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Basics of Accounting

Tally is an Accounting Software that helps you in maintaining


Accounts and Inventory of your office.
General Accounting
What is Accounting

“Accounting is the art of recording, classifying and summarizing in a significant


manner and in terms of money, transactions and events, which are in part, at least,
of a financial character, and interpreting the result thereof” – American Institute of
certified public accountants.

Methods of Accounting

There are two types of Accounting Systems.

1. American Method or Single Entry System.

2. English Method or Double Entry System.


1. American Method or Single Entry System.

It has further five types of accounting.

I. Assets Accounts
II. Liabilities Accounts
III. Capital Accounts or Owner’s Equity A/c
IV. Revenue or Income Accounts
V. Loss or Expenses A/c
Methods of Recording

I. Debit the Increase in the Assets and Credit the Decrease in the
Assets.
II. Credit the Increase in the Liabilities and Debit the Decrease in the
Liabilities.
III. Credit the Increase in the Capital and Debit the Decrease in the
Capital.
IV. Credit the Increase in the Income and Debit the Decrease in the
Income.
V. Debit the Increase in the Expenses and Credit the Decrease in the
Expenses.

2. English Method or Double Entry System.

Classification of Accounts
1. Personal Accounts: These accounts are those accounts which are
opened by a name of a person, firm, company, society or organization.

Rules: “Debit the Receiver and Credit the Giver”.

Types of Personal Accounts:

I. Natural Personal Accounts:

a) MAHESH’s Accounts
b) Owner’s Capital Accounts
c) Owner’s Drawing Accounts
d) Debtors Accounts
e) Creditors Accounts
II. Artificial Personal Accounts

a) Firm’s Accounts
a) Company’s Accounts
b) Organization Accounts
c) Bank Accounts
d) Club Accounts
e) Insurance Company Accounts
f) Government Sector accounts

III. Representative Personal Accounts

a) Outstanding Salary Due to Staff account


b) Prepaid Insurance Account
c) Accrued Income Account
d) Unearned Commission Account
3. Real Accounts: Those Business assets which can be measure in the term
of money
their accounts are called Real Accounts.

Rules: “Debit what comes in and Credit what goes out”.

Types of Real Accounts:

I. Tangible Real Accounts: These accounts are those assets


account which can be touched.

a) Cash Account
b) Stock Account
c) Furniture Account
d) Land Account
e) Building Account
II. Intangible Real Accounts: Those accounts are those assets
account which can’t touch but can be measured in the term of
money.

a) Goodwill Accounts
b) Patents Accounts
c) Trade Mark Accounts
d) Copy Right Accounts

4. Nominal Accounts: Income and Expenditure accounts of a business


are called nominal accounts.

Rules: “All the Expenses are debited and Incomes are


credited”.

Types of Real Accounts:


I. Expenditure Accounts:
a) Salary Paid Accounts
b) Rent Paid Accounts
c) Bed Debts Accounts
d) Commission Paid Accounts
II. Income Accounts:
a) Salary Received Accounts
b) Rent Received Accounts
c) Commission Received Accounts
d) Interest Received Accounts
e) Bed Debts Recovered Accounts

Steps for working in the Tally

1. Create Company: In Tally this is the First task or primary task to create a
company. For this Purpose we have to select the Create Company option
from menu Gateway of Tally. After selecting the option we have to fill up
the details for the Company like Company Name, Address, Started Date,
and Income Tax No etc.

2. Creates Groups: Groups are created for same type of Ledger A/cs. In
Tally There are many groups which are used for making ledgers. So in
the rare cases we have to create groups. These are the main groups in
the tally.

I. Reserve and Surplus (Retained Earning): You can use this


group heads like
Investment Allowance Reserve, Select Ledger and other such reserve
accounts.
a) Current Assets: This is the primary group that has all the
current assets accounts. It has Six Sub Groups under it.
b) Bank Accounts: It is used to hold all accounts of banks.
c) Cash in hand: It is used to hold ledger account of cash.
d) Deposits: It is used to hold assets like security deposits, rental
deposits and all other deposits made by the company.
e) Loan and Advances: It is used to hold all advances and loans of
non trading nature given by the company.
f) Stock in hand: It is used to hold certain special accounts like
raw material, finished goods and work in progress.
g) Sundry Debtors: It is used to hold accounts of companies and
individuals that give goods on credit to the company.

III. Current Liabilities: This is a primary group and is used to hold


outstanding and statuary liabilities of the company. The group has
three sub groups under it which are as follows.

a) Duties and taxes: It consists all types of taxes and duties like
Excise, Local Sales tax, Central Sales Tax, VAT etc.
b) Provisions: It is used to hold other tax provisions like Income
tax, depreciation in it.
c) Sundry Creditors: It is used to hold accounts trade creditors of the
company.

IV. Fixed Assets: This is used to keep accounts of all the fixed
assets, patents, trade tights etc.

V. Investment: This is used to hold ledger accounts of shares, bonus


and other securities of the company.

VI. Loan Liabilities: This is used to keep track of loan taken by the
company. This group has three sub groups which are as follows.

a) Bank OD Accounts: It is used to hold all overdraft accounts with


banks.
b) Secured Loans: It is used to hold long/medium term loans taken
by the company from financial companies and Banks etc.
c) Unsecured Loans: It is used to hold the loans taken
unconditionally by the company.

VII. Suspense Accounts: This is used by many companies to


maintain a suspense ledger which keeps track of money received or
paid by the companies, whose nature of transaction is not yet known.

VIII. Miscellaneous Expenses: The loss of the company, which has


not been written off but carried forward to the next year, should fall
here. However, tally treats it as a negative profit and carries it to the
profit and loss account.

IX. Branches/Division: This is used to keep the names of all


companies which may be branches, divisions of the company.

X. Sales Account: It is used to all goods sales accounts of the


companies.
XI. Purchase Account: It is used to all goods purchase accounts of
the companies.

XII. Direct Income: It is used to hold ledger accounts of non‐trade


income accounts that affect gross profit.

XIII. Indirect Income: This is used to hold ledger accounts of those


expenses of the company that determine its gross profit. For example
interest received and
commission received.

XIV. Direct Expenses: This is used to hold ledger accounts of those


expenses of the company which determine its gross profit. Expenses
like salary paid to labour,
transportation, electricity bills etc.

XV. Indirect Expenses:This is used to hold ledger account of those


expenses of the company, which determine its net profit. Expenses like
advertising, maintenance of vehicles, administrative expenses etc.

3. Create Ledgers: Ledgers are actual account heads to which the


transactions are identified. You Make all voucher entries in these
accounts. You have to classify all ledgers in to groups.
4. Voucher Entries: For Making the Voucher Entries first of all we have to
set the voucher date by pressing F2 then enter the voucher date. There
are various types of vouchers in tally. Those are describes as follows: ‐
I. Contra Voucher: This type of voucher is used for Cash to Bank,
Bank to Cash and Bank to Bank Entries. Press F4 to select the
voucher type.
II. Payment Voucher: This type of voucher is used for the Cash
Payment Entries. Press F5 to select the voucher type.
III. Receipts Voucher: This type of voucher is used for the Cash
Receipts Entries. Press F6 to select the voucher type.
IV. Journal: This is used for the Journal Entries like debit of credit
Entries. Press F7 to select the voucher type.
V. Sales Voucher: This is used for the Goods Sales Entries. Press F8 to
select the voucher type.
VI. Purchase Voucher: This is used for Goods Purchase Entries. Press
F9 to select the voucher type.
VII. Memo: This is used to create Memorandum or Reverse Journal
Voucher. Press F10 to select the voucher type.

5. Display Reports: There are several types of reports are generated by


the tally like Trading and Profit and Loss Account, Balance Sheet,
Inventory Reporting Ratio Analysis etc.
Introduction to Tally

Tally is a Financial and Inventory Management System. Tally is


one of the acclaimed Accounting Software with large user base in
India and abroad, which is continuously growing. Tally is developed in
India using Tally Development Language (TDL). Tally software was
developed by Mr.Bharat Goenka in the year 1988.

Features of Tally
1. Accounting wihtout codes
2. Comprehensive Accounting. Maintains complete range of books
of Accounts, Final A/c’s like Balance Sheet , Profit & loss A/c, cash
and fund flow , Trial Balance and others.
3. Provides Multiple reports in Diverse formats
4. Various options for interest Calculations
5. Maintain multiple Godowns for stock management.
6. Unlimited sub-classifications to get multi-dimensional analysis
and comparatives.
7. Allow accounts of multiple companies simultaneously.
8. Multiple currencies in the same transaction and viewing all
reports in one or more currency.
9. Prints online.
10. print daybook and balance sheet and ledger , trial balance and
profit and loss a/c.
11. Backup and restore option
12. Tally is allow to cheque printing
13. Multi tax calculation like VAT, TDS, TCS, FBT, e t c .
14. Calculate Payroll calculation easily.
15. Use Security levels for audit purpose.

To start Tally :
Start -> Programs ->Tally 9 -> Tally 9 Release 2
Or
Double click on the Tally shortcut in the desktop to open Tally

Tally Screen Components:


1) Title Bar - Displays the version number , system date and time
2) Gateway of Tally - Displays menus, screens and reports.
3) Calculator - used for calculator functions.
4) Buttons toolbars - displays buttons that provide quick interaction
with tally.
5) Minimize Button - Performs the standard windows function
allowing us to minimize tally to work on other applications.
Creating a Company
When Tally first loads the Gateway of Tally area is available.
When no companies are there , then the Select company option is not
activated. The cursor is placed the create company meaning that a
company should be created. Press enter in Create company option
in order to create a company.

To create a company choose create company option in the gateway of


tally screen or company information menu. While creating a new
company it will ask for the following inforamtion.
a) Directory - In this if needed we have to specify the path where
the company file should be stored in your computer. By default
D:\Tally\Data is the path taken.
b) Name - In this we have to type the name of the
company.
c) Mailing Name - In this we have to type the mailing name, which
is used to all the letters used in Tally.
d) Mailing Address - In this we have to type the mailing address, such
as street , city, pincode for the company.
e) E-mail Address - In this we have to type the E-mail id for the
company.
f) Statutory compliance for - By default the statutory compliance for
India. It is used for tax calculation for country wise.

g) Currency Symbol - By default the currency symbol Rs is taken.


Since Tally is a Indian product.
h) Maintain - In this we have to choose either Accounts only or Accounts with
Inventory
i) Financial Year - In this we have to type the starting date of the
financial year. In accountancy financial year start from April 1 of year to
Mar 31 of the next year. For example 1 april 2007 to 31 march
2008. Automatically tally adds 12 months with the starting date of the
financial year.
j) Book Beginning From - In this we have to specify the date in which the
book should be started. The date given must lie in between the financial
year starting date and ending date.
k) Tally Valut Password - In this we have to specify the password for the
company, if so the company name will not be displayed in the Select
company option.
l) Use Security Control - While opening the company if we need to specify the
user name and password for protection ( ex: other person can’t open
our company) , we can make this option to yes and specify the user
name and password.
m) Base Currency Symbol - This option specifies the information about
currency used in the company. Such as Base Currency Symbol, Formal
Name,Number of decimal places, Is symbol suffix with amount, symbol for
decimal portion, show amount in Millions, Is symbol suffixed with amount
etc.

Note : All the above information is not must, we can specify the
important things and omit the others.

Group And Leger

Accounts Organization: Ledger accounts and groups

In manual accounting, accounts are grouped upon preparation of Trial balance to


prepare final accounts, namely Profit and loss A/c and Balance Sheet. In tally at
the time of creation ledger accounts, we place it under appropriate account
group. Account Groups provide us the ability to classify our accounts to get all
the reports instantly and properly classified. We have the liberty to re-group
later to suit our requirements.

Creating a Group

Tally provides a list of 28 pre-defined groups. Of these, 15 are primary groups and
13 are sub-groups. We may configure our groups to enable / disable advanced
mode.
Press F12 -> Accts/ Inv info -> Account Masters -> Set to yes the following
options
Allow Advances entries in masters - Yes
Use Address for Ledger Accounts - Yes
Single group - Allows us to work on one group or sub-group at a time.
Gateway of Tally -> Accounts Info -> Groups -> Single -> Create

Name of Group : Enter the name of the desired group or sub-group ( eg:
Salary)
Alias : Give an alias to allow access the group using the alias in addition to its
name , or leave it blank
Under: Specify under which existing (Parent) group the sub-classification is
needed. We can create a new parent group by using Alt +c. In other words Alt
+C is the shortcut key to create a ledger or group during creation or during
voucher entry.
Alterin g Groups
Once created, groups can be altered by selecting Alter for single or
multiple groups. The procedure is the same as we used to display groups except
of course we may alter the data.
Deleting Groups
We can delete a group via the Group Alteration screen by pressing Alt
+D. However , we cannot delete Tally pre-defined groups,or groups with sub-
groups, or groups containing ledgers. The lowest level must be deleted first.

