them into the Ledger
of Mr. Navneet Mehra:
2013
March 1
March 10
March 11
March 12
March 15
March 20
March 25
March 31
March 31
Purchase of Goods from Ashima 3, 20,000
Paid Rent for the month
2,000
Purchase of Plant
1, 00,000
Paid Salaries
12,000
Paid Ashima
1, 00, 000
Sold Goods to Lata
20,000
Wages Paid
5,000
Received from Lata
30,000
Wages Paid
30,000
Solution
Journal of Mr. Navneet Mehra
Ledger
Cash Account
Purchase Account
Ashima's Account
Rent Account
Plant Account
Salaries Account
Lata 's Account
Sales Account
Wages Account
Trial Balance
Trial Balance is a statement which shows balances of all accounts on a particular
date. In other words, trial balance is a schedule or list of balances whether debit
or credit, extracted from the accounts in the ledger including cash and bank
balances from the Cash Book. It is a list in which all the balances of the accounts
of the Ledger are showed to test the arithmetical accuracy of the posting in the
ledger. It is prepared after the end of a particular period - year, half year or
quarter. Trial balance prepares a base for the preparation of final accounts. After
the completion of trial balance, the financial accounts - P&L. Account and
Balance Sheet are prepared to disclose the overall results of the business after a
period.
Preparation of a Trial Balance: It is very easy to prepare a Trial Balance. It
contains three columns which are as follows:
1. Particulars
2. Amount (Dr.)
3. Amount (Cr.)
The above columns, if put in a statement form, can be depicted as given below:
Proforma of Trial Balance
Trial Balance
(as on )..........)
Dr. Cr.
Generally, three columns are made in the trial balance. The first wide column is
kept for the particulars of accounts and the two columns for debit amount and
credit amount are made.
Methods of Preparation of Trial Balance
Generally speaking, there is one method of preparing Trial Balance, i.e., by
balance method. But as
per Accountants, the following are the methods of preparing the Trial balance:
(a) Balance Method
(b) Total Method
(c) By Combined Method, i.e., Balance and Total Method
1. Balance Method: Among the above methods, the balance method is the
most popular and statutory method to prepare the Trial Balance. Under this
method, as the name of the method suggests, the balance of all the accounts
are recorded. The balance of each account is taken. If an account shows a
debit balance in the ledger, this balance is recorded in the debit side of the
trial balance and if it has a credit balance, in the credit side of it is written.
If any account has no balance means its total of debit side is equal to the
total of the credit side, and it is not recorded in the Trial Balance. After
recording the balances of all accounts of the Ledger, the amounts of both the
sides are totalled to check the arithmetical accuracy of the ledger. If the
total of the debit side agrees with the total of the credit side, it proves that
the books are at least arithmetically correct. However, the trial balance is
not the sole proof of accuracy of the books of Ledger. This method is very
simple, easy to calculate, saves both time and labour. That is why it is in
vogue.
2. Total Method: Under this method, instead of taking balance of each
account, the total of both the sides of each account is taken.
3. Combined Method: Under this method, as it is clear from the name of the
method, both the above explained methods, i.e., balance as well as total
methods are used. This method is not in use because of wastage of time and
labour.
Preparation of Trial Balance with the Help of Balances
In the examination problems, the Ledger accounts are not given but a list of
balances of accounts is given. With the help of these balances, the students are
asked to prepare the Trial Balance. Students should keep in mind the following
rules to prepare a Trial Balance:
The balances of all the assets accounts and drawing accounts are recorded in the
debit side of the Trial Balance.
The balances of all the liabilities and capital accounts are recorded in the credit
side of the Trial Balance.
The balances of all the expenses and losses of the business are showed in the
debit side of the Trial Balance.
The balances of all incomes and gains are disclosed in the credit side of the Trial
Balance.
The balances of sales and sale returns are disclosed in the credit side and debit
side of Trial Balance respectively.
The balances of purchases and purchase returns are disclosed in the debit side
and credit side of the Trial Balance respectively.
Illustration: (Preparation of Trial Balance)
Mr. Akshey Mishra furnishes the following balances as on 31st March, 2013.
You have to prepare a Trial Balance with the following information:
Solution:
Trial Balance
(as on 31st March, 2013)
From the above trial balances, it is clear that the total of the debit side will agree
with the total of the credit side if Ledger accounts are arithmetically correct. If
these totals do not tally with each other, there will be some error in the ledger
accounts.
Final Accounts
Every organisation prepares its final accounts after a particular period to know
its financial results and financial position. Final accounts mean profit and loss
account and the balance sheet. Profit and loss account also contains one more
account, known as the trading account, and if the business is manufacturing any
item or article, then manufacturing account is also there. All these accounts are
prepared only after preparing the trial balance.
The final account plays an important role for every kind of organisation. There
are two main objectives of preparing final accounts: (1) to know the operational
results, i.e., final accounts are prepared to know the profit or loss during a
particular period through the profit and loss account which is also known as the
income statement, and (2) to ascertain the financial position of the business on a
particular date through the balance sheet, also known as the position statement.
Classification of Final Accounts
The final accounts can be classified in the following categories:
Trading and Profit & Loss Account
In the Trading and Profit & Loss Account, all those accounts are disclosed which
affect the profit or loss of the business. In other words, all the nominal accounts
of the Trial Balance are used to prepare the Trading and Profit & Loss Account.
In the left hand side, all the expenses incurred during a period and in the right
hand side all the incomes earned during a period are disclosed. This account
contains two parts:
Trading Account
Profit & Loss Account
Trading Account
Trading account is the comparison of sales and purchase. This account is
prepared to determine the amount of gross profit or gross loss on sales. The
proforma of trading account is given below:
Profit and loss account
Profit and loss account is the second part of trading and profit and loss account.
Trading account shows the gross profit which is the difference of sales and cost
of sale. Thus the gross profit cannot be treated as net profit while the
businessman wants to know how much net profit he has earned from the
operating activities during a period. For this purpose profit and loss account is
prepared keeping in mind all the operating and non-operating incomes and losses
of the business. In the debit (left hand side) side, all the expenses and losses are
disclosed and in the credit side (right hand side) all the incomes are disclosed.
The excess of the credit side over the debit side is called the net profit while the
excess of the Debit side over credit side shows the net loss. Net profit increases
the net worth of the business; therefore, it is added to the capital of owner. Net
loss decreases the net worth of business so it is subtracted from the capital. The
proforma of profit and loss account is given as follows:
Balance Sheet
After the determination of the net profit of the business through the Trading and
Profit and Loss Account, the businessman wants to know the financial position
of the business. For this purpose, he prepares a statement which is called the
Balance Sheet. The Balance Sheet depicts the financial position of the business
on a fixed date. A Balance Sheet is prepared with those balances of Trial Balance
which are left out (personal and real accounts) after taking out the nominal
accounts' balances to prepare the Trading and Profit and Loss Account. A
Balance Sheet has two sides - assets side and the liabilities side. The assets and
liabilities are shown in a particular order. Example: (Trading and Profit and Loss
Account and Balance Sheet)
From the following Trial Balance of Mr. Aditya, prepare a Trading
Manufacturing and Profit and Loss Account and Balance Sheet as on 31st
December, 2013.
Trial Balance
(as on 31st December, 2013)
Closing stock on 31st December, 2013 were as follows:
Raw Materials 20,000
Work-in-Progress 16,000
Finished Goods 40,000
Solution:
In the Books of Mr. Aditya
Manufacturing Account
(for the year that ended on 31st December, 2013)
Trading and Profit & Loss Account
(for the year ending 31st December, 2013)
Balance Sheet
(as on 31st December, 2013)
II
COMPUTERISED ACCOUNTING
With the expansion of business, the number of transactions increased. The
manual method of keeping and maintaining records was found to be
unmanageable. With the introduction of computers in business, the manual
method of accounting is being gradually replaced. And finally, the database
technology has revolutionised the accounts department of the business
organisations. The need for computerised accounting arises from advantages of
speed, accuracy and lower cost of handling the business transactions.
By now you are familiar with the concepts of accounting and how different
methods of accounting are to be adopted in different situations. Now, we look
accounting in a computerised environment. The first and foremost thing to
remember is that the fundamentals of accounting does not change whether books
of account are maintained manually or are computerised. The same principles of
debit and credit that we apply for recording income or expenditure, purchase or
sale of assets or creation or discharge of liability in a manual accounting system
is equally applicable in a computerised environment.
With computers being extensively used in business today, it is obvious that
accounts which were earlier maintained in a manual form will be gradually
replaced with computerised accounts.
Chapter 3
FUNDAMENTALS OF TALLY.ERP 9
Tally is an application software. It is user friendly business software, which
makes business account easy and faster. It is accounting software that is used to
record day to day transactions, preparing balance sheet etc. Managing single
and multiple groups is a very important feature of tally. It does not require
writing any special program for calculating.
Tally stores all information about each account in detail. It follows the double
entry system of accounting and hence, will eliminate any possible errors. It is
much secured against data tempering. It reduces the work. In manual process,
after entering the daily transaction user has to create trading account, trial
balance, profit & loss account, ledger, balance sheet, etc. But in Tally, the user
just enters the daily entry and gets the balance sheet.
Tally maintains all the Primary Books of Accounts like Cashbook, Bank Book,
etc. Tally maintains all registers like Purchase Register, Sales Register and
Journal Register. Tally maintains all statements of accounts like Balance Sheet,
Profit and Loss and Trial Balance, Cash Flow, Fund Flow & Stock Statement.
Tally handles different types of vouchers like Payment, Receipt, Adjustment
Entries like Journals, Debit Notes, Credit notes, Sales, Purchases, Receipt Notes,
Delivery Notes etc.
Features of Tally
The Tally Software supports concurrent multi-lingual capability. This means,
while working on Tally language, barriers should not hold you. You can maintain
your accounts in one language, while view the reports in another language and
send invoices to your customers in the third language. And this is not at all a
complex thing to do in Tally. Let us discuss some other general features present
in Tally:
Payroll: Using this feature, you can automate your employee records
management, and this can also include visa and employment contract
management.
Costing: Profitability statements for every executed project can be generated
easily.
Flexible Financial Periods: In Tally, you can perform all accounting functions for
time- periods that suit your convenience.
Unlimited Companies: You have the facility to create and maintain up to 99,999
companies, concurrently.
Data Synchronisation: Data can be synchronised and updated from multiple
locations. This feature is helpful for fast and easy exchange of business
information, between offices located at far off locations.
Consolidated Data: Companies of the same group can be consolidated in one,
and their single report can be generated. Any change done in a branch company
is automatically updated in the grouped information.
Advanced MIS: An advance MIS report can help you study and understand the
buying patterns of customers and using that resources can be channelled to
specific segments or customers.
Besides these general features, there are certain accounting and inventory
features of Tally as well. Let us check out those one by one.
Accounting Features
Following are some of key accounting features in Tally:
No Codes: In Tally, you can define unlimited levels of classification, with
regular names. This means you don't need to work with those inconvenient
account codes anymore.
Unified Ledgers: General, sales and purchase ledgers can be integrated into a
single ledger for easy management.
Bookkeeping: You can record all types of transactions including receipts,
payments, income and expenses, sales and purchases, debit notes, credit notes,
etc.
Comprehensive Accounting: Balance sheets, profit & loss statements, trial
balances, and cash and fund flows can be easily obtained in Tally.
Multi-currency Accounting: You can use multiple currencies in the same
transaction and can even view all the reports in one or more currency.
Troublesome Debtors: In Tally, it is easy to identify debtors causing trouble and
late payers, which helps you to take the right decision.
Printing: This ensures real-time linking of accounts and inventory besides
enabling instantaneous generation of documents, which can either be printed or
mailed directly to the recipient.
Security Control: You can define security levels for access control.
Powerful Audit capabilities: In Tally software, you can easily track malafide
changes and accordingly make genuine corrections.
Unlimited Cost/Profit Centre: You have an option of using multi-dimensional
analysis and comparative feature with an unlimited classification of analysis
criteria.
Calculation of Interest: In Tally, you can calculate interest on dues, loans, etc.,
by defining a certain criteria or a specified time frame.
Inventory Features
Following are some of the key inventory features in Tally:
Stock Control for Multi-location: You can easily manage simple single-location,
or complex multi-location stocks in Tally.
Warehouse Management for Multiple-location: Tally helps you to track your
stock movement in an effective way. This way you can decide which stock will
be shipped from which warehouse depending on the position of the stock.
Flexible Units of Measure: The units of measure can be flexible. This means
stocks can be tracked even in the case where you buy in tons and sell in grams or
buy in crates and sell in pieces.
Recording of Stock Movement: Inventory voucher forms let you record all types
of stock movement. These include notes of goods receipt and delivery; stock,
manufacturing and physical stock journals.
Different Types of Management Reports: With the details of goods bought and
sold you, can identify customer buying patterns, and using that can help decide
how to manage the stock. There is also a Stock Query option. It is a unique
single sheet report that gives you information on stocks at different locations, as
well as stocks in hand of substitutes.
Stock Ageing: How old stocks are kept in your inventory is an important factor
to know. You can identify stocks based on age and according to that dispose of
the old stocks quickly.
Comprehensive Order Status Report: This report ensures that you stay on top of
your stocks order position. You can set a re-order level depending on the
previous consumption or the quantity in hand.
Sales & Purchase Orders: A single sheet report can give you all the details like
current stocks, orders due for delivery, orders due for receipt, etc.
Invoicing: Invoice for a business transaction is must. In Tally, you can directly
print, export, e-mail or publish sales invoices produced within. Charges and
taxes can be set flexible in different invoice formats and that can be applied as
per the requirement.
Multiple Stock Valuations: In Tally, you can choose from different types of
valuation methods like 'First in First out', 'Age Cost', 'Last in Last out',
'Standard', etc.
Reorder Levels: This is helpful in a way that once you set the reorder level, you
can avoid excess stocking of items, while also ensuring that you don't run out of
essential stock.
Multiple Price Levels: You may want to set different price for different
categories of customers like individuals, retailers, wholesalers, etc. This can be
set up in Tally on pre-set basis, thus helping to produce error-free invoices
quickly later on.
Version Histories
The Initial Release of Tally was Tally 4.5 version. This is DOS (MS-DOS) based
software released in the beginning of 1990's. It had Basic Financial
Accounting/Book Keeping Tools Personal Computers had gaining popularity in
India those days. Peutronics (The company that develops Tally) used this
opportunity and put their Tally Version 4.5 on the market. Auditors and
Accountants who used to maintain large volumes of hard-bound notebooks were
amazed at the ability of the Tally to calculate Balance sheets and Profit Loss
accounts within seconds. All you need to do is just create Ledgers and enter
vouchers. Tally will do the rest. It will create all the statements, Trial Balance
and Balance Sheets For you.
The subsequent Tally releases are : Tally 5.4, Tally 6.3, Tally 7.2, Tally 8.1 and
Tally 9.0. These releases include support for Inventory used for the stock
maintenance of the company, Payroll which used for Employee Salary
Calculation and Wages Payments and Multi Lingual Support in many Indian
languages, such as: Hindi, Tamil, Telugu, Kannada, Malayalam, Gujarati,
Marathi and more.
Comparison between Various Versions of Tally Tally 4.5
Tally was started with is first version of Tally 4.5, which was a DOS based
program. This program was very light weight and very fast in operation.
Tally 5.4
The next version was Tally 5.4 which was a graphic interface version. It became
popular in the masses. Its pirated copy made it most popular accounting
software.
Tally 6.3
The next version was tally 6.3 which was truly a windows based version which
could support fast printing and with VAT implemented. Tally 6.3 came with
water tight security in terms of piracy. With its dongle, it was almost impossible
to crack. Although the crack of the software was available, but the Tally's policy
of frequent upgrades and newer releases did the trick.
Tally 7.2
The next version of Tally was Tally 7.2. It was also a fast version with lots of
new features like statutory compliant versions. Different VAT rules for different
states were achieved with this version.
Tally 8.1
Tally 8.1 was developed with a new data structure of Tally. A module of POS
and Payroll was added to it. It could not live up to the expectations of the people
and was marred by bugs. The company rectified many but the version could not
become popular and the company had to abort it before time and launch a new
version.
Tally 9
This is the latest version of Tally which has the maximum features. All other
versions have been declared null and void by the Tally Company. Tally 9 has
advanced features like Excise for Dealers, Payroll, FBT, TDS, e-TDS filing
facility, etc along with its regular features related to accounting and inventory
management.
Tally.ERP 9
Tally.ERP 9 is the latest offering of the Tally Software series. It has grown from
a basic accounting package into a simple-yet-sophisticated business management
software product. Comprehensive capabilities allow the Tally.ERP 9 to meet the
needs of small to large businesses with diversified operations.
Core Functionalities of the Tally.ERP 9
Accounting
Remote Access
Manufacturing
Integrated Support
Branch Management Purchase
Payroll
Sales
SMS Access
Job Costing
Jobs and Recruitment Costing
Finance
Self-Service
Inventory
Data Synchronisation
Point of Sale
Compliances
Tally.ERP 9 uses the latest technology and incorporates complex features in a
simplified manner. It is a robust, flexible, versatile and easy to use application.
The new ERP product inherently supports the ability to operate an Enterprise
Business from anywhere, removing the physical boundary of the installation, as
required by the medium and large enterprises.
Advantages of Tally.ERP 9:
Powerful remote capabilities that boost collaboration
Easy to find qualified personnel
Easy to customise
Low cost of ownership via quick implementation, Tally Integrator, Support
Centre.
Enhancement In Tally.ERP 9
Whenever a new version of an application comes it has something advanced and
enhanced in it as compared to the previous versions. Let us check out the
enhanced features in the Tally.ERP 9
Improved Performance
Remote Display Report Performance has been drastically improved when
compared to the previous releases of Tally. One can see the changes in the
following types of reports:
All Registers
Ledger Vouchers
Group Vouchers
Day Book
Statutory Audit reports
Tally.Net Auto Reconnect
This feature now works without any interruptions. It detects network
disruption/failure and then automatically reconnects the company to the
Tally.NET. In the Control Centre, it is now easy to work as the user can easily
select the account to work with.
