Volume 2 India Ver 141005 PDF

Tally Financial Accounting Program
Volume-2
© Tally Solutions Pvt Ltd 1988-2005

Tally Financial Accounting Program-Volume-2
©Tally Solutions Pvt. Ltd. 1988 - 2005 Edition

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Ltd.
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Information in this training manual is subject to change without prior notice and does not represent a
commitment on the part of Tally Solutions Pvt. Ltd.
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Tally is a registered trademark of Tally Solutions Pvt. Ltd.
Ver : Tally Financial Accounting Program Vol-2/Release 1.0/India/October 2005.

Preface
The age-old glass cupboards shelved with huge books of accounting has become a rare sight these
days. With computers taking over every aspect of human life, accounting also has acquired a new
face. Tally: the name synonymous to simple accounting process and business management.
Consider the job market; Tally Certified Professionals are the most-wanted and preferred employees.
Tally features a spiral learning method where the student is introduced to different aspects of
Accounting on computers. Additions are made to the lessons as and when the student becomes
confident about the previous lessons in accounting imparted by Tally. This method ensures that the
student learns Tally thoroughly. This type of teaching promises an organised and consistent learning
process.
In Volume 2, the student will learn to work with selected inventory related features of Tally. The
student will learn to design, setup and manage accounting systems with the help of Tally. They learn
to process transactions involving purchases and sales of goods, sales, Bills Receivable, and Bills
Payable, Set up related accounts and other documents, and prepare the financial statements.
Trust Tally for a brighter future! Happy learning with Tally!

Contents
Lesson: 1 Introduction to Trading Organisations

Lesson Objectives ................................................................................................................ 1
Recap of Level One ............................................................................................................. 1
1.1 Trading Organisations .............................................................................................. 2
1.1.1 Nature of Trading Organisations ................................................................................ 2
1.1.2 Difference between Trading and Service Organisations ............................................ 3
1.1.3 Activities in a Trading Organisation .......................................................................... 3
1.1.4 Accounting and Commercial Terms ............................................................................ 3
1.2 Introduction to Inventory ......................................................................................... 4
1.2.1 Kinds of Inventory ....................................................................................................... 4
1.2.2 Introduction to Inventory Valuation ............................................................................ 5
1.2.3 Inventory Systems ....................................................................................................... 6
1.2.4 Determining Inventory Levels ..................................................................................... 7
1.3 Points to Remember .................................................................................................. 7
Lesson: 2 Purchases and Sales

2.1 Cash and Credit Purchase ........................................................................................ 10
2.2 Three Way Matching Principle ................................................................................ 10
2.3 Cash and Credit Sales ............................................................................................... 11
2.4 Price Levels ................................................................................................................ 11
2.5 Revenue Recognition Principles ...............................................................................11
2.6 Accounting and Commercial Terms Associated with Purchases and Sales ......... 12
2.7 Bill of Exchange ......................................................................................................... 13
2.7.1 Bills Receivable and Bills Payable ........................................................................... 14
2.8 Duties and Taxes ........................................................................................................ 15
2.8.1 VAT ............................................................................................................................ 15
2.8.2 Sales Tax ................................................................................................................... 16
Lesson: 3 Overview of Tally Features

3.1 Features of Tally ........................................................................................................ 18
3.1.1 Accounting and Inventory Features .......................................................................... 18
3.1.2 Features pertaining to Duties and Taxes .................................................................. 19
3.2 Tally’s Capability for a Trading Organisation ....................................................... 19
i © Tally Solutions Pvt Ltd 1988-2005

Lesson: 4 Getting Functional with Tally
Lesson Objectives................................................................................................................. 21
4.1 Creation of a Company ............................................................................................ 22
4.2 F11: Features ............................................................................................................. 25
4.3 Alteration of a Company .......................................................................................... 26
4.4 F12: Configure .......................................................................................................... 26
4.4.1 Master Configuration ............................................................................................... 26
4.4.2 Voucher Configuration ............................................................................................. 28
4.5 Recording Transactions of Sample Data ................................................................. 30
4.6 Transactions for April 2005 ..................................................................................... 31
4.6.1 Transactions for May 2005 ....................................................................................... 51
4.6.2 Cheque Printing ........................................................................................................ 59
4.6.3 Transactions for June 2005 ...................................................................................... 62
4.6.4 Transactions for July 2005 ....................................................................................... 70
4.6.5 Bank Reconciliation .................................................................................................. 79
4.6.6 Transactions for August 2005 ................................................................................... 80
4.6.7 Transactions for September 2005 ............................................................................. 85
4.6.8 Transactions for October 2005 ................................................................................. 93
4.6.9 Transactions for November 2005 ............................................................................. 98
4.6.10 Transactions for December 2005 ......................................................................... 103
4.6.11 Trial Balance until December 2005 ...................................................................... 106
4.6.12 Transactions for January 2006 ............................................................................. 107
4.6.13 Transactions for February 2006 ............................................................................114
4.6.14 Transactions for March 2006 ............................................................................... 123
4.6.15 Provision Entries .................................................................................................. 126
4.6.16 Depreciation Entries ............................................................................................. 127
4.6.17 Adjustment Entries for Prepaid Expenses ............................................................ 128
4.6.18 Other Adjustment Entries ..................................................................................... 128
Lesson: 5 Display and Reports

Lesson Objectives................................................................................................................. 131
Introduction.......................................................................................................................... 131
5.1 Accounting and Inventory Reports in Tally ........................................................... 132
5.2 Accounting Reports .................................................................................................. 133
5.2.1 Balance Sheet ......................................................................................................... 133
5.2.2 Profit and Loss Account ......................................................................................... 134
5.2.3 Account Books ........................................................................................................ 135
5.2.4 Statement of Accounts ............................................................................................. 139
5.2.5 Age-wise Analysis ................................................................................................... 143
ii © Tally Solutions Pvt Ltd 1988-2005

