account tally 5.0

================================ { Computer Accounting - Tally } ============================

INTRODUCTION TO 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.

Accounting: 1. Recording 2. Classifying3. Summarizing 4. Interpreting Financial Events5. Information to facilitate decision-making.

Accounting Cycle:Transactions

Journal

Trading, Profit & Loss A/c& Balance Sheet

Ledger

Trial Balance

Types of Accounts: Accounts are two types

A. Personal A/c. B. Impersonal A/c.

A. Personal A/c. : Dealing with an individual or accounts of Corporate bodies or Institutions which are recognized as person in business dealings.Example: Customers, Creditors, Debtors, Owner, Bank, Firm, Capital etc.

B. Impersonal A/c. : Are two types – (1) Real, (2) Nominal (1) Real : Real Account are Two types :-

(a) Tangible Account: - These accounts relate touched, felt, measured, etc. It could be fixed or current in nature. E.G. Cash, Building, Furniture, Stock, etc.

(b) Intangible Account: - They represent things which cannot be touched but they can be measured in terms of money. E.g. Patents a/c Goodwill A/c etc.

C. Nominal A/c : It deals with expenses and losses, income and gains. These accounts are opened in the book to simply explain the nature of the transactions. For example, in a business, rent is paid to the landlord, salary to employees commission to salesman, cash goes out of the business and is real, while rent , salary or commission do not exist. The accounts of these items are opened simple to explain how the cash has been spent. E.g. Rent, Lighting Insurance, Dividends or income received or expenses for services received by the Firm etc.

Rules of Debit & Credit:

1. Personal Account

2. Real Account

======================== { Central Institute of Information Technology } ================== 1

Debit the Receiver Credit the


3. Nominal Account

Accounts Systems :

The Two systems of Accounting are as follows :

1. Cash System of Accounting : Accounting entries are made only when cash is received or paid, i.e. when actual cash exchanges hands. No. entry is made when a payment or receipt is merely, e.g. Government System of Accounting and small Business enterprise.

2. Mercantile or Accrual System of Accounting : Accounting entries are made on the basis of amounts having become due for payment or receipt. In this system sales is recognized soon after delivery, e.g. Commercial Accounting.

Some Important Definitions & Terms

Assets : Anything, which will enable a business enterprise to get cash or a benefit in future, is Assets.

Fixed Assets : Assets that are acquired for relatively long periods for carrying on the business of the enterprise and not meant for resale, e.g. Land, Building, Plant, Machinery etc.

Current Assets : Assets, which are held essentially for a short period and are meant for converting into cash. They are expected to get converted into cash within one operating cycle of business. E.g. Inventories, Debtors, Bills Receivable etc.

Liquid Assets : Assets which are immediately convertible into cash without much loss e.g. marketable securities, stamps etc.

Liabilities : It is the amount, which a business owes and has to return or account for. E.g. Loan from banks, Trade creditors A/c.

Capital : It refers to the amount invested by the proprietor in a business enterprise. It is an Owner’s A/c i.e. a personal A/c.

Revenue : It means income of a recurring nature from any source related to business.

Expense : It denotes the cost of services and things used for generating revenue. Expense is different from loss. An expense is supposed to bring some benefit to the Firm, whereas a loss brings no benefit to the firm, for example Loss by theft, Loss by fire, etc. Some example of expenses are Payment made to employees (salary),carriage Inward and Outward.

Debtor : Debtors is a person or firm who has to pay something for the benefits which he has received. Thus any person owing some amount to the other is Debtor to the latter. This relationship continues to exits till he pays off the payable amount. Thus debtor is a receiver of benefit.

Creditor : Creditor is a person who has to receive some amount for giving the benefit. So long as payment is not received by him for the benefits which he has already given he remains creditor.


Debit what comes in Credit what

Debit all expenses & Loses Credit all income & gains


Solvent : A person who is in a position to pay his debts as they become due.

Insolvent : A person who is not in a position to pay his debts as they become due. The dues from insolvent debtors are known as Bad Debts.

Drawings : Cash or goods taken by the owner of the business for his personal use. For example, payment of salaries to the employees is not a Drawing but if the owner takes money from the business for the payment of his children’s school fee then this is a Drawing. Drawing reduce the Capital at the credit of the Owner.

Wages : Remuneration paid to the laborers in the factory.

Salary : Remuneration paid to the employees in the administrative building.

Entry : Recording of a transaction in any book of accounting is called an entry.

Profit : It is a Nominal Account and is a gain. It increases liability towards the owner.

Proprietor : Proprietor is a person who invests funds in the business as capital and works for running the same, with an intention to earn profit.

Business : Business is an activity undertaken by a person or persons with a view to earn profit. This includes sale and purchase of goods, manufacturing and sales of goods etc.

Goods : This means article or things purchased with a view to resell them. Thus for a person doing the business of sale purchase of general items e.g., slates , notebooks, pencils etc., these things will be goods. Most important things in this is that the purchases must be made with a view to sell those things. Thus anything purchased for using it in the business will not be ‘Goods’. Goods A/c’s is divided into following four types. (1) Purchase A/c (2) Purchase Returns A/c (3) Sales A/c (4) Sales Returns A/c.

Discount : An allowance or a deduction allowed from an amount due, is discount. Discount payable is an expense of the organization whereas discount received is an income. Discount A/c’s is divided into two types. (1) Trade Discount (2) Cash Discount

Person : In business the term ‘Person’ includes individuals, Firm, Companies, Banks, Government concerns or departments, local body or any other form of business organizations.

RECORDING TRANSACTION IN A JOURNAL



Journal Entry (Recording) : It is a primary book of Accounting . It is a book which contains chronological record of transactions.

Illustration 1. Raju starts a business with a Capital of Rs. 50000 on April 18, 2000.In this case two accounts are involved.(i) Raju’s account i.e. Capital Account.(ii) Cash Account

Capital A/c is a Personal A/c. As per the rules of Debit & Credit applicable to personal A/c “Debit the Reviver, Credit the giver”. As business is a separate entity (Entity Concept), Raju is giving money so his account should be credited.

Capital A/c ………………..Cr.

Cash A/c is a Real A/c. According to the rules of Real A/c “Debit What Comes in, Credit what goes Out”. In this transaction, cash is coming in the business, so should be debited.

Cash A/c ……………….…Dr.

Journal

Date Particulars L.F. Debit (Rs.) Credit (Rs.)2000April 18

Cash A/c …………….Dr.To Capital A/c

(Being Commencement of business)

50000 50000

Note :

1. A Narration should be written after each Journal entry since it narrates the transaction. In the above illustration words within braces “Being Commencement of Business” is a narration.2. Convention is to pass the Debit entry prior to Credit entry in the Journal.3. L.F. stands for ledgers Folio. The transaction entered in Journal are late on posted to the

Ledger. It is given for easy reference.

Illustration 2 ( i) Salary Rs. 5000 paid to Mr. ABC by his employer.

(ii) Goods for Rs. 3000 purchased on credit from David.

( i) In this case two accounts are involved :

(a) Salary Account : Salary A/c is a nominal A/c. According to the rules of Nominal A/c “Debit all expenses & losses, Credit all income and gains”. For the business it is an expense, so Debit, so Debit it.

Salary A/c …………… Dr.