Configure Clients at Start-up
Configuring Tally.ERP 9 clients is hassle-free now. At the Tally.ERP 9 client,
one just needs to press F2 and choose from the list of compatible Licence
Servers displayed to get the licence from the server.
Unlock Yourself
You can easily obtain the Unlock Licence key by visiting Self-Support Page on
the Tally website.
Account Name - Unique Account Identification (UAI)
There is an optional field titled Account Name present in the Activate Licence
form. Here you can enter the name of an account with which you want to be
recognised. It can be an individual's/ organisation's name, as required.
Licence and TDL Configuration Automatic Updation
Tally.ERP 9 detects and updates licencing and TDL configuration at regular
intervals.
Multiple Instances
You can now run multiple instances of the TallyAdmin tool.
Multiple Licence Servers
On the same system, you can now install and run multiple Tally Licence Servers.
Simple Licencing Resolutions
The licencing resolutions have been modified to make them user-friendly and
simple to understand.
Navigate before Printing
When you are in Zoomed in View of the Print Preview Mode using Page Up,
Page Down and Arrow keys, you can easily navigate to the next and previous
pages.
Server Rule Deactivation
A new control has been introduced to deactivate the server rule. When this
option is enabled and one tries to change the client rule, the synchronisation
server will reject any changes made. Synchronisation is halted until the changes
are approved at the synchronisation server. This feature prevents any type of
unauthorised changes at the client rule.
Split Data and Continue Synchronisation
When you split the data of a company, the required synchronization rules also
splits. They are then included in the new company rules. You can synchronize
data from this newly-created child companies independent of altering the
server/client rule.
Installation Procedure of Tally.ERP 9
After having an overview of Tally.ERP 9 enhancements, next, let us check the
installation procedure of TALLY.ERP 9. We assume that you are ready with your
Tally.ERP 9 software CD. Tally.ERP 9 can be installed using the following way:
1. Double click the install.exe icon on the CD.
2. Soon, the Tally.ERP 9 Setup Wizard screen will be displayed as shown:
Click Next to continue with the installation.
3. The Tally.ERP 9 Setup Screen will appear, as shown:
Check for these options:
In the Programs section, select Tally.ERP 9.
In the Tally.ERP 9 Setup section, either you can leave the default directory, as it
appears or click on the buttons provided next to the text boxes to change the path
of Application Directory, Data Directory, Configuration Directory, Language
Directory and Licence Directory, as we have changed it below:
A brief overview of various directories:
Application Directory: The program files reside in this directory.
Data Directory: This directory is used to store the Tally.ERP 9 data files.
Configuration Directory: This is the directory where the configuration files
reside. It is generally same as the application directory.
Language Directory: The Language files with the extension .dct are stored in this
directory. This is also generally same as the application directory.
Leave the Licence Server details as it is (blank) because we are going to install it
only on our machine. Click Next.
4. In the Country/Language Selection Screen, check the Install Operating System
Language Support, if you want to install the Tally.ERP 9 with multi-lingual
support.
By default, India/SAARC will appear in the Country Selection. Select Others if
you are residing in other country. Click 'Install', once done.
5. The Setup Status screen will be displayed, as shown:
You may be asked to insert an operating system CD for installing language
support files, in case you already don't have them pre-installed. They will be
located in i386 folder of your operating system CD. Click OK after installation
of the language support.
6. In the following screen, click Finish to complete the Tally.ERP 9 Setup.
A shortcut to the application will be created on the desktop. By double-clicking,
you can start the Tally.ERP 9 application.
Opening Tally.ERP 9
The initial screen appears, as shown:
Components of the Tally.ERP 9 Window
The Gateway of Tally screen is divided into six sections, namely Horizontal
Button Bar, Main Area Info. Panel, Calculator Area (Ctrl+N), Task Bar and
Vertical Button Bar.
The elements of the Gateway of Tally screen are explained as follows:
1. Horizontal Button Bar
The Buttons, Print (Alt+P), Export (Alt+E), E-mail (Alt+M), Upload (Alt+O),
Language (Ctrl+L), Keyboard (Ctrl+K), Control Centre (Ctrl+K), Support
Centre (Ctrl+H) and Help (Alt+H) can be seen in the Horizontal Button Bar.
Control Centre (Ctrl+K) - Login to the Control Centre for Account Management
Support Centre (Ctrl+H) - To access Support Incidents, Queries and Track the
Resolution status
Help (Alt+H) - To access Tally.ERP's online context-sensitive help
2. Main Area (Gateway of Tally)
The Main Area is separated into two:
Left-hand side area
Right-hand side area
The left-hand side provides information on the Current Period, Current Date and
List of Selected Companies (Name of the company and the date when the last
entry has been made).
The right-hand side displays the Company Information menu, such as Select a
Company, Create a Company, Backup a Company or Restore a Company and so
on.
3. Info. Panel
The Information Panel or Info Panel, as it is widely known appears at the bottom
part of the screen. It is divided into five blocks, the first four blocks give you
vital information on the various aspects of the product installed on your
computer, whereas the last block contains the calculator.
The user, based on his requirement can hide the Info Panel to give you a larger
working area. To hide the Info Panel, click on the [x] close button, a green
colour band appears with a A (up arrow symbol) indicating that the info panel is
hidden. To unhide the Info panel click anywhere within the hidden Info Panel or
activate the Calculator Pane by pressing Ctrl+N.
By default the, Info Panel is displayed in the Gateway of Tally or the Company
Info menu and remains hidden in other screens or reports. To display the Info
Panel in all the screens or reports, click anywhere within the hidden Info Panel.
4.Calculator Pane
The Calculator Pane allows you to perform simple and complex mathematical
operations required by the user, eliminating the need of an additional calculator
at the desk. To activate the calculator, press Ctrl+N or click within the Calculator
Pane wherever it is displayed.
5. Task Bar
The menu path appears in the lower Left corner of the bottom pane.
The Current Date (system date), three letter day, date, month and year are
displayed in DDD, DD, MMM, YYYY format on the right-hand side.
System Time appears on the lower-right corner in Hour: Minutes: Seconds
(HH/MM/SS) format.
6. Button Bar
The buttons are designed to make the work easier and faster. They vary from one
screen to another based on the screen functionality. They appear on the right
hand side of the Tally.ERP 9 screen and the inactive buttons are greyed out. You
can either click these buttons or press the shortcut keys to access the relevant
screen.
The following are some of the buttons and their functions:
F1: Select Cmp - To select the company from the List of Companies and
access data from other data directories on the local system or through the
network. You can also access the Directory Field by pressing [Backspace].
F12: Configure - To access the configuration settings to manage the
information entered in Tally. ERP 9. For example, you can access the
General Configuration to set country specific defaults, before creating a
company.
Buttons, where a character or function key is underlined indicates that you have
to press the underlined character or the function key along with the [ALT] key.
Buttons where a character or function key is double underlined indicates, you
have to press the character or the function key along with the [CTRL] key.
F1: Press the shortcut function key [F1] to select a company.
F1: Press [ALT+F1] to shut a company.
F8: Press [CTRL+F8] to select the Credit Note voucher.
Ctrl+M: Press Ctrl+M to access the Gateway of Tally.
Ctrl+N: Press Ctrl+N to access the Calculator frame.
Close Button
The Close Button in the upper right corner functions similar to the use of Esc in
Tally.ERP 9. It brings you to back to the Gateway of Tally.ERP 9 from any
screen.
Minimise Button
The Minimise button performs the standard Windows Operating System's
function, allowing you to minimise Tally.ERP 9 and work on other applications.
To restore Tally.ERP 9, click on the Tally. ERP 9 icon on the taskbar.
Creating a Company
The first step to get started in Tally.ERP 9 is to Create a Company. Creating a
Company involves providing basic information about the company, whose books
of accounts are to be maintained in the Tally.ERP 9.
Company Info. Menu
Go to Gateway of Tally > (Alt+F3) Company Info. >Create Company
The Company Info.(Information) menu appears, as shown:
The menu options in the Company Info. are as follows:
Select Company: Allows you to Select or Load a company.
Connect Company: Allows you to Connect Company on Tally.NET.
Disconnect Company: Allows you to Disconnect Company from Tally.NET.
Shut Company: Allows you to Shut a company.
Create Company: Allows you to create a company.
Alter: Allows you to Alter a company.
Security Control: Allows you to Create Security Levels and Users & Passwords.
Change TallyVault: Allows you to Secure the Data by providing a TallyVault
Password.
Split Company Data: Allows you to Split Company Data across multiple period
Backup: Allows you to take a backup of the company data.
Restore: Allows you to restore a data backup.
Select Create Company by pressing down the arrow key and press enter the
Company Creation screen will be displayed. The Company Creation screen
appears as shown:
This is the Company Creation Screen, where we can enter the Company Details
and store data, etc. Let us explain each section separately.
Directory: Directory means the data storage location.
For example: The default Tally.ERP 9 data directory could be
C:\TALLY.ERP\DATA
Name: Type the name of the company in this field.
Address: This is the place where we can enter the address of the company.
Statutory compliance for: Select the country in which your business exists.
State: Select the state in which you want to comply statute
Pincode: Pincode of the location where your company office exists.
Telephone: Enter telephone number.
Mobile No: Enter mobile number.
Email: Enter your official communication email id.
Currency Symbol: Enter the currency symbol.
For example: Rs for Indian Rupees, USD for US dollar, etc.
Maintain: Here, you can select how you maintain your company. Some
companies are required to maintain stock items along with accounts, and in such
cases select 'Accounts with inventory', or else your requirement is only to keep
accounts, so select 'Accounts only'.
Financial Year From: Type financial year in which you want to create a
company. Suppose you may be starting company on September 01, 2013. You
should enter the financial year from as 01.04.2013.
Book Beginning From: Most of the companies have a book beginning date same
as the above field but may differ for companies which are starting in the middle
of the financial year. From the above example your book beginning date is
01.09.2013.
Tally Vault Password: This is for security purpose, and by entering password you
can prevent unauthorised access of the company data. But keep the password in
writing in a safe place to prevent future password lost. You will have to enter this
password each time you open your company. Be careful, as if your forget your
password, you will not be able to use the tally data.
Use Security Control: By enabling this, you will get a complete control over
your data, and you can assign some people only for the data entry, giving more
access to some other using this feature.
Base Currency Information: Base Currency is the currency in which your
accounts would be maintained. Financial statements are prepared on the base
currency by default and these are normally required to be submitted to the local
statutory authorities. The Base Currency information in Tally.ERP 9 varies with
the country selected for Statutory Compliance.
Formal Name: Formal Name is the full name of the currency specified.
Number of Decimal Places: The number of decimal places for the base currency
is set to 2, by default. However, you have the option of specifying up to 4
decimal places. Indian currency has 2 decimal places the whereas certain other
countries require 3 decimal, places and so on.
Is Symbol Suffixed to Amounts: For countries, which specify the symbol after
the amount (value) - this facility is provided.
Symbol for Decimal Portion: Enter the symbol for decimal portion.
Show Amounts in Millions: This is useful for companies, which require
reporting the financial statements in millions. This is possible only if the Allow
Multi-Currency is enabled in F11: Accounting Features.
Put a space between Amounts and Symbol: This facility is provided to users who
require a space between the amount and the symbol.
Decimal Places for Printing Amounts in Words: You can specify the number of
decimal places for printing the amount in words.
The currency symbol given earlier in the Company Creation screen is displayed
here automatically.
The completed company creation screen is displayed, as shown below:
Press Y or Enter to accept the screen.
On accepting the company creation screen, if you have specified the Tally Vault
password, Tally. ERP 9 prompts you to enter the TallyVault password, as below
appears:
After verification the Tally.ERP 9 imports the latest statutory masters. Wait till
the screen shows that 100% of import is complete.
The Gateway of Tally Screen will appear, as shown below:
Quitting Tally.ERP 9
You can exit the program from any Tally.ERP 9 screen, but Tally.ERP 9 requires
all screens to be closed before it shuts down.
To Quit Working on Tally.ERP 9.
Press Esc, until you see the message 'Quit'? Yes or No? Press Enter or 'Y', or
click 'Yes' to quit Tally.ERP 9.
Alternatively, to exit without confirmation, press Ctrl+Q from the Gateway of
Tally.
You can also press 'Enter', while the option 'Quit' is selected from the Gateway
of Tally.
Chapter 4
ADVANCED INVENTORY INFORMATION IN
TALLY.ERP 9
Inventory is the total amount of goods and/or materials contained in a store or
factory at any given time. Inventory Accounting includes recording of stock
details like the purchase of stock, the sale of stock, stock movement between
storage locations or godowns and providing information on stock availability.
Tally. ERP 9 makes it possible to integrate the inventory and accounting systems
so that the financial statements reflect the closing stock value from the Inventory
System.
In Tally.ERP 9, inventory accounting includes recording of stock details like the
purchase of stock, the sale of stock, stock movement between storage locations
or godowns and providing information on stock availability.
The Inventory Info menu is displayed in the Gateway of Tally, if you select the
type of the company as Maintain Accounts with Inventory in the Company
Creation screen.
The Inventory Info menu, lists the inventory masters like Stock Group, Stock
Items, Units of Measure of the company, using which you can create, alter or
display the inventory master details. Inventory information contains the
inventory masters. Each master has Create, Display and Alter functions.
Create. The 'Create' option is used to create new masters. Any modification to
the masters can be done only through the 'Alter' mode.
Display. The Display option is used to view the 'Master' information. 'Master'
information cannot be modified in 'Display' mode.
Alter. The Alter option allows you to view and make the necessary changes to
the master information. This does not allow creation of masters. In 'Alteration
mode', you can delete the master.
These three functions are grouped under:
Single: In Single, you can execute the function on one master.
Multiple: In Multiple, you can execute the function on multiple masters.
Stock Groups, Categories, Items and Units of Measure
In a newly created company, the Inventory Info. menu comprises offour types of
Masters, viz. Stock Groups, Stock Items, Units of Measure and Voucher Types.
The above Inventory Masters types are explained in detailed in the
following sections.
Groups: Group means the type of the account. Functions of each group are
fixed. The Tally provides facility to the user to create an own group. Also it
provides 28 predefined groups. Out of these 28 groups, 15 are primary groups
and 13 are sub-groups. Stock Groups in Inventory are similar to Groups in
Accounting Masters. They are helpful in the classification of Stock Items.
Classification is done based on some common behaviour. Grouping stock
items makes it easy to identify and report them in the statements. You can
group Stock Items under different Stock Groups to reflect their classification
based on some common features, such as brand name, product type, quality,
etc.
details of all the items of that brand. Grouping enables you to locate the Stock
Items easily and report their details in statements.
Following is the list of groups that affects the Balance Sheet.
1. Capital Account: Handle investments or owner's account. It has a
subgroup.
(A) Reserves and surplus. All reserves accounts like general reserves, capital
reserves etc.
2. Current Assets: These assets are divided in 6 sub-groups as follows:
(A) Bank Accounts: Holds bank transactions that means current accounts,
savings accounts, etc.
(B) Cash in Hand: All cash track in ledger.
(C) Deposits (assets): Fixed deposits, and security deposits made by the
company.
(D) Loan and Advances (assets): If the company gives any loan or advanced to
other.
(E) Stock in Hand: Keep records of opening or closing stock of the material.
(F) Sundry Debtors: This maintains the list of all companies or persons to whom
the company gives materials on credit.
3. Current Liabilities: It keeps track of the outstanding liabilities or statutory
liabilities.
(A) Duties and Taxes: All taxes and duties that are paid by the company like
Trade duties, Excise, Local Sales Tax, etc., are recorded under duties and taxes.
(B) Provisions: It maintains records of all financial arrangement for possible
future requirements.
(C) Sundry Creditors: Company purchase material or any other things on credit.
Then the list of all companies or persons is under sundry creditors form whom
the company purchased materials.
4. Fixed Assets: Handle accounts of all assets like machinery, buildings, etc.
5. Investments: It keeps records of the overall investment like Shares, Govt.
Securities, Deposits, etc.
6. Loans (Liabilities): It keeps an account of the loans taken by the company
and has following three sub-group:
(A) Bank OD accounts: Keep all overdraft accounts.
(B) Secured Loans: Keep track of loans taken by the company securities against
the fixed assets.
(C) Unsecured Loans: Unconditional loan obtained from Partners/Directors or
other parties.
7.Suspense Account: This account is used to enter the transactions whose
detai9ls are ye to tbe finalized.
8. Branch/Divisions: All the names of branches, divisions and subsidiaries of
the company.
9. Miscellaneous Expenses: Under this group, all expenses are entered.
The Following group affects Manufacturing, Trading and Profit and Loss
accounts:
10. Purchase Account: It is used to maintain records of all purchase account.
11. Sales Account: It keeps record of all sales.
12. Direct Income: This group is used for entering all direct incomes like sales
of goods.
13. Indirect Income: This group maintains all the incomes other than sales.
That means it keeps record of all incomes like rent received, interest received,
etc.
14. Direct expenses: This group is used for recording all the direct expenses
means the purchase of raw materials, or wages of workers, etc.
15. Indirect Expenses: This group is used to maintain the records of all
expenses other than direct expenses. All the salary paid, rent paid,
advertisement charges, etc., are under the indirect expenses.
Creating Single Stock Group:
Go to the Gateway of Tally > Inventory Info. > Stock Groups > Create (Under
the Single Stock Group).
Enter the details for the stock group that has to be created. Here we have added
"Domestic RO System" as a new stock group. Your screen will be similar to the
one shown below:
Press Y or Enter to accept the screen.