5.2.6 Statutory Masters .................................................................................................... 145
5.2.7 Statutory Reports .................................................................................................... 146
5.2.8 Day Book ................................................................................................................ 150
5.2.9 Exception Reports ................................................................................................... 152
5.3 Inventory Reports ..................................................................................................... 153
5.4 Point of Sale ............................................................................................................... 155
5.4.1 Creating Voucher Type ............................................................................................ 157
5.5 Printing Reports ........................................................................................................ 162
5.5.1 Types of Print Configuration Options ..................................................................... 163
5.5.2 Print Format ........................................................................................................... 163
Appendix
a.1 List of Transactions ................................................................................................... 165
a.1.1 Sample Exercise ...................................................................................................... 165
a.1.2 Provision Entries .................................................................................................... 179
a.1.3 Depreciation Entries ............................................................................................... 179
a.1.4 Adjustment Entries for Prepaid Expenses .............................................................. 179
a.1.5 Other Adjustment Entries ....................................................................................... 179
a.1.6 Practice Exercise .................................................................................................... 180
a.2 Chart of Accounts ...................................................................................................... 208
a.2.1 Sample Exercise ...................................................................................................... 208
a.2.2 Practice Exercise .................................................................................................... 210
a.2.3 List of Function Keys .............................................................................................. 212
iii © Tally Solutions Pvt Ltd 1988-2005

Lesson 1: Introduction to Trading
Organisations
Lesson Objectives
Upon completion of this lesson you will be able to:
Understand the nature of a trading organisation and its activities.
Define inventory and explain accounting terms related to inventory.
Recap of Level One

Volume 1 was the first step towards understanding the wide spectrum of business organisations,
from the simple service organisation to the complex manufacturing organisation. It took you through
the working of a service organisation, which illustrated basic accounting procedures.
You learned to process simple transactions, set up related accounts and prepare financial state-
ments. Systematic instructions were provided on the treatment of receipts and payments; advance
and credit payments for services provided; purchase of office equipments and other supplies;
adjusting entries for depreciation, prepayment, accrued revenue and expenses. The hands-on
practical approach gave you an understanding of Tally and the fundamentals of accounting.
Volume 2 deals with trading organisations and the significant role inventory plays in these organisa-
tions. You will understand the cycle of purchases, sales and and how traders use price levels to
segment customers.
© Tally Solutions Pvt Ltd 1988-2005 1

Introduction to Trading Organisations
1.1 Trading Organisations

Trading is an exchange of goods for a fixed market price or a perceived value. Traders act as
channels who provide goods produced by the manufacturers at a convenient place, price, quantity
and time to the consumers. Thus, an organisation involved in the process of buying and selling is
called a trading organisation.
Traders can be broadly classified as:

Wholesalers: Wholesalers purchase merchandise in bulk from manufacturers and sell to
retailers.
Retailers: Retailers purchase merchandise from wholesalers and sell to the end consum-
ers.
1.1.1 Nature of Trading Organisations

Based on the current supply and demand, the actual market price is established and often
valid for a short period.
The value of the product is determined by the
Quality.
Convenience.
in relation to the actual amount paid for it.
The trader deals with goods and repacks them if necessary but does not process them.
A trading organisation has to keep a track of market demand and ensure that inventory
planning is done to take advantage of demand whenever it arises.
Different prices may be charged to different customer segments by varying the percentage
of discount on the list price.
Accounting in Trading Organisations
Figure 1.1 Accounting in a Trading Organisation
2 © Tally Solutions Pvt Ltd 1988-2005

1.1.2 Difference between Trading and Service Organisations

TRADING ORGANISATION SERVICE ORGANISATION
Sells goods Sells services
Maintains inventory Does not have inventory
Cost for trading organisation is the cost of Cost for service organisation is the cost of
goods sold providing services
Goods are tangible Services are not tangible
1.1.3 Activities in a Trading Organisation

Purchases: Purchases include buying goods in exchange for a monetary value, primarily
with the intention of selling them to customers.
Sales: A sale involves transfer of goods or services for money. It is reported in financial
statements net of trade discount, value added tax and other taxes based on sales.
1.1.4 Accounting and Commercial Terms

Cost of Goods Available for Sale
Cost of goods available for sale is cost of goods that a business could have sold in a period. It rep-
resents the sum of opening stock and purchases in a period.
Cost of goods available for sale = Opening stock + Purchases – Purchase returns and allow-
ances
Cost of Goods Sold

Cost of goods sold represents direct costs incurred by businesses in the process of selling goods.
It consists of all the costs associated with the goods that were sold during a specified accounting
period. It is required to determine the gross profit of an organisation.
Cost of goods sold = Opening stock + Purchases – Purchase returns and allowances – Clos-
ing stock
Gross Profit
Gross profit is the profit earned out of core activity of buying and selling. Gross profit is arrived at by
reducing the direct expenses from direct incomes.
Gross profit in terms of percentage = [(Gross Operating Revenue – Cost of goods sold) * 100]/
Gross Operating Revenue)
Operating Expenses
Operating expenses are periodic expenses incurred in the course of running the business. It covers
all expenses related to the ongoing operations of a company, including sales,marketing, and admin-
istrative expenses.

Operating Profit (PBIT)

Operating profit is the net income before income tax and interest expenses.
Operating profit = Gross profit – Operating expenses
Net Profit
Net profit is also known as profit or net earnings.
Net profit = Operating profit – Interest expense – Income Tax expenses
1.2 Introduction to Inventory

Inventory consists of raw materials and other items available for sale or in the process of being
made ready for sale (work-in-process). In other words, inventory is the money invested by an organ-
isation in raw materials, work-in-process and finished goods, for expected future sale. The funds
invested in inventory cannot be used for other purposes until cash is received on sale of the goods.
Inventory is a current asset as it is converted into cash on sale.
1.2.1 Kinds of Inventory

Raw materials are the items purchased to be used in the production process, which are
modified or transformed into the final product. For example, rubber is the raw material for
tyres.
WIP is an acronym for Work-In-Process. It is the value of partly finished goods.
Finished goods inventory is the portion of goods in inventory which are manufactured and
available for sale.
Supplies are the items consumed in the normal functioning of a firm that are not part of the
final product.
As per the Institute of Chartered Accountants of India

Definition of Inventory (Para 3 of Accounting Standard 2)
Inventories are assets:
Held for sale in the course of business.
In the process of production for such sale.
In the form of materials or supplies to be consumed in the production process or in the ren-
dering of services.
Costs of Purchase (Para 7 of Accounting Standard 2)

The cost of purchase consists of the purchase price including duties and taxes (other than those sub-
sequently recoverable by the enterprise from the taxing authorities), freight inwards and other
expenditure directly attributable to the acquisition. Trade discounts, rebates, duty drawbacks and
other similar items are deducted in determining the cost of purchase.