(b) Cash Account : Cash A/c is a Real A/c. According to the rules of Real A/c “Debit What comes in, Credit what goes Out”. In this transaction, cash is going out from the business, so it should be credited.

Cash A/c ………………Cr.

( i ) In This case two accounts are involved :

(a) Purchase Account : Purchase Account (Nominal A/c)(b) David’s Account : David’s Account (Personal A/c ) (Credit purchase)

Purchase A/c … Dr. (Credit purchase )

David’s A/c ……Cr. (as it is a personal A/c & David is the Giver of goods)

Date Particular L.F. Debit (Rs.) Credit (Rs.)Salary A/c ………………….Dr. To Cash A/c (Being Salary of Rs. 5000 paid to Mr ABC)

5000

3000

5000

3000Purchase A/c ………………..Dr. To David A/c (Being Purchase of goods on credit)

Illustration 3 : State which two accounts are affected by the following transactions :1. Started business with a capital of Rs. 50000.2. Secured loan from Neware Rs. 30000.3. Purchased machinery for Rs. 400004. Paid interest Rs. 3000.5. Purchased goods Rs. 12000.6. Paid salary to salesman Rs. 1000.7. Sold goods Rs. 15000.8.

Received commission Rs. 500.9. Deposited in Bank account Rs. 5000.10. Sold goods on credit to ‘Singh’ Rs. 5000.

Solution Accounts affectedNo. 1 21. Cash Capital2. Cash Neware3. Cash Machinery4. Cash Interest5. Goods Cash6. Salary Cash7. Goods Cash8. Commission Cash9. Bank Cash

10. Goods Singh



This means these transactions are either to be debited or credited to the two accounts in the above chart. This done with the help of the rules mentioned above. But before applying the rule, one must understand as to which rule be applied to individual account. For this, classification of these accounts must be done. It is as follows:-

1. Cash - Real account2. Capital - Personal account3. Machinery - Real account4. Goods - Real account5. Interest - Nominal account6. Salary - Nominal account7. Commission - Nominal account8. Neware - Personal account9. Singh - Personal account10. Bank - Personal account

Journal of Shri ………………………..

Date of Transaction

Particulars L.F. AmountDr. Cr.

1.

2.

3.

4

5

6

7

8

Cash A/c……………….Dr. To Capital A/c (Being Capital Brought in the business)

50000

30000

40000

3000

12000

1000

15000

500

50000

30000

40000

3000

12000

1000

15000

500

Cash A/c ………………Dr. To Neware A/c (Being loan secured from Mr. Newa)

Machinery A/c ………….Dr. To Cash A/c (Being machinery purchased for cash)

Interest A/c ……………...Dr. To Cash A/c (Being interest paid)

Goods A/c ………………Dr. To Cash A/c (Being goods purchased for cash)

Salary A/c …………..……Dr. To Cash (Being salary paid to salesman).Cash A/c ………………...Dr. To Goods A/c(being goods sold on cost)



9

10

5000

5000

5000

5000

Cash A/c ………………....Dr. To commission A/c(Being commission received)Bank A/c ……………. …Dr. To Cash A/c (Being cash deposited in Bank)Singh’s A/c ……………….Dr. To Goods A/c(Being Goods sold on credit to ‘Singh’)

Introduction to Tally

Opening Screen of Tally is divided into three sections :

I. Gate of TALLY : This is the entry gate to Tally software Press Ctrl and M keys simultaneously or click on this area to activate it. In this portion one works on menus, masters and reports. This screen, is further sub-divided into two portions :

Left Portion : this contain the following information :

Current Period : It is the current Financial Vouchers are being entered. Current Date : Displays the date for which Vouchers are being entered. List of selected Companies : Displays all the active Companies. The currently select

company will be in bold letters. Date of last entry : Display last voucher date.

Right Portion : Display various menus.



II. Button Panel : These buttons help to perform various functions. Wherever you find a Function key underlined on the button panel, activate that function key either by clicking on it by pressing Alt and that Function key simultaneously. The functions of these buttons are discussed later.

III. Direct Command : Press Ctrl and N Keys simultaneously or click on this area to activate it. Even if the mouse does not work, you can type commands in plain English in this area and execute them.

Creating Company

1. The first thing you have to do is to Create Company. So activate GATEWAY OF TALLY section of the screen by clicking on this area or by pressing Ctrl + M key.

2. Now select Create Company Info. Menu either by pressing C or by double clicking on this option. You will see a Company Creation Screen on your Desktop.



The above screen shows various fields. These fields are discussed below :Note : Press Enter key to the next field area each field entry. For editing in the above screen use Backspace or Up arrow key or Down arrow key.

i. Name : Type the name of the Company/Firm you wish to create. The number of characters in the name of the name of the Company is not restricted to the visible length of the space for entry. The characters in the Company name compressed horizontal so that the full name is visible. This is a compulsory entry.

ii. Mailing Name & Address : Type the full address of your Company/Firm. Any number of lines for address can be given in this filed due to vertical compression. of characters. This is an optional entry. You can switch to next field just by pressing Enter.

iii. Income Tax Number : For India/Asia : type the Income Tax Number allotted to your Company/Firm by the Income Tax Department. This is an optional entry.

iv. Local Sales Tax Number : Types Sales Tax number. This is an optional entry.v. Inter-State Sales Tax Number : (Only fir India/Asia) If this number is relevant for your

Firm then type it. This entry is optional.vi. Currency Symbol : Type the currency symbol used in your business. Type Rs for

India.vii. Maintain : This is a compulsory entry . A window with three options pops up.

The three options are as follow.

(a) Accounts Only : Select this if the Business do not deal with any Inventory transaction, e.g. Professional, Corporate Officers.



(b) Inventory Only : Select this if no Financial record needed, e.g. Pure Stock Point/Godwons/Factories.

(c) Account-with-Inventory : It maintains both Financial Account and Inventory.

Viii Financial Year From : Type the starting date of the financial year. Tally considers 12 months from the given date as Financial Year. Type 01/04/98 for M/s Albert & Brothers.

ix Books Beginning From : Year may start your business in the middle of a Financial Year and may dislike the reports including the period your Company was not even in existence. Type the actual date on which the business started but this date should be a later date than the starting date of the Financial Year. This is a compulsory entry.

x. Use Security Control : This is a very attractive feature of Tally which sets-up authority levels that decides the right of the user for data manipulation. Type your name as Administration and give a password. The password is case sensitive, i.e. NA and na will be considered two different passwords

By default two security types are defined. They are as follows :

(a) Owner : He has full access and rights to all parts of Tally. Type your name as the Owner’s name.

(b) Data Entry : He has restricted right. You can modify the default settings for him.

Note : You can even create new level of security, say a Manager in between Administrator and Data Entry.

3. Press Y to accept all the entries. Now the company gets created which can be loaded from the Company info. Nemu as and when desired. The screen for selecting a company shown in Fig.



M/s Neware Brothers is clearly shown in the above screen under the Name of Company option (shown to the left and side of the Gateway of Tally screen)

Loading/Selecting a Company

A company can be selected only if it exists.

i) For loading a company press Alt And F3 Keys simultaneously to invoke Company Menu. Select the option Select Company in this menu by pressing S.

ii) Highlight the company to be selected List of Company and press Entry.Note : you can load even more than one Company at a time. This may help you to compare their performance.Shutting a Company Shutting a company means uploading it.

i) Press Alt And F3 Keys simultaneously to invoke the Company Info. Menu. Select the option Shut Company in this menu by pressing H.

ii) Highlight the company you wish to shut down form the List of Companies and press Enter.

