Tally

Tally is an Accounting Software that helps you in maintaining Accounts and

Inventory of your office.
General Accounting
What is Accounting
“Accounting is the art of recording, classifying and summarizing in a significant manner and
in terms of money, transactions and events, which are in part, at least, of a financial character,
and interpreting the result thereof” – American Institute of certified public accountants.
Methods of Accounting
There are two types of Accounting Systems.
1. American Method or Single Entry System.
2. English Method or Double Entry System.
1. American Method or Single Entry System.
It has further five types of accounting.
I. Assets Accounts
II. Liabilities Accounts
III. Capital Accounts or Owner’s Equity A/c
IV. Revenue or Income Accounts
V. Loss or Expenses A/c
Methods of Recording
I. Debit the Increase in the Assets and Credit the Decrease in the Assets.
II. Credit the Increase in the Liabilities and Debit the Decrease in the Liabilities.
III. Credit the Increase in the Capital and Debit the Decrease in the Capital.
IV. Credit the Increase in the Income and Debit the Decrease in the Income.
V. Debit the Increase in the Expenses and Credit the Decrease in the Expenses.

2. English Method or Double Entry System.

Classification of Accounts
1. Personal Accounts: - These accounts are those accounts which are opened by a
name of a person, firm, company, society or organization.
Rules: -“Debit the Receiver and Credit the Giver”.
Types of Personal Accounts: -
I. Natural Personal Accounts:
a) RAHUL’s Accounts
b) Owner’s Capital Accounts
c) Owner’s Drawing Accounts
d) Debtors Accounts
e) Creditors Accounts
II. Artificial Personal Accounts
a) Firm’s Accounts
a) Company’s Accounts
b) Organization Accounts
c) Bank Accounts
d) Club Accounts
e) Insurance Company Accounts
f) Government Sector accounts
 III. Representative Personal Accounts
a) Outstanding Salary Due to Staff account
b) Prepaid Insurance Account
c) Accrued Income Account
d) Unearned Commission Account
2. Real Accounts: -Those Business assets which can be measure in the term of
money; their accounts are called Real Accounts.
Rules: - “Debit what comes in and Credit what goes out”.
Types of Real Accounts: -
I. Tangible Real Accounts: -These accounts are those assets account which can be
touched.
a) Cash Account
b) Stock Account
c) Furniture Account
d) Land Account
e) Building Account
II. Intangible Real Accounts: - Those accounts are those assets account which can’t
touch but can be measured in the term of money.
a) Goodwill Accounts
b) Patents Accounts
c) Trade Mark Accounts
d) Copy Right Accounts
3. Nominal Accounts: -Income and Expenditure accounts of a business are called
nominal accounts.
Rules: - “All the Expenses are debited and Incomes are credited”.
Types of Real Accounts: -
I. Expenditure Accounts: -
a) Salary Paid Accounts
b) Rent Paid Accounts
c) Bed Debts Accounts
d) Commission Paid Accounts
II. Income Accounts: -
a) Salary Received Accounts
b) Rent Received Accounts
c) Commission Received Accounts
d) Interest Received Accounts
e) Bed Debts Recovered Accounts

Steps for working in the Tally.