In the similar way, create "RO Membranes" under "Primary" category only.
Press Y or Enter to accept the screen.
Creating Multiple Stock Groups:
Gateway of Tally > Inventory Info. > Stock Groups > Create (Under the
Multiple Stock Groups).
1. Enter the group name.
2. Enter "Under" to which it comes.
3. Press "Y" or Enter to accept the group and save.
Stock Categories
This is a feature, which offers a parallel classification of stock items. Like Stock
Groups, Stock Categories are also classified based on some similar behaviour.
The advantage of using TallyERP 9 lies in categorising Stock Items together,
(based on functionality) across different stock groups. This enables you to obtain
reports for alternatives or substitutes of a stock item.
Set Yes to Maintain Stock Categories in F11: Features (F2: Inventory Features)
to get an additional option Stock Categories under Inventory Info.
Creating Stock Category
Go to the Gateway of Tally > Inventory Info. > Stock Categories > Create.
1. Enter the group category name.
2. Enter "Under" to which it comes.
3. Press "Y" or Enter to accept the group category and save.
In the following example, we have created a Stock Category "RO Cabinet" under
"Primary".
4. Similarly, we created "Domestic RO Cabinet" under "Primary".
Stock Items
Stock items are goods that you manufacture or trade (sell and purchase). It is the
primary inventory entity. Stock Items in the Inventory Transactions are similar to
Ledgers being used in Accounting transactions. Therefore, Stock Items are
important in an inventory Just as Ledgers are important in accounting.
Creating a Stock Item
Go to Gateway of Tally > Inventory Info. > Stock Items > Create.
The Stock Item Creation Screen appears, as shown below:
Enter the following details:
Name: The name of the stock item.
Under: The stock group under which you want to classify the stock item.
Category: The stock category you want to classify the stock item for parallel
classification. 9 Units: The unit of measure for the stock item being created.
Rate of Duty: Enter the rate of duty charged on the item.
Opening Balance: The opening balance of a stock item refers to the stock
available with us. Godowns that have already been created must have the
opening balance quantity and the location specified.
For our example, we entered "Delphino RO System" under the "Domestic RO
System" and the category, "RO Cabinet".
Once all the details have been inserted, Press Y or Enter to accept the screen.
Units of Measure
Stock Items are mainly purchased and sold on the basis of quantity. The quantity
in turn is measured by units. In such cases, it is necessary to create the Unit of
Measure. The Units of Measure can either be simple or compound. Examples of
simple units are: nos., metres, kilograms, pieces, etc. Examples for compound
units are: a box of 10 pieces, etc. Create the Units of Measure before creating the
Stock Items.
Creating Units of Measure
Go to the Gateway of Tally > Inventory Info. > Units of Measure > Create.
The Unit Creation Screen appears, as shown below:
Enter the following details:
Type
Tally.ERP 9 has the option to create simple units as well as compound units.
Examples: box, nos. pcs, etc. A Compound Unit is a combination of two simple
units of measure. Example: A box of 10 pcs is a compound unit of measure.
Symbol
It is the abbreviated form by which a stock item is identified. For example, the
abbreviation 'pcs' indicates pieces.
Formal Name
This represents the complete or formal name of a symbol used while creating a
unit. Different companies use different symbols to represent the same units.
Formal names help you to match the symbols with their respective units. For
example, the symbol for numbers (formal name) can be 'nos' or 'num'.
Number of Decimal Places
A unit can be expressed as fractions. For example, a 4.20 Kg refers to 4Kg and
200 grams. The number of digits expressed in grams after the decimal places are
three. Likewise, fractions up to four decimal places can be expressed in the same
manner. For expressing numbers, without a decimal place, specify '0' in this
option.
For our example, we have created a new Unit with symbol 'No.s.' for formal
name 'Numbers' as shown in the following figure:
After entering the values, press Y of Enter to accept.
Godowns
A place where stock items are stored is referred to as Godowns. You can specify
where the stock items are kept. For example: A warehouse, shelf or rack, etc, and
obtain stock reports for each Godown and account for the movement of stock
between ocations/Godowns.
Set Yes to Maintain Multiple Godowns in F11: Features (F2: Inventory Features)
to get additional option like Stock Categories under the Inventory Info.
Creating a Godown
Go to the Gateway of Tally > Inventory Info. > Godowns > Create
Enter the Godown name.
Enter "Under" to which it comes.
Press "Y" or Enter to accept the godown and save.
For our example, we created a new Godown with name "Delhi" under "Primary",
as shown in figure below.
Once you are done with that, Press Y or Enter to accept it.
In the similar way, create another Godown entry with name "Kanpur" under
"Primary".
Introducing Groups, Ledgers, Purchase Orders, Sales Orders and Invoices
Groups
Groups are collection of Ledgers of the same nature. Account Groups are
maintained to determine the hierarchy of Ledger Accounts which is helpful in
determining and presenting meaningful and compliant reports. You can group
the Ledger Accounts under the Required Groups at the time of creating the chart
of accounts or you can alter them at any time. Let us have an overview of
different groups.
Non-Revenue - Primary Groups
Capital Account:
This records the Capital and Reserves of the company. The ledgers that belong to
the Capital Accounts are Share Capital, Partners' Capital A/c, Proprietor's
Capital Account and so on.
Reserves and Surplus [Retained Earnings]: This contains ledgers like
Capital Reserve, General Reserve, Reserve for Depreciation and so on.
Current Assets:
Current Assets record the assets that do not belong either to the Bank Accounts
or to the Cash-in- Hand sub-groups.
Bank Accounts: Current Account, Savings Account, Short-Term Deposit
Accounts and so on.
Deposits (Asset): They contain Fixed Deposits, Security Deposits or any
deposit made by the company.
Loans & Advances (Asset): This records all loans given by the company and
advances of a nontrading nature (example: advance against salaries) or
even for the purchase of Fixed Assets. Stock-in-hand: This group contains
accounts like Raw Materials, Work-in-Progress and Finished Goods. The
balance control depends on whether you have selected Integrated Accountcum- Inventory option, while creating the company.
Sundry Debtors: The Sundry Debtor is a person who bought goods or
received service from us.
Current Liabilities:
Accounts like Outstanding Liabilities, Statutory Liabilities and other Minor
Liabilities can be created directly under this group.
Duties and Taxes: Duties and Taxes contain all tax accounts like VAT,
CENVAT, Excise, Sales and other trade taxes and the total liability (or asset
in case of advances paid) and the break-up of individual items.
Provisions: Accounts like Provision for Taxation, Provision for Depreciation and
so on are recorded under Provisions.
Sundry Creditors: A Sundry Creditor is a person from whom we received
the goods or services.
Investments
Group your investment accounts like Investment in Shares, Bonds, Govt.
securities, Long-Term Bank Deposit Accounts and so on. This allows you to
view the total investments made by the company.
Loans (Liability)
Loans that a company has borrowed, typically long-terms loans.
Bank OD Accounts [Bank OCC Accounts]: Tally.ERP 9 provides you with
the distinct types of Bank Accounts.
Bank OCC A/c: To record the company's overdraft accounts with banks.
For example, Bill Discounted A/c's and Hypothecation A/c's etc.
Secured Loans: Term Loans or other Long/Medium-Term Loans, which are
obtained against Security of some asset does not verify the existence of the
security. Typical accounts are Debentures, Term Loans, and so on.
Unsecured Loans: Loans obtained without any security. Example: Loans
from Directors/partners or Outside Parties.
Revenue - Primary Groups
Sales Account: You can classify your sales accounts based on Tax slabs or
type of sales.
Purchase Account: This is similar to the sales accounts, except for the type
of transactions. Direct Income [Income Direct]: These are Non-trade income
accounts that affect the Gross Profit. All trade income accounts fall under
the Sales Accounts. You may also use this group for accounts like Servicing
and Contract Charges that follow the sales of equipment.
Indirect Income [Income Indirect]: These are miscellaneous non-sale
income accounts. Example: Rent Received and Interest Received.
Direct Expenses [Expenses Direct]: These are Manufacturing or Direct
Trading Expenses. These accounts determine the Gross Profit of the
company.
Indirect Expenses [Expenses Indirect]: All Administrative, Selling or Nondirect expenses.
Creating a Group
In Tally.ERP 9, there are two options for creating Groups:
Single Group - We can create only one Group by using Single Group creation
screen.
Multiple Groups - We can create Multiple Groups by using Multiple Group
Creation screen.
Creating a Single Group
This is a collection of Ledgers of the same nature, Tally.ERP 9 allows you to
create groups as per your requirements.
Go to Gateway of Tally > Accounts Info. > Groups > Create under Single Group
The Group Creation screen will be displayed, as shown:
Name of the Group: Enter the name of the Group to be created. For
example, "Shraddha Enterprise" in the name field.
Alias: Enter an alias name to allow access to the group using the Alias in
addition to its name or leave it blank. For example, we have used "owner" as an
alias here.
Under: Specify under which existing (Parent) group the sub-classification is
required.
Remember:
Creation of a new Primary Group is not allowed if Allow Advanced Entries in
Masters is set to No in F12: Configure.
Group Creation Water Resources
After entering the details, press 'enter' to accept and a new group will be created.
Creating a Group with Advanced Usage
Go to Gateway of Tally > Accounts Info > Groups > Create under Single Group
> select F12 configure (Group Configuration) and enable Allow Advanced
entries in Masters under Accounts Masters.
Now, you will see that there are extra options, while creating a new group.
Following is the description of these new options:
Group Behaves like Sub-ledger?
This option will allow such Groups to behave as defined in the Master to act as
equal to the behaviour of Ledger. When Group behaves like sub-ledger is set to
No, the same will display all the Ledgers grouped under the same in detailed
mode. When the Group behaves like sub-ledger is set to Yes, the same will not
display the Ledgers grouped under the same in detailed mode.
Net Debit/Credit Balances for Reporting
Setting this option to Yes will display either the net debit or credit balance in the
report (whichever is higher). If this is set to No, both debit and credit balances
will be displayed in the report.
Used for Calculation (e.g. taxes, discounts)
Set this option to Yes if ledgers under this group will have percentages for
discounts/taxes to be used in invoice entry.
Method to Allocate When Used in Purchase Invoice
Select the appropriate allocation method from the list. This is used to allocate the
expense of the item in the ratio of the quantity or value.
Creating Multiple Groups
Tally.ERP 9 allows you to create Multiple Groups simultaneously, and you can
create them by pressing Enter on Create under Multiple Groups. Go to Gateway
of Tally > Accounts Info. > Groups > Create (under Multiple Groups)
You can create any number of Groups under an already created/selected Group.
In this mode of group creation, the sub-groups will automatically inherit the
characteristics of their parent groups. The next figure shows some groups created
using the multi-group feature of Tally.ERP 9.
Here, if you select any group other than All Items in the Under Group Field, then
this column is filled in automatically with the Selected Group name and the
Cursor Skips this column. This speeds up Data Entry. If you select All Items in
the Under Group Field, the cursor does not skip this field and allows you to enter
the parent group of each of them.
Ledgers
After the creation of necessary masters, you should proceed with the ledger
creation. The ledger account heads are the actual account heads to which we
identify the transactions, i.e., passing of all vouchers using ledgers. Hence, a
thorough understanding of account classification is important for working with
ledgers. Tally creates the following two ledgers on its own and the other ledgers
should be created by you. (i) Cash under Cash-in-had group, (ii) Profit & Loss
Account under Primary Ledger.
Process of Creation Ledger
Ledgers are created in the following manner: Go to the Gateway of Tally >
Accounts Info. > Ledgers > Create. The Ledger Creation screen appears as
shown below:
Let us understand the creation of Ledger Accounts with some example.
1. Proprietor's Capital Account under Capital Account with an opening
balance of ' 25000.
Enter Name as Proprietor's Capital Account.
Select Capital Account from the List of Groups.
Enter 45000 in the Opening Balance (as on 1-Apr-2012) field
This is shown in the figure below:
Press Y or Enter to accept the screen.
You will notice that Tally.ERP 9 automatically capitalises the first letter for you.
2. Land & Building under Fixed Assets with an opening balance of '60000.
Enter Name as Land & Building.
Select Fixed Assets from the List of Groups.
Enter 100,000 in the Opening Balance (as on 1-Apr-2012) field.
Press Y or Enter to accept the screen.
You can see that Tally.ERP 9 displays the total debit and credit opening balances
while the ledgers are being created in the Ledger Creation screen. This is to
avoid differences in the opening balance.
3. HDFC Bank account under Bank Account with opening balance of '
250000.
Enter Name as HDFC Bank Shraddha.
Select Bank Accounts from the List of Groups.
Enter 250,000 in the Opening Balance (on 1-Apr-2012) field.
Press Y or Enter to accept the screen.
You should be familiar with the creation of Ledgers, as you will need it while
working on vouchers in the coming section.
Orders
Order Processing in Tally.ERP 9 can be classified into Purchase/Sales Order
Processing and Job Order Processing.
Purchase/Sales Order Processing
The Purchase Order Processing is the process of placing orders with suppliers
for a purchase to be made from them and Sales Order Processing is the process
of receiving orders from customers for the purpose of selling.
Job Order Processing
The Job Order Processing is the process of taking an order to manufacture or
process goods as per the prescription of the client by utilising the materials
supplied by the client or purchased on behalf of the client and charging him/her
for the services provided as Job Work or Sub-Contract.
Purchase Order: The Purchase Order is an order placed by a business
entity with a supplier for the delivery of specified goods at a given price and
at a predetermined time.
Sales Order: Sales Order is an order placed by a customer for the delivery
of specified goods at a given price and at a predetermined time.
Job Order: Job Order can be classified into the Job Work Out Order and
the Job Work In Order. Job Work Out Order is an order placed by the
principal to manufacture or process goods as per the prescription given to
the job worker. Job Work In Order is an order received by the job worker
to manufacture or process goods as per the prescription given by the
principal.
Enabling Order Processing
To enable Purchase Order, Sales Order and Job Order Processing in Tally.ERP 9,
activate the following in F11: Features (F2: Inventory Features). Set Allow
Purchase Order Processing, Allow Sales Order Processing and Job Order
Processing to Yes in the Order Processing section as shown below:
Creating Purchase Order
To create a Purchase Order, Go to Gateway of Tally > Inventory Vouchers >
press Alt + F4 or click on Purc Order
Here is the description of its various fields:
Party's A/c Name: Select the Supplier's name from the List of Ledger
Accounts. Use Alt + C to create a new account.
Order No: Enter the purchase order number under Order No. column.
Name of the Item: Select the Stock Item that needs to be purchased from the
List of Stock Items. The Item Allocations sub-screen is displayed. Enter the
details, as shown.
Due on: Enter the due date for receipt of the items.
Quantity, Rate and Amount: Enter the quantity of the item required and its rate.
The amount will be calculated automatically. Accept to save.
Narration: This field is optional. Enter the required particulars concerning
the order.
After entering all the values accept it and the purchase order will be created.
Creating a Sales Order
The Sales order Entry is exactly like the Purchase Order Entry. Sales Order
details will also depend on configuration settings. To create a Sales Order,
Go to the Gateway of Tally > Inventory Vouchers > press Alt + F5 or click
on the Sales Order.
Party's A/c Name: Select the Customer's name from the List of Ledger
Accounts. Press Alt + C to create a new account.
Order No: The Order Number is automatically displayed. By default, it will
take the Voucher number as the Order No. You can change this number, if
required.
Name of the Item: Select the Item for which the order is to be placed from
the List of Stock Items. The Item Allocations sub-screen will be displayed.
Due on: Enter the due date for the Delivery of the items. This monitors the
outstanding Delivery of the items.
Quantity, Rate and Amount: Enter the quantity of the item and its rate. The
amount will be calculated automatically.
Narration: This field is optional. You can give some particulars about the
order. After entering all the values, accept it and the purchase order will be
created.
Creating Job Work Out Orders
This voucher allows the principal company to raise Job Orders on Job Workers.
To create a Job Work Out Order, Go to Gateway of Tally > Order Vouchers >
press Alt + J or click on J: Job Work Out Order.
Party's A/c Name: Select the Supplier's (Job Worker) name from the List of
Ledger Accounts. Use Alt + C to create a new account. The Party Details
screen will be displayed.
Order No: Enter the Job Work Out Order Number under the Order No.
column.
Name of the Item: Select the Stock Item for which the order is placed, from
the List of Stock Items. The Item Allocations sub-screen is displayed.
Track Components: Set the option to Yes if components need to be tracked.
Due On: Enter the due date for the receipt of the items. This monitors the
outstanding receipts. Godown: Select the required Godown from the list:
Quantity, Rate and Amount: Enter the ordered quantity of the item and its rate.
The amount will be calculated automatically.
Narration: This field is optional. Enter the required particulars concerning the
order. After entering all the values accept it and the purchase order will be
created.
Creating a Job Work In Order
This voucher allows the Job Worker to raise the receipt of the Job Order from the
Principal Company.
To create a Job Work In Order, Go to Gateway of Tally > Order Vouchers > press
Alt + W or click on W: Job Work In Order.
Party's A/c Name: Select the Customer's (Principal Company) name from
the List of Ledger Accounts. Use Alt + C to create a new account. The Party
Details screen will be displayed.
Order No: Enter the Job Work In Order Number under the Order No
column.
Name of the Item: Select the Stock Item for which the order is received,
from the List of Stock Items. The Item Allocations sub-screen is displayed.
Due On: Enter the due date for the delivery of the items. This monitors
outstanding deliverables.
Godown: Select the required Godown from the list.
Quantity, Rate and Amount: Enter the ordered quantity of the item.
Narration: This field is optional. Enter the required particulars concerning
the order.
Invoicing
Tally.ERP 9 has an in-built system to create and print sales invoices. You will
now record sales and purchase invoice details, adjust accounting and inventory
balances. To enable the option of invoicing, set Yes to Allow Invoicing, Enter
Purchases in Invoice Format and Separate Discount Column in invoices in F11:
Features (Accounting Features/ Inventory Features).