Ledgers
Once we have created necessary Masters, now it is the turn of
ledger creation. Tally on its own, Creates 2 ledgers listed below all
others we have to create.

Cash (under Cash- in - hand Group) Profit &


Loss Account (Primary edger)

Ledger is the actual account head to which we identify a


transaction. We pass all accounting voucher entries using ledgers. All
ledgers have to be classified into groups. Hence, a through
understanding of account classification is important working with
ledgers

List of ledgers frequently used and their related Groups


1. Capital Account → Capital Account
2. Name of your creditors → Sundry Creditors
3. Name of your Debtors → Sundry Debtors
4. Name of Expenses → Direct Expenses or Indirect
Expenses according to the nature of expenses
5. Name of Income → Indirect Income
6. Name of Bank → Bank Account
7. Name of Current Asset → Current Assets
• stock in hand
• deposits
• show short term investment
8. Name of Fixed Asset → Fixed Asset
9. Name of Current Liabilities → Current Liabilities
10. Name of Fixed Liabilities → Fixed liabilities
11. Name of Loss → Direct Expenses or Indirect Exp.
12. Bad Debts → Indirect Exp.
13. Provision for Bad Debts → Current Liabilities
14. Outstanding Expenses → Current Liabilities
15. Advance Income → Current Liabilities
16. Outstanding Income → Current Assets
17. Sale Tax / VAT → Duties and Taxes
18. Excise Duty / CENVAT → Duties and Taxes
19. Drawing → Capital
20. Purchase → Purchase account
21. Sale → Sale Account
Ledgers can be created in single and multiple modes. In multiple mode you
can create multiple ledgers at a time.

Go to Gateway of Tally> Accounts Info. > Ledgers> Create (under Single


Ledger)

Name

Enter the Name of the account

Alias

Enter an alias name if required

Under

All accounts must be classified under their appropriate Groups. Select the
Group under which the Ledger is created from the List of Groups.

Go to Gateway of Tally> Accounts Info > Ledgers > Create (under Multiple
Ledgers)

Under Group

Select the name of the group under which you want to create the Ledgers
from the List of Groups.

S.No

This is auto generated.

Name of Ledger

Enter the name of the Ledger.

Under

This field defaults to the parent group selected in Under Group


Opening Balance

This is the balance remaining when you first enter your books on Tally, i.e.
the date of beginning of books

Exercise: 1

Name : King Sons


Mailing Name : King
Address : 101, 7th Main, M.G. Road,
Bangalore
State : Karnataka
PIN Code : 588 002
Telephone No : 6789999
E-Mail : king@gmail.com
Currency Symbol : Rs.
Maintain : Account only

Exercise: 2

Name : GI Enterprises
Mailing Name : GI
Address : 45, 3rd Main,
Rajajinagar,
Chennai
State : Tamil Nadu
PIN Code : 600 268
Telephone No : 4789043
E-Mail : contactabb@yahoo.com
Currency Symbol : Rs.
Maintain : Account with Inventory

Exercise: 3

Create a Ledger:
Mariya’s Capital A/C
Canara Bank
Purchase
Sales
Rent
Electricity Bill
Wages
Stationery
Discount Paid
Insurance Paid
Discount Received
Commission Paid
Paid Petty Cash
Office Expenses

Exercise: 4

Ravi’s Capital A/C


SBI Bank A/C
Purchase A/C
Sales A/C
Machinery & Furniture A/C
Investment A/C
Brokerage A/C
Typewriter A/C
Purchase from Nick Computers A/C
Rent A/C
Salary A/C
Return Inward A/C
Return Outward A/C
Drawing A/C
Sold to Suresh A/C
Traveling Expenses A/C
Discount Allowed A/C
Telephone Charges A/C
Sales to Raba Traders A/C

Accounting Vouchers

In manual accounting, we record transactions through Journal


entries. In computerized Accounting systems we do it through
Voucher entry. Normally, a transaction is supported by a Document,
e.g., Supplier’s Bill, Copy of Sales Bill , Counter foil/ Record Slip entry of
Cheque book , Pay -in-slip , Pay Register etc. For every transaction/
source document, we should enter a Voucher. A voucher contains
details of the transaction.

Particulars

If you create Accounts voucher

In this field you should specify Dr or Cr. Type the letter D or Dr over the existing
prompt to change, then select the ledger name from the pop-up list that Tally
opens. There may be multiple Debit and Credit entries in one single voucher.

If you create Inventory voucher

If you are creating inventory voucher in Tally you will give information about the
stock item you receive or issue and item related details like the
Godown/warehouse, Batch Details, Quantity, Rate, Amount etc.

Debit / Credit Amount:

This field appears in Accounts voucher only. Enter the amount of transaction and
press Enter key. Tally will update current balance of the ledger and display it. This
will happen only if you gave 'Yes' to the question 'Show Ledger Current Balance?'
under Accounting Voucher in Vouchers Entry under F12: configure option. The total
will appear on the bottom of the Debit and Credit columns. If both credit and Debit
totals are not equal Tally will prompt to enter further Credit / Debit to balance the
voucher. If both are equal Tally will move the cursor to Narration field.

The Narration field

The last field of Voucher is Narration, here you enter details of the transaction
entered in the voucher. It is not mendatory / compulsory to give narration. You can
type anything about the transaction or just leave this field blank. You can turn off
narration by responding No to the question 'Use Common Narration?' at voucher
creation/alteration screen.

Saving the Voucher:

After entering narration, when you press Enter key a confirmation prompt will
appear Asking 'Accept Yes/No?'. Press Y or Enter to save the voucher or press N to
return cursor to the first entry allows you to alter any data in the voucher. If you
give Y Tally will save the voucher and blank screen will appear next to continue
voucher entry.

Voucher Types in Tally:

Payment voucher:

The payment voucher is for all payments you make through cash or Bank. These
payments can be towards expenses, purchases, to trade creditors, etc. Follow the
below procedure to create a payment voucher.

All payment vouchers must have first entry a debit and at least one credit to a
Cash or a Bank Account. You can have any number of debit and credit entries.
However, if you do not credit one cash or bank account and still try to accept the
voucher a message appears asking for a cash or bank account.

If configured, Fund Transfer entries can also be made in payment voucher.

If you have given Yes to 'Print After Saving Voucher?' in Voucher Type
creation/Alteration Tally will print the voucher immediately after saving.

Receipt Voucher

The receipt voucher in Tally is for all receipts into the Cash/Bank account. The
voucher is similar to the payment voucher except that you debit cash or bank A/cs
and credit the ledger from which you receive. The first entry in receipt must be
credit and at least one debit to a cash or bank account. There can by any number
of debit and credit entries. If you do not debit one Cash or bank account, a
message appears asking you to rectify the entry.

If you have given Yes to 'Print After Saving Voucher?' in Voucher Type
creation/Alteration Tally will print the voucher immediately after saving.

Alternatively you can print any voucher later by going to Voucher Alteration screen
using Display menu. Open the voucher and press Alt-P to display the 'Print
Voucher' Screen. Give 'Y' to the Print? Prompt.

Sales Voucher

The first entry must be a debit involving any debtor, bank or cash account and
second should be a credit to ledger placed under sales account group. Rest of the
accounts may be any Revenue account or any account under the Group current
liabilities. Thus you can include Duties & Taxes from 3rd entry onwards.

Purchase voucher

The first entry must be a credit involving any creditor, Cash or Bank account and
second entry should be a debit to a ledger placed under purchase account group.
Rest of the accounts may be any revenue account or any account under the Group
Current Liabilities

Contra Voucher
The contra voucher is for Fund transfers between cash and Bank accounts only.
The following is the rule,

For example, If you pay Rs. 10000 cash into State bank Account. Your contra entry
should be like this,

Particulars Debit/credit
Cr. Cash Credit - 15000
Dr. State bank ac Debit - 15000

Credit Note:

Credit Note is raised when a buyer returns some goods that you sold him. or you
give him credit due to rate difference or discount/rebate or when there is an exces
debit to any party

Debit Note:

You create a Debit Note when you make purchase return or when you have short
billed a customer or you are granted credit by your supplier due to rate difference,
discount etc.

Memo Voucher

This is purely Non-accounting voucher. These entries will not affect your accounts
nor does affect your final results. You can alter and convert a Memo Voucher into a
regular voucher when you decide to bring the entry into your books.

You can use memo vouchers to make suspense payments, vouchers not verified at
the time of entry, Items given on approval.

Exercise: 5

Journalize the following:

No Date Transaction

01 01-02-2004 Maruthi & Sons Started business with capital of Rs.


2,00,000
02 02-02-2004 Paid into Indian bank Rs. 50,000
03 03-02-2004 Bought goods for cash 14,700
04 06-02-2004 Sold good to JJ Traders on Credit 7,000
05 09-02-2004 Cash Sales 19,000
06 11-02-2004 Received Commission 400
07 13-02-2004 Received seven tables from Amirtha Stores at 500 each
08 15-02-2004 Bought goods from Vignesh 2,000
09 21-02-2004 Paid cash to Amirtha Stores
10 26-02-2004 Paid rent 1,000
11 27-02-2004 Paid Salary 2,500

Exercise : 6

Journalize the following:

No Date Transaction
01 03-07-2004 Peter started business with Rs. 75,000
02 05-07-2004 Goods purchased 6,000
03 10-07-2004 Good sold Rs. 8,000
04 15-07-2004 Goods purchased from Mathew Rs. 21,000
05 17-07-2004 Goods sold to Sanjay Rs. 24,000
06 18-07-2004 Goods returned to Mathew Rs. 1,300
07 20-07-2004 Goods returned by Sanjay Rs. 500
08 23-07-2004 Opened an account with HDFC Bank Rs. 15,000
09 25-07-2004 Drew from Bank Rs. 4,000
10 25-07-2004 Furniture purchased Rs. 3,500
11 27-07-2004 Sanjay settled his account
12 28-07-2004 Settled Mathew’s Account
13 29-07-2004 Insurance Premium paid Rs. 350
14 29-07-2004 Electric Charges paid Rs. 250
15 30-07-2004 Drew for Personal use Rs. 1,300
16 31-07-2004 Salary paid Rs. 1,500

Exercise: 7
Journalize the Following with invoice:
HS & Co started the business from 01/04/2004

01/04/2004 Received capital by cash 2,00,000


01/04/2004 Cash Deposited in HDFC Bank 50,000
04/04/2004 Credit purchases from Kiran Traders 20,000 (Inv.No. 122)
04/04/2004 Credit purchases from Pooja Traders 20,000 (Inv.No. 433)
11/04/2004 Credit purchases from Kiran Traders 20,000 (Inv.No. 144)
11/04/2004 Credit purchases from Pooja Traders 20,000 (Inv.No. 444)
11/04/2004 Returned Goods to Kiran Traders 5000 (Inv.No. 122)
13/04/2004 Returned Goods to Pooja Traders 5000 (Inv.No. 444)
16/04/2004 Credit Sales to Ram & Ram 50,000 (Inv.No.1)
16/04/2004 Credit sales to Kavitha & co 50,000 (Inv.No. 2)
16/04/2004 Cash Sales 20,000 (Inv.No. 3)
18/04/2004 Credit Sales to Ram & Ram 50,000 (Inv.No.4)
18/04/2004 Credit sales to Kavitha & co 50,000 (Inv.No. 5)
18/04/2004 Goods returned by Ram & Ram 5,000 (Inv.No.1)
18/04/2004 Goods returned by Kavitha & co 5000 (Inv.No. 5)
21/04/2004 Payment made by cheque to Kiran Traders 30,000 Ch. No. 161122
21/04/2004 Payment made by cheque to Pooja Traders 30,000 Ch. No. 161123
21/04/2004 Received cheques from Ram & Ram 75000 Ch. No. 320321
21/04/2004 Received cheques from Kavitha & co 75000 Ch. No. 112310

Payment Made by cash:


26/04/2004 Paid to Petty cash by cash 1,000
26/04/2004 Furniture purchased 20,000
26/04/2004 Salaries paid 10,000
26/04/2004 Rent 4,000
26/04/2004 Electricity charges 3,000
26/04/2004 Telephone charges 3,500
26/04/2004 Cash Purchases 5,000

Payments Made by Petty Cash:


30/04/2004 Conveyance 150
30/04/2004 Postage 100
30/04/2004 Stationeries 200
30/04/2004 Staff Welfare 100
30/04/2004 Stationeries purchased from Jain & Co 1500 on Credit
30/04/2004 Depreciation on Furniture 10%
Answer: Balance Sheet Total Rs. 3, 21,950
Memorandum

Exercise: 8

25 Apr 2007 Paid advance in Travailing Rs.10000


27 Apr 2007 Paid salary advance Rs.3000
01 May 2007 Paid salary Rs.3000 against advance
05 May 2007 Paid Traveling exp Rs.8900 against advance
25 May 2007 Paid rent Advance Rs.5000
02 June 2007 Paid rent against advance

Voucher Types:

By default Tally 9 provides 18 types of Vouchers (with out counting


payroll vouchers) for recording different natures of transactions. However, if you
require further Voucher Types that function like the one of the existing type, you
can create New Voucher Types and give different Voucher Numbering series.

