What is Accounting Software?

Accounting Software means a predefined program with accounting

standards which helps to a business and accountants to record and
manage the day to day transactions and generate the relevant reports
related to Accounts, Inventory, Finance and Taxation automatically.

Types of Accounting Software:

Billing/Invoicing Software
ERP Software - handles the operational portfolio that combines all
systems used for product planning, material purchasing, inventory
management and control, distribution, accounting, marketing, finance
and Human Resource.

Tally as an accounting cum ERP system is focused on delivering total

workflow automation with the aim to provide relief to accountants
and finances experts.

Features of Accounting Software:

To simplify The accounting software solutions influence the control

accounts - in the hands of a non-accounting audience, as they are
designed to give numbers meaning and to perform
automated calculations.
To save Cost The accounting software solutions automate most of the
- core calculations and administrative procedures and
thereby also take control of the revenue framework so
that businesses will not be required to outsource finance
management to an external expert.
Transparency A good accountancy system is one that avoids costly
- and recurring human errors. In the business sentiment,
calculating inaccurate totals or failing to report data in
time can lead to a crisis, and that’s where automating
calculations are most helpful which plays an important
role in financial transparency audit.
Accurate It’s one of the major features of accounting
forecasting - software where, without a proper accounting system,
detailing on the patterns and trends of financial
 performance would take ages to complete.
Productivity - Accounting software in India is a complete package of
digitized services which makes the most cumbersome,
day-to-day tasks of companies look easier, and collects,
organize, analyze their outcomes and increase the
efficiency of reporting standards by providing accurate
data which in turn helps management in taking
informed decision making.
Complying Today almost every accounting software automatically
with tax laws complies with taxation laws as part of its internal
- structure, so the businesses can avoid penalties and
other consequences on defaults.
Data security Data related to the financial activity of a business is the
- most valuable information and it must be prevented
from falling into the wrong hands.
Here’s what the accounting systems do for their users,
they prevent accounting from being jeopardized by
theft by providing passwords and administration IDs
and setting up as who can view what.

There are 5 important account types:

1. Capital – Money brought to start the business Owner Capital (Sole
Proprietor), Partner’s Capital (Partnership), Share Capital (Public
Company).
2. Assets – Fixed Assets & Current Assets (Current means within the
year)
Current Assets – Cash, Inventory (Closing Stock – Stock in hand),
Bank Balance
Fixed Assets – Tangible Assets (which can be seen, feel & touch) –
Land & Building, Plant & Machinery, Furniture.
Intangible assets (which cannot be seen or touched but felt) –
Goodwill, Royalty, Patent, Copyrights.
There are 2 bases of transactions: Cash basis & Credit Basis
3. Liabilities – Liable to pay to the outsiders
Current Liabilities – Liability should be cleared within one year
Long – Term Liabilities – Liability will be paid after the year also
4. Expenses (Spend) – Direct Expenses (which is related to
Purchases) – Toll Tax, Wages
Indirect Expenses (which is spent on daily basis) – General &
Administrative expenses like Salary, Stationary, Rent. Selling &
Distribution & Miscellaneous Expenses.
5. Income (Earn) – Direct Income (Sales) & Indirect Income (Apart
from Sales, like Commission, Rent, Interest).
Accounting Process:
1. Journalize the Transactions – Double Entry System – “Dr” “Cr”
2. Prepare the Ledger Accounts
3. Trial Balance – List of all ledger accounts with Closing balances
4. Preparation Final Accounts Reports – Trading Account and Profit
& Loss account, Balance Sheet
Record/Journalize transactions on the basis of “Golden Rules of
Accounts”
1. Personal Account Rule – “Debit the Receiver, Credit the Giver”
Ledger accounts relates to Capital Account, Party ledger account
(person either “Natural person” or “Artificial person”.
2. Real Account Rule – “Debit what comes in, Credit what goes out”
Ledger accounts related to Assets
3. Nominal Account Rule – “Debit all expenses or losses, Credit all
incomes or gains”
Important Notes:

 When there is Purchase or Sales need to identify whether is it a

“Cash basis or Credit basis”. If cash basis, then Cash a/c has to
be taken with purchase or sales or assets account. If Credit basis,
then Party Creditor a/c (in case of purchase) or Party Debtor a/c
(in case sales) has to be taken with purchase or sales or assets
account.
 If the entry is Cash basis then either it should contain a word of
“Cash”, if not available then there should not be with Party
name in the transaction. If party name is available but no word
of “Cash” then it is Credit Basis.
Accounting Equation:
1. Capital – To increase “Credit”, To Decrease “Debit”
2. Liabilities - To increase “Credit”, To Decrease “Debit”
3. Assets - To increase “Debit”, To Decrease “Credit”
4. Income - To increase “Credit”, To Decrease “Debit”
5. Expenses - To increase “Debit”, To Decrease “Credit”
ERP System – Enterprises Resource Planning
Tally, SAP, Zoho, Quick Books
History of Tally: Tally software was introduced in the year 1986 – in
the company name of “Peutronics Private Limited”, by the founder S
S Goenka (Shyam Sundar Goenka) & Co-Founder is Bharath Goenka.
In the year 1988, company was renamed as “Tally Solutions Private
Limited” & headed by Mr. Bharath Goenka.
Versions – Major Update of Software
Tally Versions:
 1. Tally 4.5
2. Tally 5.4
3. Tally 6.3
4. Tally 7.2
5. Tally 8.1
6. Tally 9
7. Tally.ERP9
8. Tally Prime
Latest version and Release (minor updates of software) – Tally Prime
Rel 2.1
Tally Software can be downloaded and installed at free of cost (no
credentials required)
Requirement to install: To install Tally Prime your operating system
should be Windows only and Windows version 7 & above, also 64bit
processor is supported.
Tally can be used in 2 modes: License mode & Educational mode
Licenses – Silver Edition (Single User) – Rs. 18000+GST 18%
Gold Edition (Multi-User) – Rs. 54000+GST 18%
Also, can buy & use Tally licenses on Rent.
Multi-User license can share the license through physical LAN
connections to the client systems from Server system.
Difference of License mode & Educational mode:
In educational mode can enter the dates only 1st, 2nd & 31st of specific
month, in license mode can enter any date during transactions & to
check the reports.
In License mode can use TSS features like Remote access, Data
Synchronization & Auto BRS (if TSS is in Valid period).
Download the Tally Software from below link:
https://tallysolutions.com/download/
Downloaded file will be in the name of “Setup.exe”.

I- Install

Rule of using Tally is “Do not use Mouse, use only keyboard”
Tally has all the options with Shortcut Keys
Tally Data will be saved in the Local drives of the system, do not try
to save the data path of external drives like Pen drive.
In Tally there are Default or pre-defined Masters:
Accounting Group – 28 Groups (15 are Main/Primary Groups, 13 are
Sub-Groups)
Sub group means Group created under another group.
Accounting Ledgers – 2 Ledgers (Cash a/c, P&L a/c)
Every ledger account has to be mandatorily created under relevant
Accounting Groups.
Voucher Types (Transactions types)
Accounting Voucher types (8):
 1. Contra
2. Payment
3. Receipt
4. Journal
5. Purchase
6. Debit Note
7. Sales
8. Credit Note
Inventory Voucher types (8):
1. Stock Journal
2. Physical Stock
3. Receipt Note
4. Delivery Note
5. Rejection In
6. Rejection Out
7. Material In
8. Material Out
Order Voucher types (4):
1. Purchase Order
2. Sales Order
3. Job Work In Order
4. Job Work Out Order
Payroll Voucher Types (2):
1. Attendance
2. Payroll
Non-Reflecting Accounting Voucher types (2):
1. Memorandum
2. Reversing Journal
Accounting Voucher types explanation:
1. Contra- Contra voucher will be used only when the transactions
involves cash and bank ledgers. In the scenarios like
 Cash deposit to bank: Dr Bank a/c, Cr Cash a/c
 Cash withdrawn from bank: Dr Cash a/c. Cr Bank a/c
 Transfer of amount from Bank A to Bank B: Dr Bank B a/c, Cr
Bank A a/c

2. Payment: When business makes payment through cash or bank

towards the payment to party against the purchases or advance
payment paid for future purchase. Also, towards the expenses
made for the business.
 Dr Expenses a/c or Party a/c, Cr Cash/Bank a/c

3. Receipt: When business receives payment through cash or bank

towards the receipt from party against the sales or advance
receipt for future sale. Also, indirect income made for the
business.
 Dr Cash/Bank a/c, Cr Income a/c or Party a/c

4. Journal Voucher will be entered to pass any accounting

adjustment entry or transfer of one accounting ledger account
value to another ledger account at the end of particular period.
 Dr Salary Expenses a/c, Cr Salary Payable a/c
5. Purchase: The amount of goods or services bought by a business
for business use or for reselling.
• Cash purchases – Dr Purchase a/c, Cr Cash/Bank a/c
• Credit purchases – Dr Purchase a/c, Cr Party Creditors a/c
6. Debit Note (Purchase Returns): Goods that have been purchased
but returned to the seller before consumption on account of
various reasons like poor quality, damage, not as per the buyer’s
specifications etc.
 Dr Party Creditors a/c or Cash/Bank a/c, Cr Purchase Returns
a/c
7. Sales: The amount of goods or services sold by a business.
• Cash Sales – Dr Cash/Bank a/c, Cr Sales a/c
• Credit Sales – Dr Party Debtors a/c, Cr Sales a/c
8. Credit Note (Sales Returns): Goods that have been sold but
returned by the buyer before consumption on account of various
reasons like poor quality, damage, not as per the buyer’s
specifications etc.
 Dr Sales Returns a/c, Cr Party Debtors a/c or Cash/Bank a/c