INTRODUCTION :

There are many accounting packages are available in the market, Tally remains the undisputed king of all financial accounting packages available in India. Tally is capable of handling any kind of transaction you would need, whatever your business. In order to use tally, you neither need to learn new accounting methods nor should change your existing style of handling accounts. The information can be fed as well retrieved at random and all human errors can be corrected. A transaction in accounting terminology means transfer of money or moneys worth from one party to another, for example sale of goods, purchase of furniture etc. are examples of transactions. Fundamentally there are two systems of transactions: Pre transaction and post transaction. The post transaction system follows the traditional practice of entering a voucher or cash bill into a cash book after the payment has been made. Tally is a post transaction system. It follows the traditional methods of accounting, that is, the payment is first made on the basis of existing accounting methods (i.e., against a voucher or a cash bill) and that information is fed into the Tally. The simple fact that your existing system of accounting remains untouched by Tally is a big reason behind the success of this package. Prerequisites for the learning tally . The area of the Tally is very wide, you could be the owner, financial controller, accountant, manager or an auditor. All that is required to learn Tally is fundamental knowledge of accounts and familiarity with basic accounting terminology. This means that you should understand certain basic terms like an account, a debtor, a creditor, assets, liabilities, capital etc. Even if you are not well versed with the accounting, you can still use Tally effectively at the same time become known to accounting methods. Tally have many versions like 3.0, 4, 4.5, 5.0 5.4 etc. Tally release 5.0 and 5.4 are window based software in which you feel the window look like programs, than the text based screens.

ADVANTAGES OF TALLY :
Tally 9 is the ultimate business solution, designed to meet the growing needs of your business. When you use Tally 9, you will see clear business benefits accrue right from the start. The following are the powerful advantages that you can enjoy with this versatile and robust solution:

Expand your business - with the concurrent multi-lingual capability and multi-currency features that allow you to transact beyond geographical boundaries, without language barriers

No need to hire specialized resources since Tally 9 is very simple to learn and the easy interface enables you to navigate the software without difficulty

Blazing Speed - provides you with the information you want FAST.

Unmatched Scalability Tally 9 adapts to the current and future needs of your business, irrespective of its size or style

Sheer Power Tally 9 has the ability to handle huge volumes of transactions without compromising on speed or efficiency

Real-time access to information enables quick decision through fast and easy sharing of data from Tally Better cash flow and savings on interest - by using the receivables and payables management feature, to help you ensure on-time collections and generate reminder letters Amazing Accuracy Tally 9 provides user-definable templates for fast, accurate data entry Manage your future dealings with bad debtors and persistent defaulters - using the payment performance of debtors feature, to identify them Faster and error-free invoicing and data entry using the multiple price levels feature to pre-define item rates for specific categories of customers

Identify products with high or low margins - with the profitability analysis feature, that provides you with product-wise and invoice-wise profitability Avoid stocking excess items and ensure that you dont run out of essential stock - by using the reorder feature, to set reorder levels for any given period

DISADVANTAGES OF TALLY :
Most basic beam sensors are limited to non-directional counts y Can't discern people walking side-by-side y Cannot count high volume, uninterrupted traffic y High potential to become blocked by people standing in an entrance or by merchandise or displays y Infra-red beam counters may be negatively affected when subject to direct sunlight
y

INVENTORY INFORMATION :
The next choice after the Account Info. In Gateway of Tally menu is Inventory Info. In this section take a look at the options available under this choice.

Stock Groups Based on common feature, all your stock items can be classified into

stock groups. Stock Item Stock items are the actual items in stock. This is lowest level of information about your inventory. Each item that is required to beaccounted for, need to be created. You can then account for the issues and receipts of each item. Voucher Types This option allows you to create additional voucher types or alter the existing ones. The procedure is exactly identical to the voucher type functions that we discussed in Account Info. Menu.

INTRODUCTION OF BALANCE SHEET

The accounting balance sheet is one of the major financial statements used by accountants and business owners. (The other major financial statements are the income statement, statement of cash flows, and statement of stockholders' equity) The balance sheet is also referred to as the statement of financial position. Assets Assets are things that the company owns. They are the resources of the company that have been acquired through transactions, and have future economic value that can be measured and expressed in dollars. Assets also include costs paid in advance that have not yet expired, such as prepaid advertising, prepaid insurance, prepaid legal fees, and prepaid rent. (For a discussion of prepaid expenses go to Explanation of Adjusting Entries.)

