TOPI C PAGE WHAT IS ACCOUNTING? .............................................................................. ............................ 02 BOOK KEEPING ............................................................................................ ............................ 02 BANKING, BANK-ACCOUNTS & CHEQUES ............................................... ............................ 02 CHARACTERISTICS & BRANCHES OF ACCOUNTING ............................. ............................ 03 BASIC TERMS IN ACCOUNTING ................................................................. ............................ 04 RULES OF DEBIT & CREDIT ....................................................................... ............................ 07 ACCOUNTS ..................................................................................................... ............................ 08 ACCOUNTING CYCLE ................................................................................... ............................ 09 MODES OF ACCOUNTING ........................................................................... ............................ 10 BOOKS OF ORIGINAL ENTRY ...................................................................... ............................ 11 WHAT IS TALLY? ............................................................................................ ............................ 11 COMPANY CREATION .................................................................................. ............................ 12 SAVING, ALTERING & DELETING COMPANY ........................................... ............................ 13 GATEWAY OF TALLY .................................................................................... ............................ 13 ACCOUNTS INFO., LEDERS, GROUPS & JOURNALS ............................... ............................ 14 ~ 17 VOUCHER TYPES & KEYS FOR THE VOUCHER ENTRY .......................... ............................ 18 ~ 19 SOME KEY COMIBINATIONS ....................................................................... ............................ 19 JOURNAL ENTRIES ....................................................................................... ............................ 21 SOME IMPORTANT TERMS .......................................................................... ............................ 23 INVENTORY INFORMATION ........................................................................ ............................ 27 VALUE ADDED TAX ...................................................................................... ............................ 28 EXERCISES ON TALLY .................................................................................. ............................ 29 ~ 46 SERVICE TAX ................................................................................................. ............................ 46 TDS, FBT ......................................................................................................... ............................ 47 PAYROLL ACCOUNTING .............................................................................. ............................ 48
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BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 2 TALLY 9.0 ADCPM
WHAT is ACCOUNTING (ii)? Accounting is the systematic recorded presentation of the financial activities of the business. Every business has profit motive, it has transactions of financial nature such as: purchasing goods, receiving goods, incurring expenses and receiving income etc. These transactions are financial in nature and can affect the profit of the business. Transactions are classified as: assets, liabilities, Capital, revenue and expenses. Income statements are prepared to ascertain profit or loss of the business. The position statement is prepared to access the value of assets and liabilities of the business. Various statements are prepared & ratios are collated to measure the actual performance of the business. Comparison of the actual performance is compared with the previous performance or desired performance and effective plan for future is made. Accounting is an art of identify, classify, recording, summarizing and interpreting business transactions of financial nature. Book Keeping: Book-keeping is an art as well as science of recording business transactions of financial data related to the business operations in ordered manner with prescribed rules and regulations. All records before preparation of trial balance form are the subject-matter of book- keeping. There are many ways of classifying the systems of accounting. Popular ways are: Single Entry System (,d fofV .kkyh): It is a system of accounting under which only one aspect (Debit or Credit) of the transaction is recorded. It is usually used by small concerns which have very few transactions. Double Entry System (l, fofV .kkyh): In the double entry system of book keeping a complete record of both the aspects of every transaction is maintained. It states that every transaction should always be recognized in two accounts, one as debit and other as credit. Banking: Depositing money in banks and borrowing from banks are legal transactions. Banks are under the control of government. Banks accept deposits from the public as well as from the business community. Any one who saves money for future can deposit his savings in a bank. Bank is a legal organisation. It accepts deposits, which can be withdrawn on demand. It also lends money to individuals and business houses, which need it. Bank Account: A bank account is a financial account between a customer and the bank, where money can be deposited or withdrawn as per customers need. Before opening a bank account, you must consider different types of accounts: Savings Bank Accounts (n iini) (SB a/c): Savings accounts are the easiest and most flexible accounts, if your aim is to save money. This popular type of account also helps you gain an interest of around four percent. Savings bank account allows its users to draw money in form of cheques or through Automatic Teller Machines (ATM) in India. Current Bank Accounts (i iini) (CA a/c): A current account is a non-interest bearing account which is used mainly for business transactions. This cheque-operated account is opened by businessmen, companies and firms purely for business purposes. Fixed Deposit Accounts (ili -i iini) (FD a/c): In this type of account customers can deposit a fixed deposit amount for a fixed period of time at a fixed rate of interest. Money cannot be withdrawn from such accounts before the time period ends, though some banks allow withdrawal after charging a penalty fee. Recurring Deposit (Progressive) Accounts (in| -i iini) (RD a/c): In this type of account, customer has to deposit a certain fixed amount every month, till the end of account. Demat Accounts: Demat or dematerialized accounts are those accounts that are opened for buying or selling stocks and mutual funds in the share market. Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 3 Joint Bank Accounts (n iini): Joint account is a bank account owned by two or more individuals, usually used for business objectives. Members can withdraw money from, or deposit in account, according to the conditions defined at the time of opening of account. What is Cheque? Cheque is an instrument in writing containing an unconditional order, addressed to a banker, sign by the person who has deposited money with the banker, requiring him to pay on demand a certain sum of money only to or to the order of certain person or to the bearer of instrument. Classifications based on types Self Cheque: Self cheque is used to withdraw money from your own account by writing self in the payee section. You can get the money across the counter using this cheque. Bearer Cheque: A bearer cheque is again an uncrossed cheque that can be encashed across the counter of the drawee bank. Here the difference is that anybody who signs behind the cheque can withdraw the money. The bearer cheque is payable to the person specified therein or to any other else who presents it to the bank for payment. Order Cheque: An order cheque is a cheque having the name of the payee (or the receiver) written therein, ordering the bank to make the payment directly to them. Such a cheque is payable to the person specified therein as the payee. Uncrossed / Open Cheque: When a cheque is not crossed, it is known as an Open Cheque or an Uncrossed Cheque. It can be cashed at the drawee banks counter. There is no need for you to deposit the cheque into your account for getting the payment. An open cheque may be bearer cheque or order cheque. Crossed Cheque: Crossing of cheque means drawing two parallel lines on top left hand corner of the cheque with or without additional words like & Co. or Account Payee or Not Negotiable. A crossed cheque cannot encashed across the counter; you have to deposit it in your bank account. Post-Dated Cheque: If a cheque bears a date which is yet to come (future date) then it is known as post-dated cheque. A post dated cheque cannot be honoured earlier than the date mentioned on the cheque. Stale Cheque: If a cheque is presented for payment in a bank after six months from the date of issue, then it is called stale cheque. A stale cheque is not accepted / cleared by the bank. Characteristics of Accounting: 1. Reliability: The Reliability of accounting information is the degree of correspondence between the information conveyed about the transactions and the information displayed. Reliable information should be free from errors and biases. It should faithfully represent what it is meant to. 2. Relevance: To be relevant, information must be available on time. It must help in prediction and feedback and it must influence the decisions of users by confirming or correcting their past evaluations. 3. Understandability: Decision makers should be able to interpret accounting information in the sense as it is prepared and conveyed to them. A message is said to be effectively communicated when it is interpreted by the receiver in the same sense in which the sender has sent it. 4. Comparability: Users of financial reports should be able to compare various aspects of an entity over different periods and also with other entities. Branches of Accounting: Economic development and technological advancement have resulted in an increase in the BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 4 TALLY 9.0 ADCPM