Altering/Modifying Existing Company

i) Press Alt and F3 keys simultaneously to invoke the Company Info. Menu.

ii) Press A key to select Alter option from the company Info. Menu.

iii) Highlight the Company you wish to alter from the List of Companies and press Enter. You have Company Alteration screen on your desktop. Make the required charges and accept it.

New Buttons on the Button Panel

F1 : Select Company : This is select an existing Company selecting a company means activating it. More than one company can be opened at at time which will be including in the List of Selected Companies .



F1 Shut Cmp : Select this option pressing Alt and F1 keys simultaneously. This option de-activates a company. The company still exists but its name will be excluded from the List of Select Companies

F2 Date : Tally permits you to change the date using this button.

F2 Period : This button allows you to change the Financial Accounting period of the company which was wntered at the time of Company creation.

F3 Company : This button helps you to switch from one active company to another active company.

F3 Create Cmp : Select this option by pressing Alt and F3 keys simultaneously. This invokes the Info. Menu.

F4 : Backup : By clicking this button you can store the data related to a company on a floppy disk or in the hard disk. By default the backup is stored on drive A. You can change this default setting by press Shift + Tab.

F4 : Restore : Suppose you have taken backup in floppy disk. If you wish to restore this data again in the hard disk then follow the steps :



1. Click on the F4 : Restore button.2. Now insert the floppy disk containing data in the floppy disk drive. Select the

name of the Company from the list of companies and pres Enter.3. Then type the path where you wish to store the data for the company concerned.

Accounting Information

1. Select the Company By Clicking on the F1 Select Cmp. Button on the Button panel.

Note : Inventory Info. Option is deactivated in the above menu because we have selected Accounts Only option under the Maintain field while creating the Company M/s Neware Brothers. This option selected because it is simpler to work with.

2. Now select the option Account Info. Option gives you overall information of Groups, Ledgers, its creation and Maintenance, Cost Centers, Cost Categories, Voucher Types, etc. On selecting Accounts Info. option, Figure gets displayed.



3. If you wish to study the above Pre-defined Group and sub-group then highlight the Group option on the above menu, and then press Enter, immediately the Group menu gets displayed.

4. Press the D key on the keyboard or highlight display on the above menu option and press the Enter key to display the Pre-defined Groups. You will see that the Groups get displayed in an alphabetical order,



Some details related to Pre-Defined Groups

1. Capital Assets : It holds Capital and Reserves of the Company. For example, Proprietor’s or Owner’s Capital Account, Partner’s Capital Account, Share Capital.

Reserve and Surplus [Retained Earnings ] : Related to Reserves. Retained Earnings is the alias name for Reverse and Surplus, e.g. Capital Reserve, General Assets’ can accommodate it.

2. Current Assets : It consists of 6 subgroups. If all the assets of the Company could not be allocated in any of these subgroup then the primary group ‘Current Assets’ can accommodate it.a) Bank Accounts : It holds Current Savings, Short Term Deposits, etc.b) Cash-in-Hand : This holds Ledger Account for Cash. More than one Cash Account can be

opened if needed, e.g. Petty Cash A/c.c) Deposits (Asset) : It holds deposits like fixed Deposits, Rental Deposits, Security Deposits,

etc. that is the deposits made by the company (not received).d) Loan & Advances (Assets) : It is for holding loans given by the Company which are non-

trading in nature, e.g. Salary Advance, Advance for Purchase of Fixed Assets, etc.e) Stock-in-Hand : It holds Opening and Closing Stock. It is a special Group. Balances depends

on the type of Inventory Management option selected while creating a Company, e.g. Raw Materials A/c, Work-in-Progress, Finished Goods, etc.

Integrated Accounts-cum-Inventory : Transactions in Inventory record are Permitted and the corresponding changes are reflected in the Balance Sheet as Closing Stock. You just cannot alter the Closing Stock balance directly.

Non-integrated Account-cum-Inventory : No Transaction permitted. It holds only the opeing and closing balance. As no Voucher can be passed for these accounts.

f) Sundry Debtors : It holds the accounts of the debtors, who owes money to the business.

3. Current Liabilities : It holds Outstanding Liabilities, Statutory Liabilities and some other minor liabilities. Liabilities such as PF, TDS,ESI also fall under this Group.

Duties and Taxes : It holds the accounts of trade duties, Excise, Local Sales Tax, Central Sales Tax.

Provisions : This acts as a reserve like Provision for Depreciation, Provision for Taxation etc.



Sundry Creditors : It holds the account of the trade Creditors of the Company.Note : One should not open the supplier Account under Purchase Account Group, as Purchase A/c is a Revenue A/c.

4. Fixed Assets : It is a convenient place for holding the Fixed Assets of the Company.

5. Investments : It holds the accounts of overall investments, like Bonds, Shares, Govt. Securities, loan Term Bank deposits, etc.

6. Loans (Liability) : It keeps an account of the Loan taken by the Company. Bank OD Account [ Bank OCC Accounts] : Bank OCC is the alias name for Bank OD

Accounts. It holds Over Dratf Account like Hypothecation Accounts, bill Discounting Account, etc. of the Bank.

Secured Loans : It holds the accounts of the loans taken by the company from Banks and other financial Bodies by mortgaging its Fixed assets. It is a secured loan so it has to be returned from the fixed asset of the Company even if the Company Fails.

Unsecured Loans : This is unconditional loan obtained from Partners/Directors or outside parties.

7. Suspense Account : As the name implies it is created when there is some discrepancy in the balance Sheet. It is a Balance sheet item, e.g. Traveling Advance whose details will be known only after the submission of TA bill.

8. Miscellaneous Expenses (Assets) : This is mainly for legal disclosure requirements, like schedule VI of India Companies Act. It is Rarely used.

9. Branch/Divisions : It holds the accounts of all the Company’s Sister Concern, Branches, Divisions, Affiliation, etc. of the existing Company.

10. Sales Account : It holds the different Sales Account. The Sales account can be categorised as as Types of Sales (Domestic Sales, Export Sales) and the Tax slabs. To have an idea of net sales after return one can even open an account Sales Return under the Group Domestic Sales.

11. Purchase Account : It holds the accounts related to purchase.

11. Direct income [Income Direct] : It holds the account of the direct income due to sales of goods. A professional Service Company may like to open an account as Professional Fees instead of Sales account under this Group.

{ INTRODUCTION TO ACCOUNTING }

Introduction of Book Keeping or Accounting :

In the past, there was no money life was very simple, wants were limited and man was self sufficient later on there was evolution of money commodities were exchanged for money people started working for money production developed on large scale as there was development in transport communication and machinery. Number of businessman also increased number of exchanged (transaction) also increased and hence it was not possible for a businessman to remember all transaction entered into with different parties, thus, he started to keep a daily or a notebook to write (record) all transactions in it. He started recording in details about money received, money paid, cash sales, credit sales, cash purchase, credit purchase, expenses, income etc. These writings of all transaction in the book is called book-keeping.



