Basic Accounting

Dr – Cash goes out (By mode)

Cr – Cash come in (To mode)

1. Capital (capital) – cr
2. Purchase
A: Cash (purchase) – dr
B: Credit Purchase (sundry Creditors) – cr
3. Sales
A: Cash Sales (sales) – cr
B: Credit Sales (Sundry Debtors) – dr
4. Purchase return
Return outwards(purchase) – dr(cr) Manual
5. Sales Return
Return Inwards (sales) – cr (dr) Manual
6. Drawings (Owner takes amount for personal reason)
Drawing (capital) – cr (dr)
7. Expenses - dr
A: Direct (direct expenses) Manufacturing Expenses
B: Indirect (Indirect expenses) other than Manufacturing Expenses
8. Incomes - cr
A: Direct (direct Income) Manufacturing Incomes
B: Indirect (Indirect Income) other than Manufacturing Incomes
9. Assets – dr
Fixed Assets – dr
10. Bank
SBI (bank a/c) - dr

Current Asset: dr
It is converted into cash within a year. Ex. Bills receivable

Direct Expenses: dr
These are the expenses which are directly related to manufacturing of goods.
Ex. Wages, factory rent, heating, lighting etc

Indirect Expense: dr
These are the expenses which are indirectly related to manufacturing of goods.
Ex. Salary, rent, stationery, advertisement, printing

Depreciation: indirect exp dr Decrease the value of the asset.

Sundry Debtors: dr The person who is the receiver or customer

Sundry Creditors: cr The person who gives or supplier.

 Expenses Outstanding or Unpaid Expenses or Expenses Due: - Current Liability

Expenditure incurred during current year but the amount on which is not yet paid.

(Added to the expenditure on the debit side and entered on the liability side.)(Voucher)

Income Received in Advance or Income Received But Not Earned (Voucher)

Income received during the current year but not earned or a part of which relates to the next year.

(Deducted from the concerned income on the credit side and entered on the liability side)

Prepaid Advance or Expenses or Prepaid Expenses (Voucher)

Expenditure paid during current year but not incurred or a part of which relates to the next year is called
expenditure prepaid.

(Deducted from the concerned expenditure on the debit side and entered on the current assets side)
(Voucher)

Income Outstanding or Income Earned But Not Received or Income Accrued (Voucher)

Income outstanding means income earned during the current year but the amount on which is not yet
received.

(added to the concerned income on the credit side and entered on the current asset side)

CREATION OF COMPANY IN TALLY

To create the company in tally,

we have to follow the following procedures:-

1. When it is installed then double click on Tally ERP.9 icon.

2. Now, you shall see the screen as follows:-
3.
Select “create company”

After selection of “create company” the following screen will appear:-

Now, to create new company you have to fill up all the details as required by tally program as under:-

NAME Write the name of company for whom the accounts are
to be maintained. for example company’s name is M/S
XYZ LIMITED, we shall write M/S XYZ LIMITED

MAILING ADDRESS Name of company shall appear automatically. If you

want to mention other name you can. In above example
we are not changing the name. You have to write the
address also. Say, the address is 15, Nehru Place, New
Delhi – 110019

STATUTORY COMPLIANCE FOR INDIA (It can not be changed)

STATE When we fill up this detail then a list of all Indian States
will appear. Select any one. For this example we have
selected Delhi being the state of the company.