scale of operations of business, leading to the advent of the company form of organization. As management functions become complex, the importance of accounting increases. Some special accounting branches which are developed now days are explained below: Financial Accounting (l-n|ii): The purpose of financial accounting is keep to a record of all financial transactions so that: The profit earned or loss sustained by the business during an accounting period can be worked out. The financial position of the business at the end of the accounting period can be ascertained. The financial information required by the management and other interested parties can be provided. Cost Accounting (innii): The purpose of cost accounting is to analyze the expenditure to ascertain the cost of various products manufactured by the company and fix the price of the final product. It also helps in controlling the costs and providing necessary costing information to management to enable decision making. Management Accounting (i|ii): The purpose of management accounting is to assist the management in taking rational policy decisions. It also helps to evaluate the impact of past management decisions and actions. Tax Accounting ( ii): There are many taxes, which are imposed by central or state governments; as: sales tax, income tax, etc. Tax accounting provides different formats for preparing accounts of these taxes. Basic Terms in Accounting: Entity (l-n-): Entity has a definite individual existence. Business entity is an identifiable business enterprise such as Super Bazaar and so on. An accounting system is always devised for a specific business entity. Transaction (): Transaction is an event involving some value between two or more entities. It can be a purchase of goods, receipt of money, payment to a creditor, incurring expenses and so on. It can be either a cash transaction or a credit transaction. Assets (-l-n): The valuable things owned by the business are called assets. Assets are the economic resource of an enterprise, which can be expressed in the monitory terms. Assets are the following types: Fixed Assets (-ii| i -l-n): These assets are tangible assets, which are for long-term use in the business. These assets are long-lived resources, which are used in the production of finished goods in the business, they are not meant for direct sale. These assets increase the profit earning capacity of the business. Example: buildings, land, equipments, machines, furniture, vehicle, fixtures, etc. Floating Assets (-ii| i -l-n): Floating assets also known as circulating, fluctuating, or current assets, which change these values constantly. Example: Cash-in-hand, Cash-at-Bank etc. Fictitious Assets (i-nl -l-n): These are those assets, which do not have physical form; they do not have any real value. These assets are the revenue expenditure of Capital nature, which are also termed as the first revenue expenditure. Intangible Assets (-n -l-n): Those assets which are not physical assets like equipment and machinery but are valuable because they can be licensed or sold Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 5 outright to others. They include cost of organizing a business, obtaining copyrights, registering trademarks, patents on an invention or process and goodwill. Normally these assets cannot purchase and sold in the open market. Liquid Assets (n -l-n): Liquidity refers to count ability in cash. Liquid asset are those assets, which can be converted into cash at short notice. Example: Cash in hand, Cash at Bank, debtors, bills receivable etc. Capital ( |): It is that part of bill, which is used for further production. The Capital consists of all current assets and fixed assets. Cash in hand, Cash at Bank, Building, Plant and Machinery, Furniture etc. are the Capital of the business. Capital should not necessary to be in cash. Formula: Liability or Equality (il-): Liabilities are the obligation or debts by the enterprise in future in the form of money or goods. It is the profiteers and creditors claim against the assets of the business. Purchase (): It returns business to the firm, either purchase business goods for sell or purchase raw material for the manufacturing of the articles being sold by the firm. Example: Purchase of copies, pencil, files etc. costing Rs 20,000 is termed as purchase in the business. Purchase of Assets is not the purchase in accounting terminology, as these Assets are not meant for sale. Sale (l): The ultimate end of the goods purchased or manufactured by the business is their sale. It includes both cash and credit sales. In accounting terminology sales means the sale of goods, never the sale of assets. The maintenance of proper and complete record of sale is necessary because the profit or loss is associated with the amount of sale. Purchase Return or Return Outward (i|): It is that part of the purchases of goods, which is returned to the seller. This return may be due to unnecessary, excessive, and defective supply of goods. It may also result, if the supplier violets terms and condition of the order and agreement. Hence, in order to calculate net purchase, purchase return is deducted from purchases. Purchase return also known as return outwards because it is return of goods outside the business. Sales Return or Return Inward (li|): It is that part of sales of goods, which actually returns to us by purchasers. This return may also be due to expressive, unnecessary, or defective supply of goods or violation of terms and agreement. It is also known as return inward. To calculate net sales, sale return is deducted from sales. Goods (-i): Articles purchase for sale by the business or for use in the manufacture of certain other goods as raw material are known as goods. Example: Furniture will be goods for the firm dealing in furniture but it will be assets for the firm dealing in stationery. Stock (ii): The goods available with the business for sale on a particular date are termed as stock. It increases, decreases, or keeps on changing. In accounting, we use the term stock widely as opening stock or closing stock. Therefore, it comes under the current assets. Profit (ii): Profit is the excess of revenues of a period over its related expenses during an accounting year. Profit increases the investments of the owners. Gain (l,): Gain is a profit that arises from events or transactions which are incidental to business such as sale of fixed assets, appreciation in the value of an asset. Working Assets = Current Assets - Current Liability BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 6 TALLY 9.0 ADCPM
Loss (ril): The excess of expenses of a period over its related revenue is termed as loss. It also decreases the owner equity. It refers to money/moneys worth lost without receiving any benefit in return. Discount (s-): Discount is the deduction in the price of goods on sale. It is offered in two ways. Offering a deduction of an agreed percentage on the list of price at the time of the sale is one way of giving discount. Such a discount is called Trade discount. It is generally offered by manufactures to wholesalers and by wholesaler to retailer. After selling the goods on credit basis, debtors may be given a certain deduction in the amount due it they pay the amount within the stipulated period or earlier. This deduction is given at the time of payment on the amount payable. Thus, it is called Cash discount. Cash discount is an incentive that encourages debtors to make prompt payments. Revenue (in i): In accounting, Revenue means the amount realized or received from the sale of goods. Revenue is also used to receive the amount of rent, commission, and Discount received etc. Such receipt should be revenue receipts. Revenue is concerned with receipt or receivable in the day-to-day working of the business. Income is calculated by deducting expenses from the revenue. Amount received from sale of assets or borrowing loan is not revenue. Expense (i): Generally income is the foremost objective of every business. The firm has to use certain goods and services to produce articles, sold by it. Payment for these goods and services is called expense. Cost of raw material for the manufacture is goods or the cost of goods purchased for sale, expenses incurred in manufacturing or acquired goods such as: wages, carriage, freight, and amount spent for selling and Discount attributing goods such as salaries, rent, advertising, insurance etc are known as expenses. Expenses are of two types: Direct Expense (-i i): These expenses are related with the production (factory). The examples of Direct Expenses are: Freight charges Carried charges Wages Installation of Machinery Indirect Expense (-i i): These expenses are related with the office. The examples of Indirect Expenses are: Rent Paid Salary Paid Discount Paid Commission Paid. Proprietor (-i-|): An individual or a group of persons who undertake the risk of the business are known as proprietors. They invest their firms into the business as Capital. In case of profit, proprietors Capital increases. In case of loss, the proprietors Capital decreases. Solvent (-): Solvent are those persons and firms who are capable of meeting their liabilities out of their own resources. Debtor (i): The term debtors, represents the persons or parties who have purchased goods on credit from us and have not paid for the goods sold to them. Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 7 For example: If goods worth ` 20,000 has been sold to Mahesh on credit, he will continue to remain the debtor of the business till he does not pay the full payment. Creditor (i): In addition, to cash purchases the firm has to make credit purchase also the sellers of goods on credit to the firm are known as creditor for goods. Creditors are the liability of the business. They will continue to remain the creditors of the firm so for the full payment is not made to them. Creditors may also be known as creditors for expense In case certain expense Such as salaries, rent, repairs etc. remain unpaid during the accounting period. It will be termed as outstanding expense Insolvent (lili): All business firms who have been suffering losses for the last many years and are not even capable of meeting their liabilities out of their assets are financially unsound. Drawings (iri): Amount or goods withdrawn by the proprietor for his private or personal use is termed as drawing. The cost of using business assets for private or domestic use is also called drawing. For example: Use of business Car for domestic use. Voucher (i): The documentary evidence in support of a transaction is known as Voucher. For example, when you buy goods for cash you get a cash memo. When you buy goods on credit, you get an invoice. Rules of Debit & Credit Every accounting transaction involves assets, liabilities and Capital individually or collectively. There is a change in the value of assets, liabilities, Capital, due to the business transaction of financial nature. We use the term debit & credit in order to show the changes in the value of these basic accounting terms i.e. Assets, liabilities, and Capital. Debit means decrease in proprietors equity, Credit means increase in proprietors equity. Conventional Approach of Assets: Every business owns and possesses assets. The business makes use of these assets for earning income. The increase or decrease in the sense must be recorded systematically so that true financial position of the business may be assessed. Example: Cash in Hand, Cash at Bank, Stock of Goods, Building, Plant, Machinery, Furniture, Debtors, etc. Rules of Debit & Credit Debit increase in the assets Credit decrease in the assets It means when the assets is increasing then it should be debited and when is decreasing then it should be credited. Expenses & Losses: Debit increase in expenses & losses Credit decrease in expenses & losses Liability: Debit decrease in the Liability Credit increase in the Liability BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 8 TALLY 9.0 ADCPM
Capital: Debit decrease in the Capital Credit increase in the Capital Revenue & Profit: Debit decrease in revenue & Profit Credit increase in revenue & Profit ACCOUNTS (iin ): Accounts are classified as personal account and impersonal account.