Examples of asset accounts that are reported on a company's balance sheet include: 1. Cash 2. Petty Cash

3. Temporary Investments 4. Accounts Receivable 5. Inventory 6. Supplies 7. Prepaid Insurance 8. Land 9. Land Improvements 10. Buildings 11. Goodwill 12. Bond Issue Costs

Contra assets:

Contra assets are asset accounts with credit balances. (A credit balance in an asset account is contraryor contrato an asset account's usual debit balance.) Examples of contra asset accounts include: y Allowance for Doubtful Accounts Accumulated Depreciation-Land Improvements y Accumulated Depreciation-Buildings Accumulated DepreciationEquipment Accumulated Depletion

Classifications Of Assets On The Balance Sheet

Accountants usually prepare classified balance sheets. "Classified" means that the balance sheet accounts are presented in disgroupings,categories, or classifications. The asset classifications and their order of appearance on the balance sheet are:
o o

Current Assets Investments

o o o

Property, Plant, and Equipment Intangible Assets Other Assets

An outline of a balance sheet using the balance sheet classifications is shown here:

Example Company Balance Sheet December 31, 2010 ASSETS Current Assets Investments Property, Plant, and Equipment Intangible Assets Other Assets Total Assets Owner's Equity Total Liabilities & Owner's Equity LIABILITIES & OWNER'S EQUITY Current Liabilities Long-term liabilities Total Liabilities

Sales account:

You can classify your sales accounts based on Tax slabs or type of sales. This also becomes a simple mechanism for preparation of Tax returns. Examples:
y y

Domestic Sales Export Sales

Now under Domestic Sales open the following ledgers:

y y y

Sales (10%) Sales (5%) Sales (exempt)

You can even open an account as Sales Returns under the group Domestic Sales to view your net sales after returns (or the returns may be directly passed through Journal against the specific Sales account). Purchase accounts: transactions. This is similar to sales accounts, except for the type of

Direct Income [Income Direct] These are Non-trade income accounts that affect Gross Profit. All trade income accounts fall under Sales Accounts. You may also use this group for accounts like Servicing, Contract Charges that follow sales of equipment For a professional services company, you may not use Sales Account group at all. Instead, open accounts like Professional Fees under this group.

Indirect Income [Income Indirect] These are miscellaneous non-sale income accounts. Example: Rent Received and Interest Received. Direct Expenses [Expenses Direct] These are Manufacturing or direct trading expenses. These accounts determine the Gross Profit of the company.

Indirect Expenses [Expenses Indirect] All administrative, selling or non-direct expenses.Profit & Loss Account is a reserved primary account in Tally.ERP 9. You can use this account to pass adjustment entries through journal vouchers. For example, transfer of profit or loss account to Capital or Reserve account. Common and Possible Errors in Grouping and Account Classification Debtor/Creditor classification: Accounts of parties with whom your company is trading should be opened under any of the following groups (or sub-groups under them):
y y y y

Sundry Debtors Sundry Creditors Branch/Divisions

Display This option enables you to view all reports like, Trial Balance, Account Books, Statement of Accounts, Inventory Books, Statement of Inventory, Cash Flow, List of Accounts etc. Multi-Account PrintiChoose this option to print Account Books, Inventory Books and

Commom Information In The Voucher Creation Screen :

Type of Vouche All screens at the top left of voucher box display the Type of Voucher you are entering like, Purchase, Payment etc. You can change this type by pressing the relevant key.

Voucher Number: The entire voucher displays the number of the voucher. You can set these numbers manually or let the Tally generate it automatically. Date of Voucher: The top right of the voucher box displays the date of voucher and the day of the week; this date indicates the current date on which you are entering the voucher. The same date appears as the current date at the Gateway of Tally. You can change date by pressing <F2> Key.

Particular: In accounting vouchers this column contains the information about the ledgers you debit or credit. When To or Cr is displayed, specify the ledger to credidisplaspecifyledgerdebit.

Debit/Credit: This column takes value of transactions therefore, specify the amountof the transaction here. If you debit a ledger, the amount goes into the debit column and if you credit a ledger, the amount goes into the credit column. At the bottom of these columns, the totals of the debit and credit amount appears. Narration: Under each debit or credit entry, there is a provision for narration. In this column, you can mention the details of the entry. At the end of the voucher, there is a common narration for the whole voucher. The option for writing narration, for each entry

will be present only if you had set the option Use narration for each entry in the accounting vouchers section of the voucher configuration menu Yes. The following screen will display for voucher entry:

Deposits (Asset) Deposits contain Fixed Deposits, Security Deposits or any deposit made by the company (not received by the company, which is a liability

Loans & Advances (Asset) This records all given by the company and advances of a non-trading nature (example: advance against salaries) or even for purchase of Fixed Assets. We do not recommend you to open Advances to Suppliers account under this Group. For further details, please refer to the section on Common Errors.