TELEPHONE NUMBER Give the telephone number of the company. Say –

11111111
CURRENCY SYMBOL
MAINTAIN
FINANCIAL YEAR FROM
BOOKS BEGINNING FROM
DISALLOWING OPENING IN EDUCATIONAL
MODE
TALLY VAULT PASSWORD, (IF ANY)
USE SECURITY CONTROL
NAME OF ADMINISTRATOR
PASSWORD
Already given as (Rs.). We need not to change the same.
There are three options given. 1. Accounts only. 2.
Accounts with inventory. .If you want to do accounts
only then select accounts only and if you want to
maintain stock, raising the bills, then select option
“Accounts with Inventory” and if you want to maintain
inventory only then select Inventory only. In this
example we are selecting “Accounts Only”.
Suppose, we want to maintain the accounts for the
financial year 2011-12 then we shall write “01.04.2011”
Here also, we will mention “01.04.2011”. In case, you
are starting your accounts from 01.10.2011 then you can
write as 01.10.2011. But, in this case you can not make
any entry before 01.10.2011 for financial year 2011-12.
You should write “Yes” because you want to maintain
the accounts not for study purpose. But, we have
selected “No” because we are just learning.
Leave it blank. If you give any password under tally
vault, you can not see your company in list of companies
whenever you open the tally. It is advisable not to give
any password under this column.
In this column say “Yes”. Because you must have some
password for your company so that the person who
knows the password, he only can open the company.
Write any thing but remember, if you have written any
thing in capital letters, then at the time of opening
company you have to write you administration name in
capital letter only otherwise you would not be able to
open the tally. Here we are writing XYZ as
administrator’s name in capital letters.
You have to follow the procedure as given in
administrator’s name. Here also, we are writing XYZ as
password in capital letters.
REPEAT PASSWORD You should again write your password as written in
Password Column. So write – XYZ in capital letters.
You can not see what you have written. It is just to test
you whether you can remember your password or no.
So, be very careful regarding your password. If you
forget your password then you have not option to open
your company. In that case you have to contact to Tally
people only.

USE TALLY AUDIT FEATURES Write “No”. Basically this feature is required by auditors
or senior persons. So for the time being for learners, it is
advisable to select ‘No” against this column.

After filling all the columns your screen will appear as below:
Finally it asks, Yes or No.

If you select “Yes,” then the company shall be created as per the details given by you.
 It is advisable that before selection of “Yes”, once again, you must go through all the details given by you in the
form.

Suppose, instantly, you want to change any thing, and then select “No”. You can change any thing now. Finally, you
have to select “Yes”.

After you select “Yes”, your company is created. It will take few seconds to create the company. So, wait and watch.

What is a Ledger?

A group of Account is known as a ledger.

After the transactions have been recorded in the journal the accounts are prepared in this book.
The Ledger is, therefore, a derived or secondary record.
Its source of information is the book of original entry, that is journal.
The ledger is considered to be the principal or main book of account.

Single Ledger Method

From Gateway of Tally, go to Accounts Info.
 Then go to Ledgers.

Now, under Single Ledger, select the option Create.

Now you will see a simple Ledger Creation window in which you will have to enter certain
details about the ledger.

It looks like in the picture below.

Name – The first option is the Name of the ledger. Enter the name of the ledger, for
example, Furniture A/c or Building A/c.

Under – Every ledger requires a group to operate in. For example, Furniture A/c and Building
A/c will be under Fixed Assets group as they are both Fixed Assets.

You have to select a group that is required as per your ledger.

Inventory values are affected – If you have a ledger which requires inventory or in simple
words, stock to be maintained, set this option to Yes.

For example, you are selling sim cards, your ledger will be Sim Cards.
There must be a quantity to sell i.e. stock or inventory and so you must set Yes to Inventory
Values are affected.

Mailing Details – You have to fill in the mailing details like Name, Address, Country and
Bank Details for the ledger.

It is for the ledgers such as debtors and creditors which require these kind of details.

Ledgers such as Furniture or Building do not require these details because they are not humans
and therefore they do not have any mailing details.

Tax Registration Details – Similar to mailing details, these details are also of people and not for
ledgers like furniture, building etc.

Tax registration details include PAN which is required on any tax related documents.

Opening Balance – This is the opening balance of the ledger if any.

Any balance of the ledger which is being carried forward from the previous year will have to be
entered as the opening balance.

This was the last step which was required to create a ledger under Single Ledger Method.

It will not take more than a minute

In this video you will two main methods of creating ledgers in Tally.

You can simply press ALC consecutively and create a single ledger. That is the shortcut for
creating single ledgers in Tally.

Multiple Ledger Method

Like single ledger, it is extremely easy to create multiple ledgers in Tally.

The process is almost same as single ledger method. Only one step is different.

