THE MADURA COLLEGE(AUTONOMOUS) ,MADURAI-11.

PG DEPARTMENT OF COMMERCE

I-B.COM

ACCOUNTING SOFTWARE.
QUESTIONS BANK.
(OBE).

2020-21.
 SECTION – ‘A’
I-UNIT.
1.What is Tally in Accounting?
Tally Accounting is software used for financial accounting purposes. It is provided by Tally
Solutions and is standard business accounting software. K1
2.What is Data Security?
Data Security is the process of protecting data from unauthorized access and data corruption
throughout its lifecycle. Data security includes data encryption, hashing, tokenization, and key
management practices that protect data across all applications and platforms. K1

3.What is the Reason for Creation of Company in Tally?

It can be save the details in the entered in company Creation Screen after entering the details. Tally
ERP-9 will create a company and direct we can create masters and enter transactions. K1
4.What is Business Transaction for Tally in Accounting?
Passing business transactions in Journal with Debit and Credit figures. Transferring the debit and
credit figures to the corresponding Ledger Accounts. Interpreting the balanced figures of the
Ledger Accounts to the Final Account Statements. K1
5.What is Journal entry ?
A journal entry is a record of the business transactions in the accounting books of a business. A
properly documented journal entry consists of the correct date, amounts to be debited and credited,
description of the transaction and a unique reference number. K1
6.What is Ledger?
A ledger is the principal book or computer file for recording and totaling economic transactions
measured in terms of a monetary unit of account by account type, with debits and credits in separate
columns and a beginning monetary balance and ending monetary balance for each account. K1.
7.What is the roll of Tally in Accounting?
Tally is a important tool in calculating monetary terms, accountancy, tax and GST calculating,
managing commercial transactions effectively and efficiently. Tally helps you to manage all your data in a
proper way and can be efficiently accessed whenever needed. It allows you to all your data in well-
mannered way. K1
 SECTION – ‘B’

1.What is TAN?
(A).Tax Absorb Number (B).Tax Assign Number (C).Tax Account Number.
(D).Tax Assessment Number. ANS (D). K2.
2.Which tally package is developed by
(A).Microsoft. (B).Apple Software. (C).Adobe Software. (D).Tally Software.
ANS (D). K2.
3.Which short key is used Online Voucher creation from Day Book report by pressing?.
(A).ALT+A (B).Shift +A. (C).CTRL +B (D).Ctrl +A. ANS (A). K2.
4.What is the full form of TCS?
(A).Tax Collected from Sales. (B).Tax Collected by Staff. (C).Tax Consumption at Source
(D).Tax Collected at Source. ANS (D). K2.
5.How many types of Measurement Units can be create in Tally?
(A).5. (B).4. (C).3. (D).2. ANS.(D) K2.
6.Which Under Group is Sales Tax Ledger falls?
(A).Sales. (B).Purchases (C).Duties and Taxes. ( D).Indirect Expenses.
ANS.(C). K2.
7.What is the Utility of Tally Vault Password?
(A).It will lock the period of company. (B).It Will locked all voucher entries for that company
(B).It will not show the Company Name in the Company Select List. (D).None of the above.
ANS (C). K2.

SECTION – ‘C’
1.(a).Discuss in detail the Groups available in Tally? [OR] K3

(i).Sundry Creditors. (xi).Stock in hand

(ii).Duties & Taxes. (xi) Deposits.
(iii).Unsecured Loans. (xii).Cash in hand.
(iv).Reserves & Surplus.
(v).Secured loan.
(vi).Banks OD Accounts
(vii).Provisions.
(viii).Sundry Debtors.
(ix).Bank Accounts. and
(x).Loan & Advances(Assets).
 (b).List out the aliases available for Primary Group and Sub Group? K3.
Primary Group: Sub-Group:
(i).Branch / Divisions (i).Bank Accounts.
(ii).Capital Accounts (ii).Bank O/D Accounts
(iii).Currents Accounts (iii).Cash in Hand.
(iv).Current Liabilities. (iv).Deposits(Assets).
(v).Direct Expenses (v).Duties & Taxes.
(vi).Direct Income (vi).Loan & Advances(Assets).
(vii).Fixed Assets. (vii).Provisions.
(viii).Direct Expenses. (viii).Reserve Surplus.
(ix).Direct Income. (ix).Secued Loan.
(x).Investments (x).Stock in Hand.
(xi).Loan (Liability) (xi).Sundry Creditors.
(xii).Misc.Expenses(Asset) (xii).Sundry Debtors.
(xiii).Purchases Account (xiii).Unsecured Loan.
(xiv).Sales Account.
(xv).Suspenses A/c.

2.(a).State the steps involved in Creation of Groups Under Single & Multiple Group. K3.

Steps for Creation of Multiple Group:

Step 1: Choose the option Inventory Info under the Gateway of Tally screen.

Step 2: Under Inventory Info, choose the Stock Groups option.

 Step 3: It displays two types of groups under Stock Groups.

1. Single stock group

2. Multiple stock groups

In Tally, we already created single stock groups. Here we will create multiple stock groups. Now, under
multiple stock groups, choose the 'Create' option.

Step 4: Under the List of Groups, we need to choose the Group. Here we have given Television as under
Group.
 Step 5: Now, we will update the Stock Group, as shown below.

Steps for Creation of Single Group:

Step 1: Go to Gateway of Tally and then choose Inventory Info option.

Step 2: Choose the Stock Categories option under Inventory Info to create a stock category in Tally.

Step 3: Choose the 'Create' option under the Single stock category to create a single stock
category in Tally.
 Step 4: Update the following details in the next screen 'Sintock creation'.

1. Name: Enter the stock category name that has to be created in Tally. In the given screenshot, we
have given the name of a stock category as '32 Inches TV'.
2. Under: In this, choose the stock group as Primary.
3. Should quantities of items to be added: In this, choose Yes option.

4. Choose A: Accept after entering all the required details to accept the updated details.
5. In Tally, we have successfully created a single stock group.

[OR]
 (b).What is a Primary Group and a Sub-Group Distinguish? K3.

SECTION – ‘D’
1.Explain the Primary Groups of Revenue Nature in Tally. K4.
Revenue nature groups are following-

-
I.Purchase account the goods which we purchase from our sundry creditor or by cash
are called purchase and it comes under purchase account.
 Ledger creation:

Direct income- all those incomes which we earned by non-trading sources

(school, coaching, professional fee by doctors or others etc.) are called direct income. All those ledgers
which represent it come under direct income.
Ex-fee and consulting revenue—these types of ledgers are come under direct expenses.
Indirect income-all those incomes which we earned by trading sources are called indirect incomes. All
those ledgers which represent it come under indirect income.
Ex-rent (received), salary (received) and commission (received) – these types of ledgers are come under
indirect income.
 Direct income- all those incomes which we earned by non-trading
sources (school, coaching, professional fee by doctors or others etc.) are called direct income. All those
ledgers which represent it come under direct income.
Ex-fee and consulting revenue—these types of ledgers are come under direct expenses.

-
Indirect income all those incomes which we earned by trading sources are called indirect
incomes. All those ledgers which represent it come under indirect income.
Ex-rent (received), salary (received) and commission (received) – these types of ledgers are come under
indirect income.
2.State the Sub-Group Under Current Liabilities? - Explain. K4.
There are three primary types of liabilities: current, non-current, and
contingent liabilities. Liabilities are legal obligations or debt owed to another person or company. In
other words, liabilities are future sacrifices of economic benefits that an entity is required to make to
other entities as a result of past events or past transactions.
Defined by the International Financial Reporting Standards (IFRS) Framework: “A liability is a
present obligation of the enterprise arising from past events, the settlement of which is expected to
result in an outflow from the enterprise of resources embodying economic benefits.”

Classification of Liabilities

These are the three main classifications of liabilities:

1. Current liabilities (short-term liabilities) are liabilities that are due and payable within one
year.
2. Non-current liabilities (long-term liabilities) are liabilities that are due after a year or more.
3. Contingent liabilities are liabilities that may or may not arise, depending on a certain event.
Types of Liabilities: Current Liabilities

Current liabilities, also known as short-term liabilities, are debts or obligations that need to be paid within
a year. Current liabilities should be closely watched by management to make sure that the company
possesses enough liquidity from current assets to guarantee that the debts or obligations can be met.

Examples of current liabilities:

• Accounts payable
• Interest payable
• Income taxes payable
• Bills payable
• Bank account overdrafts
• Accrued expenses
• Short-term loans

Current liabilities are used as a key component in several short-term liquidity measures. Below are
examples of metrics that management teams and investors look at when performing financial analysis of a
company.

Examples of key ratios that use current liabilities are:

• The current ratio: Current assets divided by current liabilities

• The quick ratio: Current assets, minus inventory, divided by current liabilities
• The cash ratio: Cash and cash equivalents divided by current liabilities
Types of Liabilities: Non-current Liabilities

Non-current liabilities, also known as long-term liabilities, are debts or obligations that are due in over a
year’s time. Long-term liabilities are an important part of a company’s long-term financing. Companies
take on long-term debt to acquire immediate capital to fund the purchase of capital assets or invest in new
capital projects.

Long-term liabilities are crucial in determining a company’s long-term solvency. If companies are unable
to repay their long-term liabilities as they become due, then the company will face a solvency crisis.
List of non-current liabilities:

• Bonds payable
• Long-term notes payable
• Deferred tax liabilities
• Mortgage payable

Types of Liabilities: Contingent Liabilities

Contingent liabilities are liabilities that may occur, depending on the outcome of a future event. Therefore,
contingent liabilities are potential liabilities. For example, when a company is facing a lawsuit of $100,000,
the company would incur a liability if the lawsuit proves successful. However, if the lawsuit is not
successful, then no liability would arise. In accounting standards, a contingent liability is only recorded if
the liability is probable (defined as more than 50% likely to happen) and the amount of the resulting liability
can be reasonably estimated.

Examples of contingent liabilities:

• Lawsuits
• Product warranties
Other Resources

Thank you for reading this guide to types of liabilities. To further advance your financial education, CFI
offers the following resources.

• Types of Assets
• Forecasting Balance Sheet Items
• Analysis of Financial Statements
• Financial Modeling and Valuation Analyst Program K4

II-UNIT.
SECTION-‘A’
8.What is Voucher? K1.
A voucher is a bond of the redeemable transaction type which is worth a certain monetary value
and which may be spent only for specific reasons or on specific goods. Examples include housing, travel,
and food vouchers.

9.State the types of Vouchers in Tally? K1.

(i)Sales Voucher (ii).Purchase Voucher. (iii).Payment Voucher. (iv) Receipts Voucher.
(v).Journal Voucher. (vi)Contra Voucher. (vii).Credit/Debit Note Voucher.
(viii).Accounting Voucher.
10.Define ‘Sales Voucher’. K1
A sales voucher is a form of a receipt or documentation commonly given to a buyer of supplies or
goods. It typically serves as proof of purchase when a provider must order or deliver the goods at a later
point.