Ensure that the Inventory values are affected, and is set to Yes in the Purchases
Ledger.
Ensure that the Inventory values are affected? is set to Yes in Parts Sales,
Software Sales and Computer Sales.
Go to the Gateway of Tally > Accounting Vouchers > F8: Sales. Ensure the
button above the Post-Dated option reads As Invoice. This button enables you to
toggle between the voucher and the invoice format for the data entry. The button
visible is the format NOT in use.
Item Invoice and Account Invoice
Tally.ERP 9 gives you an option called the Account Invoice, where you can
select the ledgers instead of the stock items. An Item Invoice on the other hand,
allows you to select the stock items instead of ledgers. Businesses that require an
invoice raised with the item details, can select the Item Invoice option.
Businesses that want to raise invoices for services rendered can do so by
selecting the Account Invoice. At this point, it is understood that you already
know how to enter an Item Invoice, by selecting items and entering their
quantity, rate, discount, etc.
Creating an Item Invoice
1. Ensure that you are at the Gateway of Tally of Indus Enterprises.
2. Ensure Allow Invoicing option in F11: Features (F1: Accounting Features) is
set to Yes.
3. Go to the Gateway of Tally > Accounting Vouchers > F8: Sales.
4. The invoice screen must display the columns - Name of Item, Quantity, Rate,
per, Amount, etc.
5. Party's A/c Name: Customer One (create one, if it is not displayed in the
list of ledgers).
6. Press Enter, till you reach the 'Name of the Item' field and press the spacebar
to view the List of Stock Items.
Creating an Account Invoice
Go to the Gateway of Tally > Accounting Vouchers > F8: Sales.
1. The invoice screen must display the following columns: Name of Item,
Quantity, Rate, per and Amount.
2. Click on the Acct Invoice button. You will notice that Tally.ERP 9 now
displays the columns as Particulars, Rate, per and Amount, Select the Party's A/c
Name as Customer One.
4. Press Enter till you reach the Particulars field. Press the Space Bar and
Tally.ERP 9 displays the List of Ledgers.
5. Select the Consulting Fees (create one if it is not displayed under the Direct
Income).
Voucher Entry in Tally.ERP 9
In accounting terms, a voucher is a document containing the details of a financial
transaction. For example, a purchase invoice, a sales receipt, a petty cash docket,
a bank interest statement, and so on. For every such transaction made, a voucher
is used to enter the details into the ledgers to update the financial position of the
company. This feature of Tally.ERP 9 will be used most often.
You can configure a voucher by pressing 'F12' and you will have a similar screen
when you click on 'Voucher Entry':
You can create a new voucher type under the existing one.
There are basically two types of Voucher Entries:
Accounting Vouchers
Inventory Vouchers
Accounting Vouchers: Tally.ERP 9 is pre-programmed with a variety of
accounting vouchers, each designed to perform a different job. The standard
Accounting Vouchers are:
1. Contra Voucher (F4) :
The Contra Voucher is used to indicate transfer of funds from
Bank account to Cash account
Bank account to Bank account
Cash account to Bank account.
Cash account to Cash account.
For example:
Transaction: Withdrawing money from the bank for petty cash ' 55,000.
Voucher Entry:
Petty Cash (Cash-in- hand) Dr.
To HDFC (Bank Accounts) Cr.
55000
55000
Setup: In Voucher entry mode, press F12: Contra Configuration and set the
following to Yes:
Skip the Date field in Create Mode (faster entry!)
Use Cr/Dr instead of To/By during entry
Warn on Negative Cash Balance
Show Ledger Current Balances
Show Balances as on Voucher Date
Go to the Gateway of Tally > Accounting Vouchers > F4: Contra.
Enter the Particular Details like name, credit and debit amount from the ledgers
created. Following figure shows our example of transferring the amount of '
5000 from HDFC bank to petty cash.
Figure: Contra Voucher
Press Y or Enter to accept the screen.
2. Payment Voucher (F5)
Use a Payment Voucher to record the entry.
Go to the Gateway of Tally > Accounting Vouchers > F5: Payment.
For example:
Transaction: A company settles a creditor's bill by cheque.
Voucher Entry:
Ledger account paid Shraddha Ltd. (Sundry Creditors) Debit
To Bank or cash account HDFC (Bank Account)
Credit
Figure: Payment Voucher
Press Y or Enter to accept the screen.
In Voucher entry mode, use F12: Payment Configuration and set Use Single
Entry mode for Pymt/Rcpt/Contra to Yes. The advantage of a single entry mode
is that you can select multiple debits or credits depending on the type of entry.
Similarly, the transactions can be recorded in single entry mode even in Receipt
and Contra Vouchers.
Tally.ERP 9 displays a warning if the cash balance is NIL when Warn on
Negative Cash Balance is set to Yes in the F12: Payment Configuration. It
displays the negative amount in red.
2. Receipt Voucher (F6)
For example:
Transaction: The company receives a bank advice that the interest has been
credited to its deposit account.
Voucher Entry:
Bank or cash Account Deposit Account
Debit
To Ledger Account receiving Bank Interest Credit
Use a Receipt Voucher to record the entry. Ensure in F12: Payment
Configuration, Use Single Entry mode for Pymt/Rcpt/Contra is set to No.
Go to the Gateway of Tally > Accounting Vouchers > F6: Receipt. The entry
made will appear similar to one shown below:
Figure: Receipt Voucher
Press Y or Enter to accept the screen.
4. Journal Voucher (F7): Journal entries are usually used for finalisation of
accounts.
For example:
Transaction: The Company has entered some expenditure on advertising as
general office costs, rather than recording the transaction in the separate
ledger for advertising.
Voucher Entry:
Advertising (Indirect Expenses)
Debit
To Office Costs (Indirect Expenses) Credit
Use the Journal Voucher to adjust the two accounts. Go to the Gateway of
Tally > Accounting Vouchers > F7: Journal. The entry made will appear
similar to the one, as shown below:
Figure: Journal Voucher
Press Y or Enter to accept the screen.
5. Sales Voucher /Invoice (F8): When a company sells goods on credit or
cash, Sales voucher is used to record all the Sales transactions of the
company.
For example:
Transaction: The Company Viru Water Bills is selling goods to Debtor Mehra
Pvt. for a value of 500/Voucher Entry:
Mehra Pvt. (Sundry Debtors)
Debit
Viru Water Bills (Sales Account) Credit
To pass a Sales Voucher: Go to the Gateway of Tally > Accounting Vouchers >
F8: Sales. The entry made will appear similar to the one shown below:
Figure: Salary Voucher
Press Y or Enter to accept the screen.
6. Credit Note Voucher (CTRL+ F8)
Credit Note is a document issued to a party stating that you are crediting their
Account in your Books of Accounts for the stated reason or vice versa. It is
commonly used in case of Sales Returns, Escalation/De-escalation in price, etc.
A Credit Note can be entered in voucher or Invoice Mode. This voucher type is
made available when the option Use Debit/Credit Note to is set to Yes in the
F11: Features (F1: Accounting features) as shown in figure below.
For example:
Transaction: A customer returns stock that was incorrectly supplied and its
value worth is 200. Voucher Entry:
Sales Account
Debit
Customer Account (Sundry Debtors) Credit
Go to the Gateway of Tally > Accounting Vouchers > F8: Credit Note. The entry
made will appear similar to the one as, shown below:
Figure: Credit Note Voucher
Press Y or Enter to accept the screen.
7. Purchase Voucher (F9)
Purchase voucher is used to record the Purchase Transactions of the company.
The entry can be passed using the Voucher Mode or the Invoice Mode where the
calculations can be automated and, the user can experience the ease of feeding
the transactions into the system.
Transaction: A company buys computer parts on credit
Voucher Entry:
Ashima Aqua (Purchase Account) Debit
Shraddha Pvt. Ltd. (Sundry Creditor) Credit
Go to the Gateway of Tally > Accounting Vouchers > F9: Purchase. The entry
made appears, as shown below:
Figure: Purchase Voucher
Press Y or Enter to accept the screen.
8. Debit Note Voucher (CTRL+ F9)
This voucher type is made available when the option Use Debit/Credit Notes is
set to Yes in the F11: Features (F1: Accounting Features).
Debit Note is a document issued to a party stating that you are debiting their
Account in your Books of Accounts for the stated reason or vice versa. It is
commonly used in case of Purchase Returns, Escalation/De-escalation in price,
any other expenses incurred by you on behalf of the party etc.
Transaction: A company returns damaged goods worth 3000 to the supplier.
Voucher Entry:
Shraddha Pvt. Ltd. (Sundry Creditor) Debit
Ashima Aqua (Purchase Account) Credit
Use a Debit Note to record this entry. Go to the Gateway of Tally >
Accounting Vouchers > F9: Debit Note. The entry made appears as shown
below:
Figure: Debit Note Voucher
Press Y or Enter to accept the screen
9. Reversing Journals (F10)
Reversing Journals are special journals that are automatically reversed after the
date of the journal. They exist only for a day and are effective on the date of the
reversing journal. This voucher type is available only if the feature Use
Reversing Journals & Optional Vouchers is set to Yes in the F11: Features (F1:
Accounting Features).
Transaction: Records the voucher entries in a Reversing Journal Register,
without affecting the ledger accounts and financial statements
Voucher Entry:
Ledger Account Debit
To Ledger Account Credit
Go to the Gateway of Tally > Accounting Vouchers > F10: Reversing Journal.
10. Memo Voucher (CTRL+ F10)
Memo Voucher is a non-accounting voucher and the entries made using it will
not affect your accounts. In other words, Tally.ERP 9 does not post these entries
to ledgers but stores them in a separate Memo Register. You can alter and
convert a Memo Voucher into a Regular Voucher when you decide to bring the
entry into your books.
11. Optional Voucher
This is another non-accounting voucher which is available only if the feature,
Use Reversing Journals & Optional Vouchers is set to Yes in the F11: Features
(F1: Accounting Features). It differs from the Memo Voucher in two respects:
It is not a voucher type, since all the other voucher types can be marked as
Optional during a voucher entry.
You have the option to bring this voucher into your accounts temporarily and see
its effect on financial reports. Any voucher type (except non-accounting
voucher) can be designated as an Optional Voucher.
12. Post-dated Vouchers
Post-dated Vouchers are ignored by Tally.ERP 9 until the date in question. This
is useful for entering transactions that take place on a regular basis. For example,
if you pay for something by instalments, you can set-up the payments in
advance, and Tally.ERP 9 will only enter them in the ledgers as and when they
fall due. A voucher is marked as Post-dated while creating or altering it.
Let us see the examples of each voucher type.
1) Started business with cash ' 20,000/-
Cash A/c---------Dr
20,000
To Capital A/c
20,000
[Voucher Type: 'F6' - Receipt]
2) Deposited Cash in the State Bank of India ' 5,000
State Bank of India A/c ----------- Dr
5,000
To Cash A/c
5,000
[Voucher Type: 'F4' Contra]
3) Paid Salary ' 2,000/
Salary A/c ----------- Dr
2,000
To Cash A/c
[Voucher Type: 'F5' Payment]
4) Purchased Computer on credit from Hi-Tech for ' 40,000/
Computer A/c--------Dr
40,000
To Hi-Tech A/c
[Voucher Type: 'F7' Journal]
5) Credit Sales of ' 10,000/- to Mr X
X's A/c----------- Dr
10,000
To Sales A/c
[Voucher Type: 'F8' Sales]
6) Credit Purchases of ' 15,000/- from Mr Y
Purchases A/c ----------- Dr
15,000
2,000
40,000
10,000
To Y's A/c
[Voucher Type: 'F9' Purchases]
7) Received goods returned by Mr X
Sales Return A/c----------- Dr
To X's A/c
[Voucher Type: 'Ctrl + F8' Credit Note]
8) Returned goods to 'Y' ' 2,000/Y's A/c ----------- Dr
To Purchase Return A/c
[Voucher Type: 'Ctrl + F9' Debit Note]
15,000
1,000
1,000
2,000
2,000
Inventory Vouchers
Tally.ERP 9 inventory vouchers perform the same function in the inventory
system as accounting vouchers do. They are the means by which you enter
transactions relating to the Inventory. The vouchers record transactions relating
to the issue and receipt of the stock, the transfer of stock
between godowns, and physical stock adjustments. The following inventory
vouchers are available in Tally.ERP 9:
Purchase Order (Alt+F4): A Purchase order entry has to be made in the books of
the company to assist them in checking whether the goods have been received or
not. The Purchase Order number can be used as a reference. For example, the
company wishes to place an order with the supplier for some goods.
Sales Order (Alt+F5): A Sales Order entry has to be made to record this. The
Sales Order number can be used as a reference. For example, a customer places
an order with the company for purchasing some goods.
Rejections Out (Alt+F6): A Rejections Out Entry is passed to record the rejected
goods. This is a pure inventory voucher. For example: We have purchased some
goods and have rejected a part of it.
Rejections In (Ctrl+ F6): A Rejections in entry is passed to record the rejected
goods. The Rejections In entry is a pure inventory voucher. For example a
customer has rejected goods that were sold earlier.
Stock Journal (Alt+F7): To record the consumption of goods, there is no need for
entries on both sides of the voucher. Such entries can be entered in a stock
journal voucher. For example: the company transfers items of stock from the
warehouse to the shop.
Delivery Note (Alt+F8): Goods that are being delivered to a customer are
recorded in a Delivery Note Voucher.
Receipt Note (Alt+F9): Goods that are received from the suppliers are recorded
in a Receipt Note (Goods Receipt Note - GRN) voucher.
Physical Stock (Alt+F10): Tally.ERP 9 considers the stock available based on the
entry made in a physical stock voucher. For example, on conducting a stockcheck, the company finds a discrepancy between the actual stock and the
recorded stock figure.
Go to the Gateway of Tally > Inventory Vouchers. The basic steps to enter the
vouchers are:
Change the date if necessary.
Select the voucher type from the button bar menu.
Type the details and check whether they are correct before accepting.
Accept the default rates of items that appear according to the standard cost and
standard selling price given in the workbook.
SHORT-CUTS
If you want to repeat last narration of the last voucher, then go to the narration of
the voucher and Press Ctrl +R, it will place the last narration and will save your
time to write to write narration again and again.
You are entering vouchers and suppose you made a mistake in entry, however
the voucher was saved now you want to alter it, then
Hit the page up button from your voucher screen and you will find the last
entered voucher there. Now you can modify it easily alter the voucher.
Similarly you can edit any voucher by this way by selecting a date and pressing
page up button again and again and you will find voucher entries one by one for
that particular date.
If you want to create a new ledger account when you are in the middle of a
voucher, just press Ctrl+C and you will find the ledger creation screen.
If you want to alter name or group of any ledger, you can also do the same
without leaving the voucher entry screen. Just recall that voucher select the
ledger, you wanted to alter press enter one time you and go the amount field now
hit back button and come back to the same ledger account and press Ctrl+Enter.
Here you can modify name, group or any details, and you want to modify.
You are entering the amount and suppose, and you want to do calculation and
you need the result of these calculations to be entered in the amount field. Here
is a short-cut for this too. Go to amount field and Press Ctrl+C, and you will be
redirected to the calculation pane at the bottom of your Tally Screen. Make your
calculations and after that Press ENTER, the amount will be automatically
fielded in the amount column.
If you wanted to delete a voucher go to that particular voucher, then Press Alt
+D.
III
IMPLEMENTING FINAL ACCOUNTS IN TALLY
So far, we have discussed that how the business transactions are recorded in a
Fournal and Ledger and how to prepare Trial Balance. It is quite natural that
the businessman is interested in knowing whether his business is running on
Profit or Loss, and also the true financial position of his business. The main aim
of Bookkeeping is to inform the Proprietor, about the business progress and the
financial position at the right time and in the right way. Preparation of Final
Accounts is highly possible only after the preparation of Trial Balance.
Final account depicts the summarised position of the activities, performance and
the state of affairs of the business. Naturally, these reports are the essence of the
business. Anyone associated with the company must be quite curious to get these
reports. One of the major advantages of Tally is its report generation. Using
Tally's display option, you can get the desired reports easily. It provides excellent
navigation facilities through buttons at Button Bar to jump from one report to
another without leaving the Screen. Further, you can configure and format the
style of a report in your own way, decide the columns and contents, etc. Based
on the voucher that you enter, the Tally automatically prepares the Books of
Accounts and the Financial Statements. Tally provides you the power to drill
down step-by-step, from a top level report until the vouchers that contributed the
report to verify the integrity, carry out any modification or to add, insert,
duplicate, cancel or delete a voucher and thus, the report is updated online. You
can also alter a Group or Ledger, while viewing the report.
Chapter 5
Display/Reports In Tally.ERP 9
The reports generated by Tally are classified in two major categories, namely:
1. Financial Reports
2. Inventory Reports
The financial reports are further divided into:
a. Statutory Financial Reports (like Sales Register, Purchase Register, Journal
Register, Cash Book, Bank Book, Ledgers, Trial Balance, Profit and Loss
Account and Balance Sheet).
b. Financial MIS reports (like Day Book, Group Vouchers, Group Summary, and
receivables, Payables, Cost Centre Reports, Ratio Analysis, Cash Flow
Statement and Funds Flow Statement.
Now, we shall see how some of the reports appear in Tally.
Working With Trial Balance Report
In Tally, the Trial Balance is displayed as a list of all Primary Groups on the left
closing Debits and Credits balances on the right. The Trial Balance is displayed
in grouped form with main groups and their closing balances. In other words, the
Trial Balance Report provides the account balance listing for all the accounts of
the company sorted according to groups. In Tally, the matching of the Trial
Balance is a foregone conclusion as all voucher entries are in the debit and credit
format and must balance at the entry point. You can drill down a Group for
further details of that particular group or Select Details to break down the
grouped information to another ledger or Select Led-wise to take an alphabetic
listing of all ledgers and their closing balances, or Select Columns to bring up
the closing balances for another date.