The Voucher Type facility is great as you can make several alternates of each
pre-fixed Voucher Type. For example, for Sales Voucher, it may be convenient to
have several Voucher Types like Cash Sales, Credit Sales, Sales To Registered
Dealers, Sales to Unregistered Dealers, Export Sales, etc. By creating separate
voucher types for them, you can independently configure their numbering scheme,
layout, etc.

Voucher Number:

To identify a voucher uniquely, normally every voucher is given unique


number. The number may be allotted by the user, or can be automatically
generated by Tally, according to options set in voucher Types under Accounts Info.

Tally provides three options for voucher numbering

1) Automatic 2) Manual 3) None

If Automatic is opted for the selected Voucher Types, Tally allots


incremental number and cursor would not move here. And we cannot change the
voucher number.

If Manual is specified for the selected voucher type, cursor would blink
at the voucher number field to input from keyboard. We can modify the voucher
Number

If none is opted for the selected Voucher Type, voucher number field
would not appear.

Features
Tally controls operational Features through F11: Features button.
F11:Features button appear almost in every screen upon selecting a
company. We get same option irrespective of screen where we launch
it. Feature settings are company specific. We can activate an option for
one company and deactivate the same for another company.
Accounting Features - 11
1. Integrate Accounts and Inventory: This option basically
affects accounts. If we set this option to Yes, the value of stock is
automatically computed on the basis of Inventory and posted in
Balance sheet, Profit & loss a/c and we are not allowed to input the
stock value on our own as the accounts are integrated with the
Inventory Part.
If we set No, our Accounts & Inventory remains separate and we
have to input the value of closing stock in the ledger under Stock-
in-hand group which is posted in the Balance Sheet & Profit & Loss
A/c.

2. Income /Expense Statement Instead of P & L: We change Profit and Loss


A/c to Income and Expenditure statement. By default, Profit & Loss A/C

3. Allow Multi Currency: If we wish to record transaction in foreign


currency, we should set this option to yes. On setting this feature to yes,
Currency option would be available at Accounts Info menu and in ledger creation
we can specify currency for the ledger. In case we do not need foriegn currency
option, we should respond No, that would keep, Accounts Info menu and ledger
creation screen tidly.
4. Maintain Billwise Details: By default, Tally would maintain ledger wise
balance and display net debit or credit balance for a ledger. If we receive or
grant credit on purchase or sales, mere ledger balance may not reflect the true
state of affairs-as a ledger may show an amount due which may not be over
due on that date. By maintaining Bill wise details, we can get bill wise
outstanding ,compute bill wise overdue interest , In case we need these
features, respond Yes to this option that would allow to selectively option to
maintain Bill Wise Details for ledgers. In case mere ledger balances is
sufficient to meet our requirement. Respond No to keep the ledger creation
screen more sleek.
5. Maintain Cost Centres: If we wish to make cost centre wise allocation,
respond Yes that would activate Cost Centres option which we would get in
Accounts inof menu
6. More than One cost Category: If we respond Yes to the
above option, we are asked this question. If we wish to allocate a transaction to
more than one set of cost centres simultaneously, respond Yes that would
activate Cost Category option under accounts info menu and we would be able
to allocate to multiple set of cost centres.
7. Interest Calculations:Interest is re-calculated with every change in
balance outstanding. The Cr in the interest amount should not be confused to
mean an Income. It only means that it is payable and is a liability.
8. Maintain Payroll: If we set this option to yes, we can create a employee pay
slip.
9. Allow Invoicing: If we set this option to yes, we can enter sales
transactions in Invoice mode also if we respond No, we will ne restricted to enter
sales transactions in voucher mode only.
10. Maintain Budgets and Controls: If we wish to use Budget to compare with
actual or other budgets and get variance or set Credit Limit for party,set this
feature to yes. When we set this feature to yes, Budget option would be
avaliable at Accounts info and Credit Limits under Accounts Info-Ledger menu.
In case we do not need to use Budgets or credit limits, set to No.
11. Use Reversing Journals & Optional Vouchers:If we set this option
to yes, It would be enable to voucher entry.
12. Allow Zero valued entries: If we need to make Voucher entires
whose monetary transaction value is 0, respond yes (For example, to
prepare an Invoice for sample of zero value), otherwise respond No.
13. Enable Cheque printing : You can choose to write cheques
directly from Tally. Cheques will be printed when printing a Payment
Voucher. However, first activate the capability and set dimensions

Multi-Currency

Organizations who transact in multiple currencies need to record transaction in the


currencies they transact with. We can create and transact in any currency. We
can also enter selling and buying rate of different currencies.

F11- Features→ Allow Multi currency Yes

Once this option is said to yes we get currencies under accounts info.

Select currencies → press enter

The currencies menu has the usual create, display and alter options.

Symbol : Enter currency symbol

Formal Name : Enter the name of currency, must

be different from the symbol.

Number of Decimal places : Enter the number of decimal places for the
Currency.

Rate of Exchange:

Thee screen always comes up in Alter mode.

Rate of Exchange: It operate on day-to-day


Standard Rate : The standard rate is used to calculate variances from

The actual transaction rates

Selling Rate : Enter the rate at which we are selling the currency

to our money exchange.

Buying Rate : Enter the rate at which we are buying the currency

from our Banker or Money Exchanger.

Come to voucher entry → Press F5 → Payment → Payment is made to Krishna


Traders in Dollars that is 50 dollars. The entry is passed as shown below :

Once enter is pressed in the amount column the Dollar gets converted to Rupee as
on the date of voucher Entry as shown below and the amount is displayed based
on Rupee currency.

Exercise: 9

Mr. Laxman started a business in the name of Laxmana Traders on 1/5/2005

02/5/2005 Received capital from Murali 1000 Dollars.


02/5/2005 Standard rate Dollars 67,68,65

03/5/2008 Purchased items from Vimal & co for 150 Dollars


03/5/2008 Standard rate Dollars 61, 63, 60

06/5/2008 Sold goods to Raja & Raja for 75 Dollars


06/5/2008 Standard rate Dollars 46, 48, 47

08/5/2008 Received 70 Dollars from Raja & Raja


08/5/2008 Standard rate Dollars 58, 59, 57
Exercise: 10

Create currencies for the following:

Standard Selling Buying


Rate Rate Rate

$ (Dollar) 62 63 60
# (Frank) 45 47 46
£ (Pound) 72 73 72
¥ (Yen) 58 60 59
€ (Euro) 82 83 82

1.2.2004 Sathesh Started business with Rs. 5,00,000


01-02-2004 Opened Current Account in HDFC Rs. 25,000
03-02-2004 Bought goods from Levi Traders $200
06-02-2004 Sold good to Jagan Traders on Credit £150
09-02-2004 Goods Purchased from Mahila & Co ¥100
11-02-2004 Furniture purchased £500
13-02-2004 Goods returned to Mahila & Co ¥15
15.2.2004 Bought goods from Vinita & Sons €100
21-02-2004 Settled Mahila & Co Account
26-02-2004 Paid rent 1,000
27.2.2004 Paid Salary 2,500
27.2.2004 Sold to Peter Steel Enterprises € 200
28-02-2004 Peter Steel Enterprises settled his account.
28-02-2004 Drew from Bank Rs.10, 000

Cost Categories and Cost Centres


By providing cost centre, a transaction can be allocated to it which would then
enable extraction of all transactions for a cost centre. Hence, a cost centre can be
said to be any unit of an organization to which transactions can be allocated when
only costs or expenses are allocated to these units; they are referred to as cost
canters.

F11-Featrues→ Set yes to two options

Maintain Cost centre yes

More than one Cost Category yes

Steps Involved:

Cost Categories → Single → create

Name: Department

Allocated Revenue Items: yes

Accept → yes

Cost Centre→Multiple Cost Centre →Create


Under Cost Centre: All items.

In Category Column → Select Department

Under Name of Cost Centre → Type the different types of Cost Centres

Accept → yes

Come to voucher Entry

Press F5 → Payment and enter the following entry

By Salaries Rs. 45,600

Once we press enter we get the following screen, select Cost Category, then select
cost centres and type the salary amount incurred for the different departments as
shown below:

Type to cash → Type the Narration → Accept Yes

COST CENTRE CLASS

Cost Centre Classes affect all voucher types. In voucher entry, the allocation
screen would not appear, but allocation would be made automatically.
Steps Involved:
1. Press F11 -> Features -> Maintain Cost Centres and more
than one cost category options should be set to Yes.
2. press F11 -> Features -> Pre-defined cost centre
allocation during entry set Yes.
3. The following screen appears.

4. Type a Class name, say Expenses Allocation . Press Enter the


following screen appears.

5. Select the name of the cost category as Department , select


Cost Centres and type the Percentage of allocation for each
department. The percentage should be typed by us. Press Enter
Accept Yes.
6. Come to Voucher Entry. Press F5 -> payment -> Under Cost
Centre Class -> Select the name of the class as Expenses
allocation. Then pass the entry.

To view the Allocation of Expenses under different Cost


Centre: Display -> Statements of Accouts -> C ost centres
Exercise No: 11

Cost Category: Chennai

Cost Centre: Marketing, Finance, Administration

01/4/2005 Paid Salary Rs.28, 000 (M-10, 000, F-10, 000, A- 8,000)

03/4/2005 Paid Rent Rs. 8, 000 (M-2, 300, F- 2,200, A- 3, 500)

17/4/2005 Paid Stationeries Rs. 3,000 for all departments

24/4/2005 Paid Electricity charges Rs. 12,000 (M-4, 000, F- 3,500, A- 4,500)

30/4/2005 Paid Sales Tax Rs. 1,650 for all departments

01/4/2005 Paid Income Tax Rs. 1,800 for all departments

Exercise No: 12

Cost Category: Department

Cost Centre: Account, Purchase, Sales, Computer

Date Expenses Accoun Purchas Sale Compute Total


t e s r

03/5/05 Electric Bill 2000 2000 1400 5000 1040


0

05/5/05 Rent 1500 1500 300 3000 630


0

07/5/05 Interest 500 200 150 85


0

05/5/05 Wages 500 200 70


0

09/5/05 Stationery 250 50 12 100 52


0 0

13/5/05 Salary 4500 2000 3000 4000 1350


0

25/5/05 Postal 400 150 55


Charge 0

27/4/05 Telepone 1300 300 200 1500 330


Bill 0
Bill-Wise Details
By activating the Bill wise feature in F11: Features, the ledger masters
under Sundry Debtors and Sundry Creditors automatically displays an
additional option called Maintain balances bill-by-bill. On setting this option
to Yes, you get an additional option Default Credit Period.

When you enter details of sales and purchases with Bill-wise turned on,
Tally prompts you to identify the invoice with an appropriate reference
number. The reference can then be used to allocate payments to the
correct invoice to maintain an accurate account of outstanding.

