Question No.

1 : Write the steps to create a new company in Tally and also explain the all
reliable fields in company creation window.

Answer: Every business has no. of financial transactions, as a human being we could not
remember all of them. To overcome this problem we used to record all business
transactions in books. As technology is developing we are using computers in every area.

Tally is an application package which is used to record and analyze all business transactions
in computer. To work with this package we need Windows operating System in our
computer.

To record transactions in Tally, first we need to create Companies for whose transactions to
be entered. Suppose as a consultant if want to maintain number of companies data, we
need to create separate companies.

To create a company we have to follow the steps giving hereunder:

1. By Double clicking the Tally Icon on desktop, it opens the Tally screen.
2. The gateway of Tally Screen divides into four areas
o Title area : Shows version No. Date, Time etc.,
o The main area : List of selected Companies etc.,
o Calculator Area : To done mathematical calculations
o Button bar : Displays Commands to be used
3. The names of the companies already created will displays on the main area’s left
part. In the right part of the main area there is a menu called Company Info.
4. Click on Create Company. It will display a dialog box.
5. We have to fill the required fields
6. After entering all the information it will display ‘Accept Yes or No?’ dialog box.
7. Click on Yes Button to save all the information and it will creates the company

The Following are the various details required to create a company.

1. Directory: Company’s data will be saved in a directory, for this it is required to give
the path of the Data directory. Path is the location of the directory. By default Tally
creates its data directory at C:\Tally\data. We can the change the default path by
pressing backspace key and enter a new path. Internally Tally Names its directories
like 001, 002.
2. Name: Here we have to give the name of the company for whose books are to be
opened. For Eg. XYZ Company Ltd.,
3. Mailing Name and Address: Here we can enter the mailing address of the
company. It can be entered in multiple lines also.
4. E-mail Address: This is optional, if we want we can enter it.
5. Local Sales Tax Number: Here we have to enter the Sales tax number allotted to
the company by the state Govt.( if available)
6. Inter state Tax Number: Type the number if available which was allotted by
Central Govt..
7. Income tax Number: Type the number allotted by the Central Govt to the
company if it available.
8. Currencey Symbol: Type the base currency symbol like Rs. $ etc. In India it will be
Rs.
9. Maintain: We can maintain two types of Accounts
o Accounts Only: To maintain Accounts Transactions only
 o Accounts-cum-Inventory: To maintain the Inventory transaction as well as
Accounts transactions.
10. Financial Year from: Type the Financial Year of the country for Eg: 2005-06
11. Books beginning from: Tally assumes that this period will be the same as Financial
Year , if we want we can change it. Suppose company books begins from July 2006,
then the date will be 01-07-2006.
12. Tally Valut Password: To avoid unauthorized persons to operate/enter and view
our company transactions we can maintain data in encrypted form(Unrecognizable
form). By typing the password authorized persons only can view and record/enter
the information. As administrator we have give the Password for it.
13. Use Security Control: We can define and maintain security control layers by
classifying the Supervisor rights and normal user rights. Type Yes to maintain
Security control , other wise Type No.
14. Basic Currency Info: In this area we have to enter currency formal name, Decimal
Points etc., information

Question No. 2: Explain the following group with an example

1. Capital Account
2. Current Assets
3. Indirect Expenses
4. Direct Expenses
5. Bank account
6. Bank OCC account
7. Fixed Assets
8. Current liabilities

Answer:
In manual accounting grouping is need to be done after figures of transaction (Vouchers)
have been posted to the ledger accounts and balance drawn (Trial Balance).
In Tally by default it creates 15 groups; they are called as Reserved Groups (some are
divided into sub groups)

Capital Account

This group holds the Capital and Reserves of the company. The following ledgers that may
be opened under this group are
Share Capital A/c [When the firm is Company]
Partners' Capital A/c [When the firm is Partner-ship firm,
Proprietor's Capital A/c [When the firm is proprietary ship based]
Reserves and Surplus A/c [also called as Retained Earnings]
Capital Reserve A/c, General Reserve A/c, Reserve for Depreciation A/c, etc.