As business developed business man could not find time to write all the transaction into the books and therefore, they started appointing persons to record, such transaction. Such a person is known as Accountant.Today’s transaction have increased on a large scale , therefore computer are used to keep a proper record.

ACCOUNTING :

Accounting is the art of recording, classifying and summarising 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.

Accounting : 1. Recording 2. Classifying3. Summarising 4. Interpreting Financial Events6. Information to facilitate decision-making.

Accounting Cycle :Transactions

Journal

Trading, Profit & Loss A/c & Balance Sheet

Ledger

Trial Balance

Types of Accounts : Accounts Are Two Types

1) Personal A/c. 2) Impersonal A/c.

1) Personal A/c. :

Dealing with an individual or accounts of Corporate bodies or Institutions which are recognized as person in business dealings.

Example: Customers, Creditors, Debtors, Owner, Bank, Firm, Capital etc.

2) Impersonal A/c. :

Are Two Types – (a) Real, (b) Nominal a) Real : Real Account are Two types :

i) Tangible Account :



These accounts relate touched, felt, measured, etc. It could be fixed or current in nature. E.G. Cash, Building, Furniture, Stock, etc.

ii) Intangible Account :

They represent things which cannot be touched but they can be measured in terms of

money. E.g. Patents a/c Goodwill A/c etc.

b) Nominal A/c :

It deals with expenses and losses, income and gains. These accounts are opened in the book to simply explain the nature of the transactions. For example, in a business, rent is paid to the landlord, salary to employees commission to salesman, cash goes out of the business and is real, while rent , salary or commission do not exist. The accounts of these items are opened simple to explain how the cash has been spent. E.g. Rent, Lighting Insurance, Dividends or income received or expenses for services received by the Firm etc.

DIFFINATION OF BOOK KEEPING1) As a systematic record of all the business transaction to know the financial position

of a business. 2) Accounting means the recording of day-to-day transaction occurring on our business.3) Book keeping is the science of art of correctly recording in the books of accounts. All

those business transaction that result in transfer of money worth.

IMPORTANCE AND UTILITY OF BOOK KEEPING1) Human memory is limited. A businessman can not remember all the transaction for a

long time. Book keeping helps a businessman to record all transaction systematically.

2) Book keeping is useful in finding out the financial position of the business and to find out profit or loss of the business.

3) To compare the records with different periods and to plan for future and to keep control over expenditure.

4) Book keeping is a systematic record and therefore, useful as a proof in the court of law in case of dispute.

5) Book keeping is useful to calculate Sales Tax, and Income Tax payable.6) Book keeping is useful to valuation of goodwill of the business.7) Book keeping is useful to management investors, money lenders, creditors, labors,

unions, government etc. to know the position of the business.

IMPORTANT ACCOUNTING TERMSThe following are the technical terms which are very often used in this subject :



1) ACCOUNT : It is a summarize record of all the transaction relating to a particular person, an assets and expense or an income) from the books of prime entry we can not know the perfect position regarding total dealings or balance of any person or anything.Account has two side the left hand side is known as the debit side and the right hand side is known as credit side, For any particular written on the debit side that account is said to be as debited where as any particular written on the credit side then that account is said to be as credited. Debit side of particular start with words “By” while credit side start with the word “To”. At the top of every account the name of the account is written which is called “Head Of Account”. For example:- Furniture A/c, Salary A/c, X A/c,

2) LEDGER : It is a book of account. It include all the different accounts of Personal, Assets, Incomes, Expenditures etc. This is a main book.Each entry from books of prime entry, transferred to the ledger in various appropriate accounts.

3) GOODS : Goods means items or commodities in which a businessman deals. These are purchase or manufacture for sale with the object of earning profit.

4) TRANSACTION : An exchange of manager money’s worth between two parties is called a Transaction . In other word an exchange of goods of servicing is called a transaction. Transaction are of two types.1) Cash Transaction 2) Credit Transaction

5) ASSETE : Assets means property business assets, means the property own by a business firm.For example:- Land, Building, Machinery, Bank Balance, Motor, Cars, Cash etc.

The distinction show the made between assets and goods. Goods are purchase for reseals where as a assets are not purchase for reseals.

6) DEBITORS : Debtor is a person own (has to take ) money to another person. He is in debit of another person. Business has to received money from such debtor.

7) CREDITORS : Creditors is a person to whom an account is due or payable. He has to receive money from us. In other words, we own to him.

8) LIABILITIES : The amount payable by a business is known as liabilities. For examples:- Tax payable to government , capital loans, taken from bank.

9) EXPENSES : An amount paid for any consideration received by business of called expense.For example:- Electric bill paid, salary paid.

10) CAPITAL : In simple words capital means the amount invested in business, but in accounting sense,

excess of assets over liabilities is called capital.

11) INCOME : An account received for any consideration is called an Income. For example:- Interest received.

12) FOLIO : Term folio means page no. In books of prime entry as well as in ledger separate column is

keep for writing folio number, when posting is made from the books of prime entry into ledger. The page number of ledger is written in books of prime entry where as page

number of books of prime entry is written in ledger. By doing these it become easy to find out corresponding effect of a transaction.

PRINCIPLES OF DOUBLE ENTRY BOOK KEEPING SYSTEM



Book keeping is an art of recording business transaction. This

recording of transaction can be done according to any o0ne of the

following two system.

1) Double Entry System 2) Single Entry System

1) Double Entry System :

Every business transaction involves an exchange of money or money worth. An exchange

involves two parts receiving and giving. The system of book keeping which records both the

expects of transaction is known as double entry system of book keeping. There can’t be business transaction without two effects.For example:- A business transaction is comparable with the coins with two sides as the coin has two side. Transaction effect has two accounts.

In short, double entry system of book keeping means.

1) Every business transaction is like a coin.2) As a coin has two sides. Every transaction has two fold effect.3) Every transaction effects two accounts.4) One account is debited and the offer is credited.5) One account receives the benefit and the other account gives the benefit.

For example :

1) Furniture is purchased for Rs. 5000/- which cash is paid. Here, furniture comes in and cash goes out, two accounts are effected. Furniture A/c and Cash A/c.

2) Goods for Rs. 2000/- sold for cash.Here, goods goes out and cash comes in. Two accounts are effected Cash A/c and Goods A/c.

3) Electric bill paid of Rs. 500/-Here, two account has effected one Electric bill A/c and second is Cash A/c.

SINGLE ENTRY SYSTEM

In is a system of book keeping in which as a good on the record or cash and personal records are maintained.

ADVANTAGES OF DOUBLE ENTRY BOOK- KEEPING

1) It is a complete record of business transaction as both the effects of transaction are recorded.

2) Every debit has corresponding credit.



3) It minimize frauds.4) Mistake can be check and correct easily.5) List of debtors and creditors can be prepared periodically.6) A details record of transaction in purchase and sell of goods return of goods, brought

and sold with enable businessman to find out the stock in the godown.7) Amount payable for income tax and sale tax can be calculated easily.8) Miss-use of cash can be avoided.9) A trader can compare the current year income and expenses with those of the previous

year.10) Business can prepare financial statement to know their financial position and profit or

loss.

CLASSIFICATION OF ACCOUNTS

Introduction : A/c is the summarized record of all the transaction relating to a person property, income or expenses. The different types of transactions are carried on by business which effect various A/cs like Ram A/c, Sham A/c, Machinery A/c, Furniture A/c, Goods A/c, Salary A/c, Interest A/c, etc.