Bill-Wise Types:

New Ref:

To enter new credit purchase or new credit sales value

Advance

To settle payment or receipt before purchase or sales

Against Ref:

To settle payment or receipt against purchase or sales

On Account

To settle an opening balance to study party

Creation of Bill_Wise_Details:

F11: Accounting Feature:

Maintain Bill-wise Details? Yes


(for Non-trading A/c s also) No

Ledger creation:

Purchase → Purchase A/c


Ram & Co → Sundry Creditor

Voucher Creation:

Gateway of Tally→Accounting Voucher


Report:

Go to Gateway of Tally > Display > Statements of Accounts > Outstanding>


Receivables/Payables.

Exercise No: 13

Capital 2, 50,000

Sundry debtors
Milky (P)Ltd 5160

Bill No Date Amount Due days


S/01-02/301 27/01/02 1430 30
S/01-02/304 26/02/02 1730 30
S/01-02/309 27/03/02 2000 45

Sundry Creditors
Praveen & Sons 7050

Bill No Date Amount Due days


C/01-02/1248 26/01/2002 1500 30
C/01-02/1252 21/02/2002 4050 30
C/01-02/1282 25/03/2002 1500 45

Fixed Assets
Furniture 30,000
Computer 40,000
Opening Stock 10,000
Cash in hand 70,000
SBI 1, 01,890

Voucher Entry:

Sales bill

Milky (P)Ltds

Bill No Date Amount Due days


202 30/04/02 1430 30
214 15/05/02 1500 30
256 31/07/02 3640 15
301 28/10/02 2750
351 25/10/03 5050 45
392 15/03/03 11000 45

Kamal & Co

Bill No Date Amount Due days


417 12/04/02 2230 15
431 16/05/02 2650 15
452 17/08/02 5630 30
515 15/11/03 10780 45
659 21/01/03 1530
815 30/03/03 2130 30
Purchase bills
Praveen & Sons

Bill No Date Amount Due days


0001 03/04/02 455 -
0002 05/05/02 1000 15
0003 16/08/02 1675 30
0004 22/11/02 4050 30
0005 31/03/03 12350 45

Malar & Co

0006 02/02/03 11450 30


0007 15/02/03 5540 15
0008 24/02/03 875 15
0009 31/03/03 1234 30

Received cash

Milky (P) Ltd

Bill No Date Amount


304 02/05/02 1730
214 17/06/02 1500
301 01/11/02 2750
351 31/03/03 4000

Kamal & co

417 30/4/02 2230


452 20/8/02 5000
515 31/1/03 10000
659 25/1/03 1530

Payments Made

Praveen & Sons

1282 15/5/02 1500


0001 4/4/02 455
0004 20/9/02 4050
0005 30/3/03 12000

Malar & Sons

0006 5/3/03 10,000


0007 15/3/03 5,540

Interest Calculations
The Activate Interest Calculation field is displayed in the Ledger Creation
screen only if Activate Interest Calculations is set to Yes in F11: Features.

Set this field to Yes for each specific ledger account for which interest is to
be calculated.

Simple Mode (Where advanced parameters are not applicable)

To calculate Interest in the Simple Mode:


1. Go to Gateway of Tally> F11: Features > Set Activate Interest
Calculation to Yes. > Set Use Advanced Parameters to No.
2. In the Ledger Creation screen set Activate Interest Calculation to Yes.
3. The Interest Parameters sub screen is displayed. Enter the Rate and
select the interest style from the list.

Interest calculation transaction by transaction

Interest calculated on Outstanding Balances.

1. Go to Gateway of Tally> Accounts Info.> Ledgers> Alter (Single)>


Bank Ltd (bank account)
2. Set Activate interest Calculation to Yes.
3. Rate: 15%.
4. Interest Style:. Of the four options, select 365-Day Year.
5. Accept the screen.

The Interest Calculations Report can be displayed and printed.

Go to Gateway of Tally> Display> Statements of Accounts> Interest


Calculations> Ledger> Bank Account

Interest calculation transaction by transaction

1. Alter a Customer account


2. Set Activate Interest Calculation to Yes.
3. Set Calculate Interest Transaction-by-transaction to Yes.
4. Set Over-ride Parameters for each transaction to No.

To view the Interest calculated

Go to Gateway of Tally> Display> Statements of Accounts> Interest


Calculations> Ledger>

Advanced Mode (Where advanced parameters are applicable)

The advanced parameters are particularly useful where interest rates change
from time to time.

1. Go to Gateway of Tally> F11: Features > Accounting Features > Set


Activate Interest Calculation to Yes. > Set Use Advanced Parameters to
Yes.
2. The Interest Parameters sub-screen is displayed

• For Ledgers created under the Group Sundry Debtors/Sundry


Creditors, the Interest Parameters sub-screen is displayed as
shown below:

• For Ledgers created under the Group Bank Accounts, or if the


option Calculate Interest Transaction by Transaction is set to
No, then the Interest Parameters sub-screen is displayed as
shown below
To view the report on Outstanding balances:

Go to Gateway of Tally> Display> Statements of Accounts.> Interest


Calculations> Ledgers> Bank Ltd.

Advanced Parameters - Interest calculation transaction by


transaction:

Activate and specify interest calculations in ledger masters.

Advanced Parameters - Interest calculation transaction by transaction

Go to Gateway of Tally> Display> Statements of Accounts> Interest Calculation >


Ledger>X a/c

Exercise: 14

1.6.2004 Capital Rs. 1,50,000


2.6.2004 Purchased goods from Raabiya Traders for a sum of Rs.75,000
[Credit period is 45 days, Bill no.24]
Interest Rate 12% and 15%
6.6.2004 Sold goods to Kamalam & Co for a sum of Rs. 1,25,000
[Credit period is 45 days]
Interest rate 13% and 18%
2.12.2004 Amount paid to Raabiya Traders plus the interest rate.
3.3.2005 Amount received from Kamalam plus the interest rate.

Display the interest calculations from 1-06-2004 to 31-03-2005

Budgets

Budgets are used to set targets and compare against actual and get
variances. We can create multiple budgets for different purpose.

Press F11-Accounting Features → Maintain Budgets and Controls- set yes

Creation of Budgets:

Gateway of Tally → Accounts Info → Budgets→ create


On selection of create option, we get a screen as shown below

Name : Enter a name of the Budget for identification


Under : Primary
Period of Budget : Given the period range of the Budget in the
Columns From and To
Press Enter → Under Ledgers → Type yes, the next screen appears and type
the contents as shown below:

Account Name : Name of the Group or Ledger for which the


budget is created.
Cost Centre : Not applicable
Type of Budget : We get 2 options to select the type of Budget,
namely

1. On Nett Transactions
2. On Closing Balance
On Nett Transactions: This option is suitable for accounts where nett
transactions are to be monitored (eg. Revenue A/C)

On Closing Transactions: This option is suitable for accounts where closing


balance is to be monitored (eg. Personal A/C)

Press Enter→ Enter→ Accept yes. Budget has been created.

To view the Budget,


Go to Gateway of Tally → Display → Trial Balance → Press Alt + B → Budget
Variance→ select the name of the Budget→ Press Enter

Exercise: 15

Expenses Budget

Conveyance 5,400
Wages 50,000
Carriage Outwards 500
Electricity Expenses 3,000
Advertising 2,000
Selling and Distribution 1,500

Enter the following entries for Budget and Controls

May 2005
Paid Conveyance 200
Paid Wages 500
Paid Carriage Outwards 2,500
Paid Electricity Expenses 3,000
Paid Advertising 2,000
Paid Selling and Distribution 1,100

June 2005
Paid Conveyance 500
Paid Wages 250
Paid Carriage Outwards 1,500
Paid Electricity Expenses 2,000
Paid Advertising 2,000
Paid Selling and Distribution 1,220

Bank Reconciliation
Bank Reconciliation means that the accounts maintained by the banker tallies with
the bank ledger account in our Books. Even if both the accounts are in sync, the
balances may not be equal for various reasons. Bank Reconciliation is the process
to ensure that even if these two balances apparently differ, the bank Pass Book is
in sync with the Bank Book in the books of accounts.

Steps Involved:

1. Our current account statement has been sent to us by our Bank for the
month ended may 2005
2. Bring up the monthly summary of Current Account (Display→Account
Books→Bank Books and select the bank Account)
3. Bring the cursor to May and Press Enter. This brings up the vouchers for the
month of May 2005

4. It is helpful to see the Narration as that contains cheque numbers and other
details. So Press F12: Configure and activate Show Narration.
5. Since this is a Bank Account, an additional button F5 Reconcile will be visible
on the right. Press F5
6. The display now becomes an Edit screen in reconciliation mode. The primary
components are:
• A Column for the Banker’s Date
• The Reconciliation at the bottom of the screen,
Showing:

Balance as per Company Books, Amounts not

Reflected In Bank and Balance as per bank

7. Enter the bank date for the payment voucher and contra voucher.
8. The next time we come for reconciliation, we will be presented with
only those vouchers, which remain unreconciled.

Exercise: 16

01/4/2005 Received Capital by Cash 1,00,000


02/4/2005 Cash deposited in SBI 50000

Deposit Slips

05/4/2005 Kiran 45000


07/4/2005 Sanjaj 25000
10/4/2005 Kavi 20000
11/4/2005 Kiran 20000
15/4/2005 Kavi 15000

Counter Foils
08/4/2005 Kavitha 15000
09/4/2005 Sachin 5000
11/4/2005 Amutha 7500
12/4/2005 Sachin 10000
15/4/2005 Amutha 4500
17/4/2005 Kavitha 12000
30/4/2005 Bank Charges 250

Pass Book of SBI as on 30/4/2005

Date Name Deposits (Dr) Withdrawal (Cr) Balance

02/4/05 Cash 50000 50000 Cr


06/4/05 Kiran 45000 95000 Cr
09/4/05 Sanjay 25000 120000 Cr
10/4/05 Kavitha 105000 Cr
13/4/05 Amutha 7500 97500 Cr
14/4/05 Sachin 10000 87500 Cr
17/4/05 Kavi 15000 102500 Cr
30/4/05 Bank 250 102250 Cr

Exercise: 17
Jeevan & Co Started business on 1/4/2004

1/4/2004 Received capital by Cash Rs. 50,0000


1/4/2004 Cash deposited in Canara Bank Rs. 20,000

Following is the details of Deposit Slip (Sundry Debtors)

10/4/2004 Kabir 40,000


12/4/2004 Usha 25,000
14/4/2004 Syam 20,000
25/4/2004 Usha 15,000
29/4/2004 Kabir 10,000

Following is the details of counter Foil of Cheque Book (Sundry Creditors)

11/4/2004 Ashima Textiles 12,500


13/4/2004 Fashion Textiles 3,350
15/4/2004 Silky 5,000
17/4/2004 Ashima Textiles 10,000
19/4/2004 Fashion Textiles 5,000
28/4/2004 Silky 3,000
30/4/2004 Bank Charges 100

Date Name Deposits (Dr) Withdrawal (Cr) Balance

01/4/2004 Cash 20,000 20,000 Cr


12/4/2004 Kabir 40,000 60,000 Cr
13/4/2004 Ashima Textiles 12,500 47,500 Cr
14/4/2004 Usha 25,000 72,500 Cr
15/4/2004 Fashion Textiles 3,350 69,150 Cr
17/4/2004 Silky 5,000 64,150 Cr
18/4/2004 Ashima Textiles 10,000
26/4/2004 Usha 15,000 69,150 Cr
30/4/2004 Cheque Book 100

Optional and Post-Dated Voucher


This is another non-accounting voucher. Unlike a Memo voucher, this is not a
separate voucher type. You can mark an existing voucher (for example, a
payment voucher or a receipt voucher) as Optional. Press CTRL + L or click on
Optional from the Button Bar. This button toggles with Regular. By marking a
voucher Optional, the voucher does not get posted anywhere but remains in
the Optional Register.

You can make a voucher type default to Optional if you need to create a new
voucher type or alter an existing voucher type.

Go to Gateway of Tally > Accounts Info > Voucher Types> select a


Voucher Type> Set Make Optional as default to Yes.

Enabling Optional Vouchers

1. Go to Gateway of Tally

2. Select F11:Features > Accounting Features to display Company


Operations Alteration screen

3. Set Use Rev. Journals & Optional Vouchers? to Yes.

4. Accept the screen to save.

Use of Optional Vouchers


• If you do not want a transaction that is incomplete to affect the accounts, you can
mark this as an Optional Voucher. Once the transaction is complete, modify the
voucher and post it as Regular Voucher. For example, Performa sales invoice. In
fact, an optional sales invoice prints as a Performa Invoice.