11.What is difference between Voucher and Invoice? K1.

An invoice is a detailed bill from an outside supplier or a vendor for goods and/or services
rendered to a company.
A voucher is an internal document used in a company's accounts payable department in order to
collect and organize the necessary documentation and approvals before paying a vendor invoice.

12. What is difference between and a Bill and a Receipts ? K1.

A bill is recorded immediately after a payment has been made or right up front during the time
the service or product is obtained and payment is processed.
A receipt, on the other hand is proof of payment.

13.What is Debit Note Voucher? K1

Debit Note is a document/voucher given by a party to other party stating that such other party's
account is debited in the books of sender.

14.What is units of measures in inventory? K1.

A unit of measure (UOM) is the unit in which the item is packaged.
For example , you order soda pop by a single can, six-pack, two-liter bottle, or a case--each of
which is a unit of measure. When you define items in Inventory Control, you must define at least one unit
of measure per item.

SECTION-‘B’
8.Which menu is used to create new Ledgers, Groups and Voucher type in Tally? K2
(A).Masters (B).Transactions (C).Import (D).Report. ANS: (A)

9.Which key is used to Post entry in debit Note in Tally? K2

(A).Ctrl+F8. (B).Ctrl+F9 (C).F8. (C).F9. ANS:(C).

10.Which Voucher type entry is done for TDS Calculations? K2.

(A).F4:Contra (B).F5:Payment(C).F6:Receipts (D).F9:Journal. ANS:(D).

11.Which shortcut Key is used for Reconciliation of Bank Press? K2

(A).F5 (B).F6. (C).F10. (D).F12. ANS(A).

12.Which Short-Cut key is used for Sales Voucher in Tally. K2

(A).F5. (B).F6 (C).F7. (D).F8 ANS(D).
13.State the head is used for Patent Account falls Under. K2.
(A).Current Assets. (B).Liabilities (C).Investments (D).All of these above ANS(D).

14.Which Short-cut Key is used for Sales Order in TALLY? K2.

(A).Alt+F4. (B).Alt+F5 (C)F8. (D).F9. ANS(B).

SECTION-‘C’
3.(a).What are the buying and Selling activities in Voucher? [OR] K3.
Planning
Before you can make determinations about what materials you should buy for your production,
what services you should use to help support your organization and how you should sell your goods or
services, you must create a business plan for your company. A business plan includes information about
what type of products you will sell, where you will sell them, sales goals and forecasts, budgets and
benchmarks for measuring success. Planning will help you match the right processes to individual goals.
Purchasing

As businesses grow, they often create a purchasing department or name an employee as the
company’s purchasing director. A purchasing department not only determines what specific items a
company needs, but sets the terms under which vendors and supplier must bid, deliver and submit
invoices. The purchasing function of a business also keeps current with developments in the marketplace
to ensure its buy the highest quality at the lowest prices. At a small business, this might be as simple as
the office manager being tasked with purchasing all office supplies. The manager would make semi-
annual or annual reviews of product and service costs, rather than simply using the same vendors year
after year with now review.

Marketing
Sales starts with marketing, which is the macro discipline that drives advertising, public relations,
promotions and other selling efforts. Marketing includes researching the marketplace and competition,
recommending product features and determining at what price and where products will be sold. A
marketing manager works with a sales manager to learn from him what customers are saying as they deal
with the company’s sales reps. The marketing department educates the sales force to help them
understand why the company has developed certain products, priced them as it has and is selling them in
specific locations.
IT

Information technology is important in the selling process because it can help creates processes that allow
consumers to place orders over the Internet, sales personnel to submit orders online or through internal
applications and the marketing department to communicate the company message to the public. A small
business might use the IT department to add a shopping cart and credit card processing on is website.

Communications

Advertising, public relations and promotions are integral processes or selling, getting the company’s
message to potential clients and customers. Advertising is placing a paid, controlled message to
consumers. Public relations attempts to get media outlets to talk about the company. Promotions include
selling activities such as sales, coupons, grand openings, sponsorships and rebates .
(b).State the Units of Measures with Suitable Example. K3.
UNIT MEASURE:
Stock Items are mainly purchased and sold on the basis of quantity. The quantity in turn is
measured by units. In such cases, it is necessary to create the Unit of Measure. The Units of Measure
can either be simple or compound. Examples of simple units are: nos., meters, kilograms, pieces etc.
Simple Units of Measure:
1. Go to Gateway of Tally > Inventory Info > Units of Measure > Create . The Unit
Creation screen is displayed as shown below

This field will show the Type of Units.

● Simple
● Compound.
Simple units are nos, pcs , and so on. Compound unit is a combination of two simple units.
By default Tally.ERP 9 will show the Simple unit for creating the unit of measure.
You can select the Compound Units by clicking on that field or by using SHIFT+TAB [cursor
will go to the previous field].
2. Define the Symbol of the unit, for example, Nos. This symbol is used in all displays and printouts.
3. Specify the Formal Name of the symbol, for example, Numbers. This formal name is useful during
the consolidation of data of different companies, where the symbols might be the same but are
assigned to different units. The formal name will be used to match them.
4. In this field you can specify the Number decimal places for the Units from 0 to 4. This field is
useful for Units measured in fractions.
For example, Kilogram unit. 1.255 Kgs, here 1 is for Kg and fraction 255 is for gram. For this unit,
number of decimal places required is 3
Compound Unit of Measure:
A Compound Unit is a relation between two Simple Units. Hence, before you create a Compound
Unit, ensure that you have already created two Simple Units.

For example, To Create Compound unit – Doz (Dozen) of 12 Nos (Numbers), you have to create two
simple units, Doz (Dozen) and Nos (Numbers) and set the conversion factor as 12.
1. Go to Gateway of Tally > Inventory Info > Units of Measure > Create. The Unit
Creation screen is displayed as shown. Now Click on Type field or Press SHIFT + TAB or
Press Backspace Key.

2. Select Compound from the Types of Units and press Enter. The Conversion field will be
displayed for creating Compound unit

3. Select the First unit from the Units List. In the above example, Dozen will be the First Unit.
4. Specify the Conversion Factor. In the above example, Conversion factor will be 12.
5. Specify the Second Unit from the Units List. In the above example, Number will be the Second
Unit. This unit is also called Tail Unit.
6. Use CTRL + A or Accept the Screen for Saving of Compound Unit Creation.
Alter Units of Measure:
You can alter the units of measurement created in Tally.ERP 9.
1. Go to Gateway of Tally > Inventory Info. > Units of Measure > Alter .
2. Select the Name of Unit you want to alter from the Units list. The Unit Alteration screen appears
as shown below:
 3. Make the necessary changes.
4. Press Ctrl+A to accept.
You can delete a unit of measure by pressing Alt+D . However, a unit of measure that is part of a
compound measure cannot be deleted without deleting the compound measure first.
Display Units of Measure:
You can display the existing Units of Measure, since it is only display Tally.ERP 9 does not allow you
to alter any information in display mode.
1. Go to Gateway of Tally > Inventory Info. > Units of Measure > Display.
2. Select the Unit of Measure you would like to view from the Units list. You can select a compound
unit or a simple unit from the list. The Unit Display screen is displayed as shown below:

4.List out the Stock Category in Inventory. [OR] K3.

Stock Category Summary:

The Stock Category Summary lists the Closing Balances of all items belonging to the selected
category.
To view Stock Category Summary
1. Go to Gateway of Tally > Display > Statements of Inventory > Categories .
2. Select a Category .
3. Press Alt+F1 for Detailed report. The Stock Category Summary screen appears as shown below:

4. You can Drill-down from stock category summary to display Item Monthly Summary and
Stock Voucher list.
 ● Use Show Profit for profitability analysis for the Items in the Category.
● Press F7: Show Profits to expand the Outwards Column for Consumption and Profit
figures.

(b).What are the types of Inventory Masters? K3

INVENTORY MASTERS
In newly created company the inventory info menu comprise of four types of masters namely.
1. Stock Group
2. Stock Items
3. Voucher types
4. Units of Measure
However in order to maintain i) Stock Category ii) Storage Locations or Godowns Activate two
features in F11

1. Maintain stock categories.

2. Maintain multiple godowns.
Stock Items:-
Stock items refer to goods in which you deal that is goods that you manufacture or trade
(sale and purchase) stock items are important inventory.
Stock Group:-
Similar to group in accounting masters these providing for the purchase of classification of stock
items.
Stock Categories:-
This feature is required to be activated in F11 like stock group; classification is done on
some similar behavior.
Location / Godowns:-
A place where stock items are stored is referred for as godowns you can specify where the stock
items are kept e.g. warehouse shelf or rack etc. Stock report for each godown by activating
“maintain multiple godown” in F11 feature.
Units of Measure:-
While studying inventory, unit of measure is an unavoidable issue. Because, any stock
item has to be measured in some specific units for e.g. liquids will be measured in liters, solid will
be measured in kg or items or nos or pieces and so on. We have to create a specific unit of measure
for whatever type of goods that we stock in our company. We can create two types of units in Tally.
Simple & Compound Example of Simple unit is will be kg, pieces etc & examples of Compound
units will be ‘1 dozen of 12 pieces, 1 quintal of 100 kg and so on’.
 SECTION-‘D’
3.Discuss the difference options available under the Head ‘ Behaviour’ at the time creation
of a stock item. K4.
Stock Items
Stock Item refers to goods that you manufacture or trade. It is the primary inventory entity
and is the lowest level of information on your inventory. You have to create a Stock Item
in Tally.ERP 9 for each inventory item that you want to account for.
Create stock items one-by-one:
Stock items are goods that you manufacture or trade (sell and purchase). It
is the primary inventory entity. Stock Items in the Inventory transactions are similar to
ledgers being used in accounting transactions.
1. Go to Gateway of Tally > Inventory Info. > Stock
Item > Create (under Single Stock Item ).
2. Enter the Name of the Stock Item.
3. Enter the Alias name of Stock Item (if required).
4. The field Under will show the List of Groups . Here you can select the Stock
Group to which the Stock Item belongs. By default, Primary Stock Group appears in this
field.
Note: You can create a new stock Group by pressing Alt+C at this field.
5. This field will show the Unit List . Here you can select the Unit of measure
(UoM) applicable for the stock item. By default, Not Applicable appears in this field.
Note: You can create a new UoM by pressing Alt+C at this field. For stock items without
UoM, the cursor will not move to the Quantity field during voucher entry.
6. If GST is enabled, set GST Applicable to Applicable and enter the GST details
by enabling the option Set/alter GST Details .
7. Specify the Rate of Duty applicable for the stock item. This field is used for the
calculation of excise duty or if duty is based on item rate. During Invoicing, whenever you
select a Stock Item, the Rate of duty entered here is displayed in the Invoice creation
screen.
Note: In F11: Inventory features , if the option Enable Invoicing is set to No then Rate
of Duty field will not be visible.
When Excise features is activated for the company, the option Tariff Classification will
appear.
8. Specify the details of Opening Balance , if any, for the Stock Item as on the date
of Beginning of Books.
o In the Quantity Field, specify the stock item Quantity.
o In the Rate field, specify the stock item Rate.
 o In the Value field, Tally.ERP 9 automatically calculates the value by multiplying the
Quantity and Rate. You can also edit the value, Tally.ERP 9 automatically refreshes
the Rate field accordingly.
The Stock Item Creation screen appears as shown:

Note: If Unit field is Not Applicable then the cursor will move
from Quantity and Rate Field.
Button options in Single Stock Item Creation screen
Short Cut
Buttons Description and Use
Keys

G: Groups Ctrl+G Allows you to Create a Stock Group.