Major advantage of this method is that you can create many ledgers in a very short amount of
time.

It takes only 10 seconds to create a ledger with the help of Multiple Ledger method in Tally.

Let us look at this method step by step.

From the above method, when you go to Ledgers, you will have the option of Multiple
Ledgers.
Under that, you have to select Create.

Now, you will see a Multi Ledger Creation screen like in the image below.
There are not many options as there were in Single Ledger Method.

Let’s look at it one by one.

Under Group – This option is similar to the Under option under Single Ledger Method.

But under this method, it works a bit differently.

If you select the group on the top as shown in the picture above, then you will not have to select
the group every time you create a ledger.
This works well if you want to create ledgers under only one group.

Creating Ledgers under only One Group

For example, you want to create ledgers under Fixed Assets such as Furniture and Building it
will be as shown in the picture below.

As you can see, I have selected Fixed Assets as the group for the option Under Group.

Therefore when I enter the ledger name Tally will automatically select the group as Fixed
Assets and I only have to enter the amount for opening balance.

If you do not have any opening balance, you can leave it blank.

On the other hand, if you want to create ledgers but they are under different groups, you can do
that also.

Creating Ledgers under Different Groups

If you want to create ledgers in Tally but they are under different groups, you can do it easily.

For the option – Under Group, you have to select All Items.
You can see in the picture above that along with the previous two ledgers
of Furniture and Building, I have created two more ledgers named Salary and Investments.

Salary is an expense and therefore it is grouped under Direct Expenses.

A particular thing to note here is that there is no opening balance for the ledger of Salary and so
I have left it blank.

I have also created another ledger called Investments which is under the group
called Investments because it is an investment.

It also has an opening balance.

These were two different ways of creating ledgers under Multiple Ledger Method.

After you are complete with entering all the ledgers in this method, you can just press Enter
twice and all your ledgers will be created instantly in Tally.

View created accounts/ledger

Viewing of ledger accounts is, just have an overlook on created ledger information.

Go to Gateway of Tally>Account info>Ledger>Display

Select the ledger account to see. Ledger display screen will be in front. You cannot modify
anything from this screen. Here is the view of ‘Depreciation Ledger ‘ I have created earlier.
Edit or alter an account.
There certain situations we need to modify existing ledger created. For example changing of
name, Or you might be chosen wrong group in under field. or mis-typed address, phone
numbers, PAN Numbers etc. In such case you will have to modify existing details. To do
modifications /Editing of ledger go to;

Gateway of Tally>Accounts info>Ledger>Alter

Ledger alteration screen will appear, press enter key to move forward and Backspace to move
backward through the screen.
Make necessary changes and save the screen.

Delete an account
Let’s learn how an account can be deleted. Tally does not permit to delete an account with
transactions. That is if you have entered any voucher using the ledger, that ledger cannot be
deleted. If you want to delete a ledger with transactions, You need to remove or delete those
transactions.
To delete an account go to the following screen

Gateway of Tally>Account info>Ledgers>Alter

Select the account to be deleted. For example we want to delete the ledger’ICICI Bank A/c
100005456′ that we have created in above example.

Now press delete button from bottom bar or Use key board shot cut Alt+D.

A confirmation will be asked.

Confirm by pressing enter, or Y button from key board. Hope you got a clear idea about creating
ledger, Display ledger, Edit ledger and Delete Ledger in Tally ERP 9. Please do share and like
this post if you like.

Place Under
Group in
Ledger Name Tally Comments

Capital Account Capital Account For Partner

Cash Account Cash-In-Hand

Partners /Owners In a registered company no withdrawal is allowed,
Drawings A/c Capital Account Hence no Drawing account

Interest On Indirect
Capital Expense

For current account ,or saving account Create In the

Bank Account Bank Account name of Bank: For example : SBI A/c No: 321222

Bank OD A/c or You can put any of the group mentioned. This is a
Bank OD Account Bank OCC A/c current liability account.

Party means to whom we are selling. Eg: JOHNSON

Customer Ledger Sundry Debtors TRADERS

Sundry The party who are supplying goods to us or the party

Supplier Ledger Creditors to whom we owe money.