• Optional Vouchers allow you to see the impact of transactions without actually
posting them.

• Optional Vouchers can be used to forecast future sales. For example, create a
New Voucher Type - Sales Forecast. Record future sales projections using this
voucher type.

Let us consider the following example.

On 30th June you want to view the Balance Sheet as of today but June rent is not
due for payment until the first week of July. This liability is not reflected in the
Balance Sheet. To overcome this, enter an Optional Voucher dated 30th June.
The above entry is made as shown below

1. Enter Date

2. Select Optional from the button bar

3. Debit Rent account

When you view the Balance Sheet, generate a report with the Optional Voucher
included. The Optional Voucher should be already defined as a Scenario (Refer
section on Scenario Management for more details). The voucher affects the
report temporarily. Once you quit the report, Tally does not retain the Scenario
details. The next time you view the balance sheet, it will not include the effect of
the Optional Voucher unless you include it.

Post-Dated Vouchers
While entering vouchers, you can mark them as post dated. Tally will not update
the vouchers in ledgers until the specified date is approached. This is useful to
enter 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 Tally
will only enter them in the ledgers as they fall due.

Mark vouchers Post Dated by using CTRL + T or click on Post dated button
from the Button Bar. This button toggles with Current.
Accounting with Inventory
Inventory accounting includes recording stock details, the
purchase of stock, the sale of stock, stock movement between
storage locations/ godowns and providing information on stock
availability. With Tally it is possible to integrate the inventory and
accounting systems so that financial statements reflect the closing
stock value from the Inventory system.
The Inventory system operates in much the same way as
the accounting system. First we set up the inventory details, which is a
similar operation to creating the chart of accouts although , in this case
there is no pre-defined set of stock groups. Second, we create the
individual stock items. which is similar to setting up the ledgers. Finally,
We are ready to use vouchers to record the various stock transactions.
Stock items:
Stock items are the actual items in stock, and we account for
the issued and receipts of stock at this level.
Stock Groups:
We classify stock items into stock group based on any
common feature.
Stock Categories:
This is a useful Tally feature, Which allows us to classify similar
stock items together across different stock groups, enabling us to
obtain reports on alternatives or substitutes for a stock item.
Locations/Godowns:
We can specify where the stock items are held, e.g., which
warehouse shelf or rack, obtain stock reports for each Godown, and
account for movement of stock between locations/Godowns.
Units of measure:
We will need to create units of measure for stock items. These
can be simple units such as nos, metres, kilograms, pieces, or compound
units, e.g., box of 10 pieces or 1 dozen is 12 nos.
Maintain Accounts with Inventory
Tally displays a pop-up list called Type of Company – this is how
your books of accounts will be maintained.
Accounts only

Select this only if you do not have any inventory transactions (suitable for
professionals and corporate offices). Tally would not permit intrusion ofInventory
related information that are not required.

However, at a later date (if required) you can alter the information as Maintain
Accounts-with-Inventory – Tally accordingly now provides all the inventory-related
information.

Accounts-with-Inventory
This obviously allows you to maintain both financial accounts and inventory. You
may choose not to use one or the other until the need arises.
Stock Groups
Stock items can be grouped together under Stock Groups to reflect their
classification based on of some commonality. Grouping would enable easy location
and reporting of stock items in statements. Hence, items of a particular brand can
be grouped together so that you can extract stock of all items of that brand.

For example, create Stock Groups like Sony. Your stock items could then be Sony
3.5" disks, Sony tapes, etc. Classify the Sony products under the Stock Group
Sony.

Creating Single Stock Group:

Gateway of Tally→Inventory Info→Stock Group→Single Stock Group

In the Name field→ Enter Sony

In the under field → Select Primary

Can Quantities of Items be Added? Set yes

Check the data is correct and press enter and Accept – Yes

Name

Give the name of the stock group. Here we wish to create a group Sony.

Under

Specify whether it is a primary group or a sub-group of another group.

Can quantities of items be ADDED?


Field allows us to specify if it is logical for totals of stock-in-hand to be displayed
for this group heading in Stock Summary.

Creating Multiple Stock Group:

• Select Create in multiple Stock groups to bring up the multi


stock group creation screen.
• Select group name from the Pop-up list of Groups for the Under
Group field.
• In Name of Stock Group type and enter sub group name.
• In the next line type another group name and Accept -> yes.

Displaying and Altering Stock Groups


Once created, stock groups can be displayed and altered in single and
multiple mode. We can delete a stock group via single Stock group alter by
pressing <Alt>+<D>. However. we cannot delete a stock group with sub-
groups or stock items.The lower levels must be deleted first
Delete a Stock Group
Note:You can delete a stock group only if it does not have any children
under it. The children could be stock group or stock item or both.
Gateway of Tally—>Inventory Info—>Stock Groups—>Single Alter
Press [ALT]+[D]to delete the stock group
You cannot delete a stock group from multiple mode.

Stock Categories:
Stock Categories offers parallel classification of items. You may create Stock
Categories like Floppy Disks and Floppy Drives.

Require information like total stock of floppy disks or alternative items that could
be used, these would be best available through Stock Categories.

F11 Features: Maintain Stock Categories – Yes

Creating Single Stock Category:


Gateway of Tally > Inventory Info > Stock Categories

In the Name field→ Enter Floppy Disks

In the under field → Select Primary

Creating Multiple S tock Categories


• Select create in multiple mode to bring up the multi stock category
creation screen.
• Select any one stock categories from the list of categories. Type and
enter sub stock categories.
• Press Enter twise to accept the data and return to the stock
categories menu.
Display or Alter a Stock Category
Gateway of Tally—>Inventory Info—>Stock Categories—>Single/Multiple Display
Or
Gateway of Tally—>Inventory Info—>Stock Categories—>Single/Multiple Alter

Select the stock category whose particulars you wish to display. When you display
or alter a stock category, the information entered while creating it is displayed.
• Display from this mode is for master information only. You will not obtain any
balances for a stock category here. Use the Display option from the Gateway
of Tally for display of balances and transactions.
• In earlier days of computing, one would look at the master information for
balances. Tally believes that balances are a logical consequence of the
transactions; hence, they should be available with the transaction
summaries. You would find all summaries and details through the Display
option in the main Gateway of Tally.
Delete a Stock Category
You can delete a stock category only if it does not have any children under it.
The children could be stock category or stock item or both.
Gateway of Tally—>Inventory Info—>Stock Categories—>Single Alter
Press [ALT]+[D]to delete the stock category
Units of Measure
You will need to create units of measure for stock items. These can be
simple units such as numbers., metres, kilograms, pieces, or compound units,
e.g. box, where, say, one box equals ten pieces.

Create a Unit of Measure


There are two types of Unit of measure:
1. S imple
2. Compound
Select Units of measure from the Inventory info menu and select create the
Units menu to bring up the unit creation screen.
In symbol type and enter nos. in formal name type and enter Number of press
Enter twice to accept the data without quitting from the unit creation screen.
Gateway of Tally—>Inventory Info.—> Units of Measure—> Create

In Symbol type ad enter doz. In Formal Name type and enter Dozen.
Press Enter twice to accept the data.
Use the up arrow or backspace key to position the highlight in the
Type field. Select Compound form the types of units Pop-up menu. Select
doz as the First Unit. Type and enter 12 as the conversion factor.
Select nos as the Second Unit and accept the data. Press enter to
return to the units menu.

Displaying and altering units of measure


Gateway of Tally > Inventory Info. > Units of Measure > Display/Alter

Once created, units of measure can be displayed and altered. You can delete a
unit of measure in the alteration screen by pressing [Alt]+[D]. However, you
cannot delete a unit of measure that is part of a compound measure. The
compound measure must be deleted first.

Godown
Godown is the place to store goods. Tally allows us to create any number of
Godown and nest into any number of levels.

F11 Features: Maintain Multiple Godowns? Yes

Creating single Godown:


Gateway of Tally > Inventory Info. > Locations > Create
Name

In the Name field, give the name of the location.

Address

Give a address of the godown, if required.

Under

Give the location under which this location is to be sub-grouped. Use [alt]+[C] to
create the parent location. Select primary if it is not a child of any location.

Allow Storage of Materials?


Tally permits you to create a location/godown where you may not
store materials at all but treat it as a virtual location. Virtual location are
useful in case like Head Office which may have many different stock
points under it that store materials. Hence, Head Office acts like a
primary group location. Or , for example, designate London as a
virtual location with Wimbledon Warehouse, Harrow Warehouse,
Brixton Warehouse as sublocations/ godowns. These sub-locations or
godowns will allow storage of materials.
Displaying and altering stock godowns
Once created, stock locations can be displayed and altered in single
and multiple mode. You can delete a stock location via Single Location
Alter by pressing [Alt]+[D]. However, you cannot delete a stock
location with sub- locations. The lower levels must be deleted first.
Stock Item

Stock items are the actual items in stock, and we account for the issued and
receipts of stock at this level.

Stock items are the actual items in stock, and we account for the issued and
receipts of stock at this level.

Creating Stock Item:

Gateway of Tally→Inventory Info→Single Stock Item

In the Name field→ Enter Sony Disks 3.5”

In the under field → Select Sony

In the unit field → Box of 100 Nos.

Delete a stock item

You can delete a stock item only if it has not been used form transaction
entry.
Gateway of Tally > Inventory Info > Stock Items > Single Alter
Press [ALT]+[D] to delete the Stock Item

Stock Group

Exercise No: 18

a) Journalize the following Transaction in the Book of Anandha Stores

2007

Aug 01 Anand Started the business Rs.7,00,000

08 Anand Deposit into the Indian Bank Rs.25,000

10 Purchase 100 kg Ponni Rice per kg Rs.20.50

19 Purchase from Rasi Stores 200 kg Ambai 18 per kg Rs.17

Sep 02 Salary for staff Rs.4,500

05 Paid Rent for Rs.5,000

15 Purchase 50 lit Gingilly Oil per lit Rs.98

17 Purchase 300 Hamam soap (100g) per soap Rs.13

Paid Stationery Rs. 450

20 Paid to Rasi Store for Rs.3,400

Purchase from Milky & Co 125 Lax Soap per soap Rs.12

Oct 01 Purchase 75 Lit VVD Coconut Oil per lit Rs.78

05 Paid Salary Rs.4,500

15 Purchase 200 Sandal Soap per soap Rs.21


18 Sales 125 Hamam Soap (100g) per soap Rs. 15
24 Purchase 100 Hamam Soap (150g) per soap Rs.18 from Haji Store
29 Sold to Jeya Traders,

50 kg Ponni Rice Rs.22

45 kg Hamam Soap (150g) Rs.20

Nov 03 Sales Ambai 18, 50kg per Rs.18 and 75 Lax Soap per soap Rs.13

to Laxmi Store

5 Sales 10 lit VVD Coconut Oil per lit 80


6 Paid Salary Rs.4,500
12 Purchase Weight Machine Rs. 8,000
18 Sales 35 lit Gingilly Oil per lit Rs.99.50
23 Paid Telephone Bill Rs. 1,200
24 Return by Jeya Traders14 kg Ponni Rice
28 Sales 15 Hamam Soap(100g) for cash per soap Rs.15

Dec 05 Amount Settled by Jeya Traders

7 Paid to Haji Store Rs.1,000


8 Paid Salary Rs. 4,500
15 Purchase 20 lit Gingilly Oil Rs. 98

Stock Group: Rice, Soap, Oil

b)
Journalize the following Transaction in the Book of Rahuman & Sons

2006

Oct 01 Started business with Capital Rs. 10, 00,000

2 Opened a Bank account in HDFC Rs. 1,00,000


5 Purchased Stationery item for Rs.5,500
6 Purchased Furniture for Rs. 23,000
7 Credit Purchased from Guru Store Inv. No. 123

Television Rs. 6,000 10 nos

Fridge Rs. 8,800 15 nos

Audio System Rs. 4,500 5 nos

10 Credit Purchased from ALM Traders Inv. No. 124

Television Rs. 6,500 3 nos

Fridge Rs. 7,900 5 nos

11 Withdraw from Bank Rs. 5,600 for Personal use Ch.no. 098765
14 Bought a Computer for Rs.17,000 from Sai System
17 Guru Store amount settled through a cheque
18 Sold Goods for Cash