I: Items Ctrl+I Allows you to Create a Stock Item.

U: Units Ctrl+U Allows you to Create a Unit of Measure.

O: Godown Ctrl+O Allows you to Create a Godown.

V: Vch
Ctrl+V Allows you to Create a Voucher Types
Types

Note: Category and Godown buttons are visible only if you opted for the same in F11:
Features .
 Create multiple stock items in one-go
1. Go to Gateway of Tally > Inventory Info. > Stock Item > Create (under Multiple
Stock Items ).
2. Select a Stock Group or All Items from List of Groups to create the Stock Item.
3. Enter the Name of the Stock Item.
4. Select the group and Units . Press Alt+C in the Units field if you want to create a unit of
measure.
5. Enter the opening quantity, rate per unit. The Multi Stock Item Creation screen appears
as shown below:

6. Press Enter to save.

4.Explain the Difference Selling Activities? K4.

1) Transactional Selling
Using this type of sales technique, the intention of the salesperson is to overtly sell their product.
There doesn’t appear to be much of a sales process. Any process that is in place normally follows
the adage of ‘pile them high, sell them cheap’. This type of selling is reserved for the one-off sale
where there isn’t much chance of repeat business.
2) Product-Oriented Selling
As you can imagine, this is where the salesperson just talks about the product and very little else.
Salespeople often get roped into this type of sale when a prospect says to them ‘what do you do
and why are you selling this to me?’
It revolves around the features and benefits of the product and tries to blind the prospect with
science Demonstrations and examples of the product in action are the normal way of proceeding
with this particular type.
3) Needs-Oriented Selling
 Using this type of sales technique, a salesperson will identify and figure out the needs of a
customer through different questions and then present a solution to those needs as is required by
the customer. This creates a discourse between the salesperson and prospect but doesn’t go so far
as to solve specific problems that the customer may have.
4) Consultative Selling
This type of sale requires an element of trust and relationship between the salesperson and the
prospect.
The whole purpose of consultative selling is not to focus on just the product but to focus really
on the relationship and how that is going to be established between the salesperson’s company and
the prospect’s company.
This requires a constant review of how the prospect’s business can be helped by the salesperson
and turns the salesperson into a form of consultant to their business.
5) Insight Selling
Lots of research has proved that salespeople who have this specific type of salesmanship do
different things to the norm.
It’s based on a simple 3 level model that brings on successful results:
Level one is to connect, where salespeople connect the customer needs and their company
solutions to the issues that the buyers have.
Level two is the convince stage, where salespeople convince their prospects they can achieve
maximum returns with lower risk and that they are the most effective company to deal with if you
want the results that have been promised.
Level three of insight selling is known as the collaboration stage, where salespeople bring new
ideas to the table and have insights as to the future operations of the company they will be working
with.
It’s important to recognise that each of these types of sales has their place. If you understand the
type of sale that’s absolutely right for your customer, then you will be in a strong position to use
the specific type in the right way at the right time to bring the right results for both you and your
customer.
6) Social Selling
Many sales professionals are moving their prospecting and selling to online methods. Gone are the
days where you’d bang out 100+ cold calls all day long.
With social selling it’s mainly focused around LinkedIn, Twitter and Facebook depending on what
social media platform is right for your industry.
With this approach it’s all about profile building, networking, relationships, creating thought
provoking content and then attempting to move your virtual relationships into the physical world
via a meeting or a call.
 III-UNIT

SECTION-‘A’

15.List out the Purchase order Processing in Tally. K1.

• Enter the Party's A/c Name .
• Enter the Order No .
• Select the Name of Item from the List of Stock Items , or press Alt+C to create a
new stock item.
• Enter the Quantity of the item, as required.
• Enter the Rate of the item. ...
• Press Ctrl+A to accept.

16.State the Sales order Processing in Accounting K1

A sales order is a document generated by a seller for its internal use
in processing a customer order. The document essentially translates the format of the
purchase order received from the customer into the format used by the seller. ... Initiation of a
work order, if the product has to be constructed.
17.What is Pay Roll System Management? K1.
A payroll management system is a tool - predominantly a software program - that enables
your business to handle all your employee's financial records in a hassle-free, automated fashion.
This includes employee's salaries, bonuses, deductions, net pay, and generation of pay-slips for a
specific period
18.What is Debit Note? K1
A debit note is a document used by a vendor to inform the buyer of current debt
obligations, or a document created by a buyer when returning goods received on credit. The debit
note can provide information regarding an upcoming invoice or serve as a reminder for funds
currently due.
19.What is Credit Note? K1.
A credit note or credit memo is a commercial document issued by a seller to a
buyer. Credit notes act as a source document for the sales return journal. In other words the credit
note is evidence of the reduction in sales.
20.What is Bank Reconciliation Statement? K1.
A bank reconciliation statement is a summary of banking and business activity that
reconciles an entity's bank account with its financial records. The statement outlines the deposits,
withdrawals and other activities affecting a bank account for a specific period.
21.What is TDS? K1.
TDS stands for 'Tax Deducted at Source'.TDS works on the concept that every person
making specified type of payments to any person shall deduct tax at the rates prescribed in the
Income Tax Act at source and deposit the same into the government's account.

SECTION-‘B’
15. Which of the following is an effective internal accounting control over accounts receivable? K2
(a)Only people who handle cash receipts should be responsible for preparing documents
that reduce accounts receivable balances.
(b)Responsibility for approval of the write off of uncollectable accounts receivable should
be assigned to the cashier.
(c).Balances in the subsidiary accounts receivable ledger should be reconciled to the
general ledger control account once a year, preferably at year end.
(d).The billing function should be assigned to people other than those responsible for
maintaining accounts receivable subsidiary records. ANS:(D)

16. Which of the following procedures most likely would be considered a weakness in an entity’s
internal controls over payroll? K2
(a).A voucher for the amount of the payroll is prepared in the general accounting
department based on the payroll department’s payroll summary.
(b). Payroll checks are prepared by the payroll department and signed by the treasurer.
(c).The employee who distributes payroll checks returns unclaimed payroll checks to the
payroll department.
(d).The personnel department sends employees’ termination notices to the payroll
department. ANS(C).

17. Which of the following controls most likely would help ensure that all credit sales
transactions of an entity are recorded? K2
(a).The billing department supervisor sends copies of approved sales orders to the credit
department for comparison to authorized credit limits and current customer account
balances.
(b).The accounting department supervisor independently reconciles the accounts
receivable subsidiary ledger to the accounts receivable control account monthly.
(c).The accounting department supervisor controls the mailing of monthly statements to
customers and investigates any differences reported by customers.
(d).The billing department supervisor matches prenumbered shipping documents with
entries in the sales journal. ANS:(D)

18. Which of the following controls most likely would be effective in offsetting the tendency of
sales personnel to maximize sales volume at the expense of high bad debt write offs? K2
(a).Employees responsible for authorizing sales and bad debt write offs are denied access
to cash.
 (b).Shipping documents and sales invoices are matched by an employee who does not
have authority to write off bad debts.
(c).Employees involved in the credit granting function are separated from the sales
function.
(d).Subsidiary accounts receivable records are reconciled to the control account by an
employee independent of the authorization of credit. ANS(C).
19.Which of the following individuals should preferably be responsible for the distribution of
payroll checks for internal control purposes K2

(a).bookkeeper (b).payroll clerk (c).cashier (d).receptionist ANS(D).

20. Which of the following procedures, noted by an auditor during a preliminary survey of the
payroll function, indicates inadequate control? K2
(a).All changes to payroll data are documented by the personnel department on
authorized change forms.
(b).Prior to distribution, payroll checks are verified to a computer produced payroll
register.
(c).A separate payroll bank account is used and payroll checks are signed by the treasurer
and distributed by personnel from the treasurer’s office.
(d).All unclaimed payroll checks are returned to the payroll clerk for disposition.
ANS(D).

21. Which of the following would be the most appropriate test to determine whether purchase
orders are being processed on a timely basis? K2
(a).Determine the dates of unpaid accounts payable invoices.
(b).Compare dates of selected purchase orders with those of purchase requisitions.
(c).Select a block of used purchase order numbers and account for all numbers in the
block.
(d).Discuss processing procedures with operating personnel and observe actual
processing of purchases. ANS(B)

SECTION-‘C’
5.(a).List out the Order Processing in Tally? [OR] K3.
Purchase / Sales Order Processing

Purchase Order Processing is the process of placing orders with suppliers for a purchase to be
made from them and Sales Order Processing is the process of receiving orders from customers
for the purpose of selling. Usually, companies need to track the Order details for Sales and
Purchases as this significantly helps in planning the production process accordingly.
In Tally.ERP 9, Order Processing is linked to Inventory. This allows tracking of the order
position for a Stock Item. Using this you can track the arrival of goods ordered and whether the
ordered Stock Item are delivered on time etc.
Job Order Processing

Job Order Processing is the process of taking an order to manufacture or process goods as per
the prescription of the client by utilizing the material supplied by the client or purchased on
behalf of the client and charging him for the services provided as Job Work or Sub Contract.
Tally.ERP 9 allows to process the job work taken from a client as well as job work given to job
workers. It also allows the principal company to track the materials despatched to job workers
and materials received against the job given, and vice versa.
Purchase Order

Purchase Order is an order placed by a business entity with a supplier for the delivery of
specified goods at a given price and at a predetermined time.
Sales order

Sales Order is an order placed by a customer for the delivery of specified goods at a given
price and at a predetermined time.
Job Order

Job Order can be classified into Job Work Out Order and Job Work In Order .
Job Work Out Order
Job Work Out Order is an order placed by the principal to manufacture or process goods as per
the prescription given to the job worker.
Job Work In Order
Job Work In Order is an order received by the job worker to manufacture or process goods as
per the prescription given by the principal.

(b).What are the steps of Purchase Order Processing in Tally?