Personal Account (lnnn iini): The account which related to an individual firm or company or group of persons, are called personal account. Personal accounts are further classified into: Natural Personal Account: It represents human beings such as Ram a/c, Shyam a/c etc. Artificial Personal Account: Persons do not have Physical Contrasting as human being but they works as Personal Account these a/c are related to firms, Company, Industry, factory etc. Example: Ram and sons a/c, Sharma and brothers a/c, Elfin Computer Education a/c, etc. represent Personal a/c; A Particular persons or group of persons. Representative Personal Account: This represents a particular person or group of persons such as outstanding wages a/c. Here instead of using the name of the person whose wages is pending, we used the term outstanding wages account other examples are outstanding salary a/c prepaid wages a/c etc. Example: If the salaries for the month of December are not paid to the employees than the amount payable of these employees will be added under one common title that is salary outstanding a/c. Hence, salary outstanding a/c represents the a/c of all persons to whom salaries have to pay. Therefore, this term is known as representative personal a/c other examples are prepaid expense (Current Assets). Rule of Debit & Credit in case of Personal a/c: Personal a/c either receive something or give something in a business, when goods are sold to them or amount pay to them, they are the receiver. In the someway, personal a/c are given, when goods are purchased from them or amount is received from them. Hence for personal a/c the rule of debit & credit Debit the receiver, Credit the giver Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 9 Example: Goods sold to Ram. Ram a/c receive the goods therefore it is debited and the sale is credited. Key Date Particular L.F. No. Debit Credit F8 1/4/2010 Ram a/c 250000 To Sale 250000 Example: Goods purchase from Shyam. Here the giver is Shyam so the Shyam a/c is credited and the goods are received, therefore the purchase a/c is debited. Key Date Particular L.F. No. Debit Credit F7 1/4/2010 Purchase a/c Dr. 250000 To Shyam 250000 Impersonal Account (lnnn iini): All those a/c, which are not personal a/c, are known as impersonal a/c. These accounts may be related to Assets, Losses, Expenses, Income, and Gain. Impersonal a/c may be classified as: Real Account (i-nl iini): This a/c is related to the property, in other words real a/c are generally those a/c, which are concerned with the things, which really exist. All those things, which can be seen, touched and have physical construction, shape form and size are Real a/c. Real a/c are also concerned with intangible asset, Goodwill, Patience, Trademark. Example: Cash a/c, Building a/c, Plant a/c, Furniture a/c, Machinery a/c. Rule of Debit & Credit in Case of Real a/c: Real a/c is related to lifeless properties, they are either purchased or sold, it means they either come into the business or go outside the business. Hence, the rule is: Debit what come in Credit what goes out Nominal Account (i-nl iini): This a/c is just reverse to the real a/c. Real a/c general have existence but nominal a/c do not have any existence, that is these a/c do not have any form, shape and physical construction. These accounts are related to Income, Expenditure, Gain, and Losses. Example: Wage a/c, Salaries a/c, Rent a/c, Interest a/c, Discount a/c, Advertisement a/c etc. Rule of Debit & Credit in Case of Nominal a/c: Nominal a/c is related to expenses or losses & income or gains. Hence the rule is Debit all expenses or losses Credit all income or gain Accounting Cycle: The term Accounting Cycle refers to the sequence of accounting procedures followed in recording, classifying and summarizing business transactions. It starts with identification of business transaction and ends with the adjustment entries for period and outstanding expenses. The process of accounting is given below: Recording: The first step of accounting is to identify business transactions and maintain them in appropriate books of accounts in a systematic manner. Original recording must be done in a book called Journal. Classifying: It is the process of grouping of entries of similar nature in one place. The classification is done in a book called Ledger. BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 10 TALLY 9.0 ADCPM
Summarizing: The next step is summarizing. Summarizing is the process of presenting the classified data in a manner understandable to the user. It involves the preparation of profit and loss account and balance sheet. Analysis and Interpretation: The results of financial statement like profit and loss account and balance sheet are analyzed in such way that the users can make a meaningful conclusion about the financial position of the business. Communication: The accounting information is to communicate in a proper form to the persons interested in appropriate time. Mode of Accounting: J ournals (ii-i): Journal is a book of original entries in which transactions is first recorded in the order in which they occur. The process of recording transactions in a journal is turned as journalizing and the transactions entered in the journal are called journal entries. Accounting Period: A period of time, for which a financial statement is created, is called an Accounting Period. Posting (ini|): Posting is the process of transferring entries from Journal to the Ledger. In other words it is the grouping of all the transaction in respect of one particular account at one place for further accounting process. Trial Balance (n-): The trial balance is a statement showing the balances of all General/Ledger accounts. It is prepared to know the arithmetical accuracy of ledger accounts. If total of debit balances is equal to the total of credit balances, it is presumed that there is no mistake in accounting and book- keeping. It provides a summary for all business transaction and provides help in preparing financial statement. The format of Trial Balance is as follows: Financial Statement (l-n| li): A financial statement is a periodic report prepared from the accounting records of a company. Financial statement includes the profit and loss statement, balance sheet and cash flow statement. Financial statements are usually complied on a quarterly basis or annual basis. For reporting convenience, the profit and loss account is divided into: Profit and Loss Account: The profit and loss account gives the net earned by the company after considering expenses incurred over a period. This helps the company monitor and control the costs incurred and improve the efficiency. In other words, the profit and Loss statement shows the performance of the company in terms of profits or losses over a specified period. The Profit and Loss statement can be classified into: Gross Profit ( ii): Gross profit is arrived at after considering the core activities of the company. It is expressed as: Gross Profit = Net Sales - Cost of Sales Net Profit (kq) ykHk): Net profit is arrived after considering the other administrative costs incurred for the period. It is expressed as: Net Profit = (Gross Profit +other Income) - (Selling and Administrative Expenses +Taxes +Depreciation +Interest +Other Expenses) Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 11 Trading Account (iil iini): A Trading Account is prepared to arrive at the gross profit earned by the organization over a specified period. This helps the organization to arrive at the cost of its core activity and calculate the direct profit from its operations. Balance Sheet (l-n|l-iln li): Balance Sheet is a statement that summaries the assets, liabilities and owners equity of a business. It gives you the overall picture of the financial activities of a company. The excess of assets over liabilities is the net worth of a business. Two common ending periods to create a balance sheet are the end of a month and the end of the year. The balance sheet provides information to assess a companys: Long term financial strength Efficient day to day working capital management Asset portfolio Sustainable long term performance The balance of all the real personal and nominal accounts are transferred from trial balance sheet and grouped under the major heads of assets and liabilities. The balance sheet is complete when the net profit and loss is transferred from the Profit and Loss account. Books of Original Entry: Cash Book (i r|): The cash book is an accounting book which records cash receipts and disbursements. It is opened with a cash or bank balance at the beginning of the period. Day Book: Day Book shows list of vouchers in chronological order. At Gateway of Tally select Display; select Day Book to get list of all vouchers in day book for the current date. Bank Book: Bank Book shows date wise list of transaction through bank account with opening and closing balance at the end of the period. J ournal Book: Journal Book shows the date wise list of journal vouchers. Journal book shows in the journal register. Select a month to get list of all journal vouchers or the select month. Click F2 (period) and set the period for which you like to get the journal book. Ledger Book: Ledger book shows the transaction of a particular account in chronological sequence, with opening and closing balance for specified period. Sales Book (l r|): In this book amount realized from the sale of goods are recorded. Sales may be cash sales or credit sales. Purchase Book ( r|): In this book the total amount of goods purchased by a business concern on cash or credit for the purpose of sale or use in business is recorded. Sales Return Book (l i| r|): In this book that part of sales of goods, which are actually returns to us by purchasers is recorded. This return may also due to unnecessary or defective supply of goods or violation of terms and agreement, also known as Return Inward. Purchase Return Book ( i| r|): In this book that part of the purchase of goods, which is returned to the seller, is recorded. This return may occur due to unnecessary, excessive or defective supply of goods. It may also result, if the supplier violets terms and conditions of the order or agreement. WHAT is TALLY? Tally is the most popular financial accounting software among the various financial accounting softwares. There are various versions of this software in the market but Tally9.0 and Tally ERP9.0 are the latest and popular version. Tally is software by which accounts are compute in a flicker, entries are done very faster and the balance sheet not only made but also printed, when required. Tally 9.0 helps to business owners to manage their business easily. BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 12 TALLY 9.0 ADCPM
To start Tally 9.0 double click on icon named Tally9 present on the desktop, or press Start button All Program Tally 9 COMPANY CREATION: To start maintenance of accounts in Tally, first you have to create a Company in Tally. On starting Tally at Company Info menu, select Create Company to get Company Creation Screen. Gateway of Tally Company Info Create Company Company Creation You can get Company Info. Screen by pressing shortcut key ALT + F3. Company Creation screen is divided in two main sections. Company Particulars: At top part, Company Information is to be entered as under: Directory: Tally default data Drive and Path is displayed where Tally data would be stored (to keep data at different Directory, press up arrow, and enter the Drive and Path of the folder to keep data files for the Company). Tally skips this field. Name: Enter the name for the company. Mailing Name: Normally it should be same as Name. You may enter different mailing Name as you like to print in external reports. Address: Enter the postal address for the company. You may enter address in several lines. Press Enter at last blank line. Statutory Compliance for: Select the country from the list.
Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 13
State: Select State from the list. Pin Code: Specify the Pin Code of the specified Address. Telephone Number: Enter Telephone Number. E-mail Address: Enter the E-mail address for the company. Currency Symbol: Rs. is displayed in Tally, (`) is used in this book. Maintain: Select Accounts only/Accounts with Inventory (According to your requirement). Financial Year From: Enter Beginning date of Financial Year. Books Beginning From: Normally it is same of Financial Year From, unless you start accounts from middle of Financial year. Base Currency Information: At the bottom, Base Currency symbol: Rs. (for India) is displayed. You dont need to change it. Saving the Company Profile: Click Yes to save the information of company profile (click No to modify any data) or press CTRL + A to save the Company profile directly. Altering the Company Profile: At Gateway of Tally, click ALT + F3 for Company Info Alter Select the Company from the list to get Company Alteration Screen (same as Company creation), modify the company details. Deleting the Company: At Company Alteration screen, press ALT + D and click yes to confirm deletion. The company data would be deleted and you will not get back to company. Gateway of Tally:
BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 14 TALLY 9.0 ADCPM
1. Masters Accounts Info. 2. Transaction Accounting Voucher 3. Import Import of Data 4. Reports Balance Sheet Profit / Loss a/c Ratio Analysis 5. Display Multi Accounts Printing 6. Quit. Accounts Info: After creating the company, if you want to work on the company created by you then select the company name and press enter, the Gateway of Tally menu will be displayed as given above, in which the first option is the Accounts Info. After selecting the Accounts Info. this screen is displayed. Ledger (r|iini): Ledger is the principal book of the accounting system of any organization. It may be in the form of bound register or cards or separate sheets. Ledger is defined as a location of all the accounts debited or credited in journal. In a ledger the transaction of the same nature are classified and grouped together in one place in the form of account. To create ledgers, at Gateway of Tally, select Accounting Info to get Menu. At Accounts Info menu, select Ledger to get Ledger menu. In Tally, you pass all accounting vouchers using Ledgers. However, all Ledgers have to be classified into Groups. It should be noted that Tally automatically creates two ledger accounts cash under the cash-in-hand and profit & loss account under direct primary account. Now you must create all other account. There are no restrictions in ledger creation expect that you cannot create another profit & loss account. Key Date Particular L.F. No. Debit Credit F6 1/1/2010 Cash a/c Dr. 250000 To Capital 250000
Key Date Particular L.F. No. Debit Credit F9 1/1/2010 Purchase a/c Dr 3000 To Mohan 3000 Display the Ledger: You can see the entire ledger which you have create under some groups. To display the ledgers you have to go: Gateway of Tally Account Info Ledger Display Alter a Ledger: Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 15 If you want to change the ledger from the list and enter the new, you have to click Gateway of Tally Account Info Ledger Alter. Now the list of the ledger will be displayed, from here you can easily change or enter the ledger. Delete a Ledger: If you want to delete a ledger from the list of ledgers, then you can do this from the Alter key. To delete the ledger you have to press ALT + D. You do not delete the accounts that have transaction. So if you want to delete an account, which has transaction, you must first delete all its voucher entries. Groups: All the ledger account can be classified into various groups based on their functions. Depending upon the group in which you place the ledger, it performs that function There are 28 predefined groups available in Tally. Out of which 15 groups are primary and 13 groups are subgroups. Bank a/c Bank Occ a/c Bank Odd a/c Capital a/c Cash in Hand Current Assets Current Liabilities Deposits(Assets) Direct Expenses Direct Incomes Duties & taxes Fixed Assets Indirect Expenses Indirect Incomes Investment Loan & Advances Loan (Liability) Provisions Purchase a/c Reserve & Surplus Sales a/c Secured loan Stock in Hand Sundry Creditors Sundry Debtors Suspense a/c Unsecured Loans Retained a Name To insert Voucher entry, you will have to create Ledger. Ledger should come under particular Groups, which are already defined in the Tally Software. Some groups are shown above: J OURNAL (ii-i) The word Journal has been derived from the French word Jour. Journal is a book of prime record of all transactions conducted by the business. The Journal is the first place, where a transaction is recorded; it is called the book of original entry. Each transaction is first recorded in the journal and then posted the appropriate entries to concerned accounts in the G/L. The advantage of the journal is that it shows all the accounts that are affected by a transaction, and the amounts the appropriate accounts are debited and credited, all in one place. Business transaction of financial nature are studied and classified as asset, liabilities, capital, revenue, and expenses. Accounts are debited or credited in the Journal according to the rule of debit and credit applicable to the specific a/c. Question: Create a Company and then create the following Ledgers under their corresponding Group: Name of Ledger Name of Group Sale Sale A/C Purchase Purchase A/C Ravi (Debtor) Sundry Debtor Mohan (Creditor) Sundry Creditor BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 16 TALLY 9.0 ADCPM
Rent Paid Indirect Expense Commission Received Indirect Income Mahaveer (Debtor) Sundry Debtor Salary Paid Indirect Expense Wages Direct Expense Furniture Fixed Asset Freight Charges Direct Expense Tally is an accounting software, which is use to create balance sheet of a company. To create a balance sheet first of all, you have to create your company for the particular financial year. After this, create Ledgers under particular groups, with the help of the group entries and Vouchers. If your Voucher entry is correct then the balance sheet is automatically created. Question: Name of Ledger Name of Group Advertisement Indirect Expense Bad Debts Indirect Expense Bank Account Bank a/c Bank Charges Indirect Expense Capital Capital a/c Carriage Direct Expense Cash at Bank Current Assets Cash in Hand Current Assets Charity Indirect Expense Closing Stock Current Assets Coal & Gas Direct Expense Commission Given Indirect Expense Commission Received Indirect Income Creditor Sundry Creditor Debtor Sundry Debtor Depreciation Indirect Expense Discount Given Indirect Expense Discount Received Indirect Income Drawing Capital a/c Electricity Charges Indirect Expense Factory Rent Direct Expense Furniture Fixed Asset Goods Current Assets Installments Direct Expense Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 17 Insurance (Factory) Direct Expense Interest on Bank over Draft Indirect Expense Interest of Capital Indirect Expense Investment Fixed Assets Land & Building Fixed Assets Loan Current Liability Machinery Fixed Assets Power Lighting Direct Expense Printing& Stationery Indirect Expense Purchase Purchase a/c Purchase Return Purchase a/c Rent Indirect Expense Repair (Office) Indirect Expense Sales Sale a/c Sale Return Sale a/c Salary Indirect Expense Wages Direct Expense Note: Cash and Profit & Loss a/c Ledgers are already created in Tally. Question: Create a Company with name xyz create are following Ledger. Capital Capital a/c Furniture Fixed Asset Land Fixed Asset Advertisement Indirect Expense Debtor Sundry Debtor Salary Indirect Expense Wages Direct Expense Freight Charges Direct Expense Sale Sale a/c Purchase Purchase a/c Commission Received Indirect Income Rent Indirect Expense Discount Indirect Expense Sale Return Sale a/c Purchase return Purchase a/c Printing stationery Indirect Expense BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 18 TALLY 9.0 ADCPM
Vouchers: Accounting is based on the vouchers. These form the main input for the computerized accounting. These outputs are in the form of reports. Tally9.0 recognizes a number of vouchers, which can be used to enter the data (Data-Entry). Some of them are listed below with their keyboard shortcuts: Vouchers Types: Keys Voucher Types F5 Payment Voucher F6 Receipt Voucher F4 Contra Voucher F8 Sales Voucher a. Sales Order b. Sales Voucher/Invoice c. Delivery Notes d. Rejection In F9 Purchase Voucher a. Purchase Order b. Purchase Voucher c. Good Receipt notes d. Rejection Quit F7 J ournal Voucher CTRL + F8 (F7) a. Credit Note CTRL + F9 (F7) b. Debit Note c. Journal F10 Memo Voucher a. Reversing Journal ALT + F7 Stock J ournal F10 Physical J ournal Vouchers and their Use: Payment Voucher (F5): In this voucher all the entries related to payments will be done. Receipt Voucher (F6): All the entries of Receipt (such as capital) will be done in this voucher. Contra Voucher (F4): This voucher is used when the company withdraws cash from the bank or transfer funds from one bank account to another. Memo Voucher (F10): This is a non accounting voucher and the entries made using it will not affect your accounts. Reversing J ournal (F10): This is special journal that is automatically reverse after a specified date. They exist only till that date and are effective only when called for in reports like the balance sheet. Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 19 Sales Voucher (F8): All the sales transactions of the company including cash sales are entered using this voucher. Purchase Voucher (F9): All purchase transactions are entered in purchase voucher including cash purchase. Receipt Note Voucher (F9): This voucher is used to records receipt of new stock from suppliers. Rejection In (F9): It is used to record a goods received back that was rejected by a customer. Delivery Notes (F8): It records the delivery of goods to customers. Rejection Out/Quit (F8): It is used for recording of goods that are rejected and returned to the suppliers. Stock J ournal (ALT + F7): It is used to transfer material or stock from one location. Physical Stock (F10): This voucher is used to record actual stock as physically verified or counted. If you have configured your inventory vouchers to ignore physical stock difference, thus physical stock vouchers will really before recorded purposes only. Credit Note (CTRL +F8): If you set YES to the option Use Debit/Credit Note in F11 feature, you can select this voucher on clicking F7 or CTRL + F8 buttons. It is actually entered to credit customers account. When a customer returns the goods get credit for the value of the goods returned. A credit note is sent to him intimating that his a/c has been credited with the value of the goods returned. Debit Note (CTRL +F9): If you set YES to the option Use Debit/Credit Note in F11 feature, you can select this voucher on clicking F7 or CTRL + F9 buttons. It is entered to debit suppliers account. When the goods are returned (purchase return) to the supplier, or the supplier has granted credit to you on account of rate difference or discount. A debit note is sent to him indicating that his a/c has been debited with the amount mentioned in the debit note. Function keys and their combinations: Key Used for Description F1 Select Company Select the company from the list. F2 Change Date Changes the date of the voucher. F3 Statutory &Taxation At Company Features screen. ALT + F1 Shut Company Close the company at all screens. ALT + F2 Change the Period Changes the period of the accounting year. ALT + F3 Display Company Information It opens Company Information screen. ALT + A To Add a voucher Adds a voucher after the one where you positioned the cursor. ALT + D To delete a voucher