Television Rs. 6,000 5 nos

Audio System Rs. 4,500 3 nos

19 Paid into Bank Rs. 15,000


20 Sold Goods to Varun & Co on Credit

Television Rs. 7,000 10 nos

Fridge Rs. 9,000 15 nos

Audio System Rs. 5,500 5 nos

22 Paid Telephone Charges Rs. 1000


23 Received cash Rs. 16,000 from Varun & Co
24 Paid made by Cash
Paid to Petty Cash Rs. 2,000

Salaries Rs.10,000

Wages Rs. 7,000

Carriage Inward Rs. 1,500

26 Payment Made by Petty Cash


Conveyance Rs. 200

Postage Rs. 150


Stationeries Rs. 120

Staff Welfare Rs. 200

Stock Categories
Exercise No: 19

1.4.2007 Kishore Trading Company Started business with cash 80,000


4.4.2007 Paid into Bank Rs. 10,000
6.4.2007 Purchase from Uthira & Co (Inv.no. 111)

Television

BPL Color TV Rs. 7,000 10 nos

BPL Black & White Rs. 9,000 12 nos

Sony Rs. 12,500 10 nos

Samsung Rs. 11,200 15 nos

9.4.2007 Purchase from Ruba & Sons (Inv. No. 122)

Computer

HCL Rs. 12,000 15 nos

LG Rs. 10,000 10 nos

11.4.2007Credit Sales Hamsa Traders (Inv.No. 1)


Television

BPL Black & White Rs. 9,500 2 nos

Sony Rs. 13,500 5 nos

16.4.2007Credit Purchase from Santhosh Electricals (Inv.No. 133)


Fan

Usha Rs. 1,000 5 nos

Philips Rs. 1,200 8 nos

20.4.2007Cash Sales (Inv.No.2)


Computer

HCL Rs. 12,000 4 nos

LG Rs. 10,000 4 nos

Fan

Usha Rs. 1,000 2 nos

Philips Rs. 1,200 4 nos

22.4.2004Paid into Telephone Charges Rs. 1,000


24.4.2004Cash Purchase
Mixci

Kanchan Rs. 1,200 5 nos

Preethi Rs. 1,500 5 nos


Butterfly Rs. 1,000 5 nos

26.4.2004Payments Made by cash


Paid to Petty Cash Rs.20, 000

Furniture Rs. 1,500

Salaries Rs.10, 000

Wages Rs. 7,000

Carriage Inward Rs. 1,500

27-4-2004 Payment Made by Petty Cash

Conveyance Rs. 200

Postage Rs. 150

Stationeries Rs. 120

Staff Welfare Rs. 200

Godown
Exercise No: 20

Journalize the following Transaction in the Book of Reethu Stores

01-9-2007 Started Business with cash Rs. 20,00,000

02-9-2007 Stationery Items Rs. 5,000

03-9-2007 Cash Purchases

Godown

Item Rate Pettai Town


(Rs.) (kg) (kg)

I.R. 20 18 1500 2000

Ponni 20 1000 1300

Basm 22 1000 1000


ati

I.R. 8 17 2000 500

5.9.2007 Purchase from Samir Stores (Invoice No. 44)

Godown

Item Rate( Junction Palay


Rs.) (kg) (kg)

Black 35 1000 1000


Gram

Green 25 2500 1400


Gram

Wheat 18 1800 1500


8.9.2007 Credit Sales
Laxman Traders (Invoice No. 1)

Godown

Item Rate( Junction Palay


Rs.) (kg) (kg)

Black 38.50 500 450


Gram

Green 26.50 2000 750


Gram

Wheat 20.25 1000 250

10.9.2007Purchase from Kalyan Store (Invoice No. 54)

Godown

Item Rate( Junction Palay


Rs.) (lit) (lit)

VVD Coconut Oil 22 1000 1000

Idahaya Gingili 13 2500 1400


oil

Sunflower 18 1800 1500


Refined Oil

12.9.2007 Received cheque from Laxman Traders From 2,00,000


20.9.2007 Payment made by Cheque
Samir Stores Rs. 50,000

Kalyan Store Rs. 25,000

25.9.2007 Payments made by cash


Paid to petty Cash Rs. 2,000

Furniture Rs. 25,000

Salaries Rs. 30,000

Wages Rs. 25,000

Carriage Inwards Rs. 4,000

Rent Rs. 10,000

Electricity Charges Rs. 5,430

Telephone Charges Rs. 8,340

27.9.2007 Payment made by Petty Cash


Conveyance Rs. 250

Postages Rs. 300

Stationeries Rs. 250

Staff Welfare Rs. 200

Vehicle Maintenance Rs. 250

General Expenses Rs. 150

30.9.2007 Depreciate 10% on Furniture


Integrate Accounts with Inventory

F11: Features ->F2:


Inventory

Effect on Balance Sheet and Profit & Loss


Account
The option in F11:Features has a significant effect on the Balance
Sheet and Profit & Loss Account. If set to Yes, it brings the
stock/inventory balance figures from the inventory records and provides
a drill down to the Stock registers from the Balance Sheet.
If it is set to No, it ignores the inventory books figures and picks up
manually entered closing stock balances.
Stock records often contain compensating errors caused by wrong
allocation to items and the like. The feature enables finalisation of
financial books without waiting for reconciliation of stocks that may
take time.
Allow Zero value
entries
F11: Features ->F2:
Inventory
To use zero values in vouchers, activate the feature in
F11:Company
Features.
There is usually no point in having a voucher that is totally without
value. However, in some situations, zero values are required, for
example,

Batch- wise Details


Batch-wise details are given for maintaining batch information
pertaining to stock items. The various options are activating batch-wise
details, setting manufacturing date and expiry date. Manufacturing date and
expiry date options can be used only in accordance with batch-wise
details as per requirements. This is useful for business that deal in goods that
have expiry dates like medicines, food and other edibles. During voucher
entry, Date of manufacture of the product defaults to the date of the Voucher.
Which can be changed but not to a date later than the voucher date. Expiry date
cannot be a date prior to the voucher date.

Tally walk - through to activate batch-wise


details:
1. Return to Gateway of
Tally.
2. Activate the option “ Maintain Batch wise details” in F11: Features
-> Company features -> Inventory Features
3. Activate Set Expiry Dates for
Batches.
4. Accept the
screen.
5. From Gateway of Tally go to Inventory
Info
6. Create a new stock item - Tomoto
Ketchup
7. Create it under Stock Group - Ketchup (create the group if it does
not exist.
8. Put it under Stock Category
‘Sauces’.
9. Activate the option “ Maintain in Batches” in that
item.
10. Track date of Manufacture -
yes
11. Use Expiry Dates- Yes
12. Alter Standard Rates -
No
13. Rate of Duty -
5
14. Accept defaults for other
options.

15. Create a ledgerAnantha Departmental Store under sundry Creditors


16. Get back to Gateway of Tally menu an go to voucher entry.
17. Press F9: Purchase.
18. Create the following entries.
19. Date: 02-06-2008. Purchase 150 nos form Anantha Departmental
Stores 120.00. Purchase Invoice number AD/001
20. Credit period 20 days.
21. After we enter item an item allocation screen will appear,
here enter batch no as AD/001 having manufacturing date as
02/06/2008 and expiry date as 1/2/2009.
22. Accept the voucher.

Exercise: 20

Enter the following entries for Batches and Expiry dates:

2007 May 01Kabir invested Rs. 5,00,000


02Paid into HDFC bank Rs. 45,000
05Purchase Computer Rs. 16,000
06Purchase Viva 100 nos for Rs. 260 [Batch no.V201 Expiry date
2/12/2007] Rajia & Co
8 Purchase Rin 100 gm 500 nos for Rs. 19.50 [Batch no. R301,Expiry
date 1-10-2007]Mohana & Co
9 Withdraw Cash from Bank Rs. 5,000
10 Purchase Maltova 250 nos for 220 [Batch no. M202,Expiry
date 1-7-2007]
11 Purchase Power Soap 300 nos for 12 50 [Batch no. P302, Expiry
date 1-8-2007]
12 Paid Salary Rs. 13,000
13 Purchase La Soap 130 nos for Rs.11.50 [Batch no. L303, Expiry
date 9-10-2007] Mohana & Co
14 Sales Viva 25 nos for Rs. 275 to Kavitha Store
15 Sales Rin 100 gm 230 nos for Rs. 21 to Kavitha Store
25 Purchase Liril 200 nos for Rs.22.50 [Batch no. Li302, Expiry
date 11-10-2007]
28 Sales La Soap 6 nos for Rs. 12 and Liril 55 nos for 24 to Malar
Traders

2007 June 02 Purchase Maltova 250 nos for 220 [Batch no. M202, Expiry
date 1-7-2007] from Rajiya & Co
16 Purchase Power Soap 300 nos for 12 50 [Batch no. P302, Expiry
date 1-8-2007] from Mohana & Co
17 Paid Rent Rs. 3,000
18 Paid Telephone Bill Rs. 3,400
19 Paid Salary Rs. 13,000
20 Purchase La Soap 100 nos for Rs.11.50 [Batch no. L303, Expiry
date 9-10-2007] from Mohana & Co
21 Sales Maltova 25 nos for Rs. 230 to Jerry Store
22 Sales Power Soap 230 nos for Rs. 13 to Jerry Store
29 Paid Electricity Bill Rs. 2,300
30 Withdraw Cash for Personal use Rs. 1,300

2007 Sep 04 Purchase Boost 50 nos for 230 [ Batch No. B203, Expiry date 25-
9-2009] 11 Paid Salary 13,000
13 Paid Rent Rs. 3,000
23 Sales La Soap 60 nos for 13 [Batch no. L303, Expiry date 9-10-
2007]
24 Purchase Lux 300 nos for Rs. 15 [Batch No. Lx304, Expiry date 11-
11-2007] from Mohana&Co
25 Sales Lux 150 nos for Rs.16.50 to Nirupama Store

Use Different Actual & Billed Quantity

This option enables you to specify quantities, that are different


from that delivered, when invoicing, and record the fact. It is possible
that you have delivered goods but some of them are in dispute and
your customer wishes to be invoiced for only the quantity that he
agrees to. He may consider the rest later and would then like to be
invoiced. On the other hand, the rest is so bad that it is useless even for
you to take back. Hence, you can record the fact when raising the
invoice without altering the delivery note or passing a rejection
entry. Select this option if you have many such occasions.
Normally, the Billed and Acutal quantity is same when we set the
option Use different Actual and Billed Qty to No in F11: Features.
However the quantity deliverd/ received may be different from
quantity billed ub same cases as:

i. Free items are received or given.( Free & sold items are same.
For example, 1 box of Surf Excel is given free on every 5 box of
surf excel.
iii. Free items are received or given. (Free & sold items are
different).
For example, one piece of 100gm Promise tooth pase given free
on every 5 box Surf Excel.
iv. The billing quantity is rounded off
v. Invoicing in Part.
If the Billing quantity is different from actual quantity, to enter
both quantities in transaction, we need to activate option Use
different Acutal
& billed qty under F11: Features -> F2: Inventory . Consquently
during transaction entry, we wil be prompted to enter 2 quantities,
i.e., Actual and billed. Actual Quantity will update stock and Billed
Quantity will be used to compute transaction value.

Exercise: 21

20.10.2006 Purchased the following items from Omega InfoTech in an sale offer
made
by them. The offer was that on every purchase of 5 items one item is
given free. He purchased the following items and agreed to make
payment with in 10 days.

Items Purchased Free of Total Rate


Quantity cost Quantity
Processors 25 5 30 5200
Hard Disks 20 4 24 3200
Printers 20 4 24 5100
Monitor 20 4 24 10500
UPS 20 4 24 1700

25.10.2006 Vimal introduced the sale offer and sold the


following items on credit
Paramount Services and Peripherals:

Items Purchased Free of Total Rate


Quantity Cost Quantity
Processors 25 5 30 6800
Hard Disks 20 4 24 3500

28.10.2006 I – Tech Peripherals

Items Purchased Free of Total Rate


Quantity Cost Quantity
Printers 10 4 14 6000
Monitor 12 4 16 11000
UPS 20 4 24 2300

Order With Tracking Number


In Tally, order processing is linked to inventories. You can track the order position of a stock item, know
what goods that were ordered have arrived, whether you have fulfilled the orders on time and what is the
delay, if any.

In this module, you learn how to record purchase orders, and to call the orders while entering a
purchase invoice and likewise with sales orders and sales invoices.