Current Assets

This Group holds the current assets ledgers other than Bank Accounts, Cash in Hand
For Eg: Loan & Advances (assets)
Deposits (Assets)
Stock-in-hand

Indirect Expenses
This group holds all the Administrative, selling & distribution Expenses Accounts. These
expenses are generally shows in Debit side of Profit & Loss account.
For Eg. Depreciation A/c,
Rent, Rate & taxes A/c ,
Insurance charges A/c,
Printing & stationery A/c,
Repairs & Maintenance (Admn) A/c,
Traveling and conveyance A/c.
Salaries Payable A/c

Direct Expenses

This group holds all the Trade A/c Expenses; it determines the gross profit / gross loss of
the company
For Eg: Wages A/c,
Factory Light A/c,
Frieght & Octroi A/c,
Carriage inwards A/c,

Bank account

This group holds Bank related Accounts

Bank Current Accounts for Eg: State bank of India [CA-1095]
Bank Savings Accounts, for Eg: HDFC bank [SB-2555]
Short term deposits A/c etc

Bank OCC account

This group holds the Bank Overdraft Account

Fixed Assets

This group holds ledgers of fixed asset like

Land & Building A/c,
Furniture & Fixtures A/c,
immovable properties,
patents ,
trade rights,

Current liabilities

This group contains the flowing sub-groups

Duties taxes
Sales Tax,
Central Sales Tax,
Exise Duty,
Marketing Fee,
Purchase Tax
Provisions
Provision for Income Tax
Provision for Bad Debts
Sundry Creditors
All trade creditors of the company
For Eg: Raj & Raj Co.,
ABC Company Ltd

Current Liabilities holds the following Ledgers:

All liabilities accounts which are not fallen in above 3 groups can be placed here Like
Statutory Liabilities
For Eg;
T.D.S payable A/c.
E.S.I Employer’s Contrib Payable A/c
P.F Employer’s Contrib Payable A/c

Question No. 3 : Explain the following voucher entry with an example

1. Contra voucher entry

2. Payment voucher entry
3. Receipt voucher entry
4. Journal voucher entry
5. Sales voucher entry

Answer

In Tally transactions are to be entered through vouchers. A voucher is a online document to

enter/ recording transactions. In Tally there are 16 predefined vouchers. These can be
selected by pressing the function keys as well as by clicking on the commands.
Gateway of Tally —> Display—> List of Accounts —> <Ctrl>+<V> [Voucher Types]

Contra Voucher

This voucher is used to enter funds transfer transactions between cash & banks. Function
key F4 is the short cut key
For Eg: To Deposit cash Rs. 5000/- in Bank
Ledger Debit Rs Credit Rs.
Bank A/c 5000.00
Cash A/c 5000.00

To Transfer funds Rs. 5000/- from HDFC Bank to Bank of Maharashtra

Ledger Debit Rs Credit Rs.
Bank of Maharashtra A/c 5000.00
HDFC Bank A/c 5000.00

Payment voucher entry

This voucher is used to make payment to the parities through cash and bank. Function key
F5 is the short cut key
For Eg: Paid Rs. 4300/- as Insurance Charges through HDFC Bank
Ledger Debit Rs Credit Rs.
Insurance Charges A/c 4300.00
HDFC Bank A/c 4300.00

Receipt voucher entry

This voucher is used to record the cash/ bank receipts ( receipts from debtors). Function
Key F6 is the shortcut key
For Eg: Rs. 450000 received from Philips Co. Ltd., against our sales through cheque and it
has been deposited in HDFC Bank
Ledger Debit Rs Credit Rs.
HDFC Bank A/c 450000.00
Philips Co. Ltd., A/c 450000.00

Journal voucher entry

This Voucher is used to record adjustment entries between ledgers.

Function Key F6 is the shortcut key.
For eg. Rs. 75000/- made provision for make payment towards P.F Employers contribution.
Ledger Debit Rs Credit Rs.
P.F Employers’ Contribution A/c 75000.00
P.F Employers Contribution Payable A/c 75000.00

Sales voucher entry

This voucher is used to record all sales transactions. Function key F8 is the shortcut key.
For Eg. Rs.830000 worth sales done on credit to Manohar & Company
Ledger Debit Rs Credit Rs.
Manohar & Company A/c 830000.00
Sales A/c 830000.00

Rs. 4500/- made cash sales

Ledger Debit Rs Credit Rs.
Cash A/c 4500.00
Sales A/c 4500.00

Question No. 4: Write the steps to

 Delete a ledger
 Modify a voucher
 Create an user
 Delete a voucher
 Alter company information

Answer:

Delete a ledger : We can delete the legers by using the following steps:

 Click on Accounts Info from Gateway of Tally

 Click on Ledgers
 Click in Single Ledger
 Click on Alter , it displays a list of ledgers available
 Double click on the ledger which we want to delete.
 Then it displays ledger Alteration Screen
 Press Alt key + D from the key board
 It displays delete Yes or No dialog box.
 Click on Yes.
Modify a voucher : We can modify a voucher already entered. For this the following steps
to be done