K3.
Purchase Order Processing
When the order is placed with the suppliers for the supply of goods, the items, quantities,
date of receipt, and so on, details are given with the Purchase Order Number. Later, when
these goods are received, the Purchase Order is tracked for the Order Details either in the
receipt note or in the purchase Invoice.
The Outstanding Purchase Order reports are available in Tally.ERP 9. It is possible to know
the order position of any item in the Stock Summary. Separate Purchase Order Outstanding
report and Purchase Order Summary report are also available
To enable purchase order processing
1. Go to Gateway of Tally > F11: Features > Inventory Features .
2. Set Enable purchase order processing? to Yes.
 3. Press Ctrl+A to accept.
To create a purchase order
1. Go to Gateway of Tally > Inventory Vouchers > Ctrl+F2 > F4 : Purc. Order to view
the Order Voucher Creation screen.
2. Enter the Party's A/c Name .
3. Enter the Order No .
4. Select the Name of Item from the List of Stock Items , or press Alt+C to create a new
stock item.
5. Enter the Quantity of the item, as required.
6. Enter the Rate of the item. The Order Voucher Creation screen appears as shown
below:

7. Press Ctrl+A to accept.

Now, you can send the purchase order for an item to your supplier.
6.(a).Discuss in Bank Reconciliation Statement. [OR] K3.
A bank reconciliation statement is a summary of banking and business activity that
reconciles an entity’s bank account with its financial records. The statement outlines the deposits,
withdrawals and other activities affecting a bank account for a specific period. A bank
reconciliation statement is a useful financial internal control tool used to thwart fraud.
Understanding the Bank Reconciliation Statement
Bank reconciliation statements ensure payments have been processed and cash collections have
been deposited into the bank. The reconciliation statement helps identify differences between the
bank balance and book balance, in order to process necessary adjustments or corrections. An
accountant typically processes reconciliation statements once a month.
Required Information to Create Bank Reconciliation Statement
Completing a bank reconciliation statement requires using both the current and the previous
month's statements, including the closing balance of the account. The accountant typically prepares
the bank reconciliation statement using all transactions through the previous day, as transactions
may still be occurring on the actual statement date.
Bank Reconciling Statement:
Adjusting Balance per Bank
The accountant adjusts the ending balance of the bank statement to reflect outstanding checks or
withdrawals. These are transactions in which payment is en route but the cash has not yet been
accepted by the recipient. An example is a check mailed on Oct. 30. When preparing the Oct. 31
bank reconciliation statement, the check mailed the previous day is unlikely to have been cashed,
so the accountant deducts the amount from the bank balance. There may also be collected payments
that have not yet been processed by the bank, which requires a positive adjustment.

Bank Reconciling Statement: Adjusting Balance per Books

The balance of the cash account in an entity's financial records may require adjusting as well. For
instance, a bank may charge a fee for having the account open. The bank typically withdraws and
processes the fees automatically from the bank account. Therefore, when preparing a bank
reconciliation statement, any fees taken from the account must be accounted for by preparing a
journal entry.

Another item that requires an adjustment is interest earned. Interest is automatically deposited into
a bank account after a certain period of time. Thus, the accountant may need to prepare an entry
that increases the cash currently shown in the financial records. After all, adjustments are made to
the books, the balance should equal the ending balance of the bank account. If the figures are equal,
a successful bank reconciliation statement has been prepared.

(b).State the details of Job Costing Order-Discuss. K3.

Definition of Job Order Costing
Job order costing or job costing is a system for assigning and
accumulating manufacturing costs of an individual unit of output. The job order costing system
is used when the various items produced are sufficiently different from each other and each has a
significant cost. (When a company's output consists of continuous flows of identical, low-cost
units, the process costing system is more appropriate.)
Since there is a significant variation in the items manufactured, the job order costing system
requires a separate job cost record for each item (or each job or special order). The job cost
record will report each item's direct materials and direct labor that were actually used and an
assigned amount of manufacturing overhead.
The job cost records also serve as the subsidiary ledger or documentation for the manufacturer's
cost of the work-in-process inventory, the finished goods inventory, and the cost of goods sold.

Examples of Job Order Costing

A few examples of the use of job order costing are:

• A company that designs and produces custom-made machines and/or machine tooling
• A company that constructs custom-designed buildings
• A company that modifies trucks to meet customers' special needs

SECTION-‘D’
.
5 Explain the TDS. K4.
TDS stands for 'Tax Deducted at Source'. It was introduced to collect tax at the source
from where an individual's income is generated. The government uses TDS as a tool to collect
tax in order to minimise tax evasion by taxing the income (partially or wholly) at the time it is
generated rather than at a later date.
TDS is applicable on various incomes such as salaries, interest received, commission
received, dividends etc.
TDS is not applicable to all incomes and persons for all transactions. Different TDS rates
have been prescribed by the Income Tax Act for different payments and different categories of
recipients. For example, payment of redemption proceeds by a debt mutual fund to a resident
individual is not subject to TDS but for a Non-resident Indian is subject to TDS.
TDS works on the concept that every person making specified type of payments to any
person shall deduct tax at the rates prescribed in the Income Tax Act at source and deposit the
same into the government's account.
The person who is making the payment is responsible for deducting the tax and
depositing the same with government. This person is known as 'deductor'. On the other hand,
the person who receives the payment after the tax deduction is called 'deductee'. Form26AS is a
statement which shows the amount of tax deducted and deposited in a person's name/PAN in a
particular financial year.
An individual can, therefore, view/check the TDS from incomes paid to him by viewing
this Form 26AS. Each deductor is also duty bound to issue a TDS certificate certifying how
much amount is deducted in the deductee's name and deposited with the government.
Rates prescribed for different types of payments
There are different rates for TDS described in the different sections of the Act, depending on the
nature of the payments.
The government with effect from May 14, 2020 has reduced the TDS rates by 25% on
 non-salaried payments such as rent, interest received from fixed deposits, dividends etc.
However one must remember that no changes have been made with regards to TDS on salaries.
Therefore, tax on salaries will be deducted at the tax rates applicable to your income (inclusive
of cess at 4%).
Also, one must remember that the reduced TDS rate on the non-salaried payments will be
applicable till March 31, 2021.
How TDS works
The entity making a payment (which is subject to TDS) deducts a certain percentage of the
amount paid as tax and pays the balance to the recipient. The recipient also gets a certificate from
the deductor stating the amount of TDS. The deductee can claim this TDS amount as tax paid by
him (i.e. the deductee) for the financial year in which it is deducted.

The deductor is duty bound to deposit the TDS with the government. Once deposited this amount
reflects in the Form 26AS of individual deductees on the TRACES website linked to the income
tax department's e-filing website.

TDS only applicable above a threshold level

One must remember that TDS on specified transactions is deducted only when the value of
payment is above the specified threshold level. No TDS will be deducted if the value does not
cross the specified level.

Different threshold levels are specified by the Income Tax department for different payments
such as salaries, interest received etc. For example, there will be no TDS on the total interest
received on FD/FDs from a single bank if it is less than Rs 40,000 in a year from that bank. For
senior citizens, TDS on interest received on FD will be applicable if it crosses Rs 50,000 in a
single financial year.

How to avoid TDS

If a person expects that his total income in a financial year will be below the exemption limit, he
can ask the payer not to deduct TDS by submitting Form 15G/15H.

While receiving payment which is subject to TDS, deductee is required to provide his PAN
details to avoid tax deduction at the higher rates.

1. What is TDS?
TDS stands for tax deducted at source. The payer of income deducts the tax from the gross
payment due and pays the net amount (i.e. net of tax).
2. Is TDS deducted at same rate from all types income which are subject to TDS?
No, TDS is not deducted at the same rate from all incomes which are subject to TDS. There are
different TDS rates for different types of incomes.
3. Who are deductor and deductee?
A deductor is the person responsible for deducting tax. The person who receives the payment
after the deduction of tax is called the deductee.
4. How can I check if TDS is deposited with the government?
Once the TDS is deposited with the government by the deductor, then the TDS amount
deposited will be reflected in your Form 26AS. Further, the deductor is required to issue you a
TDS certificate.
5. What is the rate at which TDS on salaries is deducted?
According to income tax laws, TDS on salary is deducted at the income tax rates applicable to
one's incomes inclusive of cess.

6.Explain the features of Pay Roll Accounting in Tally.ERP-9 K4

• Payroll accounting in Tally offers the benefits of simplified Payroll processing and
accounting due to its added benefit of integration with accounts.
• The Payroll module in Tally.ERP 9 reports comprehensively as it has user defined
classifications and sub classifications. This might be associated with the employees,
employee groups, pay components, departments etc.
• The payroll module also lets flexible and user defined criteria for users.
• It also offers the facility to create user defined earnings and deductions pay heads.
• The module lets us use unlimited grouping of Payroll Masters.
• Supports production/attendance/time-based remuneration units which are user defined
production units.
• It offers all-inclusive cost center as well as employee wise costing reports.
• Ensures timely and precise processing of salary along with employee statutory deductions
and employer statutory contributions with the help of predefined processes.
• It helps generate Statutory forms and challans for EPF & ESI as prescribed.
• The payroll module helps in tracking the loan details of employees as well.
IV-UNIT
SECTION-‘A’

22.What is GST? K1
Goods and Services Tax is an indirect tax used in India on the supply of goods and
services. It is a comprehensive, multistage, destination-based tax: comprehensive because it has
subsumed almost all the indirect taxes except a few state taxes

23.How would you Upload the Number in GST? K1.

Step 1: Login to your GST account. GST Login.
Step 2: Select the month for which you wish to upload GST invoices. Select Filing
Month.
Step 3: Select GSTR-1 Return and Click on Prepare Online. ...
 Step 4: Upload B2B Invoice Details. ...
Step 5: Upload B2C Large Invoice Details.

24.What are the steps to create the GST Number for supplier K1

1.Go to official GST portal - https://www.gst.gov.in/ and under the services tab, choose
Services > Registration > New Registration. ...

2.On the Registration page, enter all the requested details (including your
PAN number), email address and mobile number.
3.After entering the details, click proceed.

25.What is CGST? K1
CGST is a tax charged on intrastate supply of goods and services by the central
government and is governed by the CGST Act, 2017. ... This means that both the central
government and the state governments agree to combine their tax collection and share the revenue
in equal proportions.

26.What is SGST? K1.

SGST means State Goods and Service Tax. It is covered under State Goods and Service
Tax Act 2016. A collection of SGST will be the revenue for State Government. After the
introduction of SGST all the state taxes like Value Added Tax, Entertainment Tax, Luxury Tax,
Entry Tax etc. will be merged under SGST

27.What are the Process of inter-state sales entry in GST? K1.

(i).Path: Gateway of Tally -> Accounting Info -> Ledgers -> Create.
(ii).Name: Inter-State Sales@18%
(iii).Under: Sales Accounts.
(iv).Set/alter GST Details: Yes, once enable this option then the below GST details
screen will appear.
(v).Nature of transaction: Interstate Sales Taxable.

28.What is IGST? K1
IGST stands for Integrated Goods and Services Tax. IGST is one of the three
components of Goods and Services Tax. IGS tax is levied when there is an inter-state transfer
of goods and services .