You will also learn how to display outstanding orders position and the effect of orders on stocks.

Remember, orders do not affect financial records nor do they update inventories.

Activate Sales and Purchase Order Processing in F11: Company Features.

• Activate Tracking numbers in F11: Company Features, if it is not already activated. In this unit,
you will use Not Applicable for Tracking Numbers. We will take up entries using Tracking
numbers in the next unit.
• Create a stock item Bricks with unit of measure Pcs. This is tradeable item as well as to be used
for construction. Stock will be maintained. Hence, Treat all Purchases as Consumed should be
set to No.
• Create a Supplier - Universal Bricks with bill-wise activated and no interest calculation.

Purchase Order Processing

Purchase Order details will also depend on configuration settings. Hence, have a look at the
configuration and voucher types.
Activate Accounting allocations in Order Entry.

Enter a Purchase Order


1. Return to Gateway of Tally.
2. Select Voucher Entry->F9: Purchase ->Select Purchase Order(Alt+4)
3. Voucher date: 15/12/08. Party's A/c Name: Universal Bricks
4. Order No: The voucher number will be your Purchase Order number. This particular Order
No. field is an additional field to record order number if different from the voucher number.
5. Name of the item: Bricks. (Once the name is given the Item Allocations subscreen pops-up
that needs to be filled in.)
6. Due on: 25/12/08 - The due date for delivery of the item. This will enable monitoring of
outstanding deliveries. The order can be split for delivery on different dates.
7. Location: Warehouse. (in case multiple location feature is active, this field is required to be
given, else it does not appear.)
8. Quantity, Rate and Amount - 5000 Pcs @ 3 per Pc. The amount is calculated but is modifiable
to enable rounding off.

Item allocation sub-screen:

• Next Item: Since no other item is required, press [Enter] on the blank field to take the cursor to
the tax/expense field.
• Expense/Tax: Once the item details have been entered, you might specify tax to be charged
and other expenses like freight, if any. The tax or expense has to exist as a ledger account or
it may be created using [alt]+[C]. Select Freight @3% on the item values.
• Narration: Optional.

Alter a Purchase Order

You can alter a Purchase Order by displaying it from a variety of places but is easier through the
Purchase Orders Book or the Day Book.

Gateway of Tally ->Display -> Day Book or Gateway of Tally, Inventory Books, Purchase Order Book.

Sales Order Processing :--

Create Sales Orders

Sales order entry is exactly like Purchase Orders.

Sales Order details will also depend on configuration settings. Hence, have a look at the configuration
and voucher types.
1. Gateway of Tally->Voucher Entry ->F8:Sales ->Select Sales Order (Alt+5)
2. Voucher date: 16/12/08. Party's A/c Name: Wimbledon Properties
3. Order No: The voucher number will be your internal serial number. This particular Order No.
field is for the customer's order number which is different from the voucher number. Enter
WP/5.
4. Name of the item: Bricks.
5. Due on: 26/12/08.The due date for delivery of the item. This will enable monitoring of
outstanding deliveries. The order can be split for delivery on different dates.
6. Location: Warehouse.
7. Quantity, Rate and Amount - 4000 Pcs @ 5 per Pc.
8. Next Item: Since no other item is required, press [Enter] on the blank field to take the cursor to
the tax/expense field.
9. Expense/Tax: Once the item details have been entered, you might specify tax to be charged
and other expenses like freight, if any. The tax or expense has to exist as a ledger account or it
may be created using [alt]+[C]. Select or create Tax @ 17.5% to be charged on the item
values.

Alter a Sales Order

You can alter a Sales Order by displaying it from a variety of places but is easier through the Sales
Orders Book or the Day Book.

Gateway of Tally->Display-> Day Book or Display, Inventory Books, Sales Order Book.

View Order position

Stock summary is perhaps the best place to view the order position.

Gateway of Tally -> Stock Summary ->Detailed [F1]

Currently, all you see is the closing balances or stock in hand as on the last day of the period. However,
you do not know how much stock is on order both inward and outward. if you knew that, you could take
plan your stocks better and not lose out on orders.

1. Press the Orders button [alt]+[F7]


2. Select Sales Orders Outstanding
3. Type No for Due orders only.
You are now in Sales Order Outstanding screen showing On Order items. Of course, you have
only Bricks on order
4. Select the line Bricks and press Enter.
The outstanding Sales order for Bricks is detailed.
5. Select F12:Configuration.
6. Select Yes to all options.

You now see your Order Analysis with Sales and Purchase Orders outstanding position for the stock
item Bricks.

1. Return to the Stock Summary screen


2. Select Detailed
3. Press [alt]+[n] Auto-Column Button.
4. Select Orders & Stock Details.
5. Remove Rate and item from display by configuring it using F12.
This will enable all columns to fit in one screen. Take note of the change in figures.
Can you accept an order for 2000 bricks ?
6. You may further drill down into each column to view greater detail. In the Stock Summary
screen, you can even bring up a new column using [alt]+[C] the New Column button and get
more options for detail. Experiment with Types of Values to get familiar with them. They are
powerful and give great business information.

Adjust Orders

You adjust orders at the time of raising delivery notes and invoices.

1. Select Voucher Entry


2. Select Purchase -> Purchase
3. Enter a Purchase invoice no UB/6
4. Voucher date: 25/12/08. Party's A/c Name: Universal Bricks
5. Name of the item: Bricks. (Once the name is given the Item Allocations subscreen pops-up that
needs to be filled in.)
6. Tracking number : Not Applicable as goods are accompanying the bill.
7. Order No: Select the order number.
8. All fields are filled up.
9. Now enter as you would normally in a Purchase voucher. Quantity, Rate and Amount - 5000
Pcs @ 3 per Pc.
10. Expense/Tax: Freight @3% on the item values

Reorder Level
Reorder Level signifies the quantity of a Stock Item in hand, after
reaching which you must place orders for your supplies. The
importance of Reorder Level arises from the desire to have sufficient
stocks to service customer orders and, at the same time, not to
unnecessarily accumulate stock.
Therefore, the points to be considered while deciding the reorder
levels are as follows.
o The lead-time for suppliers to deliver the stock.
o The delivery time specified by the customer.
o The stock-in-hand to satisfy orders in the meantime.
In simple mode, Tally accepts the quantities that you specify. In
advanced mode, it considers the past consumption patterns to suggest
reorder levels. You can however, choose to define your own reorder
levels. You may also specify the minimum quantity of the item to be
ordered, either in simple or advanced mode.
The purpose of specifying reorder levels is to obtain a report that
indicates the quantity of a Stock Item that you must order.

Specifying Reorder Levels

Go to Gateway of Tally > Inventory Info > Reorder Levels

Select a group of Stock Items from the List of Groups, to specify Reorder Levels for the
Stock Items in the Specify Reorder Levels screen.

For each item in stock, you can define a Reorder Level and the Minimum Order Quantity. If
you click Simple Reorder button, the consumption alternatives will not be available and
hence you have to input the quantities.

Note: The option Reorder Levels is displayed in the Inventory Info. menu only if Allow
Purchase Order Processing is enabled in F11: Features.

The Reorder level screen appears as follows:

The options that you have while defining Reorder Level and Minimum Order Quantity for
individual stock items are as follows.

Reorder Level/Quantity

Enter the level/quantity in this field.

Advance Parameter for Reorder Level (Consumption for the Last)

This field lets Tally calculate the reorder level/order quantity based on the total
consumption in the past for a chosen period.

Period
The choices for periods are: Days, Weeks, Months and Years. Note that it is not the average
consumption for the period but the total consumption. Enter zero (0), if you do not want
Tally to calculate the reorder level based on the consumption of the item in the past.

Criteria

Choose whether you want the higher/lower of the two, i.e., input/calculated level/quantity.

Rounding Method

Specify whether the calculated level/quantity must be rounded and also the method of
rounding.

Minimum order quantity

You can specify the minimum order quantity required.

Tracking Number

You were buying and selling goods or services where the stock would be affected
when making the purchase or sales entry. Many businesses deliver stock with a
delivery note or a challan. The bill is raised later. The bill has to be linked or
tracked with the goods already delivered. In Tally, tracking numbers do the job.
Tracking numbers allow Goods Receipt and Goods Delivery Notes for goods not
accompanied by an invoice to be linked with the invoice that is raised later. Of
course, Tally permits the opposite too. A bill can be raised first and the goods
delivered. Again, tracking numbers do the trick.
Tally walk-through for using tracking numbers
1. Go to voucher entry.
2. Select Purchase, Receipt Note.
3. Enter the following transaction:
4. On 12/12/98 - Ref GRN/UB - 1000 Pcs of Bricks received from Universal
Bricks @2 per Pc.
5. For Bricks, select Tracking Number GRN/UB and give item details.
6. Press Enter on the blank Tracking number to return to the main voucher.
7. Accept the voucher and Return to Gateway of Tally
8. Select 'Display', 'Statements of Inventory', and then 'Purchase Bills Pending'.
Purchase Bills Pending screen:
1. Tally tracks down the Goods received but whose bills have not been
received.
2. View the Profit & Loss Account and the Purchase Accounts.
3. Tally provides the purchase so that the profits are correctly arrived at.
4. View the Balance Sheet, Sundry Creditors. Has Tally provided for the
liability?
5.
Tracking numbers - track bills with goods delivered
Now go back to Voucher Entry
1. On 15/12/08, you receive the purchase bill no UB/15 from Universal Bricks
for their Delivery Note no GRN/UB for 1000 Pcs of Bricks @ 2 per Pc. You get
30 days credit.
2. Select Purchase, Purchase
Ref: UB/15
Cr Universal Bricks 2000
Billwise UB/15 30 days 2000
Dr Project Purchase 2000
3. Inventory Allocation
• Tracking Number: Select GRN/UB. Note UB/15 is also listed there. Do not
select this.
• Accept the other information that is filled up. Press Enter on the blank
Tracking number to return to the main voucher.
4. Cost Centre is activated for Project Purchase. Select Projects and
Assignments Category and Buildings Cost centre.
5. Accept the voucher.
6. Now go back to Purchase Bills Pending. Is there anything pending?

Exercise No: 22

a)
1.4.2008 Received Capital By Cash Rs.5,00,000
1.4.2008 Cash Deposited in SBI Rs.2,00,000
5.4.2008 Purchase Order Made to Rahul Textiles [P.O.N0.101]
5.4.2009 Due 12.4
Cotton Sarees 50 nos at Rs.300
Chudithar 50 nos at Rs.400
7.4.2008 Purchase Order Made to Kiran Textiles [P.O.N0.102]
Due 15.4

Cotton Sarees 75 nos at Rs.300


Chudithar 60 nos at Rs.400

10.4.2008 Purchase Order Made to Sona Textiles [P.O.N0.103]


Due 25.4

T-Shirts 100 nos at Rs.100


Jeans 100 nos at Rs.1000
10.4.2008 Purchase invoice raised for the Order 102 [Bill No.1234]
12.4.2008 Received Materials For the Purchase Order From Sona Textiles
[P.O.N0.103] [RN.NO 567]

15-4-2008 Returned T-Shirts 10 nos, Jeans 5 nos [RN.NO.567]

20-4-2008 Purchase invoice raised for Sona Textiles [Bill No.5678]

18-4-2008 Sales Order Received From Arjun Stores [SO.NO.111]

Due Date 25/4

Cotton Sarees 60 nos 500


Chudithar 40 nos 750
22.4.2008 Sales Order Received From Brinkley Garments
[SO.NO.118] Due Date 30/4

T-Shirts 60 nos 150


Jeans 60 nos 1300
27.4.2008 Sales Invoice Raised For Sales Order NO 111
[Arjun Stores] + TNGST 4%

29.4.2008 Delivery Note Given For Brinkley Garments For Sales Order No.118
[DN.NO.556]
1-5-2008 Returns From Brinkley Garments

T-Shirts 10 nos
Jeans 5 nos
5.5.2008 Sales Invoice Raised For The Delivery Note 556

b)
Kiran Electricals Started Business of Electrical items

1.8.2002 Received Cash For Capital Rs.8,00,000/-


1.8.2002 Deposited in UCO Bank Rs.3,00,000/-
7.8.2002 Purchase Order Made to Nithya Fan House [NO.124] [Due Date 14/8]
Ceiling Fan 500 nos @ Rs.1500
Table Fan 500 nos @ Rs.1200
10.8.2002 Purchase Order Made to Athi Electricals [NO.111] [Due Date 18/8]
Ceiling Fan 150 nos @ Rs.1500
Table Fan 150 nos @ Rs.1200
14.8.2002 Purchase Invoice Raised For Order NO.124
19.8.2002 Received Materials For the Purchase Order NO.111 through Receipt
Note NO.12