To delete a master
To delete a column in any columnar report At Voucher and Master (Single) alteration screens. Masters can be deleted subject to conditions, as explained in the manual. All the reports screen which can be viewed in columnar format. BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 20 TALLY 9.0 ADCPM
Key Used for Description ALT + E To export the report in ASCII, HTML OR XML format At all reports screens in TALLY ALT + I To insert a voucher To toggle between Item and Accounting invoice Inserts a voucher before the one where you positioned the cursor. ALT + L To select the Language Configuration At almost all screens in TALLY. ALT + K To select the Keyboard Configuration At almost all screens in TALLY. ALT + O To upload the report at your website At all reports screens in TALLY. ALT + N To view the report in automatic columns At all the reports where columns can be added ALT + P To print the report At all reports screens in TALLY. ALT + R To remove a line in a report At all reports screens in TALLY. ALT + R To Register Tally At almost all screens in TALLY. ALT + S To bring back a line you removed using ALT + R At all reports screens in TALLY. ALT + U To retrieve the last line which is deleted using Alt + R At all reports screens in Tally ALT + X To cancel a voucher in Day Book/List of Vouchers At all voucher screens in TALLY ALT + 2 To Duplicate a voucher Creates a similar voucher where you positioned the cursor. CTRL + ENTER To alter a master while making an entry or viewing a report At voucher entry and alteration screens / At all reports CTRL + B To select the Budget At Groups / Ledgers / Voucher Types / Currencies (Accounts Info) creation and alteration screen CTRL + E To select the Currencies At Groups / Ledgers / Voucher Types / Currencies (Accounts Info) creation and alteration screen CTRL + G To select the Group At Groups / Ledgers / Voucher Types / Currencies (Accounts Info) creation and alteration screen CTRL + I To select the Stock Items At Stock Group / Categories / items / Voucher Types / Units of Measure (Inventory Info) CTRL + L To select the Ledger/To mark a At Groups / Ledgers / Voucher Types / Currencies (Accounts Info) creation and Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 21 Key Used for Description Voucher as Optional alteration screen CTRL + R To repeat narration in the same voucher type At creation / alteration of voucher screen CTRL + S Allows you to alter Stock Items master At Stock voucher Report and Godown Voucher Report CTRL + U To select the Units At Stock Groups / Stock Categories / Stock Items. CTRL + V To select the Voucher Types To toggle between Invoice and Voucher At Groups / Ledgers / Voucher types Page Up Display previous voucher during voucher entry/alter At voucher entry and alteration screens Page Down Display next voucher during voucher entry/alter At voucher entry and alteration screens ENTER To accept you type into a field. To get a report with further details of an item in a report. You have to use this key at most areas in TALLY. ESC To remove typed value from a field / To come out of a screen To reject a voucher or master. At almost all screens in TALLY. Explanation of certain J ournal Entry Transaction 1: Started or commenced business with ` 20000/- Key Date Particular L.F. No. Debit Credit F6 1/1/2010 Cash 20000 To Capital 20000 Explanation: Business has receipt cash as Capital. Cash is an asset. This transaction is increasing the cash. Therefore cash a/c should be debited because the rule of debit & credit is: Debit the increase & Credit the decrease. In each general entry the transaction, involve minimum two a/c. In this transaction two a/c are: Cash a/c and Capital a/c. Capital a/c should be credited because the rule is Debit what comes in & Credit what goes out There is also one rule Debit the receiver & Credit the giver Hence Cash is the receiver and Capital a/c is the giver. Transaction 2: Goods purchased for ` 5000/- Cash purchases for ` 5000/- Goods purchased from Mohan for cash ` 5000/- Key Date Particular L.F. No. Debit Credit F5 1/4/2010 Purchase a/c Dr. 5000 To Cash 5000 Explanation: In this transaction of cash purchase of goods cash will decrease and credited BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 22 TALLY 9.0 ADCPM
because the cash is an asset all the assets are credited when there is decrease in them. The other a/c involves in the transaction is goods a/c that is the purchase a/c. The transaction will increase the goods and does debit. Transaction 3: Goods purchase from Mohan ` 3000/- Goods purchase from Mohan on credit ` 3000/- Key Date Particular L.F. No. Debit Credit F9 1/4/2010 Purchase a/c Dr. 3000 To Mohan 3000 Explanation: In the case of purchases goods will increase so the purchase a/c is to be debited. The payment for goods has not being made to Mohan. Therefore, it is still the liability of the business. Hence, Mohan is the sundry creditor of the firm. Mohan a/c as the liability of the business will be credited because liability a/c is credited when there is an increase in the liability. Transaction 4: Cash sale for ` 7000/- Goods sold for cash ` 7000/- Goods sold to Ajay for cash ` 7000/- Key Date Particular L.F. No. Debit Credit F6 1/4/2010 Cash a/c Dr. 7000 To Sale 7000 Explanation: In this transaction the two a/c are cash a/c and goods a/c both of these a/c are assets so they will be debited for increase and credited for decrease. Hence, cash a/c is debited and the sale a/c is credited. Transaction 5: Goods sold to Mohan ` 4000/- Goods sold to Mohan on credit ` 4000/- Key Date Particular L.F. No. Debit Credit F8 1/4/2010 Mohan a/c Dr. 4000 To Sale 4000 Explanation: It is credit sale, it will increase debtor, an assets. Mohan a/c will be debited as assets. Sale of goods will decrease an asset; therefore, the sale a/c is credited. Transaction 6: Furniture Purchase ` 3000/- Key Date Particular L.F. No. Debit Credit F5 1/4/2010 Furniture a/c Dr. 3000 To Cash 3000 Transaction 7: Machinery sold for ` 12000/- Key Date Particular L.F. No. Debit Credit F6 1/4/2010 Cash a/c Dr. 12000 To Machinery 12000 Transaction 8: Salary Paid for ` 3200/- Key Date Particular L.F. No. Debit Credit F5 1/4/2010 Salary a/c Dr. 32000 To Cash 32000 Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 23 Explanation: Salary paid to employees is an expense of the business, according to the rule of debit & credit expense are debited for increase and credited for decrease. As salary is an expense increasing therefore salaries a/c is debited the other a/c is cash a/c, which is an asset, and its decreasing therefore cash a/c is credited. Transaction 9: Rent receipt ` 2000/- Key Date Particular L.F. No. Debit Credit F6 1/4/2010 Cash a/c Dr. 2000 To Rent 2000 Explanation: Cash a/c is increasing therefore it is debited the other a/c is rent a/c which is income for business rent a/c will be credited because income a/c are credited for increase and debited for decrease. Transaction 10: Amount receipt from Mohan ` 1000/- and Discount allowed 10% Key Date Particular L.F. No. Debit Credit F6 1/4/2010 Cash a/c Dr. 900 Discount a/c 100 To Mohan 1000 Explanation: The transaction involves cash a/c (asset), Discount a/c (Indirect expense) and Mohans a/c (Sundry debtor). Cash is increasing so cash a/c will be debited. Discount is an expense and increasing so it will also be debited Mohan a/c is decreasing so it will be credited. Transaction 11: Amount paid to Shyam ` 2000/- and allowed discount ` 20/-. Key Date Particular L.F. No. Debit Credit F5 1/4/2010 Shyam a/c Dr. 2000 To Cash 1980 To Discount 20 Explanation: Payment has been made to Shyam (Sundry Creditors) is liability so payment to them will reduce liability of the firm. Hence, the creditors a/c that is the Shyams a/c will be debited as per rule of the liability, the debit increase in the liability. Cash a/c will be credited because it is decreasing; Discount a/c is the revenue a/c for which the rule is Debit decrease and Credit increase. Hence, Discount a/c will be credited. SOME IMPORTANT TERMS: Cash Discount ( s-): This Discount is allowed to the customer for making prompt (Cash) payment. In other words, cash Discount is allowed only if the customer makes the payment with in a fixed period. Such Discount motivates the customer to make the payment at the earliest. As the Discount is allowed at the time of making payment, so the entry for cash Discount is recorded along with the entry for the payment. Discount Paid is a Ledger under indirect expense group Discount Received is a Ledger under indirect income group Cash Discount is of two types for the business. 1. Discount Received (Incase the business is purchase goods) 2. Discount Paid (Incase the business is selling its goods) BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 24 TALLY 9.0 ADCPM
Bad Debts (i ~i): When the goods are sold to a customer on credit and if the amount becomes irrecoverable due to his insolvency or some other reason, the amount not recovered is called bad debts. For recording it, bad debts a/c is debited and the customer a/c is credited. Example: Ravi who owed us ` 10000/- is declared insolvent and 30p in a rupee is received from his estate the Journal entry will be. Key Date Particular L.F. No. Debit Credit F6 1/4/2010 Cash a/c 3000 Bad debts 7000 To Ravi 10000 Being Ravi is declared as an insolvent so received 30 p in a rupee. Bad Debt Recover: Sometimes it so happens that the bad debts previously written off are subsequently recovered. In such cases the Journal entry will be. Key Date Particular L.F. No. Debit Credit F6 1/4/2010 Cash a/c 7000 To Bad debts recover 7000 Outstanding Expenses (iii): It is quite common for a business enterprise to be lift with some expenses which are fat to be paid at the end of the accounting year due to one reason or the other. Such expenses are termed as outstanding expenses. These are the expenses, which should have been paid during the current year but which have not been paid. Example: If an employee has paid salary at the rate of ` 1000/- per month and up to 31 Dec, only 11 month salary amounting to ` 11000/- has been paid to him, ` 1000/- will be outstanding salary. The general entry will be. Key Date Particular L.F. No. Debit Credit F7 1/4/2010 Salary a/c 1000 To Outstanding Salary 1000 Outstanding salary a/c is a liability; it has been credited, because, it is a representative personal a/c, representing the employees to whom salaries have to be paid. Trade Discount (iil s-): The Discount allowed by sells to its customer at a fixed percentage on the listed price of goods is termed as trade Discount no separate entry is passed for the trade Discount as it is deducted from the cash memo or invoice of the goods. Example: If a Trader sales goods of the list price of ` 10000/- at 20% trade Discount for cash of the entry will be as: Key Date Particular L.F. No. Debit Credit F6 1/4/2010 Cash a/c 8000 To Sale 8000 Drawing (iri): Amount or goods withdrawn by the proprietor for his private or personal use is termed as drawing. Business assets for personal or domestic use is also called drawing, use of official car for domestic use or use of business premises for residential purpose is also termed as drawing. Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 25 Drawing should be created as a Ledger under the group Capital that means liability of the business. A certain example of drawing is as under: 1. Amount drawn by the proprietor for personal use, 2. Goods taken by the proprietor for domestic use, 3. Purchase pocket transistor for proprietors son, 4. Using business vehicles for domestic use, 5. Using business premises for residential purpose, The Journal entry for Amount withdrawn by the proprietor for personal, domestic, or private use, Key Date Particular L.F. No. Debit Credit F5 1/4/2010 Drawing a/c 5000 To Cash 5000 Explanation: In this transaction, Capital will reduce with the amount drawn, so drawing a/c will be debited as the rule goes debit the decrease of liability and credit the increase of liability. Cash is an asset and it is decreasing, so it is credited. Transaction: Goods taken by the proprietor for personal use. Key Date Particular L.F. No. Debit Credit F7 1/4/2010 Drawing a/c 1000 To Purchase 1000 Prepaid Expenses: There are certain expenses which are related to the next year but have been paid during the current year in advance. These are called prepaid expenses; the benefit of such expense will be received during the next accounting year. Example: The insurance premium amounting to ` 1200/- is paid on 1.4.93 for 1-year entry on 1.4.93 will be. Key Date Particular L.F. No. Debit Credit F5 1/4/2010 Insurance Premium 1200 To Cash 1200 When the books will be closed on 31.12.93, insurance premium for three months that is from 1.1.94 to 31.3.94 will be treated as prepaid insurance and the following entry will be passed for it on 31.12.93 Key Date Particular L.F. No. Debit Credit F5 1/4/2010 Prepaid Insurance 300 To Insurance Premium 300 The prepaid expense a/c is an asset, it has been debited because it is a representative personal a/c and represents those personal to whom payment has been made in advance. Depreciation (-~r,-~): It is the permanent and containing decrease in the value of an asset. Depreciation is a nominal a/c, which presence a loss and should be debited the asset (of which the depreciation count) will be credited because its cost is decreasing, it is treated as expense. Depreciation account is a Ledger under the group indirect expense, it is an account of wear & tear & passage of time. BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 26 TALLY 9.0 ADCPM
Depreciation on furniture ` 2000/- the Journal entry will be. Key Date Particular L.F. No. Debit Credit F7 1/4/2010 Depreciation 2000 To Furniture 2000 Interest on Capital: In order to ascertain the true efficiency of the Business, it is a normal practice to charge business with interest on proprietors Capital. Profit left after charging the amount of such interest are the real profits earned by the business. Such interest is a loss from the point of view of the business and therefore according to the rule of nominal a/c, interest a/c is debited in the Journal entry. The amount of such interest is the gain from the point of view of the proprietor. His Capital is increase by the amount of interest therefore the Capital a/c is credited in the Journal entry. Example: Provide 12% interest on Capital amounting to ` 100000/-. Key Date Particular L.F. No. Debit Credit F7 1/4/2010 Interest on Capital 12000 To Capital 12000 Interest on Drawing: If the firm allows interest on Capital, it should also charged interest on drawing made by the proprietor, such interest is an expense for the proprietor and again to the business. Hence the entry will made by debiting the drawings a/c and crediting the interest a/c. The Journal entry will be: Key Date Particular L.F. No. Debit Credit F7 1/4/2010 Drawing 1000 To Interest on Drawing 1000 Some Important Transaction 1. Drawing in Goods: Sometime the proprietor withdraw goods from the business for his personal use. Key Date Particular L.F. No. Debit Credit F7 1/4/2010 Drawing 100 To Purchase 100 2. Goods given away as Charity: Charity is an expense of the business and the charity a/c will be debited Goods are going out of the business at cost price hence purchased (asset) is reduced hence it is credited the Journal entry will be. Key Date Particular L.F. No. Debit Credit F7 1/4/2010 Charity 1000 To Purchase 1000 3. Goods Discount Distributed as Free Sample: The Journal entry will be: Key Date Particular L.F. No. Debit Credit F7 1/4/2010 Free Sample 1000 To Purchase 1000 Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 27 4. Loss of Goods by Theft or Loss of Goods by Fire: The Journal entry is: Key Date Particular L.F. No. Debit Credit F7 1/4/2010 Loss by Theft / Fire 1000 To Purchase 1000 5. The Debtor (*) Returned Goods Sold to him: The Journal entry will be: Key Date Particular L.F. No. Debit Credit F7 1/4/2010 Sale Return 1000 To X 1000 6. Proprietor Return the Goods to Sushil: The Journal entry will be: Key Date Particular L.F. No. Debit Credit F7 1/4/2010 Purchase Return 1000 To Sushil 1000 Some Important Option: 1. If you want to delete Voucher entry Go to balance sheet go to the Voucher and then press Alt + D 2. To change the date period: type anywhere Alt + F2 3. Company creation: Alt + F3 Inventory Information The different steps to do inventory are: 1. Create a company with the feature accounts with inventory. 2. Go to Accounting Vouchers F11 F2 (inventory) and in the option separate discount column on invoices click Yes and exit from the accounting Vouchers. 3. Insert inventory information a. First of all, create group if any. Example: Electric or household under primary. b. Then insert units. Example: Pieces, Meter, Kg., etc. c. Then insert items information with their opening balance. 4. Now create Ledgers. 5. Now enter the accounting Vouchers. a. If the discount is given per invoice that is called all the items single discount percentage allowed then this entry will be done using these function keys. F5 Cash Purchase F6 Cash Sales F8 Credit Sales F9 Credit Purchase b. If the discount is given per item then the Voucher entry is done only by F8 or F9. F8 Cash & Credit Sale F9 Cash & Credit Purchase BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 28 TALLY 9.0 ADCPM
In Cash Sale & Purchase, party account should be cash. Stock Groups: Stock items can be grouped together under Stock Groups to reflect their classification based on some commonality. Grouping would enable easy location and reporting of stock items in statements. Hence, items of a particular brand can be grouped together so that you can extract stock of all items of their brand. To create stock group: Gateway of Tally Inventory Info Stock Groups Stock Items: Stock items are the primary entity. You can use stock items while recording their receipts and issues. This is lowest level of the information about your inventory. Each item that is required to be accounted should be created as stock. In fact you have to create a stock ledger for each item and Tally calls this account Stock Item. To create the Stock Item: Gateway of Tally Inventory Info Stock Items VAT (VALUE ADDED TAX) Vat is a consumption tax which is enforced at each stage of production based on the value added to the product at that stage. Vat was launch on April 1, 2005 at the rate of 12.5%. Vat is multi point sales tax with set off for tax paid on purchases. It is basically a tax on the value addition on the product. The burden of tax is ultimately born by the consumers of goods. Now, all the States are drafting their separate Value Added Tax Act and as per the present position, every States will have a separate VAT Act with different provision not corresponding with each other. It can be stated that the proposed VAT Act is the primary stage of VAT. It is proposed that there would be two taxes rate slabs on which tax would be enforced. The first one would be 4% and would cover all essential items. The second one is 10% and all luxury items would be covered. In addition special rate slabs are also proposed which are 1% for bullion and jewellery, 20% for Non Essential Goods and exemption to certain goods like agricultural produce etc. Petroleum products are not included in VAT. VAT is a system of indirect taxation. It is the Tax paid by the producers, manufactures, users, retailers or many other dealers who add value to the goods and that is ultimately passed on to the consumers. The essence of VAT is in providing set off for input tax and this is applied through the concept of input credit. This input credit in relation to any period means setting off the amount of input tax by a registered dealer against the amount of his output tax. If you want to use VAT facilities, then create balance sheet using VAT feature. The steps are: 1. Create a company with Accounts with Inventory feature. 2. Go to accounting Vouchers F11 F3 select all the entries containing VAT word. Select Yes. Then it further asks for the state. Then select for U.P., and then give regular and then enter the financial year. Example: 01-04-2009. 3. Now create the Ledgers. a. Create Ledger with name VAT under the group duties & taxes, type of duties others. b. Create a purchase Ledger. Used in VAT return Yes purchase % will be 12.5% (for U.P.). c. Create the sale Ledger used in VAT return Yes and sale % will be 4% (for U.P.). 4. Then enter Voucher entries a. All the entries related with cash sale and credit sale will be done using Function key F8 Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 29 and all the entries for credit purchase and cash purchase Voucher entry will be done using F9. b. In case of cash purchase and credit purchase. First of all, give all the item information. If you have enter all the item information then press enter twice and then select VAT 12.5%, the VAT amount will be calculated automatically. c. In case of cash, sale and credit sale give all the entries then press enter twice and then select VAT 4%. The VAT amount will be calculated automatically. Question: 1. Business started with cash ` 250000/- 2. Purchase goods for cash ` 25000/- 3. Purchase from Ajay ` 7000/- 4. Purchase furniture for cash ` 5000/- 5. Sold goods to Manish ` 30000/- 6. Purchase goods from Ravi for cash ` 5500/- 7. Purchase goods from Ravi ` 3500/- 8. Sold goods to Suresh for cash ` 2000/- 9. Bought Machinery for cash ` 11000/- 10. Rent paid ` 900/- 11. Salary paid ` 1200/- Key Date Particular L.F. No. Debit Credit F6 1/4/2010 Cash 250000 To Capital 250000 F5 Purchase 25000 To Cash 25000 F9 Purchase 7000 To Ajay 7000 F5 Furniture 5000 To Cash 5000 F8 Manish 5500 To Sale 5500 F6 Cash 3500 To Sale 3500 F5 Purchase 2000 To Ravi 2000 F5 Machinery 11000 To Cash 11000 F5 Rent 9000 To Cash 9000 F5 Salary 1200 To Cash 1200 BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 30 TALLY 9.0 ADCPM