 Click on Display from Gateway of Tally

 Click on Accounts Books
 Click on Ledger
 Double Click on the Ledger which we want to modify
 From the list of vouchers Double click on the voucher which we want to modify
 Select the Voucher type command from the command bar or Press the Short cut key
to change the voucher type.
 Make the necessary changes
 Press Ctrl + A from the keyboard to save it

Create an user : When we are maintaining security layers we should create users and allot
the rights to them
The steps to create users are:

 Press Alt + F3 to open Company info menu

 Click on Security Control
 Click on users and passwords
 A dialog box will be opened ,
 Type the user names in Name of user area
 Type the Password in Password area
 Select the security level.
 In this way we can create no of users.
 Press enter key to save the transaction
 Click on Yes

Delete a voucher : To delete a voucher the following steps to be done

 Click on Display from gateway of Tally Menu.

 Click on Account Books
 Click on ledger
 Select the ledger
 Select the voucher which we want to delete
 Press Alt+ D from the keyboard
 Click on Yes to delete the voucher

Alter company information : If any requirement to alter/modify the information of

already created company, the following steps to be done

1. Press Alt + F3 to open Company info menu

2. Click on Alter, it will displays available companies list
3. Select the company which we want to modify the information
4. Then it opens company alteration screen
5. Make necessary changes.
6. Press Ctrl + A , to save the contents
7. Press Esc key from the keyboard to come out to the menu area
What is Value Added Tax (VAT)?

VAT is a simple transparent tax collected on sales of goods. The states and
union territories of India have decided to implement VAT in place of sales tax and a
number of other state taxes. VAT is a multi-stage tax levied at each stage of the
value addition chain, with a provision to allow Input Tax Credit (ITC) on tax paid at
an earlier stage, which can be appropriated against the VAT liability on subsequent
sale. VAT is intended to tax every stage of sale where some value is added to raw
materials, but taxpayers will receive credit for tax already paid on procurement
stages. Thus, VAT will be without the problem of double taxation as prevalent in the
present tax laws. Presently VAT is followed in over 120 countries. One of the many
reasons underlying the shift to VAT is to do away with the distortions in our existing
tax structure that carve up the country into a large number of small markets rather
than one big common market. In the present sales tax structure tax is not levied on
all the stages of value addition or sales and distribution channel which means the
margins of distributors/ dealers/ retailers et al are not subject to sales tax at
present. Thus, the present pricing structure needs to factor only the single point
levy component of sales tax and the margins of manufacturers and dealers/
retailers etc, are worked out accordingly. Under the VAT regime, due to multi-point
levy on the price including value additions at each and every resale, the margins of
either the re-seller or the manufacturer would be reduced unless the ultimate price
is increased.

What will be covered by VAT?

 All business transactions carried on within a State by individuals,
partnerships, companies etc. will be covered by VAT. More than 550 items would
be covered under the new VAT regime of which 46 natural and unprocessed local
products would be exempt from VAT, a PTI report quoted West Bengal Finance
Minister and VAT panel chairman Asim Dasgupta as saying. About 270 items
including drugs and medicines, all agricultural and industrial inputs, capital goods
and declared goods would attract 4 % VAT. The remaining items would attract 12.5
% VAT. Precious metals like gold and bullion would be taxed at 1 %. Considering
the difficulties faced by the tea industry, it was decided that tea-producing states
would be given an option to levy 12.5 % or four % subject to review in 2006. Petrol
and diesel would be kept out of VAT regime, which covers only marketable items;
Dasgupta was quoted as saying that the panel was yet to take a view on CNG.
Following opposition from some of the states, it was decided that states would have
option to either levy four % or totally exempt food grains but it would be reviewed
after one year.
Three items – sugar, textile and tobacco – covered under Additional Excise
Duties, will not be under VAT regime for one year but the existing arrangement
would continue.

A slab showing various rates for different commodities under VAT

 RATES OFVAT ITEMS

Natural and un-processed produces in

0% unorganized sector

  Good of social importance

  Life saving drugs

  Newspapers

  National flag barred from taxation

   

1% Gold

  Silver

  Precious and semi-precious stones

   

4% Basic necessities

  Industrial and agricultural inputs

  Declared goods

  Medicines and drugs

  AED items

  Capital goods

   

12.50% RNR[revenue neutral rate] on other goods

   

SPECIAL ADDITIONAL TAX

(>20%) Aviation turbine fuel (ATF)

  Petroleum products

  Fuels

  E-merit goods
STEPS

STEP 1: ENABLING VAT IN TALLY

STEP2: CREATION OF VAT MASTERS