For example If you take loans from a Private finance

Create a LEDGER : L & T Financial Services Loan
Loans A/c No: 1256 For Banking Institution :For Eg: ICICI
Loan Account (Liability) Bank Loan a/c No: 4656556

To account the insurance paid for the next Financial

Prepaid Insurance Current Assets year.

Income Tax
Advance Current Assets

TDS Paid Current Asset

TCS Paid Current Asset

Sales Sales Account To account the sale of goods and services

Indirect To account the freight charges received from

Freight Received Incomes customers. Eg: Transportation using Lorry

To account the sale of old machinery. Remember this

sales or Indirect type of sale attract VAT. News paper sale or carton
Sale of Scrap Income box sale can be accounted as Indirect Income

Opening Stock Stock-In-Hand

Purchase
Purchase Account

Closing Stock Stock-In-Hand

 Indirect Vary in relation to the nature of business, Some time
Salary Account Expense salary account termed as direct expense.

Wages Account Direct Expense

Directors Indirect
Remuneration Expense money paid for work or a service.

Indirect
Partners salary Expense

Indirect
Interest on loan Expense

Indirect
Depreciation Expense

Relatively change the ,group, for example ,Diesel for

Direct expense/ a machinery in a manufacturing company is direct
Indirect expense, diesel for a motor car for travelling of
Diesel Expense Expense manager is indirect expense.

Repair &
Maintenance Direct Expense

Freight paid for the purchase of materials for selling

Freight Paid Direct Expense or manufacturing

Indirect
Audit Fee Expense

Indirect
Insurance Expense

Indirect
Local Conveyance Expense

Miscellaneous Indirect
Expense Expense

Indirect
Rates & Taxes Expense

Indirect
Round off Expense

Printing & Indirect

Stationery Expense
Travelling Indirect
Expense Expense

Indirect
Vehicle Expense Expense

Telephone Indirect
Charges Expense

Advertising Indirect
charges Expense

Indirect
Discount Allowed Expense

Compound Tax Indirect

Paid Expense

Indirect
Courier Charges Expense

Interest on Income Indirect

Tax Expense

Indirect
Interest on VAT Expense

Indirect
Interest on TDS Expense

Indirect
Interest on TCS Expense

Land A/c Fixed Asset

Building Fixed Asset

Plant &
Machineries Fixed Asset

Motor Vehicles Fixed Asset

Furniture &
Fixtures Fixed Asset

Audit Fee Payable Provisions

Salary Payable Provisions

Wages Payable Provisions

TDS Payable Provisions

TCS Payable Provisions

Compound tax
payable Provisions

Income Tax
Payable Provisions

Telephone charges
Payable Provisions

Petty Cash A/c Cash-In-Hand

Computer &
Peripharals Fixed Asset

Purchase Return Purchase

Account Account

Sales Return
Account Sales Account

Discount
Received Income Indirect

Share Capital A/C Capital Account

General Reserve Reserves &

A/c Surplus

Capital Reserve Reserves &

A/c Surplus

Sales Tax A/c Duties & Tax

Output Vat Duties & Tax

Input Vat Duties & Tax

TDS Account Duties & Tax Eg: TDS on Interest

TCS Account Duties & Tax Eg: TCS on Motor vehcile

Excise Duty Duties & Tax

CST A/c Duties & Tax

Service tax Duties & Tax

Rent Payable Provisions

Investment in
Share Investment

Fixed Deposits Deposits

Goodwill Current Asset

Bills Receivable Current Asset s.d

Current
Bills Payable Liabilities s.c

Outstanding Current
Expense Liabilities

Factory Lighting Direct Expense

Import Duty Direct Expense

Royalty Direct Expense

Long Term
Investment Fixed Asset

Bad Debt
Recovered Income Indirect

Donation & Indirect

Charity Expense

Indirect
Loss by fire Expense

Indirect
Loss By theft Expense

Indirect
Legal Charges Expense

Indirect
Bad Debts Expense

Accrued Income Current Asset