Cost of Inventories (Para 6 of Accounting Standard 2)

The total cost of inventories comprises all costs of purchase, costs of conversion and other costs
incurred in bringing the inventories to their present location and condition.
1.2.2 Introduction to Inventory Valuation

As per para 5 of Accounting Standard 2, inventory is to be valued at the lower of cost or net realisa-
ble value.
In a price sensitive market, where one has to quote the selling price of the material based on the cost
of purchase, the questions to be answered are:
Is input stock identifiable with output stock?
Is the cost of input stock identifiable with output stock used for sales?
The valuation of stock has to serve the following objectives:

Allow for closing stock to be valued close to market realisable value.
The impact of the valuation method on profits should be measurable.
The valuation method has to facilitate comparison of jobs.
Inventory Costing Methods

FIFO: (First In First Out)
FIFO is a costing method whereby the goods purchased first are assumed to be the goods sold so
that the closing stock consists of the most recently purchased goods. This method is justified on the
basis that stock in hand is the one most recently purchased or produced and is, hence, closer to the
market price. The cost of goods sold represents the cost of items acquired in the earlier purchases. It
is a useful method when prices remain fairly stable.
LIFO: (Last in First Out)

LIFO is a costing method whereby the last goods purchased are assumed to be the first goods sold
so that the closing stock consists of the goods first purchased. This method is based on the logic that
cost of goods sold should reflect latest costs and profits should be booked accordingly.
Advantages of LIFO Method

LIFO matches more recent costs with current revenues.
With increasing prices, LIFO yields the lowest taxable income (assuming inventory does not
decrease).
With reduced taxes, cash flow improves.
Under LIFO, the need to write down inventory to market is lower.
Disadvantages of LIFO Method

LIFO does not approximate the physical flow of goods, except in special situations.
LIFO yields the lowest net income and, therefore, reduced earnings (when prices rise).
Under LIFO, the ending inventory is understated relative to current costs.

LIFO involuntary liquidation may result in income that is detrimental from a tax view.
LIFO may cause poor buying habits (because of the layer liquidation problem).
Weighted Average Cost

Weighted average cost is a method whereby each quantity to be averaged is assigned a weight and
the prices are averaged after multiplying them by the weighted quantities.The weights determine the
relative importance of each quantity when calculating the average. A new average price has to be
worked out on each purchase of materials.
Example: National Stores bought glass cups from K R Glassware Company. The details of the
purchases are given in the table below.
SL. NO. DATE QUANTITY RATE TOTAL VALUE
1) 4-6-2005 5 10 50
2) 15-6-2005 10 12 120
3) 20-6-2005 20 11 220
Total 35 33 390
Calculation of average prices is done as given below:

Simple Average Price = Total rate/Total number of transactions = 33/3 = 11
Weighted Average Price = Total value/Total quantity = 390/35 = 11.14
Standard Cost
Under this method, a standard price is set for each material and issues for a specified period are
made at this price. At the end of the period, the variances between actual and standard price are
booked to reflect the real position.
In the other valuation methods, comparison of two jobs is not possible due to market fluctuations.
Standard pricing method overcomes this deficiency.
1.2.3 Inventory Systems

Quantity vs. Value Records
Quantity and value records are both used to record the movement of stock. Value records are main-
tained for the use of people who deal with suppliers and customers to reveal the position of stock for
the purposes of updating sales and purchase records. Quantity records are maintained usually at
factory godowns for the use of persons receiving, distributing and consuming inventory. Tally enables
maintaining of stock quantity records as well as value based records with ease.
Perpetual and Periodic Inventory Systems

Perpetual Inventory System
Perpetual inventory system is a method where the inventory accounting is kept up-to-date and
involves the recording of receipts and delivery of materials on a daily basis. This method is applica-
ble to those businesses where the sales are of high value and there are a number of sales transac-
tions daily.

Perpetual system of inventory is preferable in cases where

Physical verification of stock is difficult.
Price movement of materials is significant.
Movement at stores level can be recorded.
Note: In Tally, perpetual inventory system is applicable when ‘Integrate accounts with Inventory’ in
F11: Features is set to ‘Yes’.
Periodic Inventory System

Periodic inventory system is a method where the physical inventory is usually taken only at the year
end or at regular intervals, to determine closing stock and cost of goods sold.
A periodic inventory system is adopted in organisations where the cost of recording stock movement
outweighs the benefits of recording and updating stock status. Organisations may not consider the
need for systematic recording :
When there is a strong physical control over the movement of goods.
When physical verification of stock is simple, on account of the low quantity of stock .
When price movement of material is insignificant.
When movement at stores level cannot be recorded or there are no stores.
Note: In Tally, periodic inventory system is applicable when ‘Integrate accounts with Inventory’ in
F11: Features is set to ‘No’.
1.2.4 Determining Inventory Levels

The level of inventory to be maintained is usually determined by the sales projections. However a
minimum stock of inventory has to be maintained for the following reasons:
There is a lead time involved for procurement of goods after placing orders with suppliers.
Factors such as machines, men, money and time may be affected by breakdowns, strikes,
other expenses and theer may be an unforeseen extension of time involved in the procure-
ment of trading goods.
An accurate prediction of the availability of the trading goods at the desired location and
price, at the time it is required, is difficult .
1.3 Points to Remember

Trading organisation is an organisation that is involved in the process of buying and selling.
Traders can be broadly classified as wholesalers and retailers.
Purchases means buying goods in exchange for a monetary value, primarily with the inten-
tion of selling them to customers.
A sale involves transfer of goods or services for money.
Cost of goods available for sale is cost of goods that a business could have sold in a period.

Cost of goods sold represents direct costs incurred by businesses in the process of selling
goods.
Gross profit is the profit earned out of core activity of buying and selling.
Operating expenses are periodic expenses incurred in the course of running the business.
Operating profit is the net income before income tax and interest expenses.
Inventory consists of raw materials and other items available for sale or in the process of
being made ready for sale (work-in-process).