SECTION-‘B’
22.Which year GST was introduced in India with effect from K2
a) 1.1.2017 b) 1.4.2017 c) 1.1.2018 d) 1.7.2017 ANS(D)
23.Which year GST was introduced in Jammu and Kashmir with effect from K2
a) 1.8.2017 b) 1.7.2017 c) 1.1.2018 d) 8.7.2017 ANS(D)

24.What is incidence of Tax? K2.

a) Tax Cascading b) Tax Pyramidding c) Tax evasion d)Indirect tax ANS(A).

25.What is ‘Value Addition’? K2

a) Expenses ‘plus’ profit b) Cost plus tax c) Cost plus tax plus‘profit
d) Tax plus profit ANS(A)

26.When applicable to UTGST is K2

a) Sold from Union territory b) Goods are purchased by Central Government c) Sold from one
union territory to another union territory d) There is interstate supply ANS(A).

27.When applicable to SGST is K2

a) Goods are sold within a state b) Goods are sold from one GST dealer to a customer
c) Goods are sold by a GST dealer to another GST dealer d) Interstate supply ANS(A)

28.Which Goods and service tax is K2

a) Supply based b) Consumption based c) Both supply and consumption based
d) None of these ANS(B).
SECTION-‘C’

7.(a).What are the features of GST? [OR] K3

(i).Subsuming of 17 taxes at Central/States level.
(ii).Consumption Based Tax.
(iii).One Tax rate across the country.
(iv).Taxable event – “Supply of Goods or Services”
(v).No differentiation in Goods or Services.
(vi).Comprehensive tax on Goods & Services.
(vii).No tax on tax.
(viii).Free flow of credit.
(b).What are the limitation of GST? K3
• .Increased costs of software purchase that can assist in GST filing process leads to higher
operational costs for many businesses.
• GST has given rise to complexity for many business owners across the nation. SMEs with a
total income of Rs.75 lakh could avail the composition scheme, pay a mere 1% tax on turnover
and abide by less compliances; however, the trade-off is that they cannot claim credit for input
tax.
• GST has received criticism for being called a ‘Disability Tax’ as it now taxes articles such as
braille paper, wheelchairs, hearing aid etc.
• The complexities in taxation for products have seen manufacturers suspend their reward
programs, which are sure to affect consumers.
• The GST transaction fees within the financial sector have become more expensive increasing
from 15% to 18%.
• With GST, insurance premiums have become more expensive.
• The impact of GST on the real estate market caused an 8% increase on real estate price leading
to 12% fall in demand closely after it was brought into action in June, 2017. This however, may
be a short-term trend.
• Petrol is not under GST, which goes against the ideals of unification of commodities.

8.(a).Explain the to Creating GST Masters in tally? [OR] K3

Creation of GST-Master:
Information entered can be different each time but the Masters allows us to have a
standard format and structure so that we can manage our business as we need.
Accounting Masters also includes background information (needed for transactions) which is
picked up by Tally ERP 9 during voucher entry
Accounting Masters are pre-defined structure and content of your
accounting information system. for example, the account Ledgers in your Chart of Accounts
and the Groups under which they are classified. The Ledgers Furniture & Fixtures, Computer
Equipment and Vehicles are classified under the Group Fixed Assets. Another example is the
structure and content of accounting vouchers which will be used to enter transactions. So
masters are like default templates into which information is entered using vouchers. The
template or master gives the 'shape' to the information we enter into it. Information entered can
be different each time but the Masters allows us to have a standard format and structure so that
we can manage our business as we need.

Accounting Masters also includes background information (needed for transactions) which is
picked up by Tally ERP 9 during voucher entry. For example when you make a 'Sales with
Freight Charges' Sales Voucher Class it picks up the %age of Freight and Amount on which it
will be charged from the Voucher Class Master that you created. Another example could be the
US Dollar currency rate picked up by Tally ERP 9 when entering Foreign Currency
Transactions.

The Control Station of Accounting (and Inventory) Masters is the F11 Features and F12
Configuration. As you know F11 Features are company specific whereas F12 Configuration is
global (means it applies to all companies in the data directory/folder). The options that you
choose in F11 and F12 will enable those (accounting/inventory) masters (and their
configuration) in your company file. For example if your business deals in Foreign Currency
unless you set YES to 'Allow Multi-Currency' in F11 Feature your Accounting Masters
(Accounts Info) will not allow you to create/display/alter Foreign Currency types and their
information like buying and selling and spot rates.

So this means that how many and what kind of Accounting (or Inventory) Masters is there for
a company depends on the features enabled in F11 and the configurations selected in F12. Your
choices in F11 and F12 will determine what masters you have to create and what fields are there
to fill up during master creation.
Configuring - F12: Configure and Setting - F11: Features

F12: Configure and F11: Features help you to organize the information and the level of
details as per requirement. You can modify/alter the settings in F12: Configure and F11:
Features at any point of time
F11: Features
Go to Gateway of Tally > F11: Features > F1: Accounting Features
 Accounts Info. Menu Options
Accounts Information contains the masters. Each master
has Create, Alter and Display functions.
Single Group option is useful when you wish to work on one Group at a time. Multiple Group
option is very useful when you are working on many sub-groups at a time and saves a lot of
time. Once a sub-group is created, it behaves exactly like a Group.
Create
The Create option is used to create new masters.
Display
The Display option is used to view the Master information. Master information cannot be
modified in Display mode.
Alter
The Alter option allows you to view and make the necessary changes to the master
information. This does not allow the creation of masters.
Groups
Groups are collection of Ledgers of the same nature. Account Groups are maintained to
determine the hierarchy of Ledger Accounts which is helpful in determining and presenting
meaningful and compliant reports.
Tally.ERP 9 has the flexibility of setting user required chart of accounts. You can group the
Ledger accounts under the required Groups at the time of creating the chart of accounts or
you can alter them at any time.
The Group behavior is classified into Capital or Revenue and more specifically into Assets,
Liabilities, Income and Expenditure. The Groups ascertain whether the same will affect
Profit and Loss Account which is revenue in nature or Balance Sheet which is capital in
nature.
A Discussion on Each of the Reserved Groups
Non Revenue — Primary Groups
Capital Account
This records the Capital and Reserves of the company. The ledgers that belong to Capital
Accounts are Share Capital, Partners' Capital A/c, Proprietor's Capital Account and so on.
Reserves and Surplus [Retained Earnings]
This contains ledgers like Capital Reserve, General Reserve, Reserve for Depreciation and
so on.
Current Assets
Current Assets record the assets that do not belong either to Bank Accounts or to Cash-in-
Hand sub-groups.
Bank Accounts
Current account, savings account, short term deposit accounts and so on.
Cash-in hand
Tally.ERP 9 automatically creates Cash A/c in this group. You can open more than one cash
account, if necessary.
Note: An account under Cash-in-hand group or Bank Accounts/Bank OCC A/c group is
printed as a separate Cash Book in the traditional Cash Book format and does not form
part of the Ledger.
Deposits (Asset)
Deposits contain Fixed Deposits, Security Deposits or any deposit made by the company (not
received by the company, which is a liability).
Loans & Advances (Asset)
This records all loans given by the company and advances of a non-trading nature
(example: advance against salaries) or even for purchase of Fixed Assets. We do not
recommend you to open Advances to Suppliers’ account under this Group. For further
details, please refer to the section on Common Errors.

Stock-in-hand
This group contains accounts like Raw Materials, Work-in-Progress and Finished Goods.
The balance control depends on whether you have selected Integrated Account-cum-
Inventory option while creating the company. (refer to Company creation section for more
details) Let us consider these options:
Integrated Accounts-cum-Inventory
This option has a significant effect on the Balance Sheet and Profit & Loss Account. If set to
Yes, it brings the stock/inventory balance figures from the inventory records and provides a
drill down to the Stock registers from the Balance Sheet.
You are not allowed to directly change the closing balance of an account under this group.
You are allowed to pass transactions in Inventory records and the account balances are
automatically reflected in the Balance Sheet as Closing Stock.
Non-integrated Accounts-cum-Inventory
If Integrated Account-cum-Inventory option is set to No, it ignores the inventory books
figures and picks up manually entered closing stock balances from the ledger account
created. This provides the facility to maintain accounts separately and inventory separately.
You are not allowed to pass transactions if your accounts that come under this Group. It
allows you to hold opening and closing balances only. Since no vouchers can be passed for
these accounts, they are the only accounts for which the closing balances can be directly
altered (by an authorised user only).
Sundry Debtors
For customer accounts refer to common and possible errors in grouping of accounts section.
Current Liabilities
Accounts like Outstanding Liabilities, Statutory Liabilities and other minor liabilities can be
created directly under this group. Sub-groups under Current Liabilities are Duties and
Taxes, Provisions and Sundry Creditors
Duties and Taxes
Duties and Taxes contain all tax accounts like VAT, CENVAT, Excise, Sales and other trade
taxes and the total liability (or asset in case of advances paid) and the break-up of individual
items.
Provisions
Accounts like Provision for Taxation, Provision for Depreciation and so on are recorded
under Provisions.
Sundry Creditors
For trade creditors, refer to common and possible errors in grouping of accounts section.
Investments
Group your investment accounts like Investment in Shares, Bonds, Govt. securities, long
term Bank deposit accounts and so on. This allows you to view the total investments made
by the company.
Loans (Liability)
Loans that a company has borrowed, typically long-terms loans.
Bank OD Accounts [Bank OCC Accounts]
Tally.ERP 9 provides you with distinct types of Bank Accounts,
Bank OCC A/c
To record the company's overdraft accounts with banks. For example, Bill Discounted A/c’s
and Hypothecation A/c’s etc.
Note: An account under Bank OCC A/c group is printed as a separate Cash Book in the
traditional Cash Book format and does not form part of the Ledger.
Secured Loans
Term loans or other long/medium term loans, which are obtained against security of some
asset. does not verify the existence of the security. Typical accounts are Debentures, Term
Loans, and so on.
Unsecured Loans

Loans obtained without any security. Example: Loans from Directors/partners or outside
parties.
Suspense Account
In modern accounting, many large corporations use a Suspense Ledger to track the money paid
or recovered, the nature of which is not yet known. The most common example is money paid
for Traveling Advance whose details will be known only upon submission of the Travelling
Allowance bill. Some companies may prefer to open such accounts under Suspense Account.

Loans and Advances (Asset) group.

The Suspense Account is a Balance Sheet item. Any expense account even if it has 'suspense' in its name,
it should be opened under Revenue group like Indirect Expenses and not under Suspense Account group.

Miscellaneous Expenses (Asset)

This group is typically used for legal disclosure requirements such as Schedule VI of the Indian Companies
Act. It should hold incorporation and pre-operative expenses. Companies would write off a permissible
portion of the account every year. A balance remains to an extent that cannot be written off in Profit &
Loss Account. Tally.ERP 9 does not show loss, carried forward in the Profit & Loss Account, under this
group. The Profit & Loss Account balance is displayed separately in the Balance Sheet.

