TALLY - ERP UNIT-III

What is a purchase order?

 A purchase order is a contract between the buyer and the

seller
 It gives specific information like product or services to be
delivered, delivery date & any other terms and conditions
including the price.
 The purchase order is also called as ‘PO’
 Purchase order procedure
 The purchase order procedure commences with the order approval which is enacted by the approver on the request raised by
the department which is in need of the raw material.

 Once the approval is given, the PO is sent back to the requisitioner i.e., the concerned department and from there it is sent
to the supplier for his acceptance.

 Once the purchase order is accepted by the vendor, it becomes a legally binding document which outlines the required
items, the agreed-upon price, delivery expectations and payment terms.

 The journey mentioned above is a complete cycle that you get to see in bigger business and business who are well-
organized. It is also possible one may simply raise a purchase order without the need for approval because the procurement
process followed by the business does not need it.

 There is no question of right or wrong, as long it meets the business needs, you are free to follow any purchase order cycle.
 Details of purchase order
Purchase orders contain the details ranging from products that are ordered to shipping address. Below are
details that usually forms part of purchase order:

 Products that are ordered

 Quantities i.e., (kg, meters, numbers etc.,)
 Price at which it is ordered
 Name of the vendor to whom the purchase order is being sent
 Shipment address or delivery location where the goods are required
 Billing address of the company
 Terms and conditions of payment.
 Due date of delivery/consignment
 Purchase order process flow
 The process begins with recording the purchase orders basic details and creating the requisition for internal
approval.
 The requisition then needs to be approved by a manager or the finance department or any other required officer
before the PO is created and sent to the supplier.
 The vendor or the supplier is automatically notified and invited to review the purchase order.
 The supplier either accepts the order or declines it, in which case a reason must be provided and sent back to the
buyer.
 In case the vendor accepts the order and delivery date is confirmed, the final details are sent to the receiving
department.
 Next steps involve receiving goods, physical verification of goods, receiving invoice and payment to the vendor
within agreed terms.
Purchase order vs purchase invoice

Purchase order Invoice

 Purchase order is a contract or  Purchase invoice is a bill issued after

confirmation of that the order for such a fulling the delivery and request for the
material is placed payment

 Buyer initiates and sends to the supplier  Supplier initiates and sends it to the
buyer
 It is issued before receiving the goods  It is issued after or along with the
delivery of goods by the supplier.
 How to enable the purchase order processing in
Tally ERP9
Path: Gateway of Tally->F11 Features ->Inventory Features-> Allow purchase order processing: Yes
 PO Creation

Path: Gateway of Tally -> Order

Vouchers -> Click on Purchase
order

Click on F4: Purchase Order

 Recording a Purchase Order
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
 Recording a Purchase Order Cont..

7. Press Ctrl+A to accept.
Now, you can send the purchase order
for an item to your supplier.
 Purchase Order Creation

Enter party A/c name: Pavan Traders

 
Enter purchase order no: 2
 
Select the name of stock item from the list of stock items
 
Enter quantity of item
 
Enter rate of item
 
Press enter to save the screen
Invoice posting 
(Goods received against purchase order No: 2)

Accounting Entry
 
HP Computers Dr 5,40,000
 
CGST Dr 48,600
 
SGST Dr 48,600
 
To Pavan Traders 6,37,200
How to Check Purchase Order Outstandings in
Tally

Path: Gateway of Tally -> Display ->

Statements of Inventory -> Purchase Order
Outstandings

Click on purchase order outstandings and check

the status of order.
 Purchase Order for Services

Example: On 2-7-2012 ABC Company placed a purchase order for advertising services with Krypton Agency for
Rs.25,000

Record the Transaction in Purchase Order (Without Item)

Set up:
In F11: Features (F2: Inventory Features)
• Set the option Allow Purchase Order Processing to Yes
To record the Purchase Order
Go to Gateway of Tally > Inventory Vouchers > F4: Purchase Order
1.Press F2 and change the date to 02-07-2012

2.In Party A/c Name field select Krypton Agency from List of Ledger accounts

3.In Order No. field enter the Purchase Order number - PO-001

4.In Name of Item field select End of List and press Enter

5.Select Purchase- Advertising Services and press Enter to view Service Tax Details screen

6.In Service Tax Details screen

 Purchase Order for Services

1.In Type of Ref field select New Ref

2.Name : This field displays the Reference Number for the Service Taxcalculation. The
default Reference Number displayed, is a combination of abbreviation of Purchase
Order, Order Number and Line Number. Example: Purc Order /PO-001-1 which
can be changed by the user.
• Type of Service: Based on the Type of Service selected in the Service Provider, Type
of Service will be defaulted (displayed). By default Input Credit is displayed and
Tally.ERP 9 skips the field.
• Category: Based on the Service Category selected in the Purchase Ledger, category will
be defaulted (displayed). By default Taxable Service is displayed and Tally.ERP 9 skips
the field.
• Service Amount: In this field enter the Service Amount which is ordered Rs. 25,000
• Amount (Incl. of Tax): In this field the cumulative (collective) amount of Service
amount and Tax will be displayed in this field
 Purchase Order for Services

• In Amount field Service Amount of Rs. 25,000 will

be displayed
7.Select Service  Tax Ledger e.g. Service Tax @
12%. Service Tax amount will be calculated and
displayed automatically.
8.Select Education Cess Ledger e.g. Education
Cess @ 2%. Education Cess amount will be
calculated and displayed automatically.
9.Select Secondary and Higher Education Cess
Ledger e.g. Secondary Education Cess @
1%. Secondary and Higher Education Cess
amount will be calculated and displayed
automatically.
 The completed Purchase Order

10.Press Enter to Accept
and save
Financial Reports in Tally
Reports
Balance Sheet
Profit and Loss Account
Cash Book
Trial Balance
Bank Books
Account Books
Ledgers
Group Summary
Day Book Group Vouchers

List of Accounts Journal Registers

DISPLAY - TALLY.ERP 9 REPORTS

The display screens of Tally.ERP 9 are dynamic and

interactive. They are not spooled print files but are specially
designed for the screen. Whatever you see on the screen can
be printed as well depending upon your printer’s capabilities.

To view the Display Menu:

Go to Gateway of Tally > Display

DISPLAY - TALLY.ERP 9 REPORTS

Gateway of Tally displays only the

 Balance Sheet and
 Profit & Loss Account
Are directly as these statements are considered the most
important
All the other Tally ERP 9 reports are classified into two broad
categories.
 Accounting reports
 Inventory reports
Each area is further grouped into books and statements.
View the Balance Sheet

1. Go to Gateway of Tally > Display > 

Balance Sheet .
2. Press F12 to configure the Balance Sheet .

3. Press Ctrl+A to accept.
Configure Balance Sheet

 The options in balance sheet for method

of showing balance sheet, format, and
other additional details.
 Go to Gateway of Tally > F12:
Configuration > General. 
Profit & Loss Account
 You can view the Profit & Loss account
details in Tally.ERP 9 for a specified period.

 By default, the Profit & Loss A/c report will

be generated as on the date of the last
voucher entry. You can change the date to
view the report for the required period.

1. Go to Gateway of
Tally > Display > Profit & Loss A/c .
2. Click F1 : Detailed to view the Profit &
Loss Account in detailed format.
3. Press F2: Period to change the period as
required.
Schedule VI Profit & Loss A/c
 The Profit & Loss A/c is in
horizontal form, by default. You
can view the report in vertical
format by enabling the option 
 Show Vertical Profit & Loss by
clicking F12: Configure . You can
view additional information or
toggle to another report using the
options available in the button
bar.