Stock-in-hand Thisgroup contains accounts like Raw Materials, Work-in-Progress and Finished Goods. The balance control dependsonwhetheryouhaveselectedIntegratedAccountcum-Inventory option while creating the company. (refer to Company creation section for more details) Let us consider these options:

Integrated Accounts-cum-Inventory This option has a significant effect on the Balance Sheet and Profit & Loss Account. If set to Yes, it brings the stock/inventory balancefigures from the inventory records and provides a drill down to the Stockregistersfrom the Balance Sheet.You are not allowed to directly change the closing balance of an account under this group. You are allowed to pass transactions

in Inventory records and the account balances are automatically reflected in the Balance Sheet as Closing Stock.

Non-integratedAccounts-Inventory If IntegratedAccount-cum-Inventoryoption is set to No, it ignores the inventory books figures and picks up manually entered closing stock balances from the ledger account created. This provides the facility to maintain accounts separately and inventory separately. You are not allowed to pass transactions if your accounts that come under this Group. It allows you to hold opening and closing balances only. Since no vouchers can be passed for these accounts, they aronly accounts for which the closing balances can be directly altered (by an authorised user only).

CREATING PURCHASE / SALE LEDGERS Purchase / Sales ledgers are required for tradingrepacking or for usage in manufacturing products. Sales and Purchase account groups are meant for revenueaccounts and are reflected in the Profit & Loss Account. To create a Purchase / Sales Ledger, Go to Gateway of Tally > Accounts Info > Ledgers > Create

Creating a Company: Creating a Company involves providing basic information about the company whose books of accounts are to be maintained in Tally.ERP 9. Go to Gateway of Tally > (Alt+F3) Company Info. > Create Company

The Company Creation screen appears as shown :

A detailed explanation on each field is given:

Directory: The data path where you want the company to be created is specified in the Directory field. This field is skipped by default when you create the company in the data path given in the Tally.INI file. If you want to change it, use the backspace key and modify it to the path required.Enter the name of the company whose books are being opened. If you are a professional accountant and are maintaining the books of your clients, give the Client Company's name. Mailing Name and Address: In addition to the Company Name, Tally.ERP 9 provides the facility to enter the Mailing Name field. It displays the Company Name by default. You may change it as

required, if the mailing name is different from the Company Name. The mailing name and address details are picked up for inclusion in any report that needs the company name and address as heading. For example: Balance Sheets, Statement of Accounts, and so on.

Statutory compliance for: Select the Country from the List of Countries. The Statutory Features and Base Currency Symbol are enabled in accordance with the country selected. For example, if the accounts belong to a company in India, the base currency would be Indian Rupees. The Base Currency will appear with respect to the Country selected. Selecting India from the List of Countries brings up a State, Pin Code and Telephone No. field.

State: You can select the appropriate state from the predefined list. Pin Code Specify the PIN Code (Postal Index Number) of the specified address. Telephone Enter the Telephone number. Mobile No Enter the mobile number of the company. E-mail Address Enter the E-mail address that will be used to e-mail documents, reports and data from Tally.ERP 9.

Use Security Control? Set this to Yes, if you want to initiate a password-protected system to control access to Tally.ERP 9 data. Else, set this to No. If you opt for security control, Tally.ERP 9 offers a comprehensive password based access control to different features of Tally.ERP 9 based on authority lists created by the

Administrator. For more information refer Data Management in Tally.ERP 9.

Name of Administrator, Password, Repeat Assuming the Tally Vault Password and Use Security Control is set to Yes enter the Name of Administrator, Password and Repeat in the respective fields.

Use TallyAudit Features Tally Audit allows the administrator or an auditor profile user to track changes in accounting information. If you wish to use this facility, select Yes. Tally Audit will be available only to the administrator/auditor, through Display of Statements of Accounts.For more information refer Data Management in Tally.ERP 9 Disallow opening in Educational mode ?Set this option to Yes, if you don't want the company to be opened in Educational mode of Tally.ERP 9. Else, set this to No.On accepting the company creation screen, if you have specified Tally Vault password, Tally.ERP 9 prompts you to enter the TallyVault password as appears:

Then Tally.ERP 9 prompts you to enter the Name of User and Password (if any).

After verification Tally.ERP 9 imports the latest statutory masters. Wait till the screen shows that 100% of import is complete.