Tally.ERP 9 shows groupwise Trial Balance. The next level detail for a group
can be exploded by pressing Shift+Enter. Details of all the groups can also be
obtained through configuration, except for groups behaving like sub-ledgers.
Select F1: Detailed to break down the grouped information or simply drill down
a Group for further detail.
Button F4: Group
Generally the default Trial Balance will display only primary groups. If you
want to view only one group select this button. From this you can drill down to
further details of the sub groups or ledgers.
Normally, the default Trial Balance is a grouped Trial Balance. However, if you
wish to view a Trial Balance with only ledgers and their balances, irrespective of
which group they fall, you can make use of this option.
F5: LedWise /Grouped
To get group vouchers click this button. This button toggles between vouchers
and summary.
F7: Vouchers: To configure a trial balance, click this button.
F12: Configure
Show Opening Balance:
You should respond "Yes" to this option to view the Trial Balance in a columnar
from together with opening balances.
Show transactions
By responding Yes to this option, you can view the transaction amounts in a
separate column.
Net Transactions Only
Tally by default displays debit and credit transaction figures in separate columns.
To get Net balances in a single column, set this option to Yes.
To get Debit and Credit values in separate columns, set this option to No.
The Display screen will show Closing Balances
A Trial Balance can be shown with opening balance, transactions and closing
balance or any one of these. Choosing transactions will give further liberty to
restrict Net transaction (Net of Dr and Cr). Net transactions will be useful while
viewing group summary for Expenditure groups / Income Groups.
Books and Registers
In Tally.ERP 9, as soon as the transactions are entered they are immediately
posted to the respective ledgers, books and registers thereby facilitating instant
reporting and faster decision making.
Books of Account
Books of account record the transaction details as entered. Although items are
posted too many different ledgers, Tally.ERP 9 brings all the transactions of a
particular category together into a book of account for viewing and printing. For
example, Cash Book records all the transactions affecting cash and the Sales
Book records all sales transactions.
Working with Day Book Report
The Day Book lists all transactions made in a particular day and by default
displays the last voucher entry date of a regular voucher. It could also be set up
to list all the transactions made over a certain period. Transactions include all
financial vouchers, reversing and memorandum journals as well as inventory
vouchers.
In Tally.ERP 9, the Day Book is by default displayed for the current date (as on
the last date of voucher entry). However, you may specify the required period, as
per your requirements.
To view the Day Book, Go to Gateway of Tally > Display > Daybook
To change the period for which it is displayed, Press F2: Period on the button bar
or press the key Alt+F2. Then specify the required period.
The Day Book for a specified period will be shown then.
To view Day Book for a particular voucher type, you can press F4: Chg Vch
button from the button bar. A menu similar to the one shown below will appear.
Select the required Voucher Type to display. The screen with the Day book for
the selected voucher will be displayed.
Sales Register (Sales Day Book)
Sales Register displays the monthly summary of the sales transactions and
closing balances. The list of transactions pertaining to each month can be
viewed by selecting that month and viewing its details. Tally.ERP 9 permits you
to change the display according to the information required.
The period of the report and the content details can be modified. The Columnar
Periodic Reports can be generated using Alt+N: Auto Column button for
different periods as shown by the columnar details list. Tally.ERP 9 also allows
you to compare similar data of two or more companies stored in the same data
directory.
The Sales register displays the monthly summary of sales made during the
selected period.
To view the Sales Register,
Go to Gateway of Tally > Display >Account books > Sales Register
The Sales Register screen is displayed as shown:
By default, all the registers display the Monthly Summary with transactions and
closing balances.
Drill down into each month to view the sales voucher register for that month,
which finally takes the user to the accounting voucher alteration (secondary)
screen.
Select a month and press Enter to see the Sales Voucher Register.
A list of all the sales vouchers pertaining to the month you selected will be
displayed. You can use the options in the button bar to change the display
according to your preferences. You can change the period of the report as well as
the depth of information.
Use F12: Configure to see the report with some or all of the following
information, namely
Narrations, Bill-wise details, Cost Centre details and Inventory details.
Click on F1: Details to view the reports in detailed format from within the Sales
Voucher Register screen.
Display Purchase Register
A Purchase Register displays the information on the periodic purchases of a
business concern. The Purchase register helps in analyzing the details of the
movement of the purchased goods to various godowns, on the basis of which the
stock movement at each godown is determined.
Go to Gateway of Tally > Display > Account books > Purchase Register
The screen similar to the one shown below will be displayed.
Purchase Returns made during a year can also be traced. The parties to whom
the purchase returns have been made and the causes thereof can be analysed to
draw conclusions on the supplier and the quality of purchases made.
A Purchase Register can be configured using the Ctrl+F12: Value button to view
the following information.
Actual Quantity
Billed Quantity
Date
Bill Name
Cost Centre
Cost Category
Voucher Number
Narration
Stock item
Godown Name
Display Cash Book
The account books record individual transaction details that have been entered.
Though the items are posted to different ledgers, Tally.ERP 9 brings together all
the transactions of one category into books of account for viewing and printing.
For example, the cash book records all transactions that affect cash.
Cash/Bank Summary
To display the cash/bank summary, Go to Gateway of Tally > Display > Account
Books > Cash/ Bank Book(s)
The Cash/Bank Summary similar to the one shown below will appear:
As earlier mentioned also, the values and particulars for all fields are specific to
our example and they will vary based on what values you have specified for your
company.
Display Bank Book
To view the Bank Book Summary
Go to Gateway of Tally > Display > Account Books > Cash/Bank Book(s)
Display Journal Register
Journal Register Report displays all the journal vouchers that have been
passed.
To view a journal register details, Go to Gateway of Tally > Display > Account
Books > Journal Register.
The Journal Register Screen will be displayed. You can also view the
transactions related to other voucher types like sales or purchases in this screen.
To change the voucher type, Press F4 at the Journal Register screen which will
then display the details of the selected voucher type.
Display Post dated Vouchers
While entering the vouchers, you can mark them as post-dated. The Tally.ERP 9
will not update the vouchers in ledgers until the specified date is approached.
This is useful to enter the transactions that take place on a regular basis. For
example, if you pay for something by installments, you can set up the payments
in advance, and the Tally.ERP 9 will only enter them in the ledgers as they fall
due.
Mark vouchers Post-dated by using CTRL+T, or click on the Post dated button
from the Button Bar. This button toggles with Current.
Post-dated Vouchers Register
All Post-dated vouchers are maintained in a Post-dated Voucher Register.
Go to the Gateway of Tally> Display> Exception Reports> Post-Dated Vouchers
It will list all your post-dated vouchers.
Working with Profit & Loss A/C Report
The Profit and Loss Account is a statutory report that shows the operational
results for a given period of time. It lists out the Incomes and Expenditures based
on the Primary Groups of Tally. The Profit & Loss Account in Tally is updated
instantly with every transaction voucher that is entered and saved. No special
processing is required to produce a Profit & Loss Account. The following is the
syntax to view the Profit & Loss Account: Gateway of Tally -> Profit and Loss
Account (to view the profit and loss account in a detailed format)
Buttons
F12 Configure
The following screen will appear as soon as you press this button
Show Vertical Profit and Loss:
To view the Profit and Loss Account in a Vertical Form, respond with 'Yes' to
this option. If you respond with 'No' to this option, the Profit and loss Account
will be displayed in T Form.
Show Percentage
If you respond with Yes to this Option, you can view the Percentages along with
the Amounts. Show Gross Profit
This prompt will appear only if you have responded with No to option Show
Vertical Profit & Loss. If Responded with Yes to this option, you will get a
separate Trading Account showing the Gross Profit or Gross Loss.
Working with Balance Sheet
The Balance Sheet at the Gateway of Tally screen provides the ready summary
figure still the last voucher entered. From here, you can move on to any direction
and any part of the system, even the lowest level and trace back. The following is
the syntax for viewing the Balance Sheet.
Gateway of Tally -> balance sheet ->F12
Press (to view the profit and loss account in a detailed format)
Buttons
F1
While 'Detailed' displays next level group, the 'Condensed' displays parent level
primary groups. If you wish to compare this with the Balance Sheet of another
Company or view the Report for Different Periods, select this button.
Alter Column
This button allows you to alter the parameters of a column that you have already
given.
Del Column
This button activates on creation of a new column for deleting a column.
Auto Column
You can click this button when there is a need for Multiple Period Column, etc.
F8 Other Reports
Not Functional.
F9 Inv. Reports
This button facilitates the views of inventory reports quickly without leaving the
Current Screen. F10 Acc. Reports
Allows to generate the following Accounting Reports
a. Bills Payable - Displays all the outstanding bills that are to be payed.
b. Bills Receivable - Displays all outstanding bills that are to be received.
c. Cash/Bank Book - Displays Cash / Bank Group Summary, all groups and
ledgers placed under cash in hand. Bank Accounts and Bank OCC Groups.
d. Cash Flow - Displays month-wise cash flow summary. Cost center summary Displays cost category summary with underlying cost centers.
e. Day Book - Displays day Book.
f. Funds Flow - Displays month - wise funds flow summary.
g. Profit and Loss A/c - Displays profit & loss a/c for the relevant period.
h. Purchase Order - Displays purchase order details.
i. Purchase Register - Displays purchase register monthly summary. j. Sales
order - Displays sales order details.
k. Sales register - Displays sales register monthly summary
l. Statistics - Displays all types of vouchers and accounts (masters) with their
numbers.
F12 Configure
The above button allows you to configure the report.
F12 Configure
The button allows you to configure the report
Show Vertical Balance Sheet:
Normally, the tally displays the Balance Sheet in horizontal form (T-Form) with
closing balances of Primary Groups of Assets and Liabilities. If you want a
vertical format of Balance Sheet with details of Sources and Applications of
Funds, you should respond with 'Yes' to this query. In Tally, the Balance Sheet
can be viewed in a columnar form only with a vertical format.
Show Percentage:
To get percentage for the closing balance of Groups Respond with yes to this
option, you respond so to this query, the values for each Group would be
displayed as percentage of the total of Assets and Liabilities.
Show Working Capital Figures:
This option is available for both the formats of Balance Sheet i.e. vertical and
horizontal. If you respond with 'yes' to this option, you will get working capital
figures.
Method of Showing a Balance Sheet
The normal format of Balance Sheet is Liabilities / Asset, i.e., the Liabilities on
the left hand side and Assets on the right hand side. If you want the Liabilities on
the right hand side and the Assets on the left hand side, you can configure so in
the Tally.
Working with Stock Summary Report
Displaying / Viewing Stock Summary
A Stock Summary is a statement of the stock-in-hand on a particular date. It is
one of the primary inventory statements that is generated in the Tally.ERP 9, and
updates the stock record in real time as and when transactions are entered. The
Stock Summary provides information on stock groups and shows the quantity
details, rate and the closing value of the stock items under them.
The statement can be drilled-down, as with all Tally.ERP 9 reports, and
configured to enable you to view different details, for instance, the total flow of
stock can be viewed with a single report. Tally.ERP 9 treats the Stock Summary
as one of the primary statements and makes it accessible directly from the
Gateway of Tally.
To view the Stock Summary
Go to the Gateway of Tally > Stock Summary
By default, the Stock Group balances are displayed.
Select Detailed to show the another level of detail.
The detailed report which includes sub-groups or Stock Items (in cases where
there are no subgroups), is displayed as shown:
The Stock Groups displays total quantities, as the unit of measure is the same for
all the stock items added. A grand total is also available as there is a single unit
of measure for all addable items. If there were different units of measure, then
the grand total would not be calculated and displayed.
Configurations in the Stock Summary
Stock Summary can be further configured to derive the following information:
1. Stock Flow: This can be viewed using the F12: Configure button on the
Tally.ERP 9 screen. The flow of stock ranging from opening stock, goods
inwards, goods outwards to the closing stock can be analysed in terms of its
quantity. It gives you an insight into the quantitative movement of each
stock item. However, for reconciling the closing balance value, this report
cannot be referred to, since the outward goods are valued at the sales price
and not the cost price.
2. Profitability and Consumption: This can be viewed using the F7: The
Show Profit button on the screen. Stock Summary shows the profitability
and consumption details for each stock item. This statement shows the
quantity and value of the opening stock, inward goods, outward goods,
closing stock and the value of consumption (using the cost method). This
statement is used to reconcile the closing balance because here the closing
value is derived by taking the consumption values instead of the outward
goods at the sales value.
Stock Flow
You can configure the Stock Summary Statement to display the flow of goods.
Select F12: Configure, while on the Stock Summary screen.
Set the configuration, as shown.
The Stock Summary displays the flow of stocks, i.e., the Opening Stock, Goods
Inwards, Goods Outward and the Closing Stock, as shown.
The report is quantitatively reconciled, i.e., Opening Quantity + Inward Quantity
- Outward Quantity = Closing Stock Quantity. However, this is incorrect for the
values as the Outward Value displays the Sale Values, not the Cost. The Closing
Stock Value is, however, based on the Cost and the Cost Method adopted for
each item. The Value Reconciliation is possible if you are using the
Consumption figures instead of the Sales Values.
Profitability and Consumption
Stock Summary can also be expanded to show consumption and gross profits for
each stock item.
Select F7: Show Profits or F12: Configure, while on the Stock Summary screen.
Set Show Consumption and Gross Profits to Yes.
The Stock Summary report will be displayed to you.
The Outward Column shows the Cost of Goods Outwards termed as
Consumption and the Gross Profit Value and Percentage are displayed.
This statement is useful to analyse:
Profitability Analysis of Sales (Outwards)
Value Reconciliation of Stocks
Stock Valuation Methods
The Stock Summary Report with Stock Valuation Methods can be used to view
the effects of different methods on the value of stocks. Each stock item can be
set up to have a different stock valuation method. In some instances, a particular
method of valuation may be required, for example.to assess the replacement
value or saleable value of stock. The Tally.ERP 9 displays stocks in any or all the
valuation methods dynamically and simultaneously, without any complicated
procedure.
Suppose you want to use Last Purchase Cost method to assess the replacement
value and the Last Sale Price method for realizable (saleable) value.
In the Stock Summary screen, select the New Column button on the button bar
or press Alt+C. The screen appears, as shown:
Select the Last Sale Price from the Stock Valuation Methods list.
The Stock Summary report with Last Sale Price column will be displayed to you.
The Tally.ERP 9 allows you to view the effects of different stock valuation
methods on the closing stock values. You can view simultaneous columnar
display of different stock valuations by using the Alt + N: Auto Column button
on the screen.
Understanding Ratio Analysis
Ratio analysis is a powerful tool for financial analysis. A meaningful
analysis of a financial statement is made possible by the use of ratios. Ratios
are a set of figures compared to another set. The comparison gives an
understanding of the financial position of a business unit. There are a
number of ratios which can be computed from a single set of financial
statements. The ratios to be computed depend on the purpose for which
these ratios are required. A single ratio may sometimes give some
information, but to make a comprehensive analysis, a set of inter-related
ratios are required to be analysed.
To view the Ratio Analysis, Go to Gateway of Tally> Ratio Analysis
The Ratio Analysis screen is displayed, as shown.
The screen is divided into two parts:
Principal Groups
Principal Ratios
The Principal Groups are the key figures that give perspective to the ratios.
Principal Ratios relate two pieces of financial data to obtain a comparison that is
meaningful.
Principal Groups and Key Figures
Working Capital
The Net Working Capital is calculated by subtracting the Current Liabilities
from the Current Assets. Financial Analysts often consider the total Current
Assets as the Working Capital. This serves as a measure of how far the firm is
protected from the liquidity problems.
Cash in Hand and Bank Balances
This data presents another perspective on the liquidity position.
Sundry Debtors (due till today)
The list of all the debtors and the total debts due, as on the date of the statement,
are displayed.
Sundry Creditors (due till today)
The list of all the creditors and the total credits due, as on the date of the
statement are displayed.
Sales and Purchase Accounts
The Sales and Purchase Accounts, which collate the trading activity for the
period, are displayed.
Stock in Hand
This field displays the stock in hand, as on the date of the report and together
with Cash and Bank Balances and Debtors, completes the Current Assets aspect
of the Working Capital.
Net Profit
This is derived from the Profit & Loss Account and is the profit after direct and
indirect expenses. Working Capital Turnover (Sales Accounts/Working Capital)
This is an activity or efficiency ratio that shows the number of times the working
capital has been rolled over during a particular period. It depicts how effectively
the firm is using its working capital.
Inventory Turnover (Sales Accounts/Closing Stock)
This is an activity or efficiency ratio that shows the number of times the stock
has been rolled over during the period of the report. It depicts how effectively
the firm is using its inventories.
Principal Ratios
You can compare the Principal Ratios of your company over a certain period
with industry averages as well as with ratios pertaining to other periods to assess
the current performance.
Current Ratio (Current Assets: Current Liabilities)
This indicates the solvency position of the enterprise. The ideal ratio is 2 under
normal business conditions.
Quick Ratio (Current Assets - Stock in Hand: Current Liabilities)
This indicates the liquidity position of the enterprise. This ratio is useful in
planning the future cash requirements.
Debt Equity Ratio (Loans (Liabilities): Capital + Net Profit)
This indicates the level of exposure to the external borrowings, and is a useful
tool in determining the options of raising the additional capital, internally or
externally.
Gross profit % (Gross Profit / Total Turnover)
This indicates the percentage of profit earned from direct operations
(manufacturing). This ratio is useful, where an enterprise produces more than
one product, in identifying the order of profitability and making decisions, such
as increasing production capacity, continuance of a product, etc.
Net Profit % (Net Profit/ Total Turnover)
This indicates the percentage of net profit earned by the enterprise after
considering all expenses of the enterprise. This is useful in identifying the
overall profitability of the enterprise.