Basically these A/cs are classified as follows.

1) Personal A/c :- Personal A/c include the A/cs of persons or parties with whom the business deals. This A/cs can be classified into two categories.

a) Natural A/c b) Artificial A/c

a) Natural A/c :- The terms natural personal means persons who are creation of goods. For example:- Amar’s A/c, Ajay’s A/c.

b) Artificial A/c :- These A/c include A/cs of co-operation bodies or institutions. For example:- Companies, Clubs, Co-operatives A/cs, Government insurance companies, Charitable Trust, Legal authorized (like municipality, Grampanchayat) schools, colleges etc.

2) Impersonal A/c :- All A/cs other than personal A/cs are impersonal A/cs. There are further divided into two categories.

a) Real A/c b) Nominal A/c.

a) Real A/c :- These are further divided into two categories.

i) Tangible Real A/c 2) Intangible Real A/c

i) Tangible A/c:- Tangible means the things which we can touch, see , measure and feel.For example:- Cash A/c, Building A/c, Land A/c, Machinery A/c, Furniture A/c, Stock A/c etc.

ii) Intangible A/c:- These A/cs represent such things which cannot be seen and touch, but can be measured in memory. For example:- Goodwill, Popularity, Trademark, etc.

1) Nominal A/c : These A/c are open in the books to explain the nature of the transaction . They don’t exist and thus they are fortuitous. In a business salary is paid to a credit, rent is paid, to a land lord, commission is paid to an agent, for all these transaction cash goes out of the business and cash is real but salary, rent, commission, etc. don’t exist. The A/cs of these items are a opened simply to explain how to cash as we spent. Nominal A/cs include A/cs of all expenses, losses, incomes, and gains. For example:- Rent, insurance, premium, paid bank charges, dividend, interest, electricity bills, loss by fire, loss by theft, profit on sale, of investment etc.

RULES OF DEBIT AND CREDIT



1) Personal A/c : Debit the receiver or Debtors. Credit the giver or Creditors.The personal A/c which receive the benefit is debited while personal A/c which gives the benefit are credited.

2) Real A/c : Debit what comes in.Credit what goes out.When an assets or goods is purchased it comes in and hence that assets or goods A/c is debited.When an assets or goods is sold out is goes out and

hence that assets or goods A/c is credited.

2) Nominal A/c : Debit the expenses and the losses.Credit the income and gains.For expenses like salary paid, insurance premium etc. Account should be debited, for income like interest received, Rent received, etc. A/cs should be credited.

{ T a l l y - 5 . 4 }

Introduction to Tally

Opening Screen of Tally is Divided into Three Sections :

1) Gateway of TALLY :

This is the entry gate to Tally software Press Ctrl and M keys simultaneously or click on this area to activate it. In this portion one works on menus, masters and reports. This screen, is further sub-divided into two portions :

Left Portion : this contain the following information :

Current Period : It is the current Financial Vouchers are being entered. Current Date : Displays the date for which Vouchers are being entered. List of selected Companies : Displays all the active Companies. The currently select

company will be in bold letters. Date of last entry : Display last voucher date.

Right Portion : Display Various Menus.



2) Button Panel :

These buttons help to perform various functions. Wherever you find a Function key underlined on the button panel, activate that function key either by clicking on it by pressing Alt and that Function key simultaneously. The functions of these buttons are discussed later.

3) Direct Command :

Press Ctrl and N Keys simultaneously or click on this area to activate it. Even if the mouse does not work, you can type commands in plain English in this area and execute them.

Creating Company :

1) The first thing you have to do is to Create Company. So activate GATEWAY OF TALLY section of the screen by clicking on this area or by pressing Ctrl + M key.

2) Now select Create Company Info. Menu either by pressing C or by double clicking on this option. You will see a Company Creation Screen on your Desktop.

The this screen shows various fields. These fields are discussed below :Note : Press Enter key to the next field area each field entry. For editing in the above screen use Backspace or Up arrow key or Down arrow key.

i) Name : Type the name of the Company/Firm you wish to create. The number of characters in the name of the



name of the Company is not restricted to the visible length of the space for entry. The characters in the Company name compressed horizontal so that the full name is visible. This is a compulsory entry.

ii) Mailing Name & Address : Type the full address of your Company/Firm. Any number of lines for address can be given in this filed due to vertical compression. of characters. This is an optional entry. You can switch to next field just by pressing Enter.

ii) Income Tax Number : For India/Asia : type the Income Tax Number allotted to your Company/Firm by the Income Tax Department. This is an optional entry.

iii) Local Sales Tax Number : Types Sales Tax number. This is an optional entry.

Inter-State Sales Tax Number : (Only fir India/Asia) If this number is relevant for your Firm then type it. This entry is optional.

iv) Currency Symbol : Type the currency symbol used in your business. Type Rs for India.Maintain : This is a compulsory entry . A window with three options pops up.

The Three Options are as Follow :

a) Accounts Only : Select this if the Business do not deal with any Inventory transaction, e.g. Professional, Corporate Officers.

b) Inventory Only : Select this if no Financial record needed, e.g. Pure Stock Point/Godowns/Factories.

c) Account-with-Inventory : It maintains both Financial Account and Inventory.

Viii Financial Year From : Type the starting date of the financial year. Tally considers 12 months from the given date as Financial Year. Type 01/04/98 for M/s Albert & Brothers.

ix Books Beginning From : Year may start your business in the middle of a Financial Year and may dislike the reports including the period your Company was not even in existence. Type the actual date on which the business started but this date should be a later date than the starting date of the Financial Year. This is a compulsory entry.



x. Use Security Control : This is a very attractive feature of Tally which sets-up authority levels that decides the right of the user for data manipulation. Type your name as Administration and give a password. The password is case sensitive, i.e. NA and an will be considered two different passwords

By default two security types are defined. They are as follows :

a) Owner : He has full access and rights to all parts of Tally. Type your name as the Owner’s name.b) Data Entry : He has restricted right. You can modify the default settings for him.

Note : You can even create new level of security, say a Manager in between Administrator and Data Entry.

3. Press Y to accept all the entries. Now the company gets created which can be loaded from the Company info. Menu as and when desired. The screen for selecting a company shown in Fig.

M/s Neware Brothers is clearly shown in the above screen under the Name of Company option (shown to the left and side of the Gateway of Tally screen)

Loading/Selecting a Company

A company can be selected only if it exists.

iii) For loading a company press Alt And F3 Keys simultaneously to invoke Company Menu. Select the option Select Company in this menu by pressing S.

iv) Highlight the company to be selected List of Company and press Entry.Note : you can load even more than one Company at a time. This may help you to compare their performance.Shutting a Company Shutting a company means uploading it.

iii) Press Alt And F3 Keys simultaneously to invoke the Company Info. Menu. Select the option Shut Company in this menu by pressing H.

iv) Highlight the company you wish to shut down form the List of Companies and press Enter.

Altering/Modifying Existing Company

iv) Press Alt and F3 keys simultaneously to invoke the Company Info. Menu.



v) Press A key to select Alter option from the company Info. Menu.

vi) Highlight the Company you wish to alter from the List of Companies and press Enter. You have Company Alteration screen on your desktop. Make the required charges and accept it.