Lesson 2: Purchases and Sales
Lesson Objectives
Upon completion of this lesson you will be able to:
Define cash and credit purchases and differentiate between the two.
Define cash and credit sales and differentiate between them.
Understand the concept of price levels.
Understand the principles of revenue recognition.
Understand the application of bills of exchange.
Understand the accounting and commercial terms associated with purchases and sales.
Understand the concept of Value Added Tax and Sales Tax.

Purchases and Sales
2.1 Cash and Credit Purchase

When payment is made on a purchase instantly, either by cash or cheque, it is known as cash
purchase.
Example for cash purchase: National Stores bought glass cups by paying Rs. 1,000 at the time of
purchase from Goblets and Sparkles. The accounting entry passed is:
Purchases Account Dr. 1000
Cash/Bank Account Cr. 1000
When both parties involved in the transaction agree upon a later date as the date of payment for the
goods purchased it is known as credit purchase. If the goods are purchased in smaller units, vendor
details are not recorded in the books. However, if the buyer orders on a regular basis, the transac-
tions are usually routed through a vendor account. This helps buyers to:
Record payments to be affected in future.
Negotiate trade and cash discounts.
Bargain for greater credit period.
Example for credit purchase: National Stores bought glass cups worth Rs. 1000 from K R
Glassware Company and paid after 90 days of purchase. The entry passed at the time of purchase
is:
Purchases Account Dr. 1000
K.R.Glassware Company Account Cr. 1000
At the time of making payment, the entry passed is:
K.R.Glassware Company Account Dr. 1000
Cash/Bank Account Cr. 1000
Note that K.R.Glassware Company Account is netted off and the second entry matches with the
earlier cash purchases entry.
2.2 Three Way Matching Principle

While recognising purchase of goods, organisations have to answer the following questions:
Has the purchase been authorised?
Are goods actually received?
Does the invoice raised by the supplier match with the authorisation of purchase and the
actual receipt of goods?
This has resulted in Three Way Matching principle wherein payment is released when:
A proper purchase order has been placed to the supplier, encompassing rate, quantity,
delivery and payment terms.
Goods are actually received in “stores” and verified with respect to quantity and quality.

Purchases and Sales
Invoices received from the supplier match with purchase order terms as well as goods
receipt note issued by the company’s stores.
2.3 Cash and Credit Sales

When payment is received for goods sold instantly, either by cash or cheque, it is known as a cash
sales.
Example for cash sales: Goblets and Sparkles sold glass cups to Abode Bazaar on immediate
payment of Rs. 1200. The entry passed is:
Cash/Bank Account Dr. 1200
Sales Account Cr. 1200
When both parties involved in the transaction agree upon a later date as the date of payment for the
goods sold it is known as credit sales.
Example for credit sales: K.R.Glassware Company sold glass cups worth Rs. 1200 to Variety
Stores on credit of 60 days. The entry passed at the time of sale is:
Variety Stores Account Dr. 1200
Sales Account Cr. 1200
At the time of collecting the amount, the entry passed is:

Cash/Bank Account Dr. 1200
Variety Stores Account Cr. 1200
If the goods sold are in smaller units, then the seller need not record buyer details. However, if the
supplier receives regular orders, the transactions are regularly routed through the customer account.
2.4 Price Levels

Products are sold in different markets for different prices and to different customer segments based
on the demand and supply for the product and competition from other organisations dealing in similar
products. This diversity followed in assigning different values for the same product is known as
setting up of price levels.
The price level feature in Tally allows setting up of different price lists for the same items. One can
prepare invoices with ease for different customers for the same product having different price list
based on the customer or market segmentation.
2.5 Revenue Recognition Principles

According to the guidelines set by the Institute of Chartered Accountants of India in Accounting
Standard 9 for Revenue Recognition, revenue is to be recognised when:
Significant risks and rewards of ownership of goods are transferred to the buyer.

Purchases and Sales
Seller retains no effective control over the goods usually associated with ownership.
No significant uncertainty exists regarding the amount of consideration to be received.
2.6 Accounting and Commercial Terms Associated with Purchases and

Sales
Credit Period
Credit, is an arrangement for deferred payment of goods and services. Credit period is the time
frame over which the supplier agrees to provide the customer with credit.
Some of the factors that help in deciding the credit period are:
The credibility of the buyer based on his own financial stability and relationship with the
seller.
Overall profitability on account of repeated orders.
The profit margin in the product.
The credit period offered by the competitors.
Trade Discount and Cash Discount

There are two major kinds of discounts offered by traders while making sales. They are:
Trade Discount: Trade discount is a discount allowed from the list price of a commodity. It
is offered based on customer segmentation. While recognising sales revenue, trade dis-
count is deducted from the list price.
Cash Discount: Cash discount is a discount allowed as an inducement/incentive to the
customers to make prompt payments. Cash discount is not deducted from sales revenue
but is recognised separately.
Returns/ Allowances
Returns are the total value of merchandise returned by customers for refund or credit. Allowance,
on the other hand, is a concession granted to customers for unsatisfactory goods or services.
Goods may be returned on account of the following:
Quantity related issues.
Quality related issues.
Payment terms and delivery related issues.
TYPE OF ISSUE SOLUTION

Reach a conclusion on quantity of stock delivered
Quantity related Deliver the balance to the customer
Reduce the customer obligation
Take back the stock
Quality related
Offer a discounted rate

Purchases and Sales
It is important to understand, at the time of returns, whether purchases/sales have been booked in
the account books.
If purchases/sales are already recorded, a debit note/credit note has to be raised to account
for returns/allowances.
If purchases/sales are not recorded, a delivery note/receipt note is issued and rejection
out/rejection in is recorded to account for returns/ allowances.
Debit note is a note that accounts for an amount owed by a person or company. A debit note is
prepared showing the date of return, name of the supplier to whom the goods have been returned,
details of the goods returned and reasons for returning the goods. It informs the supplier that his
account has been debited with the value of the goods returned. If discount was allowed by the
supplier, this should be taken into consideration while calculating the value of the goods returned.
The scope of a debit note in not limited to account for purchase returns only but can also be issued
when:
The buyer does not agree with the sales invoice of the supplier after booking the purchases.
The supplier intimates the buyer that interest is due for delayed payments.
The supplier accounts for and intimates the buyer that expenditure incurred on his behalf
are recoverable.
Credit note is a note that acknowledges and accounts for an amount owned by a person or a
company. It is a simple and efficient system to inform the supplier of all the receipts due.
Credit notes are usually issued when:

The supplier acknowledges the goods returned by the buyer.
The buyer acknowledges to the supplier that interest is due for delayed payments.
The buyer acknowledges reimbursement of expenditure incurred by the supplier on his
behalf.
2.7 Bill of Exchange

Bill of exchange is an instrument in writing, containing an unconditional order, signed by the maker
(drawer), directing a certain person (drawee) to pay a certain sum of money only to, or to the order
of, a certain person or to the bearer (payee) of the instrument. It must be accepted by the drawee as
well as dated and properly stamped. There are three parties to a bill of exchange:
Drawer: Drawer is the person who prepares or draws the bill of exchange.
Drawee: Drawee is the person on whom the bill is drawn.
Payee: Payee is the person who receives the payment on maturity of the bill.
Transactions involving bills of exchange are governed by the provisions of the Negotiable Instru-
ments Act, 1881.

Purchases and Sales
Specimen of Bill of Exchange
Figure 2.1 Specimen of Bill of Exchange
2.7.1 Bills Receivable and Bills Payable

A bill of exchange is treated as both bills receivable and bills payable. When the drawee accepts the
bill and sends it back to the drawer, it becomes a bills receivable to drawer as money is receivable
by him on the bill. Therefore, it becomes an asset to him. On the other hand, it becomes a bills
payable to the drawee as money is payable by him on the bill and is, therefore, a liability for him.
The drawer can make use of the bill in any of the following ways:
Retain the bill till the date of maturity and collect the money from the drawee.
Endorse the bill to his creditor.
Discount the bill with the banker.
Send the bill to the banker for collection.
For example: K.R.Glassware Company sold to Variety Stores glass cups worth Rs. 2000 and drew
upon them a bill of two months, for the amount, on 1-6-2005. Variety Stores accepted the bill and
returned it to K.R.Glassware Company, which retained the bill, and on its maturity, presented it to the
drawee. The bill was honoured.
ACCOUNTING ENTRIES IN THE BOOKS ACCOUNTING ENTRIES IN THE BOOKS
OF DRAWER OF DRAWEE
When goods are sold on credit When the goods are purchased on credit
Variety Stores Account Dr. 2000 Purchases Account Dr. 2000
To Sales Account Cr. 2000 To K.R.Glassware Company Cr. 2000
Account

Purchases and Sales
When the bill is drawn and accepted When the bill is accepted
Bills Receivable Account Dr. 2000 K.R.Glassware Company Dr. 2000
To Variety Stores Account Cr. 2000 Account
To Bills Payable Account Cr. 2000
When the bill is honoured When the bill is honoured

Cash/Bank Account Dr. 2000 Bills Payable Account Dr. 2000
To Bills Receivable Account Cr. 2000 To Cash/Bank Account Cr. 2000
2.8 Duties and Taxes

2.8.1 VAT
Value Added Tax (VAT) is an indirect tax on goods, introduced in lieu of sales tax, to ensure trans-
parency and greater compliance. The basic premise of VAT is to tax the "true value" added to the
goods, at each stage of the transaction chain. This ultimately reduces:
Tax paid to the government.
Cost/tax passed onto the consumer.
VAT is a multi-point tax as against sales tax, which is a single-point tax. Under sales tax regime, the
“value” of goods to be taxed at each stage is computed as basic cost + profit margin + sales tax paid
at earlier stage. VAT does away with the cascading effect of tax on tax, by allowing a set off for input
tax, that is, tax paid at earlier stage on purchases. It is an efficient, globally acceptable and easy to
administer taxation system.
The advantages of implementing VAT are:

Enhancement of competitiveness by removal of the cascading effect of taxes.
Simplifying the process of taxation.
Self-regulatory mechanism ensuring greater compliance.
Terms associated with VAT

TERM DESCRIPTION
Input Tax This is a tax paid on purchases.
Output Tax This is a tax charged on sales.
Input Credit The amount of Input tax that is permitted to be set off against Output tax.
Dealers with annual gross turnover not exceeding a certain threshold
(threshold is decided by the respective State Governments) who can opt
for a composition scheme whereby they will pay tax as a small percent-
Composite Dealers
age of their gross turnover. However, retailers opting for this composition
scheme will not be entitled to Input Credit. The State Governments fix the
periods and the procedures for the payment of the lump sum.

Purchases and Sales
2.8.2 Sales Tax

Sales Tax is a levy on purchase and sale of goods in India. Sales Tax is levied under authority of
both Central Legislation (Central Sales Tax) and State Government Legislation (Local Sales Tax).
Central Sales Tax is governed by the Central Sales Tax Act, 1956 which covers inter-state transac-
tions of sale of goods as well as transactions of import or export of goods. The Local Sales Tax is
governed by the respective State Sales Tax Acts under which tax is levied on intra-state transactions.
In addition to sales tax, some states also levy additional tax, surcharge, turnover tax and the like.
Sales tax is payable by the seller to the Government. Ordinarily, sales tax is recovered from the
buyer as a part of consideration for sale of goods. Rates of sales tax vary from state to state.

When payment is made for a purchase instantly, either by cash or cheque it is known as
cash purchase. When the same is done for sales, it is cash sales.
When both parties involved in the transaction agree upon a later date as the date of pay-
ment for the goods purchased it is known as credit purchase(/sale). When the same is done
for sales, it is credit sales.
The diversity followed in assigning different values for the same product is known as setting
up of price levels.
Credit period is the time frame over which the supplier agrees to provide the customer with
credit.
Trade discount is a discount allowed from the list price of a commodity and is offered based
on customer segmentation.
Cash discount is a discount allowed as an inducement/incentive to customers to make
prompt payments.
Returns are the total value of merchandise returned by customers for refund or credit.
Allowance is a concession granted to customers for unsatisfactory goods or services.
Debit note is a note that accounts for an amount owed by a person or a company.
Credit note is a note that acknowledges and accounts for an amount owed to a person or
company by you.
Bill of exchange is an instrument in writing, containing an unconditional order, signed by the
maker (drawer), directing a certain person (drawee) to pay a certain sum of money only to,
or to the order of, a certain person or to the bearer (payee) of the instrument.
VAT is a multi-point tax as against sales tax, which is a single-point tax.
Sales Tax is levied under authority of both Central Legislation (Central Sales Tax) and State
Government Legislation (Local Sales Tax).