This completes the Company Creation process in Tally.ERP 9.

INTRODUCTION OF TALLY SCREEN :

Following figure shows the screen of tally when you start tally for first time. (Figure 1) The tally screen is divided into three parts: Gateway of Tally, Direct Command Area and The Buttons. Let us discuss each part of Tally

GATEWAY OF TALLY (THE ACTUAL WORK AREA) : It is the

area in which you actually work. You can activate this area either by clicking any where in this area or by pressing <Ctrl> + <M> key combination. Direct Command Area Although Tally supports mouse commands, you can execute all commands in plain English from a keyboard by typing them in this area. You can activate this area either by clicking anywhere in this area or by pressing <Ctrl> + <N> key combination.

 The Buttons This area contains buttons which perform various useful functions. For example the second button in this area has a caption F4:Backup this means that in order to take backup of a company on floppy disk you will have to either click on this button or press the<F4> key. The third button has caption F4:Restore this means that in order to restore a company whose backup had been already taken on floppy you will have to either click on this button or press <Alt+F4> key combination. Company Information Menu The right half of the Gateway of Tally area displays the company info. Menu This menu has following three options: Select Company Create Company Quit

(Figure 2)

Creating a New Company In order to create a new company for accounting following screen will appear :

Once you have created a company then you are ready for maintaining account for the company. You have to feed all the information given in above figure and then save it. You can also alter any information given above in the figure. When you have created company then go to main menu and select company by giving username and password (if you have enabled the security)

when you select a company then following screen will appear.

(Figure 3)
in the left hand side of the screen you will see the information about company selected like current period financial year of books, name of company selected etc. On right hand side of screen you will see the Gateway of Tally.

GATEWAY OF TALLY :
Account Info. This option permits you to handle all the information related to financial accounts. It allows you to work on creation and maintenance of masters like Ledgers, Cost Centers, Cost Categories and other related information. Inventory Info Using this option you can handle information relating to the inventory accounts. It enables you to work on stock items, stock groups, stock categories, units of measurement and other inventory related information Voucher Entry This is the most frequently used option. It allows you to make daily vouchers as well as invoices. Balance Sheet This option displays the balance sheet of your company as at the last voucher entered. Profit and Loss Account This option allows you to take a look at gross profit and net profit for both opening and closing stock. Stock Summary This option displays the stock position of all items in stock as at the last entry made. Display This option enables you to view all reports like, Trial Balance, Account Books, Statement of Accounts, Inventory Books, Statement of Inventory, Cash Flow, List of Accounts etc. Multi-Account Printing Choose this option to print Account Books, Inventory Books and Day Book. Quit This option allows you to Quit Tally.

INVENTORY INFORMATION :
The next choice after the Account Info. In Gateway of Tally menu is Inventory Info. In this section take a look at the options available under this choice.

(Figure 4)

Stock Groups Based on common feature, all your stock items can be classified into stock groups. Stock Item Stock items are the actual items in stock. This is lowest level of information about your inventory. Each item that is required to be accounted for, need to be created. You can then account for the issues and receipts of each item. Voucher Types This option allows you to create additional voucher types or alter the existing ones. The procedure is exactly identical to the voucher type functions that we discussed in Account Info. Menu. Units of Measure This option is used to specify the various units of measure you use to specify the quantities of stock items.

COMMON INFORMATION IN THE VOUCHER CREATION SCREEN :

Type of Voucher: All screens at the top left of voucher box display the Type of Voucher you are entering like, Purchase, Payment etc. You can change this type by pressing the relevant key.

Voucher Number: The entire voucher displays the number of the voucher. You can set these numbers manually or let the Tally generate it automatically. Date of Voucher: The top right of the voucher box displays the date of voucher and the day of the week; this date indicates the current date on which you are entering the voucher. The same date appears as the current date at the Gateway of Tally. You can change date by pressing <F2> Key. Particular: In accounting vouchers this column contains the information about the ledgers you debit or credit. When To or Cr is displayed, specify the ledger to credit. When By or Dr is displayed, specify the ledger to debit.

Debit/Credit: This column takes value of transactions therefore, specify the amount of the transaction here. If you debit a ledger, the amount goes into the debit column and if you credit a ledger, the amount goes into the credit column. At the bottom of these columns, the totals of the debit and credit amount appears. Note: The voucher entry is completed only when the total in the two columns matches. Narration: Under each debit or credit entry, there is a provision for narration. In this column, you can mention the details of the entry. At the end of the voucher, there is a common narration for the whole voucher. The option for writing narration, for each entry will be present only if you had set the option Use narration for each entry in the accounting vouchers section of the voucher configuration menu Yes. The following screen will display for voucher entry:

(Figure 5)

VOUCHERS TYPE :
Contra Voucher <F4> This voucher is used for fund transfers between cash and bank accounts only. Using this voucher you can account for cash deposits into banks, cash withdrawals from bank and fund transfers between two bank accounts or cash accounts.