New Buttons on the Button Panel

F1 : Select Company : This is select an existing Company selecting a company means activating it. More than one company can be opened at time which will be including in the List of Selected Companies .

F1 Shut Company : Select this option pressing Alt and F1 keys simultaneously. This option de-activates a company. The company still exists but its name will be excluded from the List of Select Companies

F2 Date : Tally permits you to change the date using this button.

F2 Period : This button allows you to change the Financial Accounting period of the company which was wintered at the time of Company creation.

F3 Company : This button helps you to switch from one active company to another active company.

F3 Create Cmp : Select this option by pressing Alt and F3 keys simultaneously. This invokes the Info. Menu.

F4 : Backup : By clicking this button you can store the



data related to a company on a floppy disk or in the hard disk. By default the backup is stored on drive A. You can change this default setting by press Shift + Tab.

F4 : Restore : Suppose you have taken backup in floppy disk. If you wish to restore this data again in the hard disk then follow the steps :

1. Click on the F4 : Restore button.

2. Now insert the floppy disk containing data in the floppy disk drive. Select the name of the Company from the list of companies and press Enter.

3. Then type the path where you wish to store the data for the company concerned.

Accounting Information

2. Select the Company By Clicking on the F1 Select Cmp. Button on the Button panel.

Note : Inventory Info. Option is deactivated in the above menu because we have selected Accounts Only option under the Maintain field while creating the Company M/s Neware Brothers. This option selected because it is simpler to work with.

2. Now select the option Account Info. Option gives you overall information of Groups, Ledgers, its creation and Maintenance, Cost Centres, Cost Categories, Voucher Types, etc. On selecting Accounts Info. option, Figure gets displayed.

3. If you wish to study the above Pre-defined Group and sub-group then highlight the Group option on the above menu, and then press Enter, immediately the Group menu gets displayed.



4. Press the D key on the keyboard or highlight display on the above menu option and press the Enter key to display the Pre-defined Groups. You will see that the Groups get displayed in an alphabetical order,

Some details related to Pre-Defined Groups

1. Capital Assets : It holds Capital and Reserves of the Company. For example, Proprietor’s or Owner’s Capital Account, Partner’s Capital Account, Share Capital.

Reserve and Surplus [Retained Earnings ] : Related to Reserves. Retained Earnings is the alias name for Reverse and Surplus, e.g. Capital Reserve, General Assets’ can accommodate it.

2. Current Assets : It consists of 6 subgroups. If all the assets of the Company could not be allocated in any of these subgroup then the primary group ‘Current Assets’ can accommodate it.g) Bank Accounts : It holds Current Savings, Short Term Deposits, etc.h) Cash-in-Hand : This holds Ledger Account for Cash. More than one Cash Account can be

opened if needed, e.g. Petty Cash A/c.i) Deposits (Asset) : It holds deposits like fixed Deposits, Rental Deposits, Security Deposits, etc.

that is the deposits made by the company (not received).j) Loan & Advances (Assets) : It is for holding loans given by the Company which are non-trading

in nature, e.g. Salary Advance, Advance for Purchase of Fixed Assets, etc.k) Stock-in-Hand : It holds Opening and Closing Stock. It is a special Group. Balances depends on

the type of Inventory Management option selected while creating a Company, e.g. Raw Materials A/c, Work-in-Progress, Finished Goods, etc.

Integrated Accounts-cum-Inventory : Transactions in Inventory record are Permitted and the corresponding changes are reflected in the Balance Sheet as Closing Stock. You just cannot alter the Closing Stock balance directly.

Non-integrated Account-cum-Inventory : No Transaction permitted. It holds only the opeing and closing balance. As no Voucher can be passed for these accounts.

l) Sundry Debtors : It holds the accounts of the debtors, who owes money to the business.

3. Current Liabilities : It holds Outstanding Liabilities, Statutory Liabilities and some other minor liabilities. Liabilities such as PF, TDS,ESI also fall under this Group.



Duties and Taxes : It holds the accounts of trade duties, Excise, Local Sales Tax, Central Sales Tax.

Provisions : This acts as a reserve like Provision for Depreciation, Provision for Taxation etc.

Sundry Creditors : It holds the account of the trade Creditors of the Company.Note : One should not open the supplier Account under Purchase Account Group, as Purchase A/c is a Revenue A/c.

4. Fixed Assets : It is a convenient place for holding the Fixed Assets of the Company.

5. Investments : It holds the accounts of overall investments, like Bonds, Shares, Govt. Securities, loan Term Bank deposits, etc.

6. Loans (Liability) : It keeps an account of the Loan taken by the Company. Bank OD Account [ Bank OCC Accounts] : Bank OCC is the alias name for Bank OD

Accounts. It holds Over Draft Account like Hypothecation Accounts, bill Discounting Account, etc. of the Bank.

Secured Loans : It holds the accounts of the loans taken by the company from Banks and other financial Bodies by mortgaging its Fixed assets. It is a secured loan so it has to be returned from the fixed asset of the Company even if the Company Fails.

Unsecured Loans : This is unconditional loan obtained from Partners/Directors or outside parties.

7. Suspense Account : As the name implies it is created when there is some discrepancy in the balance Sheet. It is a Balance sheet item, e.g. Travelling Advance whose details will be known only after the submission of TA bill.

8. Miscellaneous Expenses (Assets) : This is mainly for legal disclosure requirements, like schedule VI of India Companies Act. It is Rarely used.

9. Branch/Divisions : It holds the accounts of all the Company’s Sister Concern, Branches, Divisions, Affiliation, etc. of the existing Company.

10. Sales Account : It holds the different Sales Account. The Sales account can be categorised as as Types of Sales (Domestic Sales, Export Sales) and the Tax slabs. To have an idea of net sales after return one can even open an account Sales Return under the Group Domestic Sales.

11. Purchase Account : It holds the accounts related to purchase.

12. Direct income [Income Direct] : It holds the account of the direct income due to sales of goods. A professional Service Company may like to open an account as Professional Fees instead of Sales account under this Group.

VOUCHER ENTRY

In accounting journal entry is call voucher entry. On optional selection of “Getaway of Tally” entry voucher will appear on the screen. Most important facts is that different kinds of voucher entry of Tally package will appear at the bottom of the screen. There different kinds are set on f4 to f10 function keys. As per type of voucher it should be selected through the particular key of keyboard. Let us identify all these different kinds.

1) Contra (F4) :We have taken contra entries in Accounting. At the time of



deposit or withdrawn the amount from our Bank A/c, this transaction will effect on Bank A/c & Cash A/c entries. But the transaction, in which we have deposited the amount in Bank in out A/c or withdrawn the amount from olut A/c should not be treated as entry contra.For Example:- 1)Rs. 5000/- Deposited in Bank of India.

2) Rs. 2000/- Withdrawn from Bank of India.

In the above transaction there will be effect on the both Account Bank of India A/c & Cash A/c.

In the 1st transaction an amount of Rs. 5000/- received by the bank earned by the bank and 2nd transaction bank has expended the amount of Rs. 2000/- for such type of voucher entry transaction it is necessary to select “Contra” for which F4 function key of the keyboard will have to be press.

2) PAYMENT (F5) : For the purchase of Goods, Assets, or Cash payment to the dealers, for such type of transaction “Payment” type is to be used.