Question: 1. Business started by Deepak for Cash ` 500000/- 2. Purchase goods for cash ` 50000/- 3. Purchase furniture for cash ` 45000/- 4. Purchase Machinery for cash ` 80000/- 5. Purchase goods from Suraj ` 200000/- 6. Paid to Suraj half amount by cash half amount by cheque. 7. Salary to Akhilesh ` 2000/- 8. Sold goods to Man Mohan ` 80000/- 9. Sold machinery for cash ` 50000/- 10. Rent receipt ` 2000/- 11. Goods given as charity ` 7,500/- Key Date Particular L.F. No. Debit Credit F6 1/4/2010 Cash 500000 To Capital 500000 F5 Purchase 50000 To Cash 50000 F5 Furniture 45000 To Cash 45000 F5 Machinery 80000 To Cash 80000 F9 Purchase 200000 To Suraj 200000 F5 Suraj 200000 To Cash 100000 To Bank 100000 F5 Salary 2000 To Cash 2000 F8 Man Mohan 80000 To Sale 80000 F6 Cash 50000 To Machinery 50000 F6 Cash 2000 To Rent Receive. 2000 F7 Purchase 7500 To Charity 7500 Question: Delhi Furniture Mart Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 31 1. Started business with cash ` 50000/- 2. Deposited into the Bank ` 9000/- 3. Purchased machinery for ` 5000/- 4. Paid instillation charges of machinery ` 100/- 5. Purchase timber from Nuveen of ` 2000/- allowed 10% trade Discount 6. Furniture costing was used of ` 500/- in furnishing the office. 7. Sold furniture to Naresh at list price of ` 1000/- allowed him 5% trade Discount 8. Received a cheque from Naresh for ` 950/- 9. Paid wages ` 350/- and Rent ` 200/- Key Date Particular L.F. No. Debit Credit F6 1/4/2010 Cash 50000 To Capital 50000 F4 Bank 9000 To Cash 9000 F5 Machinery 5000 To Cash 5000 F5 Installation 100 To Cash 100 F9 Purchase 1800 To Naveen 1800 F7 Furniture 500 To Purchase 500 F8 Naresh 950 To Sale 950 F6 To Bank 950 Naresh 950 F5 Wage 350 To Cash 350 F5 Rent 200 To Cash 200 1. Started business with cash ` 10000/- Stock ` 5000/- 2. Paid into current a/c ` 4000/- 3. Sold goods to Mohan ` 2000/- 4. Goods purchase from Shyam ` 3000/- BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 32 TALLY 9.0 ADCPM
5. Purchase goods from Ram of ` 10000/- on 10% Trade Discount 6. Amount receipt from Mohan and 5% Discount allowed 7. Amount paid to Shyam and 10% Discount allowed by him. 8. Rent paid ` 12000/-. 9. Furniture purchased for office use of ` 500/- 10. Salary paid ` 3000/- Key Date Particular L.F. No. Debit Credit F6 1/4/2010 Cash 10000 Stock 5000 To Capital 15000 F4 Cash 4000 To Bank 4000 F8 Mohan 2000 To Sale 2000 F9 Purchase 3000 To Shyam 3000 F9 Cash 9000 To Ram 9000 F6 Cash 1900 Discount Paid 100 To Mohan 2000 F5 Shyam 3000 To Cash 2700 To Discount Received 300 F5 Rent 1200 To cash 1200 F5 Furniture 500 To Cash 500 F5 Salary 3000 To Cash 3000 Question: 1. The Company is starting creating the a/c for next financial year and the closing a/c of previous year is Assets: Cash ` 15000/- Bank balance ` 5000/- Stock ` 40000/- Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 33 Furniture ` 3600/- Debtors: ` 24000/- (X ` 6000/-, Y ` 8000/- Z ` 10000/-) Liabilities: Bank loan ` 10000/- Creditors: ` 12500/- (Ajay ` 5000/-, Vijay ` 7500/-) Following transactions to place during Jan 1994: 2. Bought goods from Kailash for ` 20000/- at a trade Discount of 10% and Cash Discount of 2% paid 60% amount immediately. 3. Sold goods to X for ` 9000/- 4. Receipt from X in full settlement of his a/c ` 14800/- 5. Cash deposited into the Bank ` 10000/- 6. Cheque received from Y for ` 7850/- in full settlement of his a/c 7. Received a cheque from Z ` 2000/- 8. Cheque received from Z deposited into the Bank. 9. Amount due to Ajay paid by cheque. 10. Old newspaper sold ` 50/- Old furniture sold ` 750/- 11. Purchase goods from Gopal ` 8000/- and paid by cheque 12. Sold goods bought for cash ` 2000/- and allowed Discount 5% 13. Paid salary to Motilal by cheque ` 2000/- 14. Received Rent ` 1500/- Key Date Particular L.F. No. Debit Credit F6 1/4/2010 Cash 15000 Bank a/c 5000 Stock 40000 Furniture 3600 X 6000 Y 8000 Z 10000 To Bank loan 10000 To Ajay 5000 To Vijay 7500 To Capital 65100 F5 Purchase 18000 To Cash 10584 To Discount Received 216 To Kailash 7200 F8 X 9000 BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 34 TALLY 9.0 ADCPM
Key Date Particular L.F. No. Debit Credit To Sale 9000 F6 Cash 14800 Discount Paid 200 To X 15000 F4 Bank 10000 To Cash 10000 F6 Cash 7850 Discount Paid 150 To Y 8000 F6 Cash 2000 To Z 2000 F4 Bank 2000 To Z 2000 F5 Ajay 5000 To Bank 5000 F6 Cash 50 To Mice income 50 F6 Cash 750 To furniture 750 F5 Purchase 8000 To Bank 8000 F6 Cash 1900 Discount paid 100 To Sale 2000 F5 Salary 2000 To Bank 2000 F6 Cash 1500 To Rent 1500 Question: Following Transactions shows the position of Harish as on 01.01.04 1. Cash-in-hand ` 10000/- Cash-at-Bank ` 16800/- Furniture ` 8000/- Stock ` 50000/- Creditor - Anil ` 4000/- Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 35 Sunil ` 5000/- Debtor - Ram ` 8000/- Suresh ` 2000/- Shyam ` 12000/- 2. Received a cheque from Ram in full settlement of his a/c after deducting 5% Discount and deposited the above cheque into the Bank, 3. Goods purchase for ` 20000/- at 10% Trade Discount and 5% cash Discount payment is done by cheque. 4. Received a cheque from Shyam for ` 3860/- and Discount allowed to him ` 240/- cheque deposited into the Bank on the same day. 5. Suresh become insolvent and 40p in a rupee could be received from his estate. 6. Cash paid to Anil after deducting 2% cash Discount. 7. Received ` 2000/- from Subhash, which was written off as bad debts in the previous year 8. Old furniture sold for ` 800/- 9. Salaries paid ` 10000/- 10. Salaries due to clerk ` 5000/- 11. Rent paid this year for the next year. ` 1000/- 12. Commission received ` 800/- Key Date Particular L.F. No. Debit Credit F6 1/4/2010 Cash 10000 Bank 16800 Furniture 8000 Stock 50000 Ram 8000 Suresh 2000 Shyam 12000 To Anil 4000 To Sunil 5000 To Capital 97800 F6 Cash 7600 Discount paid 400 To Ram 8000 F4 Bank 7600 To Cash 7600 F5 Purchase 18000 To cash 17100 To Discount received 900 BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 36 TALLY 9.0 ADCPM
Key Date Particular L.F. No. Debit Credit F6 Bank 3860 Discount paid 240 To Shy am 4100 F6 Cash 800 Bad debt 1200 To Suresh 2000 F5 Anil 4000 To cash 3920 To Discount received 80 F6 Cash 2000 To Bad debt received 2000 F6 Cash 800 To furniture 800 F5 Salary 10000 To Cash 10000 F7 Salary 5000 To outstanding 5000 F5 Prepaid Rent 1000 To cash 1000 F6 Commission 800 To Cash 800 Question: 1. Started business with Cash ` 500000/- Bank ` 400000/- Furniture of ` 5000/- 2. Purchase goods for ` 140000/- in all, out of which half the goods were on credit from Mr. Sudhir. 3. Purchased building for ` 200000/- by cheque Paid registration charges ` 24000/- which were paid in cash. 4. Sold goods to Arun for ` 200000/- Arun paid amounts in cash. 5. Received cheque from Arun of ` 148000/- in full settlement and the cheque is immediately deposited into the Bank. 6. Provide 10% depreciation costing ` 5000/- on furniture 7. Provide 8% interest on Capital ` 500000/- 8. Paid office expense from personal cash ` 500/- Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 37 Stationery expenses from office cash ` 180/- 9. Paid for office cleaning ` 200/- 10. Received rent of ` 2500/- for a portion of building let out 11. Paid for advertisement in the Hindustan ` 2000/- Key Date Particular L.F. No. Debit Credit F6 1/4/2010 Cash 100000 Bank 400000 Furniture 5000 To Capital 505000 F5 Purchase 140000 To Cash 70000 To Sudhir 70000 F5 Building 200000 To Bank 200000 F5 Registration 24000 To Cash 24000 F6 Cash 50000 Arun 150000 To Sale 200000 F6 Bank 14800 Discount paid 200 To Arun 15000 F7 Depreciation 500 To furniture 500 F7 Interest on Capital 40000 To Capital 40000 F5 Office exp 500 To Cash 500 F5 Stationery 180 To cash 180 F5 Office cleaning 200 To Cash 200 F6 Cash 2500 To Rent paid 2500 F5 Advertisement 2000 To Cash 2000 BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 38 TALLY 9.0 ADCPM
Question: 1. Sundar started business with cash ` 75000/- Stock ` 35000/- Furniture ` 5000/- 2. Sold goods to Bhushan at list price of ` 10000/- at a trade Discount of 10% Bhushan return goods worth ` 1000/- 3. Received from Bhushan ` 8000/- in full settlement of his a/c 4. Purchase furniture for ` 6000/-. 5. Purchase goods from Naveen for ` 25000/- less trade Discount 12% Returned goods to Naveen of ` 2000/- at the list price 6. Cleared the a/c of Naveen by paying cash under the Discount of 5% 7. Sold goods to Ajay ` 10000/- and Vijay ` 16000/- 8. Received cash from Ajay ` 9800/- in full settlement of his a/c 9. Paid insurance premium of ` 750/- 10. Paid for Sunder life insurance premium ` 1200/- 11. Purchase goods for ` 8000/- for cash trade Discount 10% and cash Discount of 2% 12. Received cash for Vijay at the cash Discount of 5% in full settlement of his a/c 13. Paid Rent ` 800/-, Advertisement ` 1000/-, Salary ` 4000/-. 14. Received commission ` 500/- 15. Old costing ` 4000/- of which a sale price ` 5000/- destroyed by fire. 16. Salaries paid ` 4000/- Due ` 1000/- 17. Goods costing ` 800/- taken by the proprietor for personal use Key Date Particular L.F. No. Debit Credit F6 1/4/2010 Cash 75000 Stock 35000 Furniture 5000 To Capital 115000 F8 Bhushan 9000 To Sale 9000 F7 Sale return 1000 To Bhushan 1000 F6 Cash 8000 To Bhushan 8000 F5 Furniture 6000 To Cash 6000 F9 Purchase 22000 To Naveen 22000 F7 Purchase return 2040 To Naveen 2040 Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 39 Key Date Particular L.F. No. Debit Credit F5 Naveen 20900 To cash 20900 F8 Ajay 10000 To Sale 10000 F8 Vijay 16000 To sale 16000 F6 Cash 9800 Discount paid 200 To Ajay 10000 F5 Insurance premium 750 To Cash 750 F5 Drawing 1200 To Cash 1200 F5 Purchase 7200 To Cash 7056 To Discount Received 144 F6 Cash 15200 Discount Paid 800 To Vijay 16000 F5 Rent 800 To Cash 800 F5 Advertisement 1000 To Cash 1000 F5 Salary 4000 To Cash 4000 F6 Cash 500 To Commission received 500 F7 Loss by Fire 5000 To Purchase 5000 F5 Salary 4000 To Cash 4000 F7 Salary 1000 To Outstanding 1000 F7 Drawing 800 To Purchase 800 BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 40 TALLY 9.0 ADCPM
Question: Following balances appeared in the books of Radhika Traders on 01.01.94 1. Assets: Cash ` 8000/- Bank ` 7000/- Stock ` 30000/- Debtors: Mohan ` 10000/- Mohan ` 12000/- Danish ` 14000/- Furniture ` 5000/- Building ` 25000/- Liabilities: Creditors: X ` 5000/- Y ` 6000/- 2. Bought goods of the list price of ` 6000/- from Khanna Brothers less 15% trade Discount and 2% cash Discount, paid 40% price at the same time. 3. Received a draft of ` 9750/- from Mohan in full settlement and deposited it into the Bank. 4. Purchase goods from Suresh of ` 8000/- on list price at 20% Trade Discount and paid him by cheque. 5. Sold goods and Received a cheque of ` 25000/- 6. Deposited the above cheque into the Bank 7. Mohan deposited in our Bank a/c ` 4000/- 8. Paid income tax ` 5600/- 9. Received a cheque from Mohan and send to the Bank ` 7800/- Discount allowed 20% 10. Withdraw from the Bank for office ` 2000/- and for private use ` 4000/-. 11. Send a cheque to X ` 4900/- in full settlement of his a/c. 12. Cheque of Mohan returned by the Bank as discount hounded. 13. Danish was declared insolvent and a payment of 60 p in a rupee received from his estate. 14. Bank allowed interest ` 350/-. 15. Paid for Rent by cheque ` 1500/- 16. Paid for travelling expense by cheque ` 500/- 17. Purchase goods for ` 5000/- for cash and paid ` 50/- carriage on these goods. 18. Give as charity cash ` 500/- and goods ` 2000/-. 19. Provide 10% depreciation costing ` 5000/- on furniture Key Date Particular L.F. No. Debit Credit F6 1/4/2010 Cash 8000 Bank 7000 Stock 30000 Mohan 10000 Mohan 12000 Danish 14000 Furniture 5000 Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 41 Key Date Particular L.F. No. Debit Credit Building 25000 To X 5000 To Y 6000 To Capital 100000 F5 Purchase 5100 To Cash 1999.2 To Discount Received 40.8 To Khannas 3060 F6 Bank 9750 Discount paid 250 To Mohan 10000 F5 Purchase 6400 To Bank 6400 F6 Cash 25000 To Sale 25000 F4 Cash 25000 To Bank 25000 F6 Bank 4000 To Mohan 4000 F5 Drawing 5600 To Cash 5600 F6 Bank 7800 Discount Paid 200 To Mohan 80000 F5 Office 2000 Drawing 4000 To Bank 6000 F5 X 5000 To Cash 4900 To Discount received 100 F5 Mohan 4000 To Bank 4000 F6 Cash 8400 Bad debt 5600 To Danish 14000 BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 42 TALLY 9.0 ADCPM