Branch/Divisions
This maintains ledger accounts of all your company's branches, divisions, affiliates, sister concerns,
subsidiaries and so on. Tally.ERP 9 permits Sales and Purchase transactions to take place with accounts
opened here. Remember, these are their accounts in your books and not their books of accounts. Just
treat them as any other party account. If you wish to maintain the books of a branch/division on your
computer, you must open a separate company. (Tally.ERP 9 allows maintenance of multiple company
accounts).

Revenue — Primary Groups

Sales Account
You can classify your sales accounts based on Tax slabs or type of sales. This also becomes a simple
mechanism for preparation of Tax returns.

EXAMPLES:
• Domestic Sales
• Export Sales
Now under Domestic Sales open the following ledgers:

• Sales (10%)
• Sales (5%)
• Sales (exempt)
You can even open an account as Sales Returns under the group Domestic Sales to view your net sales
after returns (or the returns may be directly passed through Journal against the specific Sales account).

Note: Do not create customer accounts under this group. For more details, refer to common and
possible errors in grouping of accounts section.

Purchase Account
This is similar to sales accounts, except for the type of transactions.
Direct Income [Income Direct]

These are Non-trade income accounts that affect Gross Profit. All trade income accounts fall under Sales
Accounts. You may also use this group for accounts like Servicing, Contract Charges that follow sales of
equipment.

For a professional services company, you may not use Sales Account group at all. Instead, open accounts
like Professional Fees under this group.

Indirect Income [Income Indirect]

These are miscellaneous non-sale income accounts. Example: Rent Received and Interest Received.

Direct Expenses [Expenses Direct]

These are Manufacturing or direct trading expenses. These accounts determine the Gross Profit of the
company.

Indirect Expenses [Expenses Indirect]

All administrative, selling or non-direct expenses.

Profit & Loss Account is a reserved primary account in Tally.ERP 9. You can use this account to pass
adjustment entries through journal vouchers. For example, transfer of profit or loss account to Capital
or Reserve account.

Common and Possible Errors in Grouping and Account Classification

Debtor/Creditor classification
Accounts of parties with whom your company is trading should be opened under any of the following
groups (or sub-groups under them):

• Sundry Debtors
• Sundry Creditors
• Branch/Divisions
Sales and Purchase account groups are meant for revenue accounts and are reflected in the Profit &
Loss Account. If you open party accounts under these groups, it becomes difficult to pass sales or
purchase voucher transactions.

For example, in a sales voucher transaction entry, you must debit an account, which can be sundry
debtor, branch/division or even a sundry creditor. Moreover, other facilities like bill-wise allocation and
tracking will not be available unless the accounts belong to one of these groups.
Opening two accounts of the same party
Tally.ERP 9 classifies debtors, creditors and branch/divisions for convenience. This helps you in the
process of keeping the accounts of a particular group together during display and analysis. Thus you can
pass both sales and purchase entries for a party account placed under Sundry Debtors. Use the
classification depending on the most natural group for the party.

For example, parties from whom you buy frequently can be placed under Sundry Creditors, as that is
the natural place to look for their account. Tally.ERP 9 does not restrict the accounts from having
obverse balances. Thus, a Sundry Debtor can have a credit balance depending on the state of his
account.

Therefore, you need not open two accounts for the same party - one under Sundry Debtors and another
under Sundry Creditors. Tally.ERP 9 restricts opening of two identical ledger accounts. In such cases,
you may decide to circumvent by marking one account as "A & Co - S/Dr" and another "A & Co - S/Cr".
This will allow you to have two accounts of the same party under two groups, but you will lose the
advantage of analyzing net position at a single instance. It is always better to maintain a single account
to obtain best benefits.

Expenditure items are entered under Liabilities group. For example, the expenditure item Rates & Taxes
under the group Duties and Taxes.

The group Duties and Taxes is specifically meant to handle taxation liabilities of your company. Rates &
Taxes and other statutory expenses should be placed under Indirect Expenses.

Simply adhering to the reserved groups may be sufficient for many organizations. For greater diversity,
Tally.ERP 9 allows you to create your own groups, either as sub-groups or primary groups. Groups can
be sub-classified to practically an unlimited level, giving you a virtual accounting tree. At the lowest
level, of course, would be the ledger account.

Note: While it is necessary to assign every ledger to a group/sub-group, it is not essential to have your
own sub-classification of accounts; you may simply use the reserved groups for grouping your ledger
accounts.

(b).Explain – “How to apply for uploading GST Numbers to Suppliers”. K3

How to get GST registration?
You can simply register your business on the official GST portal and then scan and upload all
the required documents. You will then receive an acknowledgement. A GSTIN will be generated
on acceptance of the application and a temporary password and login will be sent. GSTIN is a
unique 15-digit ID.
GST Registration Online - An Overview

Launched on July 1 2017, the Goods & Services Tax (GST) applies to all Indian service providers
(including freelancers), traders and manufacturers. A variety of Central taxes like Service Tax,
Excise Duty, CST and state taxes like Entertainment Tax, Luxury Tax, Octroi, VAT are absorbed
in one tax – GST, implemented on 01.07.2017. GST is to be charged at every step of the supply
chain, with full set-off benefits available. The procedure for GST is entirely online and requires
no manual intervention.
Every product goes through multiple stages along the supply chain, which includes the purchasing
of raw materials, manufacturing, sale to the wholesaler, selling to the retailer and then the final
sale to the consumer. Interestingly, GST will be levied on all of these 3 stages. Let’s say if a
product is produced in West Bengal but is being consumed in Uttar Pradesh, the entire revenue
will go to Uttar Pradesh.
Also, taxpayers with a turnover of less than Rs.1.5 crore can choose composition scheme to get
rid of tedious GST formalities and pay GST at a fixed rate of turnover.

What are the components of GST?

GST will have 3 tax components, which includes a central component (Central Goods and Services
Tax or CGST) and a state component (State Goods and Services Tax or SGST) where centre and
state will levy GST on all entities, i.e. when a transaction happens within a state. Inter-state
 transactions will attract the Integrated Goods and Services Tax (IGST), to be levied by the centre,
i.e. when a transaction happens one state to another.
What is the input tax credit?

Input tax credit lets you reduce your tax you have already paid on inputs and pay the remaining
amount at the time of paying tax.
You pay taxes on the purchase when a product is purchased from a registered seller, and when you
sell the product, you too collect the tax. With input credit, you can adjust the taxes paid at the time
of purchase with the amount of tax on sales (output tax) and pay the balance liability of tax, i.e.
tax on sale minus tax on the purchase.
Who needs a GST Registration?

Every business or corporation that are involved in the buying and selling and good of services have
to register for GST. It is mandatory for companies whose turnover is more than Rs.20 lakhs (for
supply of services) and Rs. 40 lakhs ( for supply of goods) yearly to register for a GST.
All businesses making interstate outward supplies of goods have to register for a GST too. The
same applies to businesses making taxable supplies on behalf of other taxable persons, example
Agents and Brokers.
Also, as per the recent notification, e-commerce sellers/aggregators need not register if total sales
are less than Rs.20 lakhs.
What are the GST tax rates?

• Items that are considered basic necessities come under exempt list i.e. they are not taxed.
• Household necessities and life-saving drugs etc. are taxed at 5%.
• Products like computers and processed food are taxed at 12%.
• Hair oil, toothpaste and soaps, capital goods, industrial intermediaries and services are taxed at
18%.
• Luxury items are taxed at 28%.
You can see the tax rates for all the products here: https://cbec-gst.gov.in/gst-goods-services-
rates.html
Check out the GST calculator which comes in handy to calculate the Goods and Service Tax using
different slabs.
What is a GST Return?

A GST Return is a document containing details of income that is required to be filed as per the law
with the tax authorities. Under the GST law, a taxpayer has to submit two returns on a monthly
basis and one such return annually. All returns have to be filed online. Please note that there is no
provision for revising the returns. All invoices for the previous tax period that went unreported
must be included in the current month.
 Under GST, a registered dealer has to file GST returns that include: Purchases, Sales, Output, GST
(On sales) and Input tax credit (GST paid on purchases).
What is GSTIN?

GSTIN is a unique identification number given to each GST taxpayer. To verify a GSTIN number
a person who has a GST number can log onto the GST portal.
What is the GSTN (Goods and Service Tax Network)?

The Goods and Service Tax Network (or GSTN) is section 8 (non-profit), non-government, private
limited company. GSTN is a one-stop solution for all your indirect tax requirements. GSTN is
responsible for maintaining Indirect Taxation platform for GST to help you prepare, file, rectify
returns and make payments of your indirect tax liabilities.
Mandatory documents for Online GST registration

The list of documents required for registration of GST for various business are as follows:
Proprietorship
• PAN Card and address proof of proprietor
LLP
• PAN Card of LLP
• LLP Agreement
• Partners’ names and address proof
Private Limited Company
• Certificate of Incorporation
• PAN Card of Company
• Articles of Association, AOA
• Memorandum of Association, MOA
• Resolution signed by board members
• Identity and address proof of directors
• Digital Signature
The following can be shown as proof of address of a director:-
• Passport
• Voter Identity Card
• Aadhar Card
• Ration Card
• Telephone or Electricity Bill
• Driving License
• Bank Account Statement
Add what works as identity proof, One can use a PAN Card, Aadhar Card as identity proof. For
address proof, any of the director’s can show their voters ID, passport, telephone bill, electricity
bill and telephone bill.
Preparation of GST application

One of our GST representatives will collect all the required documents and process the GST
application through the iCFO platform.
Application Filing
Once all the documents are collected, the application will be processed and filed. Then
immediately the ARN number will be issued.
GST Registration Certificate
The GST registration certificate and GSTIN will be issued upon verification of GST application
and other mandatory documents by the GST officer. Be aware that no hard copies of the certificate
will be issued and the GST registration certificate can be downloaded from the GST Portal.
Penalties For Failure To GST Registration
As per the Section 122 of the CGST act, in India, there is a direct penalty for all those taxable
persons who fail to register for GST.
Voluntary Registration Under GST (for Companies With A Turnover Below Rs.20 Lakhs)
Any small business with turnover less than 20 lakh can voluntarily register for GST even though
it is not compulsory by law. Voluntary GST registration has its own advantages and some of them
are:
• Take input credit: In GST, there is a flow of input credit right from manufacturers of the goods
till the consumers, across the country. Input credit means a taxpayer while paying tax on output
can deduct the tax that has already been paid on inputs and pay only the remaining amount.
Voluntarily registered businesses can increase their margins and profits through this.
• Do inter-state selling with no restrictions: SMEs can increase the scope of their businesses
and find prospective customers and explore online platforms
• Register on e-commerce websites: SMEs can widen their market by registering through e-
commerce sites.
• Have a competitive advantage compared to other businesses.
GST Return Filing

A GST Return Filing is a return document that contains details of the income of the taxpayer. It
has to be filed with the GST administrative authority. The document is used tax authorities to
 calculate the tax liability of a GST taxpayer. A GST Return Filing form has to include the following
details.
• Output GST (On sales)
• Sales
• Input tax credit (GST paid on purchases)
• Purchases
For filing a GST Return, you need to have GST compliant sales and purchase invoices attached.