For example: 1) Goods purchased for cash Rs. 30,000/-2) Machinery purchased for cash Rs. 10,000/-3) Paid salary Rs. 2000/- and advertisement expenses Rs. 3000/- in cash and

carriage inwards by cheque Rs.4000/-For above 1st and 2nd transaction goods and machinery (assets) is purchased in cash. And in 3rd transaction amount spent for salary and Advertisement in cash but for carriage inward payment in paid through cheque. An amount spent for above purchases the whole amount will less from the bank balance.In short, on any transaction the amount of the bank or bank balance will decreased for such voucher entries transaction “Payment” type is always used.

3) Receipt (F6): An amount is received through sells of Assets, goods, amount received by cheque, for such transaction of voucher entries “Receipt voucher” is always used.

For example: 1) Goods sold for cash.2) Machinery sold for cash.3) Received interest by cheque.4) Received commission by cheque.

From the above transaction the amount/cheque is receiving by the bank, hence entries of these voucher entries will have to be done “Receipt voucher” head.

4)JOURNAL(F7): There are 3 options in journal. 1) Credit note 2) Debit note 3) Journal

1) Credit Note: Some quantity of the sold goods is returned to the dealer by the purchase alongwith details of returned goods, such details document is called credit note. and such entries are being taken in “Sales return” or Return Inward”

For example: 1) Goods returned by Amit Rs. 1000/- Entry of this transaction will have to be taken in the type of voucher entry credit note.

By Sales return A/c Dr. 1000/-To Amit A/c Cr. 1000/-



2) Debit Note: Some quantity of the purchased goods is returned to the dealer alongwith details of returned goods, such details document is called as Debit not. and such entries are being taken in the Debit note.

For example: 1) Goods return to Mahesh Rs. 500/-By Mahesh A/c Dr. 500/-To Purchase return A/c Cr. 500/-

3) Journal : If there are some adjustment entries in this account such entries are to be taken in entries “Journal” type.Transaction of actual cash should not be taken as adjustment .

For example: 1) Depreciation to be charged on machinery Rs. 10,000/-By Depreciation A/c Dr. 10,000/-To Machinery A/c Cr. 10,000/-

5) SALE (F8) : (For credit sales only) :- Sale type should be used on the occasion of credit sales only.

For example: 1) Goods sold to Nikhil on credit Rs. 5000/-By Nikhil A/c Dr. 5000/-To, Sales A/c Cr. 5000/-

6) PURCHASE (F9): (For credit purchase only)Transaction of purchase should be entered under purchase type.

For example: 1) Goods purchased from Arvind Rs. 50,000/- on credit.By Purchase A/c Dr. 50,000/-

` To Arvind A/c Cr. 50,000/-Such entry should be taken under “Purchase type”.

7) MEMOS (f 10) : (Memorandum)Some time we have to decide to in our the amount on some important factors. This decision is provisional, which will not effect on our Bank balance or capital. But, after some days this provision can be laps from our human mind.Tally package has provide facility of such decision in Memorandum voucher type. Entries in memorandum type.It will not effect on actual Accounting. (Balance sheet and Profit & Loss A/c)

For example 1) Mr. X has decided to take out Rs. 1000/- from his balance amount to pay Rent, but actually he has not paid the amount to the house owner. In the memory of our computer this decision can be save under memorandum type.` By Rent A/c Dr. 1000/-

To Cash A/c Cr. 1000/-If such type of entry taken under “Payment” type this will effect on our Balance sheet upto Profit & Loss Account.Entry regarding payment of Rs. 1000/- on A/c of Rent paid by cash will be appear in the concern Account. But when we have taken such entry in memorandum type it will not effect upto Balance sheet. This entry will store in the memory in our computer.While operating the computer and making entries in Tally, voucher entries, it should be decided that in which type of above transaction is being made the particular function key should be pressed.Separate entries instead of combine entries should be taken in Tally package for maintaining correct Accounting reports.

For example By cash A/c Dr. 25,000/-



` By furniture A/c Dr. 20,000/-By Building A/c Dr. 1,55,000/-

To Capital A/c Cr. 2,00,000/-

In Tally if we have taken combine entry of Cash A/c, Furniture A/c, & Building A/c it will effect on Cash A/c. To avoid this all entries should be taken separately instead of combine entries.

Now let us take information of entry voucher on the screen.

1) Date :- While taking voucher entry the date and day will appear on the right side of the screen.

2) Change of Date (F2) :- For change of date (F2) function key should be u8sed. Current & previous both dates will appear on the screen. We can mentioned there which date require but the require date should be from the current financial year. If we pressed only enter key it will mentioned next further date.

3) Types of Vouchers : On select of voucher type it will appear on left side on screen. and on which number the voucher entry is being taken the sequence will be appear. If we have to make payment entry No. 3, Sr. No.3 will appear after previous two payment entries.

4) Ref : If we select “Purchase” or “Sale” type of voucher “Ref” word will appear. Reference of the credit bill of credit transaction can be mentioned here.

5) Dr/Cr : As per voucher type “Debit” or “Credit” there words will change.

For example: Interest received in cash. The entry of this transaction should be taken as under.By Cash A/c Dr.To Interest A/c Cr.

In Tally for entry of this transaction we have to select “Receipt” type. Here will appear a word ‘Cr’ hence the word before ‘Cr’ the word “Interest A/c” should be mentioned.For word ‘Dr’-‘By’ and for word ‘Cr’-‘To’ can be appear on the screen.

6) Debit Amount / Credit Amount :- Under this column we can deposit the amount related to particular transaction of the account.

For example: Salary paid Rs. 5000/- For the voucher entry of this transaction Rs. 5000/- should have been maintained in the Debit Amount column before the salary A/c.

7) Narration : We can explain here all voucher entries. The matter under “Narration” comes under text matter. There will be no effect if any entry will not cover narration.

GROUPWISE LIST OF COMMONLY USED

1) CAPITAL (Equity): All the capital A/cs whether fixed or current capitals or drawings A/c or share capital A/cs are to group under this head.1) Equity shares capital A/c.2) Reference share capital A/c.



3) Partners capital A/c.4) Partners drawing A/c.5) Proprietors capital A/c.6) Proprietors drawing A/c.

2) Reserves & Surplus :- (Retained Earning)All reserves and fund A/c are the amounts of profit set a side for some particular or general purpose.1) Building fund A/c2) Depreciation fund A/c.3) General reserve A/c.4) Reserve for doubtful debit A/c.

3) LOANS (Liabilities) : This groups is further divided into three sub-groups.1) Bank Occ A/c 2) Secured A/c 3) Unsecured A/c

1) Bank Occ A/c : A group under Tally, which allows Conta entry with the bank loans A/c for working capital Bank of

Baroda ------Cash Credit Loan A/c.Bank Occ A/c ------ Over Cash/Credit A/c.Bank of India ------ Book Debit loans A/c. Mahabank overdraft loan A/c.

2) Secured Loans : Secured loans term loans which are repaid monthly or by fixed installment are covered under this groups. It includes bank, private and other loans, borrowed against a security.

1) Loans from Bank of India A/c.2) Loans from Finance Co. Ltd. A/c.3) Loans from MSFC A/c4) Loans from STCOM A/c.

3) Unsecured Loans : These are term loans without any security. They may be borrowed from bank, friends or any relatives.