Lesson 3: Overview of Tally Features
Lesson Objectives
Upon completion of this lesson, you will be able to:
Understand the basic and advanced features of Tally.
Understand the features in Tally pertaining to duties and taxes.
Recognise Tally’s capability for a trading organisation.

Overview of Tally Features
3.1 Features of Tally

3.1.1 Accounting and Inventory Features
BASIC ACCOUNTING BASIC INVENTORY
Complete book-keeping Stock categories
Books, registers and statements of accounts Stock query by stock group, or stock category
General ledgers Multiple godowns
Accounts receivable and accounts payable Stock transfers to godowns and branches
Flexible voucher numbering Multiple stock valuation methods
Batch-wise/ Lot-wise, including expiry date han-
Flexible classification of account heads
dling
Bird’s eye view Alternate units of measure and tail units
Tracking through receipt notes/ delivery notes/
Drill down display
rejections inwards/ rejections outwards
Database reporting Additional costs incurred on purchase
Movement/ Profitability analysis party-wise/
Voucher and cheque printing
Item-wise/ Stock group-wise
Customisable sales invoices using price lists
Columnar reports
with multiple prices
Bank reconciliation Sales and purchase order processing
ADVANCED ACCOUNTING ADVANCED INVENTORY

Stock items classified as raw materials, work-in-
Multiple companies
progress, finished goods
Multi-currency Bill of Material, with auto-adjustment of stocks
Multiple financial years Job-working concepts, including sub-contracting
Comparison of data using multi-columnar Additional cost of manufacturing with notional
reporting value and percentage
Memo vouchers Excise/ VAT analysis on invoices
Post-dated vouchers Modvat support
User defined vouchers types Reorder levels
Sales and purchase extracts Stock ageing analysis
Cash flow statement Batch related stock reports
Daily balances and transaction values/inter-
est calculations
Percentage based reporting
Ratio analysis

Overview of Tally Features
3.1.2 Features pertaining to Duties and Taxes

Tally ies 7.2 provides:
Statutory reporting capability for VAT (Value Added Tax), CST (Central Sales Tax), Service
tax, TCS (Tax Collected at Source) and TDS (Tax Deducted at Source).
State-specific statutory VAT and CST returns.
Returns and challans for service tax.
TDS/TCS enabled with e-TDS/e-TCS capability, with facility for printing certificates/ chal-
lans.
3.2 Tally’s Capability for a Trading Organisation

Tally can be used to prepare invoices.
Balance sheet can be viewed at any given point of time.
Profit and loss account can be prepared for any period.
Stock valuations under multiple methods can be viewed and their effect on profit can be
estimated.
Periodic movement of cash and funds in business can be viewed.
Stock details can be maintained location-wise.
Pending orders to be delivered, can be tracked.
An account of pending invoices of orders delivered can be maintained.
Pending payments against invoices can be followed up.
Slow-moving and fast-moving items can be identified and necessary remedial action can be
taken.
Stocks can be identified batch-wise, if necessary.
Expiry dates for inventory items can be ascertianed.
Using stock groups and category, alternate products can be made available.
Interest can be charged on payments pending beyond due date.
Physical stock can be reconciled with stock records.
Different price lists can be set for different customer segments.
Volume based discount and trade discount can be given to different customer segments.
Credit period and credit limits can be fixed for customers.
Credit periods availed from suppliers can be recorded.
Free samples and replacement stocks can be accommodated.

Tally enables multiple stock valuation methods.
In Tally, sales invoices can be customised using price lists with multiple prices.
Tally provides statutory reporting capability for VAT, CST, Service tax, TCS and TDS.
Tally provides State-specific statutory VAT and CST returns.

Lesson 4: Getting Functional with Tally
Lesson Objectives
Upon completion of this lesson, you will be able to:
Understand the relevant features and configuration settings.
Record transactions through accounting vouchers.
Appreciate the need for bank reconciliation and how it is done.
Understand cheque printing and its requirements.

Getting Functional with Tally
4.1 Creation of a Company

The first step to get started with Tally is to create a company in Tally. Create a company using the
Company Creation screen.
Go to Gateway of Tally > Company Info > Create Company
Use the following details to create a company. To navigate between the fields, you can use Enter
key, Tab key, the arrow keys or the mouse.
COMPANY CREATION SMART AGENCIES
FIELD DATA TO BE ENTERED
Directory Accept what is displayed on the screen.
Name Smart Agencies
Mailing Name Smart Agencies
Address No. 23, Wood Street, Bangalore.
State Select ‘Karnataka’ from the list of states displayed.
PIN Code 560001
E-mail Address sales@smartagencies.com
Use Indian VAT?: Set to Yes for the com- Yes
panies which are located in the state
where VAT is applicable. If VAT is not
applicable, the field is set to No.
Applicable From: Enter the date from 1-4-2005
which VAT is applicable.
Note: Only if VAT is set to ‘Yes’, the field Applicable From appears on the screen.
VAT TIN: Enter the VAT TIN number. The 11700234566
Taxpayer’s Identification Number (TIN)
consists of 11 digits. The first two digits
represent state code as used by the
Union Ministry of Home Affairs.
Local Sales Tax Number Skips field automatically.
Inter-state Sales Tax number Skip field – don't enter any details.
Income Tax number ABCDE1234F
Currency Symbol Rs. (pre-defined)
Maintain Accounts with Inventory
MAINTAIN
OPTION DESCRIPTION
Accounts only Financial Accounts of the company only
Accounts with Inventory Both Financial Accounts and Inventory Records of the
company

Figure 4.1 Company Creation Screen – Maintain Field Sub-Window

Financial year from 1-4-2005
Books beginning from 1-4-2005
TallyVault Password (if any) Skip field - don’t enter any details.
Use security control No
Base Currency Information Skips fields automatically

BASE CURRENCY INFORMATION

FIELD DESCRIPTION
Base currency symbol Pre-set as a default currency Rs. (as specified earlier)
Formal name Complete name for the currency symbol. By default, this is set to
Indian Rupees.
Number of decimal places By default, this is set to 2.
Show amounts in mil- Tally caters to currencies where the different parts of large
lions? amounts are called by special names. By default, this is set to No.
Is symbol suffixed to By default, this is set to No.
amounts?
Put a space between By default, this is set to Yes.
amounts and symbol?
Symbol for Decimal Por- By default, this is set to paise.
tion
Decimal Places for Print- By default, this is set to 2.
ing Amounts in Words
The completed company creation screen appears as follows.
Figure 4.2 Company Creation Screen – Smart Agencies
Accept the screen to create the company, Smart Agencies.