20.8.2002 Returned 10 nos of the Ceiling Fan & 5 nos of Table Fan For the Order
NO.124

22.8.2002 Sales Order Received From Akshai Traders [NO.2,Due Date 1/9]
Ceiling Fan 300 nos @ Rs.2000
Table Fan 300 nos @ Rs.1500
1-9-2002 Raised Sales Invoice For the Order NO.2 with Sales Tax @ 4%
2.9.2002 Sales Order Received From ABI Traders [3.Due Date 10/9]
Ceiling Fan 200 nos
Table Fan 200 nos
10-9-2002 Delivery Note Raised For the Order NO.3
12.9.2002 Returned 5 nos of Ceiling Fan.Table Fan
14-9-2002 Sales Invoice raised For the Order NO.3

Track Additional Cost Of Purchase


Normally, in case of purchase, taxes etc, are also considered to be part
of purchase and we may wish to debit purchase account only for the
entire cost. With this feature, without debiting separate account, we may
get breakup of basic price as well as additional cost incurred, resulting
into the Effective Rate on various inventory reports.
For Example,

Athi & Co purchased the following components


CPU 50nos 15000
Keyboard 50nos 7000
At the time of purchase of components, they spent additional cost such
as
Carriage 15000
Packing charges 2000

F 11 Features – Activate the options


Track Additional Cost of Purchase - Yes

• Create ledger Under Sundry Creditor


Athi & Co

• Create an Unit of Measure Nos as Shown below:

• Create a stock item as CPU

• Pass purchase Entry


After entering the purchase go to Display →Inventory Books →
Movement Analysis → Stock Item Analysis → Select the Item

Exercise: 23

a)
On 1/1/2005 Received capital by cash Rs. 5, 00,000
On 2/1/2005 Deposited in ICICI Bank Rs. 2, 00,000
On 5/1/2005 Purchased from GTL 500 Nos. of Lux Soaps @ 15/No
Sales Tax 4%
Packing Rs. 500
Carriage Rs. 700
[Create bill no. Credit days 30]
On 8/1/2005 Purchased from GTL 500 Nos. of Power Soaps @ 10/No
Sales Tax 4%
Packing Rs. 700
Carriage Rs. 1000
[Create bill no. Credit days 30]

On 20/1/2005 Purchased from GTL 200 Nos. of Arial Powder @ 50/No


Sales Tax 4%
Packing Rs. 750
Carriage Rs. 1200
[Create bill no. Credit days 30]

On 31/1/2005 Paid to GTL for all the products. Discount received 5 %

b)
Rahuvar & Sons purchased the following components

CPU 100 Nos 15000


Keyboard 100 Nos 7000
Mouse 100 Nos 1500
IC Chips 150 Nos 1000

At the time of Purchase of components they spent additional cost such as

Carriage 15,000
Tax 4%
Packing Charges 20,000
Labour Charges 5,000

Bill of Materials
A Bill of Materials contains a list of items that make up another item. In
other words, it is a list of constituent items for a product.

Enable Bill of Materials Facility

To activate or enable Bill of Materials go to Gateway of Tally, Click on F12:


Configure and select Accounts/inventory Info from the menu. Now say yes to
"Allow component list details (Bill of Materials)?"
A Bill of Material should be available while manufacturing an item. Hence, first
enable manufacturing entries. This is done through a stock journal.

Create a new manufacturing journal

Create a new voucher type called Manufacturing Journal under Stock


Journal.

1. To create a new Manufacturing Journal go to Gateway of Tally. Select Accts


Info, Voucher Type and then Create.

2. Give Mfg.Journal (Manufacturing Journal) as the name and under ' Voucher
types' select Stock Journal.

3. Follow the normal Voucher type creation as explained earlier for the rest.

4. Select Yes for "Use as Manufacturing Journal" and accept the screen.

Create a Bill of Material

You can create a Bill of Material (BoM) for any stock item. Typically, you would like
to create a BoM only for those items that are being manufactured. You will specify
a BoM at the time of creating a stock item or altering its master.

Tally walk-through to specify its Bill of Materials

JC Computer Supplies decides to get into the business of Televisions.


They want to assemble their own televisions and sell them.

Therefore,
1. Create a stock item Television. Create it under a new stock group Home
Electronics.
2. Unit of measure - nos.
3. Say Yes to "Set Components (BoM)?"
4. Once this is made to yes it takes you to a screen where you can enter 1
each for Unit of Manufacture and items VDU, Picture tube, IC Chips, Sound Card
and aerial which are required for the assembly of one Television. These items
do not exist. Create them and group them under a stock group Television
Parts. Unit of measure - nos.

5. Give Standard Cost for each of the items as follows:-


6. VDU - 2000, Picture Tube - 3750, Sound Card - 500, IC Chips - 5000, Aerial -
300.
7. You propose to store them On-Site. Accept the screen. Accept all other
defaults. None of the items will have any opening stock balance.

The purpose of creating a bill of material is to enable consumption of the materials


in the ratio specified when the product is manufactured. Tally uses a
Manufacturing Journal to enter goods manufactured with bill of materials.

First you should purchase the components required to produce the television.
Make a purchase voucher entry as follows:

On 21 December 08, bought 10 pcs each of the following at the standard


cost mentioned against them:

1. VDU - 2000, Picture Tube - 3750, Sound Card - 500, IC Chips - 5000, Aerial -
300.

Paid cheque from Current Account immediately. Stored On-Site. Account -


Purchases. Ignore Tax.

Manufacturing Journal Entry


From the Gateway of Tally Menu select Voucher Entry, As you have
created new voucher type Mfg. Journal, a pop-up menu will show both
the default Stock journal and the manufacturing journal.

1. Select manufacturing journal.


2. Under the Name of Product to be manufactured, type Television.
3. Manufacture it in the On-Site.
4. Quantity to be manufactured - 5.
5. Under Component (consumption) the component list for the television to be
manufactured under proportionate quantity of each component is picked up
automatically. The default location as specified in the BoM is also given for
each component. The standard cost is picked up for each item. However the
entire component list can be altered.
6. It will take you to the screen giving the details of additional cost. Under
Additional Cost Components you may specify the additional cost incurred for
producing the item.
Additional cost of Wages - 3000 and Power - 2000 have been incurred. Add
them in. If ledger accounts for these expenses do not exist, create them under
Direct Expenses.
7. Note that the additional costs entered for the Iedgers, do not reflect in the
relevant ledger with the amount but only add to, the cost of the item.

Exercise : 24
a)

Stock Item VCD Player


Components Aerial Rs.2, 250
IC Chips Rs.1, 200
Speaker (2 nos) Rs.1, 500
On 19-08-2007
Manufactured 250 Nos of VCD Player
Additional cost
Power Rs. 20,000
Wages Rs. 15,000
b)
Moorthy &Co purchased the following components for used Switch
Boards:

1. 12×8 Wooden Board 1 No. 18.00/no


2. Switches 4 Nos. 15.00/no
3. 2pin plug point 1 No 20.00/no
4. 3 pin plug point 2 Nos 25.00/no

On 10/5/2004 They manufactured 100 units of switch Boards


Additional costs incurred are as follows:

Wages 15000
Power 10000

At the time of Purchase of components, they spent additional cost such


as
Carriage 5000
Tax 4%

c)
Manu &Co purchased the following components for used Computer:

1. Mother Board 1 No. 6,900


2. SMPS 1 No. 4,780
3. Hard Disk 1 No 4,900
4. RAM 1 No. 2,500
5. Floppy Drive 1 No. 550
6. CD Drive 1 No. 1,280

On 10/5/2004 They manufactured 10 Numbers of Computer


Additional costs incurred are as follows:
Wages 3, 000
Power 2, 000

Price List
This feature is provided in Tally to allow different pricing
structure for the same item depending on their quantity of
purchase or sale.

Activate and create Price List Types


1. Press F11: Features. At the bottom the last option is Set/Modify
Other Company Features. Type Yes.
2. Activate "Use Multiple price levels for invoicing". Tally takes you to
"Company Price Levels" screen.
3. Type the different price levels - Retail Sales, Export Sales and Whole
Sale and accept the screen.
4. Accept all the features and return to Gateway of Tally.

Create a Price List


1. The following are the steps to create a price list. Simply go through
them but create the price list in the exercise.
2. From the Gateway of Tally select Inventory Info and Click on Price
List.
3. Select the required stock item group from the List of Groups or you
can even select All Items if you require to set the price list for all the
Stock Items you have created.
4. Now the Price List screen is displayed.
5. Select the price level from the pop - up for e.g. Retail Sales and
enter the date from which your price list is applicable.
6. Enter the Quantity, Rate and the Discount % for the respective
items. You will find the Standard Cost Price of the items displayed
on the extreme right of the screen

7. More than one Price level can be entered for a single Stock Item.

Note: These prices will automatically appear while making


an Invoice once the price level is specified.
When we change the price list with a new 'applicable from' date, the
previous prices given for the item will be shown in the Historical Details
column.
Now the customer ledger accounts have to be altered to put them in the
relevant price level.
a)
Retail Sales

Bronze 8

Less than 10 Nos. Rs.65


10 Nos. to 25 Nos. Rs.65 5%
From 25 onwards Rs.65 10%

Gold 8

Less than 10 Nos. Rs.80


10 Nos. to 25 Rs.80 5%
From 25 onwards Rs.80 7.5%

Silver 8

Less then 10 Nos. Rs.100


10 Nos. to Nos. Rs.100 5%
From 25 onwards Rs.100 8%

Whole Sales Price

Bronze 8

Less than 10 Nos. Rs.55


10 Nos. to Nos. Rs.55 5%
From 25 onwards Rs.55 10%

Gold 8
Less than 10 Nos. Rs.75
10 Nos. to 25 Nos. Rs.75 5%
From 25 onwards Rs.75 10%
Silver 8

Less than 10 Nos. Rs.95


10 Nos. to 25 Nos. Rs.95 5%
From 25 onwards Rs.95 8%
On 02-06-2007 Purchased 50 Nos of Gold 8, 25 Nos of Silver 8, 22 Nos of Bronze 8.
On 04-06-2007 Sold to Tirumathi & Co 25 Nos of Gold 8, 15 Nos of Silver 8, 10 Nos of
Bronze 8. (Retail Sales)
On 16-06-2007 Purchased 25 Nos of Gold 8, 25 Nos of Silver 8, 25 Nos of Bronze 8
On 25-06-2007 Sold to Jeba & Co 5 Nos of Gold 8, 5 Nos of Silver 8, 10 Nos of
Bronze 8 (Whole Sales)

b)

Export price
Cotton sari Less than 50 Nos. Rs.700
50 to100 Nos . Rs.700 3%
More then 100 Rs.700 5%

Chudidhar Less than 20 Nos. Rs.1000


20 to50.Nos. Rs. 1000 2%
More then 50 Rs .1000 5%
Retail Price

Cotton Saris Less than 60 Nos. Rs.800


60 to100 Nos. . Rs.800 4%
More then 100 Rs.800 6%

Chudidhar Less than 20 Nos. Rs. 900


20 to 50.Nos. Rs. 900 2%
More then 50 Rs. 900 5%

Whole Sale

Cotton Sarees Less than 50 Nos. Rs.700 3%


50 to100 Nos. . Rs.850 4%
More then 100 Rs.800 6%

Chudidhar Less than 20 Nos. Rs. 950


20 to 50 Nos. Rs. 950 2%
More then 50 Rs. 950 5%

On 02/4/2004 Cash Purchase:


Cottan Sarees Rs. 500 1000 Nos
Chudidhar Rs. 300 800 Nos
On 16/4/2004 Sold to Ram traders Cotton Sarees 150 Nos., Chudidhar 100 Nos
[Whole sales]
On 20/4/2004 Sold to Naveen Exporters Cotton Sarees 150 Nos, Chudi 80 Nos
[Export price]
On 30/4/2004 Sold to Amirtha Textiles Cotton Sari 90Nos. Chudi 40 Nos
[Retail Price]