1. Create Company: - In Tally this is the First task or primary task to create a company.
For this Purpose we have to select the Create Company option from menu Gateway of
Tally. After selecting the option we have to fill up the details for the Company like
Company Name, Address, Started Date, and Income Tax No etc.
2. Creates Groups: -Groups are created for same type of Ledger A/cs. In Tally There
are many groups which are used for making ledgers. So in the rare cases we have to
create groups. These are the main groups in the tally.
I. Reserve and Surplus (Retained Earning): -You can use this group heads like
Investment Allowance Reserve, Select Ledger and other such reserve accounts.
 II. Current Assets: - This is the primary group that has all the current assets
accounts. It has Six Sub-Groups under it.
a) Bank Accounts: -It is used to hold all accounts of banks.
b) Cash in hand: -It is used to hold ledger account of cash.
c) Deposits: -It is used to hold assets like security deposits, rental deposits and
all other deposits made by the company.
d) Loan and Advances: -It is used to hold all advances and loans of non trading
nature given by the company.
e) Stock in hand: -It is used to hold certain special accounts like raw material,
finished goods and work in progress.
f) Sundry Debtors: -It is used to hold accounts of companies and individuals
that give goods on credit to the company.
III. Current Liabilities: -This is a primary group and is used to hold outstanding
and statuary liabilities of the company. The group has three sub groups under it
which are as follows.
a) Duties and taxes: -It consists all types of taxes and duties like Excise, Local
Sales tax, Central Sales Tax, VAT etc.
b) Provisions: -It is used to hold other tax provisions like Income tax,
depreciation in it.
c) Sundry Creditors: -It is used to hold accounts trade creditors of the company.
IV. Fixed Assets: -This is used to keep accounts of all the fixed assets, patents,
trade tights etc.
V. Investment: -This is used to hold ledger accounts of shares, bonus and other
securities of the company.
VI. Loan Liabilities: -This is used to keep track of loan taken by the company. This
group has three sub groups which are as follows.
a) Bank OD Accounts: -It is used to hold all overdraft accounts with banks.
b) Secured Loans: -It is used to hold long/medium term loans taken by the
company from financial companies and Banks etc.
c) Unsecured Loans: -It is used to hold the loans taken unconditionally by the
company.
VII. Suspense Accounts: -This is used by many companies to maintain a suspense
ledger which keeps track of money received or paid by the companies, whose
nature of transaction is not yet known.
VIII. Miscellaneous Expenses: -The loss of the company, which has not been written
off but carried forward to the next year, should fall here. However, tally treats it
as a negative profit and carries it to the profit and loss account.
IX. Branches/Division: -This is used to keep the names of all companies which
may be branches, divisions of the company.
X. Sales Account: -It is used to all goods sales accounts of the companies.
XI. Purchase Account: -It is used to all goods purchase accounts of the companies.
XII. Direct Income: -It is used to hold ledger accounts of non-trade income accounts
that affect gross profit.
XIII. Indirect Income: -This is used to hold ledger accounts of those expenses of the
company that determine its gross profit. For example interest received and
commission received.
XIV. Direct Expenses: -This is used to hold ledger accounts of those expenses of the
company which determine its gross profit. Expenses like salary paid to labour,
transportation, electricity bills etc.
 XV. Indirect Expenses:-This is used to hold ledger account of those expenses of the
company, which determine its net profit. Expenses like advertising, maintenance
of vehicles, administrative expenses etc.
3. Create Ledgers: -Ledgers are actual account heads to which the transactions are
identified. You Make all voucher entries in these accounts. You have to classify all
ledgers in to groups.
4. Voucher Entries: -For Making the Voucher Entries first of all we have to set the
voucher date by pressing F2 then enter the voucher date. There are various types of
vouchers in tally. Those are describes as follows: -
I. Contra Voucher: -This type of voucher is used for Cash to Bank, Bank to Cash
and Bank to Bank Entries. Press F4 to select the voucher type.
II. Payment Voucher: -This type of voucher is used for the Cash Payment Entries.
Press F5 to select the voucher type.
III. Receipts Voucher: - This type of voucher is used for the Cash Receipts Entries.
Press F6 to select the voucher type.
IV. Journal: - This is used for the Journal Entries like debit of credit Entries. Press F7
to select the voucher type.
V. Sales Voucher: -This is used for the Goods Sales Entries. Press F8 to select the
voucher type.
VI. Purchase Voucher: -This is used for Goods Purchase Entries. Press F9 to select
the voucher type.
VII. Memo: -This is used to create Memorandum or Reverse Journal Voucher. Press
F10 to select the voucher type.
5. Display Reports: -There are several types of reports are generated by the tally like
Trading and Profit and Loss Account, Balance Sheet, Inventory Reporting Ratio
Analysis etc.
 TRADING ACCOUNT

Figure for the current year

yearFigure for the previous

yearFigure for the previous

Figure for the current year

Expenditure Income

Rs Particulars Rs. Rs. Particulars Rs.