4.2 F11: Features

F11: Features is used to modify the various features of a company. This button is available in most
applications of Tally. The company features are specific to the current company only and thus each
company may have different features activated.
Ensure that the company details are as shown.
Figure 4.3 F11: Features – Company Operations Alteration
Integrate Accounts and Inventory?: If accounts are not integrated with inventory, inventory
vouchers will not have any impact on the balance sheet stock figures. Stock balances will be main-
tained separately. However, if the accounts and inventory are integrated by setting this field to ‘Yes’
inventory entries automatically update the balance sheet stock figures. In other words, the perpetual
inventory system is activated.
Allow Multi-Currency?: Tally is multi-currency enabled. If required, transactions can be recorded in

foreign currency, invoices can be raised in US Dollars (or any other currency), bank accounts or
ledgers can be maintained in foreign exchange.
If ‘Allow Multi-Currency’ is set to ‘Yes’:

In the base currency symbol field different currency symbols can be provided.
In the formal name field, the corresponding formal name for the base currency can be set.
The number of decimal places for the base currency can be altered. (Any number between
0-4).
Note: The multi-currency feature once set to ‘Yes’ cannot be modified if it has been used.

Allow Invoicing?: Invoicing is generally used for sale of stock where the details of the items sold are
listed. Without invoicing, the option for price lists will not be available.
Enter Purchases in Invoice Format?: If this field is set to ‘Yes’, purchase vouchers can be created
in invoice mode. The suppliers' invoices can be entered in the same way as they physically appear.
In invoice mode, purchases can be allocated to cost centres only when cost centre classes are used.
Using the voucher mode of entry for purchases allows manual allocation of purchases to cost
centres.
Maintain Billwise Details?: This field has to be set to ‘Yes’ for it to be available for ledger accounts.
Each ledger account can then individually be set for the feature as required.
The other features will be explained as and when required in the later sessions.
4.3 Alteration of a Company

Information of the company created in Tally can be modified, at any time.
To alter details of a company:

Go to Gateway of Tally > F3: Cmp Info > Alter
Type ‘0’ in the field ‘Number of decimal places’ and accept the company alteration screen.
Quit and restart Tally to effect the change made.
Note: Base currency information can be altered only if ‘Allow Multi-currency’ is activated in F11:
Features is set to ‘Yes’.
4.4 F12: Configure

F12: Configure is used to configure settings for various applications available in Tally. Before
starting work on the company, it is advisable to configure it, by pressing F12: Configure button.
Configuration settings affect all companies maintained in the same data directory and setting config-
uration for one company will affect other companies in that data directory.
4.4.1 Master Configuration

Master Configuration is used set the details that should appear in the account masters. This is
available in the accounts and inventory master screens through the F12: Configure button and can
be modified as per requirement.

Go to Gateway of Tally > F12: Configure > Accts/Inv Info

Ensure that the master configuration settings are as shown in figure.
Figure 4.4 F12: Configure – Master Configuration
Allow ALIASES along with names?: An alias is another name for an account head. For those who
wish to continue with account codes, this field can be used to enter codes. If an 'alias' is given, both
'Name' and 'alias' are available while entering a voucher, either of them can be used. Enter a blank
field if specifying alias is not necessary.
Allow Advanced entries in Masters?: If this field is set to ‘Yes’, fields requiring advanced settings
are displayed in the group creation and ledger creation screen.
The following fields are displayed in group creation screen:

Group behaves like a Sub-Ledger?: If this field is set to ‘Yes’, the group behaves like a
control account for the ledgers it contains. Only the group balance will be displayed, not the
individual ledger balances.
Used for Calculation (eg. Taxes,Discounts)? (for Sales Invoice Entry): This field is set
to ‘Yes’, if the ledgers under this group have percentages for discounts/taxes to be used for
invoice entry. Only voucher entry in 'invoice' mode uses the automatic calculation capability.
Method to Allocate when used in Purchase Invoice?: In this field ‘allocation method’
needs to be assigned if applicable. This means that when the user enters a purchase trans-
action using the invoice mode the values given for the selected group’s ledgers in the entry
can be apportioned or appropriated or allocated based on the purchase value or purchase
quantity.

Net Debit/Credit Balances for Reporting?: If this field is set to ‘Yes’, amounts are dis-
played as a net figure instead of separate debit and credit balances in reports.
Add NOTES for Ledger Accounts?, Use ADDRESSES for Ledger Accounts?, Use CONTACT
DETAILS for Ledger Accounts?: These three fields are self explanatory. If these are set to ‘Yes’,
user can fill in the mailing and related details along with essential notes for a ledger account head.
4.4.2 Voucher Configuration

This is used to configure features while making voucher entry.
Go to Gateway of Tally > F12: Configure > Voucher Entry

Ensure that the voucher configuration settings are as shown in figure.
Figure 4.5 F12: Configure – Voucher Configuration
Configuration settings of one company will affect all companies maintained in the same data direc-
tory.
Skip Date field in Create Mode (faster entry!)?: If this is set to ‘Yes’, Tally goes directly to the Dr or
Cr field, depending on the voucher type. If this is set to NO, Tally goes to the date field. If there are
many entries to be made on the same date, it is advantageous to set this option to ‘Yes’, for faster
entry.