SECTION – ‘D’
7.Explain the Process and Latest Uses of GST in Tally K4
What is Goods and Service Tax Act 2017?
GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service
Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July
2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax
that is levied on every value addition.

In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods
and services. This law has replaced many indirect tax laws that previously existed in India.

Types of taxes under GST

There are currently three types of GST

• CGST – Central GST – Applies to sales within the state – goes to Central Government
• SGST – State GST – Applies to sales within the state – goes to State Government
• IGST – Integrated GST – Applies to sales outside the state – goes to Central Government

For example, if you sell something within the state, 50% of the GST will be CGST and 50% of
the GST will be SGST. But when you sell something outside a state, 100% of it will be IGST
which will go to the Central Government.

Now that you have a basic understanding of how GST works, we can go ahead to understand the
working of GST in Tally along with its accounting and calculation.

How to begin Tally ERP 9?

In order to use Tally, following steps must be followed

To create a company in Tally

To enable GST Features

To create ledgers
Let’s discuss the above in detail

To create a company in Tally

Step 1 : - Go to Gateway of Tally > Alt + F3 > Create Company

Step 2 : - Enter the basic information, i.e., name, mailing name and address of the
company, currency symbol etc.

Step 3 : - In the ‘maintain field’, select Accounts Only or Accounts with Inventory as
per the company requirements.

Step 4 : - In the Financial Year from, the first day of the current financial year for e.g.,
1-4-2018 will be displayed by default, which can be changed as per
requirement.

Step 5 : - Enter the Tally Vault Password if required.

Step 6 : - Press Y or Enter to accept and save.

To enable GST features in Tally

Step 1 : - Go to Gateway of Tally > F11: Features > F3 : Statutory & Taxation

Step 2 : - In the screen you will find the following options : -

•
o Enable goods and service tax (GST): Yes
o Set/alter GST Details: Yes.

This will display another screen where you can set GST details of the
company such as the state in which the company is registered, registration
type, GSTIN number etc.
Step 3 : - Press Y or Enter to accept and save.

To create ledgers
After creating a company and activating GST features, you need to create ledgers that will enable
you to pass accounting entries in Tally ERP 9.

Step 1 : - Go to Gateway of Tally > Accounts Info > Ledgers > Create

Step 2 : - Create ledgers such as Purchase, Sales, State GST, Central, Integrated GST,
Stock item names etc.

Step 3 : - Select the appropriate group to which such ledger belongs for example state
tax under duties and taxes group.

Step 4 : - Enter the other related information required and press Y or Enter to accept
and save.
After creating ledgers we can proceed with preparing Accounting entries in Tally ERP 9. For that
we have to follow : -

Gateway of Tally > Accounting Vouchers

There are many accounting vouchers in Tally such as Payment, Receipt, Contra, Sales, Purchase,
etc. After choosing the relevant voucher we start passing the accounting entries.

How will GST work in Tally.ERP 9?

The functionality of GST in Tally is almost the same as prevalent during erstwhile taxation laws
such as VAT or CST or Service Tax.

The first step before passing an Accounting Entry in Tally is to make GST Calculation. But first,
let’s take an example for our understanding. For example: M/s ABC Ltd of Mumbai sold goods
worth Rs. 50,000/- to M/s XYZ Inc. of Ahmedabad; GST rate applicable for the given product is
18%

GST Calculation - M/s ABC Ltd has to collect GST and say it is 18%. Then GST will
come at Rs. 9,000/-.

Taxable Value - This is the portion on which tax will be levied (i.e.,) Rs. 50,000/- in
this case.

Type of Tax to select - Since it is a transaction involving Inter-State trade, the ledger to
create and select while preparing Accounting entry is IGST ledger.

Rate of Tax to be fed during 18% IGST (Tax type : Integrated Tax) .
Tax Ledger creation screen -

Tax rate to key while 18% IGST and Tally will automatically bifurcate and distribute the
preparing Stock Item Ledger tax rate to CGST and SGST as 9% each.
-

Other ledgers to create - Create XYZ Inc., ledger along with GSTIN number.

Now we have to go to the Accounting Voucher Screen and fit these details in Sales Voucher
screen (F8). We are also not required to worry about tax calculation as Tally automatically
calculates Tax amount portion based on the details fed in Stock Item Creation Screen and Tax
ledger creation screen.
8.Explain – (i).SGST (ii).CGST. (iii)IGST. (iv).GST Report and Returns K4

(i).SGST:

Tax Ledgers should be created under Duties and Taxes group which contains all tax
accounts like GST, and other trade taxes and total liability.

To account for the different taxes to be paid under GST (central tax, state tax, union territory tax,
integrated tax, and cess), you have to create a tax ledger for each tax type.

The following GST Ledgers will be created :

i. SGST [ State Tax for both Purchase and Sale within State ]

ii. CGST [ Central Tax for both Purchase and Sale within State ]

iii. IGST [ Integrated Tax for both Purchase and Sale Outside State]

i. To create ‘SGST’ ledger

1. Go to Gateway of Tally > Accounts Info. > Ledgers > Create.

2. In Under, select Duties & Taxes.

 3. Select GST as the Type of duty/tax.

4. Select State Tax as the Tax type.

Note : Percentage of Calculation should be 0% ( Don’t Change ) due to multiple Tax Rate

Similarly, you can create ledgers CGST & IGST by selecting the relevant Tax type under GST.
For CGST Ledger :

For IGST Ledger :

 V-UNIT
SECTION-‘A’

29.What is budget? K1.

30.What is Budgetary Control? K1

31.What is Cost Centre? K1.

32.What is Cost Categories? K1.

33.State the elements of Purchase and Sales Reporting? K1.

34.What are the steps to create for Financial Report in Tally? K1.

35.How would you interest Calculation for Point of Sales? K1.

SECTION-‘B’

29.Which Payroll Report is choose K2.

(a).Gateway of Tally >Display (b).Gateway of Tally >Display >Statement of
Accounts (c).Gateway of Tally >Display> Statement of PayRoll. ANS(D)

30.Explain the BOM- K2

(a).Billing of Machine. (b).Bill of Materials (c).Bills of Maintence

(d).None of these. ANS(B)

31Which ‘Alias’ Represents K2

(a).Short Name (b).Nick Name. (c).Code name. (d).All of these.
ANS(D).
32.Which of the following will not appear in a cash budget? K2.
(a) Sales revenue. (b) Depreciation of Machinery (c).Machinery on hire
purchase (d).Wages. ANS(B

33.Which a fixed budget is K2

(a).A budget that is set for a specified level of activity (b).A Budget that Never
changes (c).A budget that ignores inflation. (d). A budget that itemizes the fixed cost of
a department. ANS(A).

34.Define a Flexible budget is K2

(a). A budget that will be changed at the end of every month in order to reflect the actual
cost of a department. (b). A budget that comprises Variable cost only. (c).A budget that is
Constantly being changed, (d) A budget that is adjusted to reflect different costs at different
activity level. ANS(D).

35.The ‘Term’ “Budgetary Period Relates to K2

(a).The Period for which the budget is prepared (b).The Sub-divisions of the main
Budget. (c).Specific year for which the budget has been Prepared. (d).The period
in which the budget is finalized. ANS(A).
SECTION-‘C’

9.(a).How will your activate Cost Centre? [OR] K3.

Creating cost centres and cost categories: The first thing is to create the cost centre
to which the costs can be allocated.

To create Cost centre: Follow these steps

Step 1 Go to Gateway of Tally.ERP 9 > Accounts Info. > Cost Centres > Select
‘Create’ under Single Cost Centres.
Step 2 Select the Cost Category under which we want to classify the cost centre
created and to do this follow :

Step 1 Go to Gateway of Tally > Accounts Info. > Cost

Categories
Step 2 Select ‘Create’ under ‘Single Cost Category
Step 3 Enter the Cost Category name and accept the screen.
 Allocating expenses to cost centre : - To allocate expenses to each cost centres while
making payment the first thing which needs to be done is to create the expense ledger
in Accounting vouchers section and then pass entry for payment transaction.

To pass the entry for payment transaction:

Step 1 Go to Gateway of Tally > Accounting Vouchers > F5: Payment

Step 2 Debit the ‘Expense’ ledger with the required amount
Step 3 Press Enter to open ‘Cost Allocation’ screen
Step 4 Select the ‘Cost Category’
Step 5 Allocate each cost centre created with the required amount
Step 6 Credit Bank or Cash to complete the payment transaction

(b).State the Procedure involved in Creation of Cost Category K3.

Cost Category in Tally.ERP 9 Did you know that Tally.ERP 9 can help you easily allocate
costs to each of your organizational units (a department, an employee etc.) and effortlessly analyze
the financial inflow or outflow of all these units? Would it not be easier to make the decision for
your business if you have the option to view the costs incurred on each of your business unit and
how much profit each unit made? This is exactly what the ‘Cost Centre and Cost Category’ in
Tally.ERP 9 can do for your business. The cost centre in Tally.ERP 9 refers to an organizational
unit to which costs or expenses can be allocated during transactions while the cost category is used
to accumulate costs or profits for parallel sets of cost centers. For example, you can use cost centre
to track expenses of each employee while cost category can be used to see the effectiveness of
each project. To use cost center in Tally.ERP 9, let’s consider a ‘Sales department’ in an
organization which has 4 different Salesmen. To record their expenses and incomes, let’s follow
the steps below: Enabling Cost Centre and Cost Category To do this: • Go to Gateway of Tally >
F11: Features > F1:Accounting Features • Set ‘Maintain Cost Centres’ to ‘Yes

’ • Set ‘More than ONE Payroll/ Cost Category’ to ‘Yes’

Creating Cost Categories To group the salesmen under one Cost Category (one
similar project):

• Go to Gateway of Tally > Accounts Info. > Cost Categories > Select ‘Create’ under
‘Single CostCentre.

• Enter ‘Sales Project 1’ in ‘Name’ > Accept the screen Creating Cost Centres Each
salesman is considered as a cost centre, so to create these:
• Go to Gateway of Tally> Accounts Info.> Cost Centres> Select ‘Create’ under Single
Cost Centres
• Select ‘Sales Project 1’ in ‘Category’
• Enter ‘Salesman 1’ in Name and accept the screen Similarly, you can create cost centres
for other 3 salesmen. Allocating Expenses to Cost Centres during Transaction To allocate expenses
to each cost centres while making payment for salesmen’s expense (for e.g. Conveyance):
• Let’s create a ‘Conveyance’ ledger under ‘Indirect Expense’. Also note that ‘Cost Centre
is enabled by default. To pass the payment transaction:
• Go to Gateway of Tally > Accounting Vouchers > F5: Payment • Debit the ‘Conveyance’
ledger with the required amount
• Press Enter to open ‘Cost Allocation’ screen
• Select the ‘Sales Project 1’ in ‘Cost Category’

10.(a).State the essential of Budget? [OR] K3.