Key Date Particular L.F. No. Debit Credit F6 Bank 350 To Interest 350 F5 Rent 1500 To Bank 1500 F5 Travel expense 500 To Bank 500 F5 Purchase 5000 To Cash 5000 F5 Carriage 50 To Cash 50 F5 Charity 2500 To Purchase 2000 To cash 500 F7 Deprecation 500 To furniture 500 Question: Following was the position of Harish as on 1.4.94 1. Cash in hand ` 10000/- Cash at the Bank ` 16800/- Building ` 50000/- Furniture ` 8000/- Stock ` 50000/- Debtors: Ram ` 8000/-, Shyam ` 12000/- Creditor: Anil ` 4000/-, Sunil ` 5000/- 2. Withdraw from the Bank for office ` 2000/- and for private use ` 500/- 3. Paid for furniture repair to Bahadur ` 100/- 4. Sold goods to Ramesh of the list price of ` 10000/- at a trade Discount of 10% 5. Ramesh returned goods ` 1000/- 6. Received a cheque from Ramesh after deducting 2% cash Discount, cheque was deposited into Bank. 7. Bank charge ` 100/- for the Bank charges 8. Paid income tax ` 4500/- 9. Received cash from Ram ` 7600/- in full settlement of his account 10. Furniture purchase for cash ` 2000/- 11. Goods costing ` 2000/- of which the sale price is ` 2500/- given away as charity. 12. Bought machinery for ` 20000/- and carriage paid on it ` 400/- 13. Shyam is declared as insolvent and received 40p/Rupee from his estate. 14. Goods stolen of amount ` 4000/- Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 43 15. Harish borrowed from Nitin ` 100000/- 16. Purchased goods ` 100/- 17. Salary unpaid ` 2000/- Rent due to landlord ` 3000/- 18. Provide interest on Capital ` 50000/- at the rate of 5% 19. Paid fire insurance premium on building ` 1000/- by cheque and Harish life insurance premium ` 800/- by cheque 20. Provide 10% depreciation costing ` 8000/- 21. Charge interest on drawing ` 800/- Key Date Particular L.F. No. Debit Credit F6 1/4/2010 Cash 10000 Bank 16800 Building 50000 Furniture 8000 Stock 50000 Ram 8000 Shyam 12000 To Anil 4000 To Sunil 12000 To Capital 138800 F5 Office 2000 Drawing 500 To Bank 2500 F5 Furniture 100 To cash 100 F8 Ramesh 9000 To sale 9000 F7 Sale return 1000 To Ramesh 1000 F6 Bank 8820 To Ramesh 8820 F5 Drawing 4500 To cash 4500 F6 Cash 7600 Discount Paid 400 To Ram 8000 F5 Furniture 2000 BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 44 TALLY 9.0 ADCPM
Key Date Particular L.F. No. Debit Credit To Cash 2000 F7 Charity 2000 To purchase 2000 F5 Machinery 20000 To cash 20000 F5 Carriage 400 To cash 400 F6 Cash 4800 Bad debt 7200 To Shyam 12000 F7 Loss by theft 4000 To Purchase 4000 F6 Cash 100000 To Nitin Loan 100000 F5 Purchase 100 To Cash 100 F7 Salary 2000 To outstanding 2000 F7 Rent 3000 To outstanding 3000 F7 Interest on Capital 2500 To Capital 2500 F5 Insurance of building 1000 To Bank 1000 F5 Drawing 800 To Bank 800 F7 Depreciation 800 To furniture 800 F7 Capital 800 To interest on drawing 800 Question: 1. Business started with Cash ` 20000/- Building ` 100000/- Furniture ` 10000/- Capital ` 300000/- Stock: Stationery: Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 45 a. Sharpener 10 Pieces @ ` 2/- b. Eraser 90 pieces @ ` 0.50 c. Pencil 200 pieces @ ` 1/- d. Box 100 pieces @ ` 10/- Home product: a. A.C. 5 pieces @ ` 18000/- b. Fridge 18 pieces @ ` 7000/- c. Cooler 15 pieces @ ` 3000/- 2. Purchase goods from Bhanu for cash and Discount allowed 10% Sharpener 20 pieces @ ` 2.50 Eraser 40 pieces @ ` 0.75 Pencil 50 pieces @ ` 1.25 Fridge 10 pieces @ ` 7500/- Cooler 12 pieces @ ` 2500/- 3. Purchase goods from Raja A.C. 5 pieces @ ` 19000/- Fridge 15 pieces @ ` 8000/- Cooler 20 pieces @ ` 4000/- 4. Sold goods to Rajesh for cash A.C. 7 pieces @ ` 25000/- Discount 5% Fridge 15 pieces @ ` 12000/- Discount 8% Cooler 20 pieces @ ` 8000/- Discount 10% Pencil 200 pieces @ ` 3/- Eraser 120 pieces @ ` 2/- Box 80 pieces @ ` 15/- 5. Sold goods to Ram Pencil 50 pieces @ ` 3/- Box 20 pieces @ ` 20/- Sharpener 20 pieces @ ` 3/- A.C. 2 pieces @ ` 30000/- Fridge 10 pieces @ ` 15000/- 6. Interest on drawing ` 3000/- 7. Commission Received ` 10000/- Key Date Particular L.F. No. Debit Credit F6 1/4/2010 Cash 20000 Building 100000 Furniture 10000 To Capital 130000 F5 Purchase 105142.50 BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 46 TALLY 9.0 ADCPM
To Cash 94628.25 To Discount received 10514.25 F9 Purchase 295000 To Raja 295000 F8 Cash 477890 Discount paid 39150 To Sale 517040 F8 Ram 210610 To Sale 210610 F7 Drawing 3000 To Interest on Drawing 3000 F6 Cash 10000 To Commission received 10000
SERVICE TAX ( i ) Service tax is a form of indirect tax enforced on some specified services, called taxable services. Service tax cannot be charged on any service which is not come under the list of taxable services. Service tax is charged on the value paid for any taxable service. It is included in the gross amount charged by the service provider. Service tax comes into existence on 1 July 1994. At present, the service tax is charged @ 10%, which was reduced from 12% on Feb. 24, 2009. Service tax is indirect tax on Service provided. Service tax is paid by buyer of service to seller of service, who in turn, deposits the tax with government. Some Taxable Services which are come under the Service tax: Port Telex Architects Stockbroker Internet Caf Photography Convention Telegraph Facsimile Sound Recording Broadcasting Cargo Handling Event Management Dredging Services Cleaning Services Packaging Services Cable Operators Airport Services Video-Tape Production Franchise Services Beauty Parlors Fashion Designer Rail Travel Agents Telephone/Cell Phone General Insurance Advertising Agencies Courier Agencies Consulting Engineers Dry Cleaning Services Custom House Agents Steamer Agents Air Travel Agents Tour Operators Management Consultants Mandap Keepers Interior Decorators
Education Cess: To give a boost to primary education in the country, on July 2004 Finance Minister proposed to charge an Education Cess of 2% on Income tax, Corporation tax, Excise and Customs duties and Service tax. The education Cess is charged only on the total payable tax, not on the total income. Module 4 FI NANCI AL ACCOUNTI NG DEC - 2010 / BLY ADCPM TALLY 9.0 Page - 47 To Calculate the Service Tax: 1. Press F11 F3 Service tax option Yes 2. Gateway of Tally Account info create single ledger. 3. Gateway of Tally Inventory info Create Group & item 4. Gateway of Tally Accounting Voucher in F9 & F8.
TAX DEDUCTED AT SOURCE (TDS) Tax Deducted at Source is one of the modes of collecting income tax from the taxpayers. Such collection of tax is affected at the source when income arises or accurse. Hence where any specified type of income arises or accrues to any one, the Income Tax act enjoins the payer of such income to deduct a stipulated percentage of such income by way of income tax pay only the balance amount to the receiver of such income. Tally provides an easy to use interface with complete flexibility for TDS. It helps you to handle any intricate case and to the income tax Department. Features of TDS in Tally: 1. Simple and user friendly. 2. Quick and easy to set up and use. 3. Partial or Full payment of tax deducted 4. Auto and Manual calculation of TDS amount. 5. Generated TDS Challan and Exception reports. 6. Complete tracking of each transaction from deduction to payment. 7. Challan management and printing ensures prompt and accurate filing of tax. 8. The Auto allocation feature prevents error-prone data entry and helps to track the transactions faster. Steps to create the TDS: 1. Create company Alt + F3. 2. Press F11 and F3 and than TDS option Yes. 3. Gateway of Tally Account info Ledger single ledger create 4. Gateway of Tally Account Voucher create journal entry in journal voucher
FRINGE BENEFIT TAX (FBT) FBT is a tax, which is charged on bonus or fringe benefits. It is a tax which is provided by an employer to his employee. Fringe benefit means any consideration for employment provided by way of any privilege, service, facility or amenity provided by the employer to the employee. Fringe Benefit tax is to be charged on the employer in respect of fringe benefits provided by the employer to his employees during any financial year. Features of FBT: 1. Fringe Benefit Tax payable by an employer is in respect of freebie or fringe benefit provided to have been provided by the employer to his employees in addition to the cash salary or wages paid during the year. 2. Fringe Benefit tax is levied in addition to the Income Tax charged. To calculate the FBT: 1. Press F11 F3 And FBT option Yes 2. Gateway of Tally Accounting info create single ledger BLY / DEC - 2010 FI NANCI AL ACCOUNTI NG Module 4 Page - 48 TALLY 9.0 ADCPM
3. Gateway of Tally Accounting info Voucher Type. 4. Voucher Type create FBT voucher 5. Gateway of Tally Accounting Voucher F8.
PAYROLL ACCOUNTING: Payroll assists the users to set up and implement salary structures, ranging from simple to complex, as per the organizations requirements. You can also align and automate payroll processes and directly integrate them with main stream accounting applications. Payroll also supports configurable formats for pay slip printing, flexible salary and wages, attendance, leave and overtime register and gratuity. Features of Tally Payroll: 1. It allows flawless integration with Tally accounts. There are no connections between Payroll and Accounts. 2. It offers Employee groups- unlimited classification and sub-classification of employees. 3. It offers Pay structures- ease of conformity, faster entry and flexibility of non dependence. 4. It offers Pay components- user definable earnings, deductions and others. 5. It is independent of processing period restrictions. 6. It offers a unique Auto-Manual payroll processing facility. Payroll Info Payroll Information option allows you to set up the employee defaults and standard payroll information with common payroll fields used for calculating earning and deductions. Gateway of Tally Payroll Info Pay Heads: The salary components compose Pay structures which are called Pay Heads. A Pay Head may be an earning which is paid to an employee or a deduction which is recovered from salary. Employee Group: An Employee Group allows you to group employee in a logical manner. The salary structure can be defined at the Employee Group level. Referring to this group as template and changing accordingly will ease building all your employee records on it. Employee: The Employee Creation screen allows you to enter basic set up information that applies to the employees. Enter General Information, Payment Details and Passport and Visa Details. Salary Details: Salary Details is used to define a Pay structure to an Employee or to an Employee Group to speed up the entry of Individual Employees Pay Structure. To Create the Payroll: 1. After company creation press F11 F3 F1 for Pay Roll option Yes. 2. Gateway of Tally Payroll info create Pay Heads 3. Create Employees Group. 4. Create Employees. 5. Create Salary Details. 6. Gateway of Tally Payroll Voucher entry. 7. Gateway of Tally Display Payroll Report Statement of Payroll Pay Slip / Pay Sheet.
Note: If you find any typing or printing error/s, inform immediately to your branch office.