Operating Cost % (As percentage of Sales Accounts)
This is referred to as the percentage of operating cost with respect to the total
turnover. This ratio is useful in making decisions in the areas of cost control, cost
reduction, etc.
Receivables Turnover in Days (Payment performance of Debtors)
This is an analysis of debtor wise payment performance and a useful tool in
identifying the most preferred and least preferred customers or agents and
planning the receivables collection process.
Return on Investment % (Net Profit/Capital Account + Net Profit) %
This is a useful tool in measuring returns expected from the project/product and
plan additional capital infusion, increase in production capacity (subject to
market demand), etc.
Return on Working Capital (Nett Profit/Working Capital) %
This is referred to as the percentage of net profit to the working capital (current
assets - current liabilities).
Working Capital Turnover Ratio (Sales Account/Working Capital)
This indicates how effectively the working capital is used in terms of turnover, it
can help to generate. It is a useful tool in identifying the level of deployment of
funds with respect to sales.
Inventory Turnover Ratio (Turnover / inventory)
This indicates the relationship of inventory with respect to sales. This is a useful
tool in identifying the extent of investment in stock and indicates:
1. Stock control measures whether to be taken in case of change in demand
2. Procurement planning
Chapter 6
Payroll Accounting
Payroll is the total amount of money paid by a business to its employees over a
set amount of time. The Payroll is the aggregate expenditure on wages and
salaries incurred by a business in an accounting period. It can also refer to a
listing of employees, giving details of their pay.
Payroll includes the gross pay due to the employee and employer taxes.
The gross pay is divided into the net pay actually received by the employee and
the deductions made from the gross pay for the employee taxes and other
deductions, such as pension contributions.
In payroll accounting, it is important to distinguish between employee taxes
which are deducted from the employee's gross pay and are therefore paid by the
employee, and employer taxes which are in addition to the gross pay and paid by
the employers.
Both taxes are usually collected by the employer and paid over to the relevant
tax authority.
The analysis of payroll is shown below:
Employers record two basic types of payroll entries: paying the employees
(payroll entry) and paying the employer payroll taxes (employer payroll tax
entry).
If the gross pay is ' 22,000 and employee tax is ' 5000 with no further
deductions, then the net pay due to the employee is ' 17000. The double entry
would be as follows:
A. Payroll Entry
Payroll Accounting – Gross pay
Account
Gross Wages
Employee tax
Net Wage Control
Total
Debit Credit
22,000
5000
17000
22,000 22,000
The Gross wage is the cost charged to profit and loss. The Employee tax control
is a balance sheet control account representing the amount due to the tax
authority, and the net wage control is also a balance sheet control account
representing the amount due to the employee.
B. Employer Payroll Tax Entry
In addition, the Employer tax liability needs to be recorded.
Payroll Accounting – Employer Tax
Account
Employer Tax
Employer Tax Control
Total
Debit Credit
2500
2500
2500 2500
The first entry is the cost charged to the profit and loss, and the second entry is
the liability to the tax authorities recorded in the balance sheet.
C. Payroll Accounting - Gross Pay
When you pay the employees using cash, the entry is to the Net Wage Control
Account:
Payroll Accounting – Gross Pay
Account
Cash
Net Wage Control
Total
Debit Credit
17,000
17,000
17000
Any difference on this account should be reconciled by the payroll accounting
team, as it means an employee has either been underpaid or overpaid.
Finally, the tax authority is paid and the tax control accounts are cleared.
Payroll Accounting – Payment to the Tax Authority
Account
Cash
Employee tax Control
Employer tax Control
Total
Debit Credit
7,500
5000
2500
7,500 7,500
Again the control accounts should net to zero after the payments have been
made, and any difference needs to be investigated before completing that
period's payroll accounting.
Primary Payroll Journal Entry
The primary journal entry for the payroll is the summary-level entry that is
compiled from the payroll register, and which is recorded in either the payroll
journal or the general ledger. This entry usually includes debits for the direct
labour expense, salaries, and the company's portion of payroll taxes. There will
also be credits to a number of accounts, each one detailing the liability for
payroll taxes that have not been paid, as well as for the amount of cash already
paid to employees for their net pay. The basic entry (assuming no further
breakdown of debits by individual department) is:
Account
Debit
Direct labour expense
xxx
Salaries expense
xxx
Payroll taxes expense
xxx
Cash
Federal withholding taxes payable
Social security taxes payable
Medicare taxes payable
Federal unemployment taxes payable
State withholding taxes payable
State unemployment taxes payable
Garnishments payable
Credit
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
There may be a number of additional employee deductions to include in this
journal entry. For example, there may be deductions for 401(k) pension plans,
health insurance, life insurance, vision insurance, and for the repayment of
advances.
When you later pay the withheld taxes and company portion of payroll taxes to
the IRS, you then use the following entry to reduce the balance in the cash
account, and eliminate the balances in the liability accounts:
Accrued Payroll Journal Entry
It is quite common to have some amount of unpaid wages at the end of an
accounting period, so you should accrue this expense (if it is material). The
accrual entry, as shown next, is simpler than the comprehensive payroll entry
already shown, because you typically clump all payroll taxes into a single
expense account offsetting the liability account. After recording this entry,
reverse it at the beginning of the following accounting period, and then record
the actual payroll expense (as just described under the "Primary Payroll Journal
Entry" section whenever it occurs.
Account
Debit
Direct labor expense
xxx
Salaries expense
xxx
Accrued salaries and wages
Accrued payroll taxes
Credit
xxx
xxx
Tally Payroll is integrated with Accounting to give the user the benefits of
simplified Payroll Processing and Accounting. Tally Payroll supports
payslip printing; flexible salary/wage, attendance, leave and overtime
registers; gratuity and expat reports alongwith statutory reports. Tally.ERP
9 delivers integrated Payroll Management Software with all the necessary
Payroll Compliances built in. The Payroll Management feature handles
simple Payslip Generation right up to complex allied processes including
Loans and Advances, Salary Revision and Arrears Calculation, Deductions
and Ad-hoc payments etc.
Tally.ERP 9 intergrated Payroll Management Software also covers a wide range
of functions including:
Create and maintain the employee database viz. contact/personal/bank
account/statutory details, etc., expat details like Passport, Visa and Work Permit
Employee group or department wise categorisation
Attendance, overtime, leave or production details
Multiple salary structures for different groups of employees, for example,
department-wise salary structures and processing
Support Salary revision and arrears calculation both as prospective and
retrospective change
Tracking of loans and advance paid to employees and defining multiple criteria
for recovery of such advances (single or multiple installments from the
employee's salary)
Complete support to implement Provident Fund and Employee Insurance
Schemes along with Professional Tax Calculation
Supports Gratuity as per the specified criteria
Benefits of using Tally.ERP 9 Intergrated Payroll Management Software:
Time spent on processing salaries and paper work can be reduced to a great
extent.
Accurate and timely salary processing.
Salary calculation against employee attendance is much easier.
Generate the Payment Advice to instruct the bank for salary payment.
Payslips can be printed, exported to Excel or emailed to the respective
employees.
All payroll-related reports can be generated with the click of a button.
Above all, the Payroll feature is completely integrated with Accounts.
The New Payroll Feature provides the following Statutory Reports:
Employees Provident Fund Computation & Support:
PF deduction & contribution monthly statement
PF Combined Challan Form 5
Form 10
Form 12A
Form 3A
Form 6A etc.
ESI Computation & Support:
ESI deduction & contribution monthly statement
Payment Challan
Form 3
Form 5
Form 6 etc.
Professional Tax computation for all the states with the following reports:
PT Computation Report
PT Monthly Report.
Configuring and Exploring Payroll in Tally.Erp 9
Payroll in Tally.ERP 9 is easy to use and can handle all the functional,
accounting and statutory requirements of the payroll department.
The payroll Configuration can be enabled, as shown below:
Gateway of Tally > F12: Configure > Payroll Configuration
The option Show Statutory Details (for India/ SAARC companies only) can be
set to Yes to enter the PF, ESI and PF PAN details in the Employee Master
Creation screen and print the same information in the Employee Payslip. For
International Companies, the option Show Statutory Details will allow to capture
only the Employee's Income Tax Number in the Employee Creation screen.
The options, Show Passport & Visa Details and Show Contract Details, should
be set to Yes as shown, to capture the information regarding the Employee
Passport Number, Passport Expiry date, Visa Number, Visa Expiry date,
Contract Start and Expiry dates in the Employee Master and to display the same
in the Expat Reports.
The option Show Deactivated Employees can be set to No, to avoid displaying
the names of the resigned employees in the Attendance and Payroll Vouchers.
The content in the Information in Payment Advice field will be printed in the
Payment Advice sheet.
Press Enter to accept and save.
The Payroll Info. menu allows to create various payroll masters required for
computing earnings and deductions for employees.
Enabling Payroll in Tally.ERP 9
In Tally.ERP 9, the activation of Payroll requires a one time simple setup. Follow
the steps given below to enable the Payroll.
Enable Payroll
Go to Gateway of Tally > Press F11: Company Features > press F1: Accounting
Features
In the F11: Accounting Features screen:
Set Maintain Payroll to Yes
Set More than ONE Payroll / Cost Category to Yes
The completed F11: Accounting Features screen is displayed, as shown:
Figure: F11: Accounting Features Screen
Press Enter to Accept the F11: Accounting Features Screen
The option More than ONE Payroll/ Cost Category is set to Yes, when separate
cost categories are created to allocate the Employee Cost. In cases, where only
one cost category, i.e., the primary cost category is used to allocate the multiple
cost centres, and this option may be set to No.
Once the Payroll Feature is activated in Tally.ERP 9, the following two new
options get activated in the F11: Statutory & Taxation Master.
Enable Payroll Statutory Features
Go to Gateway of Tally > press F11: Company Features > press F3: Statutory &
Taxation in F11: Statutory & Taxation Features Screen:
Set Enable Payroll Statutory to Yes
Set Set/Alter Payroll Statutory Details to Yes
Figure 1.3: F11: Statutory & Taxation Features Screen
Press Enter
In the Payroll Statutory Details Screen:
Enter the Provident Fund & Employee State Insurance details of the company, as
shown:
Figure 1.4 Payroll Statutory Details screen
Press Enter to Accept the screen and go back to F11: Statutory & Taxation
Features screen
Press Ctrl+A to Accept the screen.
Creating Payroll Masters And Processing With Payroll Vouchers
The Payroll feature in Tally.ERP 9 requires minimal effort for accurate payroll
processing. Essentially, Payroll involves the calculation of amounts due for an
employee on the following basis:
Pay on Hourly wages
Provident Fund
Company Code: This field denotes the Provident Fund Code of the Company
allotted by the Department. Company Account Group Code: This field denotes
the Provident Fund Group Code of the Company allotted by the Department.
Company Security Code: This field denotes the Security Code of the Company
allotted by the Department.
Employee State Insurance
Company Code: This field denotes the ESI Code of the Company allotted by the
Department.
ESI Branch Office: This field denotes the nearest ESI office under whose
jurisdiction, I the company is situated.
Standard Working Days (per month): This field denotes the consistent Pay
Period to be considered for ESI Calculation. If this field is left blank, the
calculation is done based on the Calendar days in each month.
Pay on a fixed basis such as certain amount per week, per month and so on 9 Pay
to sales persons on commission
Reimbursement of expenses such as travel expenses, either as paid by the
employee or based on per item rate
Pay on the basis of number of pieces produced/ manufactured/ sold
Generating Payroll Reports
It is essential to quantify the following payroll information for the purpose of
computation of payments to employees. For this purpose, the following Payroll
masters have to be created in Tally. ERP 9 in the manner as discussed:
Employee Masters
Payroll Masters
Pay Heads
Salary Details
Processing payroll
1. Employee Masters
The Employee Master records the employee information - department, date of
joining, date of leaving, ID number, designation, location, function, employee
bank details, statutory details, Passport and Visa details, and so on. The
Tally.ERP 9 provides the flexibility to create the Employees and Group them
under specific Employee Group which in turn can be created under specific
Employee Categories. The following masters can be created in the Tally.ERP 9
to successfully record the Employee Details:
a) Employee Category: The Employee Category will provide an additional level
to classify the Employees in a logical manner.
b) Employee Groups: Businesses with multiple departments, divisions, functions
or activities may create the required employee groups and classify the individual
employees under a specified group, i.e., Production, Sales, Marketing, Stores,
Support or a particular group of employees such as managers, supervisors, substaff and so on.
The Employee Group Creation screen is displayed, as shown:
Figure: Employee Group Creation
For example: To create Production as an Employee Group:
Go to Gateway of Tally > Payroll Info. > Employee Groups > Create In the
Employee Group Creation screen,
Select Primary Cost Category as the Category (You can also create a separate
cost category to segregate Employee Cost based on respective categories)
Type Production as the Name of the Employee Group
Select the group as Primary (Tally.ERP 9 allows an unlimited grouping of
Employee Groups)
Press Enter to Accept the Employee Group Creation screen
c) Employees:
After creating the Employee Groups, create individual Employee Masters, with
or without grouping them, under the Employee Group Master. In Tally.ERP 9,
you can record all the necessary information of the employees in the Employee
Masters. Tally.ERP 9 also allows you to enter the Statutory, Expat and Contract
details of the employees. To display the options for entering the Statutory, Expat
and Contract details enable these options from the Company Configuration
screen as explained below: Go to Gateway of Tally > F12:Configure > Payroll
Configuration.
Set the following options:
Show Statutory Details to Yes
Show Passport & Visa Details to Yes
Show Contact Details to Yes
The F12: Payroll Configuration screen is displayed, as shown:
Figure F12: Payroll Configuration Screen
Press Enter to Accept
Tally.ERP 9 allows you to configure the above settings from the Employee
Creation screen by pressing F12: Configure.
The information to be printed in the Payment Advice is automatically pre-filled
in Tally.ERP 9. However, you can also modify the same as per your
requirements.
Pay Slip Note will be printed if you does not want the Authorised details to be
printed while emailing or printing the Pay Slips if set to Yes in the F12:
Configuration.
A customised message for specific occasion can be entered as Pay Slip Message
and will be printed if set to yes ion F12 screen while emailing or printing.
The option Date of Leaving and Reason for Leaving will be available only in the
Alteration mode.
2. Payroll Masters
Pay components are computed based on the Payroll Units. Therefore, create the
following Payroll masters in Tally.ERP 9:
a) Payroll Units
A payroll unit refers to a unit of measurement based on which pay heads are
calculated. Payroll units can be classified into two types viz., Simple Payroll
Units and Compound Payroll Units.
Simple Payroll Units refer to individual units such as Day, Week, Month, Hours,
Pcs, Box, Nos etc.. Whereas, Compound Payroll Units refer to Units which are
combination of two simple units, i.e., an Hour of 60 Minutes, Month of 26 days,
Day of 8 Hrs. Usually, the Pay components are computed based on a single or
compound payroll units. Sometimes an employee may be paid on the basis of a
combination of two or more units. For example, an employee is paid a regular
salary and an hourly rate for the overtime hours. In this case, the two likely units
are Calendar Month and Hours. A Payroll Unit is similar to a Unit of Measure
used in the Inventory module. In Tally.ERP 9, pay components are calculated for
a given period depending on the payroll Units. In Tally.ERP, you can create
simple as well as compound units. By default, Tally.ERP 9 contains four preset
Calculation Periods - Days, Fortnights, Months and Weeks. However, you can
also create new Payroll Units based on your business requirements.
Name
Type
Hours
Simple
Minutes
Simple
Hours of 60 Minutes Compound
Symbol
Hrs
Mins
Hrs of 60 Mins
Creating Simple Payroll Units
Go to Gateway of Tally > Payroll Info. > Units (Work) > Create
In the Unit Creation screen,
Select Type as Simple.
Enter the Symbol for the Unit: Specify Mins as the Symbol.
Enter the Formal Name: Type Minutes as the Formal Name.
Provide the Number of Decimal Places for the Unit if you want to use the Unit in
fractions: Specify 2 as the Number of Decimal Places.
The completed Unit Creation screen is displayed, as shown:
Figure: Simple Unit Creation Screen
Press Enter to Accept the Unit Creation Screen.
Similarly, you can create Minutes as another Simple Unit and other Payroll Units
like Minutes, Hours, Pieces, etc.
Creating Compound Payroll Units
A Compound Payroll Unit involves a combination of two payroll Units. For
example: Box of 10 Nos, Dozen of 12 Pcs, Hr of 60 Mins, etc.
To create a compound payroll unit - Hr of 60 Mins
Go to Gateway of Tally > Payroll Info. > Units (Work)
In the Unit Creation screen:
Press Backspace and select Compound as the Type of Unit
Specify Hrs as the First Unit
Enter 60 as the Conversion
Specify Mins as the Second Unit
Press Enter to Accept the Unit Creation Screen.
b) Attendance / Production Types
Attendance/Production Type masters are used to record the nature of attendance/
production i.e.. time and work rate. Based on the various components (Pay
head), you may need to define multiple attendance / production types. In
Tally.ERP 9, you can create Attendance types based on time such as Present and
Absent or based on work based production units such as Piece productions, Sales
performance and so on. An Attendance/Production Type is associated with a pay
head in an employee's pay structure. Attendance/Production Types may also be
defined in hierarchical groups, whereby Attendance Types having a Common
Unit are combined under logical groups. e.g. Present Days can have Present and
Leave with Pay as sub-groups.
The Attendance/Production Type may be:
Attendance/Leave with Pay: This should be used to record the positive
attendance and leave with pay (For example: Present, Sick Leave, etc.)
Leave without Pay: This should be used to record negative attendance (For
example: Absent, Leave Without Pay, etc.)