To Opening Stock: By Sales:
I. Raw Materials Less: Sales Returns
II. Work-in-Progress By Closing Stock:
III. Finished Goods I. Raw Materials
To Purchases II. Work-in-Progress
Less: Purchases Returns III. Finished Goods
To Manufacturing Exp.
(Direct Exp.)
I. Wages
II. Wages and Salaries
III. Direct charges
IV. Carriage inwards
V. Gas fuel and power
VI. Freight, Octroi,
Cartage
VII. Royalty
VIII. Excise Duty
IX. Custom or Import
Duty
X. Factory Rent and
Lighting

Rs. To Gross Profit (If Any) Rs. Rs. By Gross Loss (If Any) transferred to Rs.
transferred to P/L Account P/L Account (Bal. Figures)
(Bal. Figures)
Rs To Gross Loss (If Any) B/D Rs. Rs. By Gross Profit (If Any) B/D Rs.
 Profit and Loss Account

Figure for the current year

yearFigure for the previous

yearFigure for the previous

Figure for the current year

Expenditure Income

Rs Particulars Rs. Rs. Particulars Rs.

To Employee’s By Gross Profit (If Any) B/D
Remuneration: By Rent From Tenant
I. Salaries, Bonus etc. By Discount Received
II. Contribution of By Income From Investment
provident fund, By Profit on role of investments
Pension fund etc. By Interest received
III. Staff Welfare exp. By Commission Received
To Selling and Distribution By Dividend Of Shares
exp: By Apprentice Premium
I. Advertising, Godown, By Profit on sale of Assets
Rent etc. By Miscellaneous Receipts
II. Commission, By Income From other sources
Brokerage and
discount Allowed.
To Office Exp.
I. Rent, Rates and Taxes
II. Salaries, Salaries and
Wages
III. Insurance Premium
IV. Printing, Postage &
Stationery
V. Repair and lightning.
VI. Unproductive wages.
VII. Audit fees and legal
charges.
VIII. Telephone Exp.
IX. Trade Exp.
X. Establishment Exp.
XI. General Exp.
To selling and distribution
Exp.
I. Carriage outward.
II. Commission.
III. Export duty.
IV. Parking charges.
V. Bad debts.
VI. Sales tax.
VII. Miscellaneous Exp.
Rs. To Net Profit (If Any) Rs. Rs. By Net Loss (If Any) transferred to Rs.
transferred to Capital Account Capital Account (Bal. Figures)
(Bal. Figures)
Balance Sheet of RN Pvt. Ltd.
As on 31st march 2007
Figure for the current year
yearFigure for the previous

yearFigure for the previous

Figure for the current year

Liabilities Assets

Rs Particulars Rs. Rs. Particulars Rs.

 1. Share Capital:
Authorized and Subscribed
shares.
2. Reserve and Surplus:
I. Capital Reserve
II. Share Premium
III. Other Reserves
Less: Debit Balance of P/L
Appropriation A/c (If Any)
IV. Surplus i.e Credit Bal.
of P/L A/c (After Providing
the Proposed Dividend,
Bonus or Reserves)
V. Sinking Fund
3. Secured Loans:
I. Debentures
II. Loan and Advances
4. Unsecured Loans:
I. Fixed Deposit
II. Short term Loan and
Advances
5. Current Liabilities
and Provisions:
I. Acceptance (B/P)
II. Sundry Creditors
III. Unclaimed Dividends
IV. Interest Accrued but
not due on loans
V. Provision for Taxation
VI. Proposed Dividends
VII. Provision for
Insurance
VIII. Other provisions
IX. Contingent Liabilities
like Claim against company
not acknowledged or debts
Rs. Total Amount
1.Fixed Assets:
I.Goodwill
II.Land
III.Building
IV. Leaseholds
V. Plant and Machinery
VI. Furniture and Fittings
VII. Patents, Trade Mark and Copy
Right
VIII. Vehicles
2. Investment:
I. Govt. or Trust Securities
II. Share, Debentures and bonds
III. Investment and Immovable
Properties
3. Current Assets, Loans and
Advances:
I. Interest Accrued on
Investment
II. Stores and spare parts
III. Loose Tools
IV. Stock-in-Trade
V. Work in Progress
VI. Sundry Debtors
Less: Cash or Bank Balance
VII. Bills of Exchanges
4. Miscellaneous Expenditure
I. Preliminary Expenses
II. Discount Allowed on the
share or debenture
III. Development Expenses not
adjusted.
5. Profit And Loss Account
Debit Balance of P/L Account (If
Any). (This is shown only when its
debit balance could not be written off
out of other reserves)
Rs. Rs. Total Amount Rs.