(Figure 6) Payment Voucher <F5> This voucher is used for all payments you make through cash or bank. These payments can be forwards expenses, purchases, to trade creditors etc.

(Figure 7)

Receipt Voucher <F6> This voucher is used for all receipts into cash or bank accounts. The voucher is similar to the payment voucher except that you debit cash or bank account and credit the ledger from which you receive.

(Figure 8) Sales Voucher <F8> This voucher needed only if you do not make sale entry through invoice. In case you are not using invoice, you can enter you sales as sale voucher and print it out as an invoice.

(Figure 9)

Purchase Voucher <F9> This voucher is similar to the sale voucher with the exception that you credit the seller and debit the purchase account.

(Figure 10)

Journal Voucher<F7> A Journal voucher is an adjustment voucher. Thus all amounts to be adjusted between two accounts are passed as a journal. By the term adjustment, we mean that no physical movement of funds takes place. For example, if a sale of Rs. 1000 is made to a party and the party returns Rs. 900 after having deducted Rs. 100 for short supply of goods, then physical fund transfer has been Rs.900 only. However this entry is passed as receipt, then an outstanding of Rs. 100 will remain against the party, which would be incorrect. Typically this amount is adjusted by a journal debiting the amount to sales or sales return A/c and crediting the party, thus cleaning its accounts.

(Figure 11)

VIEWING BALANCE SHEET :

A Balance sheet is a statement of the financial position of a company in terms of the capital, assets and liabilities of a business entry. At the Gateway of Tally select Balance Sheet option. It displays the closing balances of the primary groups Liabilities and Assets.

(Figure 12) The liabilities include the Capital Account, Current Liabilities, Loan Liabilities, Net Profit (if any) and any other primary group that you created as liability. Assets include the Fixed Assets, Current Assets, Investments, Loans and Advances, Miscellaneous Expenses and Net Loss (if any).

To see detailed Report Press <Alt> + <F1> you will find following screen :

(Figure 13) You can alter the balance sheet periodically, Column wise etc.

PROFT AND LOSS ACCOUNT :

The next option at the Gateway of Tally Menu after balance sheet is Profit and Loss Account. In order to view the Profit and Loss Account of a Company make sure that the Gateway of Tally menu is active. Press the <P> key. This will bring up the profit and loss Account of the financial Year on the screen.

(Figure 14)

For detailed information press <Alt>+<F1>

(Figure 15)

DISPLAY : The next option in the Gateway of Tally menu after Ratio Analysis is Display. This option allows you to view books accounts and inventory such as Cash Book, Bank Books, Ledgers, Stock Item Summaries etc. Apart from these you can also view reports like the Trial Balance, Statement of Accounts (Bill Receivable or Payable), Day Book, List of Accounts, Cash Flow, Funds Flow etc.

(Figure 16)

TRIAL BALANCE :

The Balance on an account is the difference between the figures posted on each side of it, i.e. the difference between the total of the debit side and the total of the credit side. At the end of an accounting period all the accounts are balanced and the balances listed. Both sides of this list, called the trial balance, should balance. Because of the duality concept, every debit should have a credit. The Trial Balance option displays the Trial Balance of the company as the last voucher you entered.

(Figure 17)

For detailed Trial Balance Press <Alt> <F1> key combinations

(Figure 18)

CASH BOOK: In order to view the Cash Book, select Cash Book option in above menu.

(Figure 19) To view the cash on particular month press enter and select the month.

LEDGERS : To view ledger of different accounts select Ledger option from menu. Then you will found list of all ledger account you fed. Select the Account from menu in order to view the ledger of particular account:

(Figure 20) Select the account and following report will display with monthly details

GROUP SUMMARY : The Group Summary displays the net transaction and balances of all ledger under a Group. In order to view select Group Summary option from Account Books menu. A list of all the existing groups will appear on the screen like follows:

(Figure 21) Then select a particular group to view for example Bank Accounts

Sale Register All Sales Vouchers you entered in Tally from a part of the Sales Register. To view Sale Register select option Sale Register from menu.

(Figure 22)

Purchase Register : Select Purchase register option from Books menu to view the Purchase Register :

(Figure 23)

Journal Register :

(Figure 24)