Essential of Budgeting:
(i).Sound Forecasting
(ii).An Adequate, Planned and Reliable Accounting System
(iii).Efficient Organisation
(iv).Formation of Budget Committee
(v).Cleanly defined Business Policies
(vi).Availability of Standard Information
(vii).Support of Top Management
(viii).Good Reporting System
(ix).Motivation

Sound Forecasting: Business forecasts are the foundation of budgets. The

forecasts are discussed by the executives and when most profitable combinations of
forecasts are selected, they become budgets. The more sound are the forecasts better
results would come out of the budgeting.
An Adequate, Planned and Reliable Accounting System:
There should be a proper flow of accurate and timely information in the business
which is ‘must’ for the preparation of budgets. The finance department should
continuously supply financial data on the basis of which budget estimates and forecasts
are to be made. If the data are wrong all the estimates will be wrong and the very
objectives of budget will be misguiding.
Efficient Organisation: Preparation of Budget and its operation requires
efficient, adequate and best organisation. Therefore, a budgeting system should always be
supported by a sound organisational structure demarcating clearly the lines of authority
and responsibility.
Formation of Budget Committee: It is the Budget Committee that receives the
forecasts and targets of each department as well as periodic reports and finalizes the final
acceptable targets in form of Mater Budget. The Budget Committee also approves the
departmental budgets. It is imperative that opportunities must be provided to the
executives of all the departments for their participation in the process of budget making.
Cleanly defined Business Policies:
Budgets for each department should be prepared taking into account the policies
set for particular department. Policies should be precise and clearly defined as well as
free from any ambiguity.
 Availability of Standard Information:
It is very essential that sufficient and accurate relevant data should be made
available to each department. Take for example, sales forecasts, production targets, price
data may not flow from normal accounting system alone and these data should be
collected and processed by using advanced statistical techniques and methods.
Support of Top Management: In order to make budgets effective, each member
of top management should cooperate and should involve themselves enthusiastically in
the process of budget making. The whole system of budget making should enjoy the
active and spontaneous support of the top management.
Good Reporting System: An effective budgeting system also requires the
presence of a proper feed back system. As work proceeds in the budget period, actual
performance should not only be recorded but it should also be repaired with the budgeted
performance. The variations should be reported promptly and clearly to the appropriate
levels of management.

The reporting system should be designed in such a way that along with variations, the
causes of such variations and persons responsible for such variations are also reported so
that management may decide about suitable remedial or corrective actions.
Motivation: All the employees or staff other than executives should be strongly
and properly motivated towards budgeting system. There is need to make each member
of the staff feel too much involved in the budget making system.

(b).What are the different types of Budget available IN Tally? K3

(i)Incremental budgeting. Incremental budgeting takes last year's actual
figures and adds or subtracts a percentage to obtain the current year's budget.
(ii).Activity-based budgeting.
(iii).Value proposition budgeting.
(iv).Zero-based budgeting.
(v).Imposed budgeting.
(vi).Negotiated budgeting.
(vii).Participative budgeting.
Incremental budgeting:

Incremental budgeting takes last year’s actual figures and adds or subtracts a percentage to obtain
the current year’s budget. It is the most common method of budgeting because it is simple and
easy to understand. Incremental budgeting is appropriate to use if the primary cost drivers do not
change from year to year. However, there are some problems with using the method:
 • It is likely to perpetuate inefficiencies. For example, if a manager knows that there is an
opportunity to grow his budget by 10% every year, he will simply take that opportunity to
attain a bigger budget, while not putting effort into seeking ways to cut costs or economize.
• It is likely to result in budgetary slack. For example, a manager might overstate the size of
the budget that the team actually needs so it appears that the team is always under budget.
• It is also likely to ignore external drivers of activity and performance. For example, there
is very high inflation in certain input costs. Incremental budgeting ignores any external
factors and simply assumes the cost will grow by, for example, 10% this year.
2. Activity-based budgeting

Activity-based budgeting is a top-down budgeting approach that determines the amount of inputs
required to support the targets or outputs set by the company. For example, a company sets an
output target of $100 million in revenues. The company will need to first determine the activities
that need to be undertaken to meet the sales target, and then find out the costs of carrying out these
activities.

Source: CFI’s Budgeting & Forecasting Course.

3. Value proposition budgeting

In value proposition budgeting, the budgeter considers the following questions:

• Why is this amount included in the budget?

• Does the item create value for customers, staff, or other stakeholders?
• Does the value of the item outweigh its cost? If not, then is there another reason why the
cost is justified?

Value proposition budgeting is really a mindset about making sure that everything that is included
in the budget delivers value for the business. Value proposition budgeting aims to avoid
unnecessary expenditures – although it is not as precisely aimed at that goal as our final budgeting
option, zero-based budgeting.
4. Zero-based budgeting

As one of the most commonly used budgeting methods, zero-based budgeting starts with the
assumption that all department budgets are zero and must be rebuilt from scratch. Managers
must be able to justify every single expense. No expenditures are automatically “okayed”. Zero-
based budgeting is very tight, aiming to avoid any and all expenditures that are not considered
absolutely essential to the company’s successful (profitable) operation. This kind of bottom-up
budgeting can be a highly effective way to “shake things up”.

The zero-based approach is good to use when there is an urgent need for cost containment, for
example, in a situation where a company is going through a financial restructuring or a major
economic or market downturn that requires it to reduce the budget dramatically.

Zero-based budgeting is best suited for addressing discretionary costs rather than essential
operating costs. However, it can be an extremely time-consuming approach, so many companies
only use this approach occasionally.

Levels of Involvement in Budgeting Process

We want buy-in and acceptance from the entire organization in the budgeting process, but we
also want a well-defined budget and one that is not manipulated by people. There is always a
trade-off between goal congruence and involvement. The three themes outlined below need to be
taken into consideration with all types of budgets

Imposed budgeting

Imposed budgeting is a top-down process where executives adhere to a goal that they set for the
company. Managers follow the goals and impose budget targets for activities and costs. It can
be effective if a company is in a turnaround situation where they need to meet some difficult
goals, but there might be very little goal congruence.

Negotiated budgeting

Negotiated budgeting is a combination of both top-down and bottom-up budgeting

methods. Executives may outline some of the targets they would like to hit, but at the same time,
there is shared responsibility for budget preparation between managers and employees. This
increased involvement in the budgeting process by lower-level employees may make it easier to
adhere to budget targets, as the employees feel like they have a more personal interest in the
success of the budget plan.

Participative budgeting

Participative budgeting is a roll-up approach where employees work from the bottom up to
recommend targets to the executives. The executives may provide some input, but they more or
less take the recommendations as given by department managers and other employees (within
reason, of course). Operations are treated as autonomous subsidiaries and are given a lot of
freedom to set up the budget.

SECTION-‘D’

9. State the Procedure involved in Creation and Alteration of Cost Centre. K4

By enabling cost centres in accounting features helps you to create cost centres under
account info.

.Step 1: Go to Gateway of Tally > F11: Features > click on F1: Account Features.
Step 2: In the next screen, enable the option for Maintain Cost Centres as “Yes”
Path: Gateway of Tally –> Accounts Info –> Cost Centres.

Cost centre in Tally:

In this Tally Tutorial, we shall learn how to create, display and alter cost centre in Tally ERP 9 step
by step.
Enable Cost Centre in Tally
Before creation of cost centre in tally, make the following configuration settings to enable cost
centre in Tally.ERP 9. By enabling cost centres in accounting features helps you to create cost
centres under account info.
Step 1: Go to Gateway of Tally > F11: Features > click on F1: Account Features.
Step 2: In the next screen, enable the option for Maintain Cost Centres as “Yes”
 How to create cost centre in Tally:
Path: Gateway of Tally –> Accounts Info –> Cost Centres.
Step 1: Go to Gateway of Tally and click on Accounts Info.

Step 2: Now click on the option “Cost Centres”

 Step 3: In the next screen, under single cost centre option click on the option create.
Note: If you want to create multiple cost centres in Tally, choose the option create under multiple
cost centres.

Step 4: On cost centre creation screen, update the following details

 ▪ Category: Tally automatically create primary cost centre where all the cost
centres are to be assigned. Primary cost centre is a default cost centre until we
create new one. Choose the category as Primary Cost Centre.
▪ Name: Enter the name of cost centre.
▪ Alias: You can can call the cost centre with other name, for e.g. Head Office,
Branch, etc.
▪ Under: Update the parent cost centre for this cost centre from the list of cost
centres.

After entering the required details for cost centre creation, choose A:Accept to save the
details.
How to display Single Cost Centre in Tally
Path: Gateway of Tally –> Accounts Info –> Cost Centres –> Single Cost Centre -> Display
On select the cost centre screen, choose the cost centre from the list of cost centres.

Now the cost centre displays on screen with details.

10.Discuss the Procedure involved in the Creation of Budget in Tally? K4

Procedure for Create Budgets for Ledgers:

On enabling budgets , the option to create Budgets is available in the Accounts
Info. menu. Budgets can be created for specific ledger accounts created.
1. Go to Gateway of Tally > Accounts Info. > Budgets > Create .
2. In the Budget Creation screen, enter a n ame for your budget.
3. In the Under field, select the required budget from the List of Budgets . By
default, Primary is selected from the List of Budgets . Sub-budgets can be created
under primary budgets.
4. Enter the period of the budget in the From and To fields.
5. In Set/Alter Budgets of , enter Y in the Ledgers field to view the Ledger
Budget screen.
6. Press Space bar to open List of Ledgers .
7. Select the required ledger.
8. Select the required Type of Budget
Note: Select On Nett Transactions to monitor the transaction amounts and not the
balances. Nett is net of debits and credits for the specified period. Nett transactions
Budgets specified for a period automatically gets apportioned over the period. i.e., When
 On Nett transactions Budgets are defined, the debit amount for the specified period after
reducing the credits for the same period is considered without taking into account opening
and closing balances. For example to compare transactions against budgets, especially
revenue income and expenses On Nett Transactions can be selected.
Select On Closing Balance to monitor the balances of the Accounts and the not the
transactions. i.e., each month will have the same budget value except that the actual
Opening Balance is also taken into account. Budgets on Closing balances can be set for
Bank Account Ledgers, Debtors Ledger balances and so on. For example to compare
closing balance figures in final statements, especially Balance Sheet items like assets and
liabilities, select Closing Balances.

9. Enter the budget amount in the Amount field.

10. Press Enter to save.

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