Production Type: This should be used to record the Production details (For
example: Piece Production, Overtime Hours, and so on)
User Defined Calendar Type: This should be used to create User Defined
Calendar which can be later used to specify the variable number of days for each
month. This allow the per day pay value calculation when the user want to have
different number of working days in each month by considering the Holidays
and Sundays etc. For example: 22 days in January, 26 days in February, 21 days
in March and so on.
We can create the following Attendance Types for Karma Water Solutions Pvt.
Ltd.
Name
Present
Absent
Overtime
Under
Primary
Primary
Primary
Attendance/Production Type Period Type
Attendance/ Leave with Pay Days
Leave without Pay
Days
Production
Hrs of 60 Mins
I. Present Attendance Type
Go to Gateway of Tally > Payroll Info. > Attendance / Production Types >
Create In the Attendance Type Creation screen,
Enter the Name of the Attendance Type: Type Present as the Name of the
Attendance type.
Select Primary from the list for the field Under: Specify the group as Primary in
the field 'Under'. By default primary is selected.
Select Attendance/Leave with Pay as the Attendance Type: Select Attendance/
Leave with Pay as the Attendance Type and the Period Type appears as Days, by
default.
The completed Attendance Type Creation screen is displayed as shown:
Figure: Attendance/Production Type Creation Screen
Press Enter to Accept the Attendance Type Creation Screen.
II. Absent Attendance Type
The completed Attendance Type Creation screen is displayed, as shown:
Similarly, we can create another Attendance Type as Absent and Enter Leave
without Pay in the field Attendance Type for recording the negative Attendance
in the same manner.
Press Enter to Accept the Attendance Type Creation screen.
In the same way, we can create Overtime as the Production Type with
Production as the Attendance Type.
III. Overtime Production Type
To create a Production Type to record the Overtime details,
Go to Gateway of Tally > Payroll Info. > Attendance/Production Types > Create
Enter the Name of the Production Type
Select Primary from the list for the field Under
Select Production as the Attendance Type
Select the appropriate type of unit from the list in the Unit field
The completed Overtime - Production Type Creation Screen is displayed, as
shown below:
Press Enter to Accept the Production Type Creation Screen.
Similarly, we can create the other Attendance/Production Types, as per your
business requirements.
IV. User Defined Calendar Type
To create the User Defined Calendar Type,
Go to Gateway of Tally > Payroll Info. > Attendance/Production Types > Create
Specify the required Name for the Attendance Type
Select Primary in the Under field
Select User Defined Calendar Type in the Attendance Type field
Accept to save.
The User Defined Calendar Type created can be used in the Attendance based
Pay Heads (for example: Basic Pay) to compute the per day salary.
The value for the number of days in each month (period) should be captured
before recording the attendance details using an Attendance Voucher.
3. Pay Heads
The salary components constituting an employee's pay structure is called a Pay
Head. The components of a structured salary are created under Pay Heads. A Pay
Head may be an earning to the employee, or a deduction, which is recovered
from his/her salary. The value of these pay heads could be either fixed or
variable, for each payroll period.
Pay Heads may be broadly considered as Earnings and Deductions from an
employee's point of view. However, these pay heads would still be Expense and
Liability from the employer's viewpoint. Some examples of Earnings Pay Heads
are the Basic Salary, Dearness Allowance, City Compensatory Allowance,
House Rent Allowance, Night Shift Allowance, Uniform Allowance, Sales
Commission and so on. Some examples of Deductions pay heads are Employees'
Provident Fund (EPF), Employees' State Insurance (ESI), Professional Tax,
Income Tax, TDS, Advance (if any).
Create the salary structure components in the pay head. You can create any
complex type of pay head with ease in the Tally.ERP 9. In the Tally.ERP 9, each
pay head is to be created as an individual ledger account and grouped under its
respective group, i.e., all the Earnings pay heads under the Indirect Expenses
group or Direct Expenses group and all the Deductions pay heads under the
Current Liabilities, Current Assets and Duties & Taxes group.
The preset Pay Head types in the Tally.ERP 9 are:
a. Earnings for Employees
b. Deductions from Employees
c. Employees' Statutory Deductions
d. Employer's Statutory Contributions
e. Employer's Other Charges
f. Bonus
g. Gratuity
h. Loans and Advances
i. Reimbursements to Employees
The pay heads marked with the above pay head types will be available during
the payroll processing, and if the Pay Head Type is marked as Not Applicable, it
will not be available. The Salary Payable, PF Payable, ESI Payable Ledgers
should be created by selecting 'Not Applicable' as the 'Pay Head'
Type.
Create the following pay heads in the books of Karma Water Solutions.
A. Basic Pay Head Creation
Go to Gateway of Tally > Payroll Info. > Pay Heads > Create
In the Pay Heads Creation Screen,
In the Pay Heads Creation Screen,
Type Basic Pay as the Name of the Pay Head
Select Earnings for Employees in the field Pay Head Type.
The Pay Head Creation screen is displayed, as shown:
Specify the group as Indirect Expenses in the field, Under and press, Enter
Set Affect Net Salary to Yes
Specify Basic in the field Name to appear in the Pay Slip
Set Use for Gratuity to Yes
Select On Attendance in the field, Calculation Type and then press, Enter
Figure: Basic Pay Head Creation - Calculation Type
Affect Net Salary - If this option is set to Yes, then the Pay Head will appear in
the Salary Slip for calculation of the Net salary.
Name to Appear in the Pay Slip - If Affect Net Salary is set to Yes, then the
required name for the Pay Head that appears in the Pay Slip should be
specified against this field.
Use for Gratuity - This parameter should be set to Yes, for the Pay Head
components that will be used for the Gratuity calculation (e.g. Basic and DA)
Calculation Type refers to the method of computation of pay components. In
Tally.ERP 9, there are basically 5 calculation types.
As Computed Value - This method is used when the pay value is computed
based on certain predefined factors, i.e., slab rates, pay heads and so on.
As User-Defined Value - This method is used when the value ofpay is not fixed
and does not depend upon any pay components.
Flat Rate - This method is used when the value of the pay heads is fixed for
the given month. This calculation type is not dependent upon
attendance/production. For example, conveyance of ' 800 per month.
On Attendance - This calculation type depends upon the Attendance Records
and is used along with rate per unit of attendance. For example, Overtime of '
25 per hour.
On Production - This method is used when the pay value is measured based on
work done, i. e., pieces or numbers produced/manufactured.
Select Present in the field Attendance/ Leave with Pay.
Select Months in Calculation period field and then press Enter
Select User defined in the Per Day Calculation Basis field
Specify the Months of 22 Days and press Enter
Select Normal Rounding as the Rounding Method and then press Enter.
There are four methods of Rounding Off in the Tally.ERP 9 which are as follows:
Not Applicable - The decimal points will be taken into consideration, and the
amount will not be rounded off.
Downward Rounding - The decimal points will not be taken into consideration
and the amount will be rounded off to the lower value.
Normal Rounding - The amount will be rounded off to the nearest currency
value.
Upward Rounding - The amount will be rounded off to the higher value.
Specify 1 as the Rounding Limit (The Rounding Limit allows the value to be in
multiples of the limit specified and is based on the Rounding Method selected)
Press Enter to Accept the screen
The completed Basic Pay Head Creation screen is displayed, as shown:
B. House Rent Allowance Pay Head Creation
Similarly, create House Rent Allowance Pay Head. In the Pay Head Creation
screen,
Type House Rent Allowance as the Name of the Pay Head
Select Earnings for Employees in the field, Pay Head Type
Specify the group as Indirect Expenses in the field Under and then press, Enter
Set Affect Net Salary to Yes
Specify HRA as the Name to appear in Pay Slip
Set Use for Gratuity to No
Select As Computed Value in the Calculation Type field and then press, Enter
Select Normal Rounding as the Rounding Method and 1 as the rounding Limit
and then press Enter
In the Computation Info screen, select On Specified Formula in the Compute
field
Computation on details:
On Current Deductions Total - This calculation type is used when the value of a
pay head depends upon the total of the deduction pay heads previously defined.
On Current Earnings Total - This calculation type is used when the value of a
pay head depends upon the total earnings pay heads previously defined.
On Current Sub Total - This calculation type is used when the value of a pay
head depends upon the net totals of earnings and deductions previously defined.
On Specified Formula - This calculation type is used when the pay head value is
computed on the value of one or more pay heads already defined in the pay
structure. (Tally.ERP 9 allows the addition and subtraction of pay heads already
defined in the pay structure, and multiplications and divisions using attendance
types. For example, HRA is computed as 30% of the basic salary.)
Press Enter and the Compute subscreen is displayed :
In the Sub-screen, Compute:
Select the Basic Pay as the Add Pay Head function and press Enter> Select End
of List> Press Enter to Accept the screen.
The pay head drop-down box contains pay heads already created. If any pay
head(s) is a component for the given Pay Head, you may create the required Pay
Head by pressing Alt+C from the above Pay Head field and make the necessary
alterations in the required pay head.
Specify 1-4-2013 as the Effective From date. (In case of a revision in pay
structure, you can define the revised computation information for the given pay
head, by giving the effective from date)
The From Amount column is automatically skipped, assuming it to be zero.
Press Enter to skip the Amount Up to column
Select Percentage as the Slab Type from the List of Slabs
Slab Type Details:
Percentage - This Slab rate is used when the amount is stated as a proportion of a
whole.
Value - This Slab rate is used when the amount is stated as absolute value.
Specify 30% in the Value Basis field and then press Enter
Press Enter to Accept the screen
The completed House Rent Allowance (HRA) Pay Head Creation screen is
displayed, as shown.
C. Conveyance Pay Head Creation
Similarly, create the Conveyance Pay Head with Calculation Type as Flat Rate.
The completed Conveyance Pay Head Creation screen is displayed, as shown:
Figure: Conveyance Pay Head Creation
Press Enter to Accept the screen.
D. Overtime Pay Head Creation
Similarly, create the Overtime Pay Head with Calculation Type as Production.
The completed Overtime Pay Head Creation screen is displayed, as shown:
Press Enter to Accept the screen.
E. Variable Pay Head Creation
Similarly, create the Variable Pay Head with Calculation Type as User Defined
Value.
4. Salary Details
Here we create the applicable salary structure for both employee groups as well
as the individual employees. The Salary Details masters contain information on
the Employee Group/ Individual Employee Pay Structure, comprising of both
earnings and deductions pay components for the applicable period. Businesses
having a common pay structure for a particular department or division or set of
employees can define the salary details for an employee group and classify the
individual employees under the specified group to inherit the parent pay values.
The Employee Group master prefills the parent group values to the individual
employee masters created under them. It reduces the possibility of erroneous
data entry and expedites the data entry. This categorisation also helps in
generation of Group-wise reporting. Pay structure constituting the Pay Heads
and the basis of calculation should be similar for the employees falling under the
same group, but pay values need not be the same. The Tally.ERP 9 also allows
you to set up individual employee salary details with all parameters applicable
for the Employee groups. The individual employee masters with separate pay
structures are usually created on a case-to-case basis.
To define the Salary Details for the employees, Go to the Gateway of Tally >
Payroll Info. > Salary Details > Create
Select any name from the List of Employees and then press Enter In the Salary
Details screen,
The Effective date is entered as 01-04-2013 by default based on the Date of
Joining entered in the Employee Master.
Select Basic Pay as the Pay Head from the List of Pay Heads
Specify 12,000 as Rate.
The Attendance units, Pay Head Type and Calculation Type appear by default,
based on the pay head definitions.
Select House Rent Allowance as the second Pay Head and press Enter
Select Conveyance as the next Pay Head
Specify 1000 as Rate and press Enter
Select Overtime Pay as the Pay Head
Specify 100 as the Rate and press Enter
Select Variable Pay as the Pay Head and press Enter
Select Professional Tax against the Pay Head and press Enter
Select Employee's PF Contribution @ 12%, Employee's ESI Contribution @
1.75% as Pay Head and press Enter
Select the Gratuity Expenses (Provisional) ledger and press Enter (In case of
Employees eligible for Gratuity, the Gratuity Expenses ledger should be included
in the Salary details of the respective Employee for provisional assessment of
Gratuity)
The Tally.ERP 9 allows you to modify the pre-defined Slab rates by pressing
F12: Configure and setting the option Allow to Override Slab Percentage to Yes.
Salary Details creation for the Sales Group
Go to Gateway of Tally > Payroll Info. > Salary Details > Create
From the List of Group / Employees, select Sales
Select the Pay Heads from the List of Pay Heads which are applicable to this
group.
Leave the Rate field empty if there is no standard rate. Go to Gateway of Tally >
Payroll Info. > Salary Details > Create
5. Process Payroll and Generate Pay Slip
Record a Payroll Voucher to enter all the earnings and deductions that is paid to
the employees. Generate the Pay Slip that provides the attendance details,
itemises each component of the employee's earnings and deductions, and
displays the net amount paid to him for a given pay period. It also provides
information to the employee as to how the net amount is arrived at.
There are three types of Payroll Vouchers namely Attendance Voucher, Payroll
Voucher and Payment Voucher, which are by default preset in the Tally.ERP 9 to
record the above Payroll transactions. Payroll Vouchers are used for the purposes
of operating your payroll and also records the attendance of the employees for a
given period. These vouchers are basically used to input information pertaining
to Payroll Processing.
Attendance Vouchers
An Attendance Voucher is used to record the employees' attendance data, based
on Attendance/ Production types (i.e., present or absent days, overtime hours and
so on). An Attendance Voucher allows you to record the attendance/ production
units for the employees. Tha Tally.ERP 9 gives you the flexibility to enter the
attendance records through a single attendance voucher for a payroll period, or
through multiple attendance vouchers, as and when required within a payroll
period.
Payroll Vouchers
A payroll voucher is used to record all the employee-related transactions. It
enables you to compute all the values for the respective Pay Heads (Earnings
and Deductions). The calculations are made on the basis of the definitions
specified in the pay head masters, pay structure and attendance entries. In Tally.
ERP 9, you can pass the payroll vouchers manually for individual employee as
well as for the entire group/ organisation by using the Auto Fill facility (Alt+A).
Accounting For Employer PF Contributions
Both the employer and the employee contribute a certain amount every month in
the employee's name for a future benefit. It may be said this scheme is called as
the Provident Fund Scheme.
Employee's Provident Fund
Employee's Provident Fund is the fund which is created for the social security
and retirement benefits for the employees. Different countries organisations are
created for the benefits of the employees. In Provident Fund there includes three
schemes:
The Employees Provident Fund Scheme, 1952
9 The Employees Family Pension Scheme, 1971
9 The Employees Deposit-Linked Insurance Scheme, 1976
Contribution to this scheme is to be treated as:
(A) For Employee's contribution to P.F.
Salary and Wages A/c Dr.
To Employee's contribution to P.F. A/c
To Cash A/c
(B) For Employer's contribution to P.F.
Salary and Wages A/c Dr.
To Employer's contribution to P.F. A/c
In the Tally.ERP 9, the Employer's contribution towards the Employees' Pension
Fund (Employees' Pension Scheme), Provident Fund, Admin Charges and other
PF related ledgers are required to be created separately for appropriate
Accounting and Reporting. Create the following ledgers in the Tally.ERP 9,
Employer Contributions Pay Head
Employer EPS @ 8.33%
Employer EPF @ 3.67%
I. Employer Contribution EPS @ 8.33% Pay Head Creation
Go to Gateway of Tally > Payroll Info. > Pay Heads > Create In the Pay Heads
Creation screen,
Type Employer EPS @ 8.33% as the Name of the Pay Head
Select Employer's Statutory Contributions in the field Pay Head Type
In the field Statutory Pay Type, select EPS Account (A/c No. 10) as shown
Specify the Group as Indirect Expenses in the Under field and press Enter
Set Affect Net Salary to No
By default the Calculation Type is set to As Computed Value and Calculation
Period as Months
Select Normal Rounding as the Rounding Method and 1 as the rounding Limit
and press Enter
In the Computation Info section,
Select On Specified Formula in the Compute field
Press Enter, the Compute sub-screen appears
In the Compute sub-screen,
Select Basic Pay as the Add Pay Head function from the list of Pay Heads, as
shown.
Figure: Compute Sub-screen
Select End of List
Specify 1-4-2009 as the Effective From date.
Specify 7500 in the Amount Upto column.
Select Percentage as the Slab Type from the List of Slabs and specify 8.33% in
the Value Basis field and press Enter.
The From Amount is prefilled as 7500, press Enter to skip the Amount Upto
field.
Select Value as the Slab Type from the List of Slabs.
Specify 541 in the Value Basis field and press, Enter.
Press Enter to accept.
The completed Employer EPS @ 8.33% Pay Head Creation screen is displayed,
as shown:
Figure: Completed Employer EPS Pay Head Creation Screen
II. Employer Contribution EPF @ 3.67% Pay Head
Go to Gateway of Tally > Payroll Info > PayHeads > Create
In the Pay Heads Creation screen,
Type Employer EPF @ 3.67% as the Name of the Pay Head.
Select Employer's Statutory Contributions in the field, Pay Head Type.
In Statutory Pay Type field select PF Account (A/c No. 1).
Specify the group as Indirect Expenses in the Under field and press Enter.
Set Affect Net Salary to No.
The Calculation Type is defaulted automatically As Computed Value and the
Calculation Period as Months.
Select Normal Rounding as the Rounding Method and 1 as the rounding Limit
and the press Enter
In the Computation Info section,
Select On Specified Formula in the Compute field.
Press Enter and the Compute On sub-screen displays
In the Compute sub-screen,
Select Employee's PF Contribution @ 12% from the List of Pay Heads as the
Add Pay Head function and then press Enter
Select Subtract Pay Head in Function and under the Pay Head select Employer
EPS @ 8.33% from the List of Pay Heads.
Figure: Compute Sub-screen
Select End of List
Specify 1-4-2009 as the Effective From date.
Press Enter to skip the Slab fields.
Select Percentage as the Slab Type from the List of Slabs.