1) Ghorpade Balwantrao Loans A/c.2) Shri Mahavir Patsanstha Ltd. Loan A/c.

3) CURRENT LIABILITIES: This major groups is further divided into three sub-group.1) Duties and Taxes2) Provision3) Sundry Creditors (Account payables)

1) Duties and Taxes :- Government dues must be paid with first priority else either you pay fine or go behind bar. To avoid this separate all the Govt. dues from other current liabilities. These A/c are credited when Taxes are collected.

For example: 1) Excise duty (collected) A/c.2) Income Tax (collected) A/c.3) Profession Tax (collected) A/c.4) Sales Tax (collected) A/c.The word “collected” need not be included in the name of an account. It is only mentioned for the sake of understanding that is a liability and not an expenditure A/c.

1) PROVISION :- It represent all current liabilities in the nature of



unpaid expenses, since the accounting of an expenses has to be done in the year of its enjoyment a provision for the unpaid expenses is made for which a journal entry is to be passed, such provision for unpaid/payable expenses is to be classified here.1) Audit fees payable A/c.2) Electricity charges payable A/c.3) Municipal Taxes payable A/c.4) Office Rent payable A/c.5) Provision for bad Debits.6) Provision for Doubtful Debits.7) Provision for Income Tax A/c.8) Salary payable A/c.9) Telephone charges payable A/c.10) Telephone charges payable A/c.11) Water charges payable A/c.

2) Sundry Creditors:- (A/c Payable)Here classify accounts of all parties from whom you purchase goods on credit. This includes accounts of all suppliers and parties to whom you own money.1) Ledger A/c2) Bharat Agencies A/c3) Cadbury’s India Ltd. A/c.4) Computer corner A/c.5) Hindustan lever Ltd. A/c.6) Voltage Ltd. A/c.7) Tara oil mills A/c.

3) FIXED ASSETS : An investment in a fixed assets does not change its from and that assets remains in use till is either discarded or sold out. This group is used to classify account relating to all fixed assets.

1) Building A/c2) Computers A/c3) Electrical Equipment A/c4) Furniture & Fixture A/c5) Land freehold A/c6) Patent license & quarters A/c.7) Plant & Machinery A/c8) Vehicles A/c.

6) INVESTMENT : The difference between a fixed assets and an investment is that the former is used by the owner to do business but the later is lying with others and we earn some interest dividend or profits on the amount so invested.

1) Equity shares of Co. Ltd. A/c.2) Preference shares of Co. Ltd. A/c.3) Capital invested in firm.

4) DEPOSITS (Assets): The accounts relating to all deposits such as tender money deposit with

landlord, or with principle in case of an agents etc.1) Deposits with kolhapur Municipal corporation.2) Deposit with MSEB A/c.



3) Deposit with Telephone.4) Tender money deposit A/c.

5) CURRENT ASSETS : The assets which change either forms frequently are known as current assets. so an investment locked in stock of goods gets converted into sundry debtors or in cash when it is sold. The commonly classified accounts under this groups are further divided into 5 sub-groups.

1) Cash in hand2) Bank A/c. (Current saving A/c)3) Stock in hand4) Sundry Debtor (Account Receivables)5) Loans and Advance (Assets)

1) Cash in hand :- This group is used to classified only cash accounts. Tally automatically open a cash A/c, when you create a company. you may after it to enter the opening cash balance. If necessary create petty cash A/c or a like A/c.

2) Bank A/c : It is used to classify bank A/c or saving bank A/c only no. other Bank A/c, can be opened under this group.

1) Bank of India Current A/c.2) Bank of India saving A/c.

3) Stock In Hand : The accounts of different stock items should be

here. Different types of uses will have different accounts head.a) Retailerb) Whole Sale Traders.c) Manufactures.

3) Sundry Debtors : This groups is to be used to classify the customers A/c only. These A/c can be adjusted on balance only or Bill-by-Bill method. The second method is more preferred. A name of A/c should not start with “M/s”

1) Haridwar A/c.2) Chougule computing center A/c3) Lucky novelty stores A/c.

5) Loans & Advance : These are the loans or advance given to others. They are not your liabilities. The different between them and sundry debtors is that they are not your customers.

1) Loans to Prashant Inamdar (Friend)2) Loans to Prakash Ghorpade (Employees)3) Loans to Mrs. Ganak Yantra (Sister)4) Advance to OHS India Ltd. (For gift)

8) MISCELLENEOUS EXPENSES (Assets) :

This group gives shelter to all Bogus or fictitious assets. Assets which are normally expenses only but for the time being they are treated as assets due to the right arising out of those expenses or including expenses to be written of within 2 or more years.

1) Pre-operative expenses A/c.2) Advertisement (Profit & Loss) A/c.Showing loss of a company should not be classified under this group. It is a automatically created by Tally Itself.



9) SUSPENSES A/c: Theoretically this group should not exist. However a number of large companies uses a suspense ledger to track money paid or received the nature of transaction for which is not yet known.

1) Travelling Expenses Advance A/c.2) XYZ Ceremony Expenses Advance A/c.

10)BRANCHES & DIVISIONS (Subsidiary Concern) :Here you many keep names of all companies which many be branches, division, sister concern, subsidiaries etc. This is a group for convenience and it is optional to use.

1) Modern publications A/c.2) Modern Data processors A/c3) Modern school of computers A/c.4) Modern Tours & Travels private limited A/c.

11)REVENUE A/c : This is the parent group of all sun-groups relating to all income & Expenses which net profit or net loss. This main sub-group are.

1) Sales Accounts.2) Purchase Accounts3) Incomes4) Expenditure Accounts5) Direct Expenses 6) Indirect Expenses

1) SALES A/c :- Use this group to classify all accounts of sale of goods. (Not sale of assists). Depending on information need you may create sales A/c as under.

1) Whole sale Traders2) Retailer/ Manufactures.3) Sales Return A/c

2) PURCHASE A/c :- It covers all purchases of goods only & excludes purchases of assets or purchases of commodities in the nature of expenses depending on information needs. You may create purchase Accounts as under.

1) Whole sale Traders2) Retailer3) Manufactures4) Purchase Return A/c

3) INCOME : Normally it used to classify incomes other than sales and shall includes casual incomes such as:

1) Commission Received A/c.2) Compensation Received A/c3) Dividend Received A/c4) Insurance claim Received A/c5) Rent Received A/c6) Interest Received A/c

4) EXPENDITURE EXPENSES A/c: This group is further divided into two sub-groups . 1) Direct Expenses 2) Indirect Expenses.

1) Direct Expenses :- Used for accounting manufacturing or trading (Trading and manufacturing expenses) . It is used to arrive at gross profit of a company. 1) Bonus to workers A/c2) Carriage Inward Transportation A/c3) Factory expenses A/c



4) Factory rent A/c5) Labor Welfare for workers A/c 6) Packing and forwarding changes A/c.

2) Indirect Expenses:- For all administrative , sallying and distribution and non-direct expenses. (Administrative Expenses). This groups is used .1) Advertisement A/c2) Bonus to employees A/c3) Carriage outward A/c4) Computer maintenance expenses A/c5) Electricity charges A/c6) Income Tax paid A/c7) Insurance Premium A/c8) Telephone charges A/c9) Water charges A/c10)Miscellaneous expenses A/c


account tally 5.0

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