Specify 100% in the Value Basis field and then press, Enter.
The completed Employer EPF @ 3.67% Pay Head Creation screen is displayed,
as shown:
Figure: Completed Employer EPF Pay Head Creation Screen
Press Enter to accept.
Chapter 7
Taxation and Tally.Net in Tally.ERP 9
Indian Tax Structure
India has a well developed taxation structure. The tax system in India is mainly a
three tier system which is based between the Central, State Governments and the
local government organisations.
A tax may be defined as a "pecuniary burden laid upon individuals or property
owners to support the government, a payment exacted by the legislative
authority. A tax "is not a voluntary payment or donation, but an enforced
contribution, exacted pursuant to legislative authority". Taxes consist of direct
tax or indirect tax, and may be paid in money or as its labour equivalent (often,
but not always unpaid labour).
Direct Taxes
A Direct Tax is a kind of charge, which is imposed directly on the tax payer and
paid directly to the
government by the persons (juristic or natural) on whom it is imposed.
Indirect Tax:
An indirect tax is a tax collected by an intermediary (such as a retail store) from
the person who bears the ultimate economic burden of the tax (such as the
customer). An indirect tax is one that can be shifted by the taxpayer to someone
else. An indirect tax may increase the price of a good so that consumers are
actually paying the tax by paying more for the products.
Configuring Income Tax
To configure Income Tax,
Go to Gateway of Tally > F11: Features > F3: Statutory & Taxation
It should be noted that the Payroll and Payroll Statutory features should be
enabled in Tally.ERP 9,
before configuring the Income Tax.
Set the option Set/Alter Payroll Statutory Details to Yes
Under Income Tax section,
Specify your Company's TAN in the Tax Assessment Number field
Specify the Income Tax ward details in the Income Tax Circle/Ward field
Select the required Deductor Type based on the type of organisation from the
List of Company Type
Specify the name of person who is responsible for deducting Income Tax in
Name of Person responsible field
Specify the father's name for the person responsible for deducting Income Tax in
Son/ daughter of field
In Designation field specify the formal designation of the person responsible for
deducting Income Tax.
Press Enter accept and save.
Once the Income Tax is configured, the new menu options will be available
under the Payroll Masters and the Payroll Reports to configure the Income Tax
and to check the respective reports.
Tax Deducted at Source in Tally.ERP 9
Tax deduction at source means the tax required to be paid by the assessee, is
deducted by the person paying the income to him. Thus, the tax is deducted at
the source of income itself. It is one of the methods of collecting Income Tax,
which ensures a regular flow of income to the Government. Some of such
incomes subjected to T.D.S. are salary, interest, dividend, interest on securities,
winnings from lottery, horse races, commission and brokerage, rent, fees for
professional and technical services, payments to non-residents, etc.
TDS Process
A Seller (Deductee) provides services to the Buyer (Deductor).
The Buyer deducts the Tax at the time of payment of advances or while
accounting the Bills received.
The Buyer deposits the deducted amount to the Designated Branches of the
authorised bank. 9 The Buyer issues Form No.16A to the Deductee.
The Buyer files annual returns electronically to the Income Tax department.
The Seller files returns, along with Form 16A claiming the credit of the Tax
deducted at source.
Tally.ERP 9's TDS Feature enables you to handle all the functional, accounting
and statutory requirements of your business in an accurate and simplified
manner.
Enabling TDS in Tally.ERP 9
Follow the steps given below to enable TDS in Tally.ERP 9:
Go to Gateway of Tally > F11: Features > F3: Statutory & Taxation
Set Enable Tax deducted at Source to Yes.
Enable Set/Alter TDS Details to Yes.
Figure F11: Statutory & Taxation Features
Press Enter, the Company TDS Deductor Details Screen displays:
Tax Assessment Number (TAN): TAN is a TEN digit alphanumeric number
issued by the Income Tax Department (ITD) to the deductor, which must be
quoted on all Challans, Payment for TDS, Certificates issued in Form 16/16A,
Returns and in all documents and other correspondence with ITD.
Income Tax Circle /Ward (TDS): Income Tax Circle/Ward, in which the
deductors are assessed for Income-Tax (TDS) with TAN of each person.
Deductor Type: According to the nature of the organisation, the Deductor type
will be
selected. In case of Government, the option, Government will be selected as the
Deductor Type and if the deductor is Non-Government body, the Others will be
selected.
Name of the person responsible: Person responsible means the person who is
authorised to file the TDS returns of the company.
Designation: Mention the designation of the authorised person filing the TDS
returns.
Press Enter to Accept.
Enter the Permanent Account Number (PAN No.) and other details. PAN is 10
Digit Alpha numeric numbers allotted by the Income Tax Department to all the
tax payers, whose income is taxable.
The completed F11: Statutory & Taxation screen appears, as shown
Figure: Completed F11: Statutory & Taxation Screen
Press Enter to Accept.
Tax Collected at Source in Tally.ERP 9
Tax is collected at the point of sale. It is to be collected at source from the buyer,
by the seller at the point of sale. Such tax collection is to be made by the seller,
at the time of debiting the amount payable to the account of the buyer or at the
time of receipt of such amount from the buyer, whichever is earlier. The goods to
be subjected to TCS are clearly specified and the type of buyers, sellers and
purpose are clearly defined in the Act. Tax rates vary depending on the goods.
Configuring Tally.ERP 9 for TCS
In the F11: Features (Statutory & Taxation Features), Set the option, Tax
Collected at Source to Yes.
Set/Alter TCS Details to Yes.
Press Enter to view the TCS Collector Details screen, and ensure that the TCS
Collector Details screen is displayed, as shown below:
Figure: Company TCS Collector Details
Press Y or Enter to accept the screen.
VAT in Tally.ERP 9
VAT - Value Added Tax - is a tax levied on the sale of goods and services. The
Value-Added Tax (VAT) is a tax on consumer spending. Every time the Value is
Added to the product, there is a tax - thus, the Value Added tax. From the
perspective of the buyer, it is a tax on the purchase price. From that of the seller,
it is a tax only on the value added to a product, material, or service, from an
accounting point of view, by this stage of its manufacture or distribution.
It is levied on the added value that results from each exchange. Different rates of
VAT apply to different types of goods and services, and there are some goods
and services that aren't taxable for VAT at all. So you need to know whether VAT
applies to the goods or services you sell and how much to charge.
Enabling Value Added Tax (VAT)
To enable VAT, press F11: Features (Statutory & Taxation Features) and
Set Yes to Enable Value Added Tax (VAT)
The VAT classifications are different for each State in India. In order to activate
and view the various VAT classifications, set the option, Set / Alter VAT details
to Yes.
In Fll: Features (Accounting Features), set Maintain Bill-wise details to Yes.
Depending on the type of business, type of transaction, and statutory
requirements of your state, you need to select the appropriate classifications
from the list. You can define your classification: At the time of ledger creation
and at the time of voucher entry.
Configuring the Tally. NET in Tally. ERP 9
Tally.NET is an enabling framework which establishes a connection through
which the remote user can access the client's data without copying / transferring
the data. In other words, the remote user can access the company data, provided
the company is open and connected on Tally.NET.
Using Tally.NET features, the user can create remote users (ids), authorise and
authenticate them for accessing the connected (available) companies. The remote
users can be mapped to a particular user and assigned security controls based
upon their security levels (viz., Tax Auditor/Administrator, Standard User, etc.).
The remote user can further create sub-ids under him to assign tasks based on
their security levels.
The user making the company available and a person accessing the data behave
as clients to Tally.NET, thereby rendering a secure exchange system.
Tally.NET is a default feature available in the product and provides the following
host of capabilities.
Connect companies from Tally.ERP 9 9 Create and maintain Remote Users 9
Synchronisation of data (via Tally.NET)
Remote access of data by authorised Remote User(s)
Use online help and support from Tally or the browser
Use Control Centre for centralised Account Management
Remote availability of Auditors' Edition of Tally Licence
As discussed above, the Tally.NET is enabled in the Tally.ERP but however,
certain configurations are required to be setup for enabling the Company data to
get connected. Follow the steps given below:
Configuring Tally.NET features
Creating and Authorising Remote Users
Configuring the Tally.NET in Tally.ERP 9
Configure Tally.NET Features
To configure Tally.NET, follow the steps shown:
Go to Gateway of Tally > F11: Features > F4: Tally.NET Features 9 The
Tally.NET Features screen appears.
In the Registration Details section:
In the Connect Name field, provide a specific name with which the company is
displayed on Tally.NET servers.
Provide the name of the contact person in the field Contact Person Name.
Provide the Mobile/Telephone numbers of contact person in the field, Contact
Number
The name of the contact person and the contact number are published along with
the Company Name, Account ID and Serial Number in the List of Companies
screen.
In the Connect for Remote Access section,
Allow to Connect Company is set to Yes, in case you want the company to be
connected for remote access.
Contact on Load is set to Yes, when you want the company to be connected for
remote access on loading.
Press Enter to accept.
The completed Tally.NET Features Screen is displayed, as shown:
Accept to save the Configurations
TDS on Expenses-with Inventory (Purchase Voucher)
However in day-to-day business transactions, sometimes you have to face some
complex cases, e.g. a sales or purchase transaction where both Vat and TDS are
charged, so how will you account this? This article will help you to record such
transactions, where the TDS on Expenses with Inventory is applied for Purchase
Vouchers:
Example: On 2-8-2009 ABC Company received the bill for ' 52000 (for the
supply of 1000 cartons @ 50 per carton and VAT @ 4%) from AK Enterprises.
Cartons are printed with the company logo and other information as required on
which (including the VAT amount) TDS is applicable.
The above transaction will be recorded in a Purchase Voucher
Step 1: Create Stock Item
Go to Gateway of Tally > Inventory Info. > Stock Item > Create
In the Name field, enter the Stock Item Name e.g. 'Cartons'
In the Under field, select the Primary group
In the Unit field, select Nos
In the Rate of VAT (%) field, enter 4%
Press 'Enter' to save
Step 2: Create Party Ledger
Go to Gateway of Tally > Accounts Info. > Ledgers > Create
In the Name field, enter the Ledger Name e.g. AK Enterprises
In the Under field, select the Sundry Creditors group
Set Maintain balances bill-by-bill to Yes
Enter the Default Credit Period if any
Set Is TDS deductible to 'Yes'
In Deductee Type field select Company-Resident
Enter the Mailing Details and Tax Information
Press Enter to save
Step 3: Create Purchase Ledger
Go to Gateway of Tally > Accounts Info. > Ledgers > Create
In the Name field, enter the Ledger Name e.g. Purchase @ 4%
In the Under field, select the Purchase Accounts group
Set Inventory values are affected to 'Yes'
Set Used in VAT Returns to 'Yes'
In the VAT/TAX class, filed select Purchases @ 4%
Set Is TDS deductible to 'Yes'
In the Default Nature of Payment field, select Payment to Contractors (Other
Than Advertisement)
Set Use for Assessable Value Calculation to 'No'
Press Enter to save
Step 4: Create VAT Duty Ledger
Go to Gateway of Tally > Accounts Info. > Ledgers > Create 9 In the Name
field, enter the Ledger Name, e.g. Input VAT @ 4%
In the Under field, select Duties & Taxes group
In the Type of Duty/Tax field, select VAT 9 In the VAT/TAX class, select Input
VAT @ 4%
Set Inventory values are affected to No.
Set Rounding Method as Not Applicable 9 Set Is TDS Applicable to Yes
In the Default Nature of Payment field, select Payments to contractors Other
Than Advertisement
Press 'Enter' to save
Step 5: Create TDS Duty Ledger
Go to Gateway of Tally > Accounts Info. > Ledgers > Create
In the Name field, enter the Ledger Name e.g. TDS - Contractor Other Than
Adv.
In the Under field, select Duties & Taxes group.
In the Type of Duty/Tax field, select TDS.
In the Nature of Payment field, select Payments to contractors (Other than
Advertisements)
Press 'Enter' to save.
Step 6: Create Purchase Voucher
Go to Gateway of Tally > Accounting Vouchers > Press F9: Purchase In F12:
Configure
Ensure the option, Use Common Ledger A/c for Item Allocation to Yes
Ensure that the Purchase Voucher is in the Item Invoice Mode
Press F2 and change the date to 2-8-2009
In the Supplier Invoice No. field, enter the reference number as 4587
In party A/c Name field, select AK Enterprises
In the Purchase Ledger field, select Purchase @ 4%
In the VAT/Tax Class field, Purchases @ 4% will be defaulted automatically as
defined in the ledger master
In the Name of Item field, select Cartons from the List of Items
Enter 1000 in the Quantity field
In the Rate field, 'enter' the '50
' 50000 will be automatically updated in the Amount filed
1. In the TDS Nature of Payment Details screen accept the default details
2. Select Input VAT @ 4% ledger from the List of Ledger Accounts.
3. VAT amount of '2000 will be updated automatically in the Amount filed and
press enter to view the TDS Nature of Payment Details screen.
Notes
The 'TDS Nature of Payment' Details screen is displayed even for the VAT
ledger as the Vat amount is also considered for TDS calculation.
1. Select TDS - Contractor Other Than Adv ledger and press enter to view TDS
Details screen
2. In the TDS Details screen
3. In Type of Ref field, select New Ref
4. In the Name field, the reference number is defaulted as Purc / 4-1
5. In the Nature of Payment, select Payments to Contractors (Other Than
Advertisement)
6. Assessable Amount and TDS Amount are defaulted automatically
Note: The TDS amount of '1040 will be displayed with negative sign'.
1. Set Show Statutory Details to Yes to view the duty calculation
2. In the Bill-wise Details screen
3. In Type of Ref filed, select the New Ref as the Method of Adjustment
4. In the Name field, enter Bill-897
5. In the Amount and Dr/Cr field, keep the default allocation
6. In the Type of Ref field, select New Ref
7. In the Name field, enter Bill-897
8. In the Amount and Dr/Cr filed, keep the default allocation
Appendix
Short-cut Keys in Tall
CD Script
With this book, you get bonus of 25 high quality video tutorials on
Tally.ERP 9. Their brief description has been given below:
Attendance Production
This video tutorial teaches you the process of adding different types of
Attendance/production types for employees. We have added Present, Absent and
Overtime entries here.
Balance Sheet
This video tutorial teaches you how you can check the balance sheet of your
company. Balance sheet shows you all liabilities and assets details.
Cash Book Display
This video tutorial teaches you the way of checking cash/bank summary for your
accounts. This includes particulars like cash in hand.
Company Create
This video tutorial teaches you the first and most important step in Tally of
creating a new company. You fill up all the details for the company from name to
contact details in this procedure.
Contra Voucher
This video teaches you the way of entering details for a contra voucher. You
select the desired account and input the amount transactions as required.
Employee Creation
This is another important video where you will learn the process of adding new
employees to the company. In this step, you enter all the employee details like
employee number, deisgnation, address and other details.
Employee Group
Employee Group determines the creation of different groups, for example
Managers, Supervisors etc. In this video tutorial you will learn about creating
three different employee groups.
Enabling Payroll
Payroll is not present by default in Tally.ERP 9. This video tutorial teaches you
how you can enable this option which will open for you the access to all Payroll
fields.
Godowns
Godowns are the places which keep your stocks. In this video tutorial you will
be taught how you can add different godowns for your stock items.
Group
In this video tutorial you will learn about working with groups in Tally.ERP 9.
Journal Voucher
This video teaches you the way of entering details for a journal voucher. You
select the desired ledger accounts and input the debit and credit amount as
required.
Ledger
Adding ledger accounts is one of the important topic to discuss in Tally.ERP 9 as
you will be requiring to have ledger accounts ready before performing different
functions. This video tutorial teaches you working with ledger accounts.
Multi Groups
You might need to create multiple groups of same types quickly. For that you
can use Multi Group function. This video tutorial teaches you about creating
multiple groups in Tally.ERP 9.
Pay Head
When a salary is calculated for an employee, it includes various fields like Basic
Pay, HRA, Bonus etc. In this video tutorial you will learn about creating
different pay heads.
Payment Voucher
This video teaches you the way of entering details for a payment voucher. You
select the desired ledger account and input the amount transactions as required.
Purchase Voucher
Purchase voucher is entry of all the purchase done. This video tutorial teaches
you the way of entering details for a purchase voucher. Select the desired ledger
accounts and input the amount transaction entries as required.
Ratio Analysis
Ratio analysis gives you access to the complete analysis of your company
accounts. From ratio analysis option you can check working capital, bank
account details, current ratio, quick ratio and other principal groups and ratios. In
this video tutorial you will learn about working with ratio analysis.
Receipt Voucher
This video tutorial teaches you the way of entering details for a receipt voucher.
Select the desired ledger accounts and input the amount transaction entries as
required.
Sales Voucher
This video tutorial teaches you the way of entering details for a sales voucher.
After selecting the desired ledger accounts you will be entering dispatch, order
and buyer's details. You will also do item allocation for all your stocks being
sold.
Stock Category
Stock category option is not available by default in Tally.ERP 9. You need to
enable it first. This video tutorial will guide you about enabling stock category
option and then using it create new stock categories.
Stock Group
This video tutorial guides you about creating new stock groups under which you
can later on add items.
Stock Items
In this video tutorial you learn about adding new stock items. You can then
assign desired group and category to the item before saving it.
Stock Summary
Stock summary gives you complete report of all your stock items, there quantity,
price and total value which is dependent on the quantity of the stock items. This
video tutorial guides you about working with stock summary.
Unit Measure
This video tutorial teaches you creation of new units which are used for
measuring at different times while working in Tally.ERP 9. For example, entry of
some vegetables (which will be stock items) will be measured in kg.
Units for Work
Units for work are different from units for measure as the units for work are
specific to Payroll entries, mainly employees working duration. For example, the
working duration like hours and minutes are added in this. In this video tutorial
you will learn creation of units of work.