Show Inventory Details?: If this field is set to ‘Yes’, Tally shows the name of the stock item,
quantity, rate and value details.
Show Table of Bill Details for Selection?: If this field is set to ‘Yes’, Tally displays a table listing
the pending bills references.
Show Bill-wise Details?: If this field is set to Yes, bill-wise details are available. Bill-wise details are
pertinent only for party accounts, that is, ledger accounts classified under Sundry Debtors, Sundry
Creditors and Branch/Divisions. Bill-wise details sub-screen does not come up for inventory
vouchers. It is relevant only for accounting purposes.
Bill-wise details need to be set to ‘Yes’ if the user has to track each invoice to its conclusion and to
adjust the bills and payments, bill by bill. Information about outstanding analysis, ageing analysis,
pending, due and overdue bills, and so on can be obtained from this feature.
Expand into multiple lines?: This is the additional field displayed when ‘Show Bill-wise Details’ is
activated. If this field is set to Yes, Tally displays all bill-wise information, for example, the 'due date'
based on the credit days given.
Show Ledger Current Balances?: If this field is set to ‘Yes’, Tally displays the current balance of
the ledger selected while the user makes an entry. This avoids the need to go to the report to get the
balance information.
Show Balances as on Voucher Date?: This is the additional option displayed when ‘Show Ledger
Current Balances’ is set to ‘Yes’. If this is set to yes then any voucher viewed in alteration mode will
display the ledger balances on the voucher screen based on the voucher date and not the current
balance based on date of last entry.
Allow Cash Accounts in Journals?: If this field is set to ‘Yes’, Tally allows entry of transactions
which affect cash and bank account in journal vouchers.
Use Cr/Dr instead of To/By during entry?: If this field is set to ‘Yes’, Tally uses Dr/Cr instead of the
defaults To/By. Each voucher line displays a prompt of 'Dr' or 'By' for debit entries, or 'Cr' or 'To' for
credits. Depending on the voucher type, Tally selects either 'Dr' or 'Cr' for the first prompt, which the
user cannot change. Thereafter, the prompt can be changed (if necessary) by typing over it with a D
or C.
Warn on Negative Cash Balance?: If this field is set to ‘Yes’, Tally warns the user in case the cash
ledger reaches a negative balance. Tally warns and displays the credit cash balance in Red. The
user can accordingly decide whether to proceed with the entry.

4.5 Recording Transactions of Sample Data

Use the following simple illustration to understand how to record transactions in Tally.
Anurag Rai started a new shop ‘Smart Agencies’ on Wood Street, Bangalore, on 1-4-2005. Smart
Agencies will deal in the wholesale trade of stabilisers and pumps of different capacities.
Mr. Rai wants to maintain his accounts on Tally ies 7.2.
The transaction details recorded for Smart Agencies is elaborated in the illustration.
Note: Please refer appendix I for the list of transactions for Smart Agencies. Refer appendix II for the
entire list of chart of accounts for the same.

4.6 Transactions for April 2005

SL.NO. DATE TRANSACTIONS
APRIL 2005
1) 1-4-2005 Anurag Rai started Smart Agencies by bringing in capital of Rs.
1500000 by cheque and deposited the same in ICICI bank by opening
a new account.
Note: Anurag Rai wants that all entries pertaining to bank receipts (payments) to be made in
bank receipt (payment) voucher. He also wants separate serial numbers to be displayed for
bank receipts and bank payments. Hence, the accountant has to create new bank receipt
voucher under receipt voucher and bank payment voucher under payment voucher.
Voucher Type
A voucher is the primary online document for recording transactions. Transaction recording and
analysis are greatly facilitated by having specific formats for different types of transactions. Tally
provides 16 different predefined voucher formats. These are used for recording various transac-
tions pertaining to both accounting and inventory. Some of these vouchers can also be used dif-
ferently according to the situation, for example, sales vouchers can be used as invoices. Such
use can be decided at the time of voucher entry by selecting the appropriate button.
Tally acknowledges the special requirements of some users for more voucher types. These arise
in cases like when user needs the same voucher but in different names or separate series of
numbers. Examples include Cash Payment Vouchers and Bank Payment vouchers where the
relevant predefined voucher is Payment Voucher.
i.Create ledgers Anurag Rai Capital A/c (under Capital Account) and ICICI Bank (under Bank
Accounts)
ii.Create voucher type Bank Receipt

1. Go to Gateway of Tally > Accounts Info. > Voucher Types > Create to view the Voucher
Type Creation screen.
2. Name: Bank Receipt.
3. Type of Voucher: Select Receipt from the list of Voucher Types.
4. Method of Voucher Numbering?: Select Automatic from Types of Numbering list.
5. Prefix Details – Particulars: Type BR/.
6. Suffix Details – Particulars: Type /05-06.
Note: Rest of the fields are retained at their default values. Press Enter to skip fields without
making changes.

Figure 4.6 Voucher Type Creation – Bank Receipt
7. Press Y or Enter to Accept the voucher type.
iii.Make an entry of the transaction in a Bank Receipt voucher

1. Go to Gateway of Tally > Accounting Vouchers > F6: Receipt > select Bank Receipt from
voucher type list to view bank receipt voucher entry screen.
2. Credit Particulars: Anurag Rai Capital A/c 1500000.
3. Debit Particulars: ICICI Bank amount of 1500000 is automatically displayed.
4. Narration: Ch.No: 187962 being cheque deposited in ICICI bank.

Figure 4.7 Accounting Voucher Creation – Bank Receipt Voucher
5. Press Y or Enter to Accept the voucher entry.

2) 3-4-2005 Mr. Rai withdrew Rs. 50000 by cheque for shop expenditure from ICICI
bank. (Cheque number: 123451)
i.Make an entry of the transaction in a Contra voucher
1. Go to Gateway of Tally > Accounting Vouchers > F4: Contra to view contra voucher entry
screen.
2. Press F2 to change voucher date. Type 3-4-2005.
3. Credit Particulars: ICICI Bank 50000.
4. Debit Particulars: Cash (Pre-defined ledger) amount of 50000 is automatically displayed.
5. Narration: Ch. No: 123451 being cash withdrawn for shop expenditures.
6. Accept? Yes or No Press Y or Press Enter.
3) 5-4-2005 Mr. Rai purchased furniture and fixtures worth Rs. 150000 for the shop
by cheque (cheque number:123452)
i. Create ledger Furniture and Fixture (under Fixed Assets)

ii. Create voucher type Bank Payment

1. Go to Gateway of Tally > Accounts Info. > Voucher Types > Create to bring up the voucher
type creation screen.
2. Name: Bank Payment.
3. Type of Voucher: Select Payment from the list of Voucher Types.
4. Method of Voucher Numbering?: Select Automatic from Types of Numbering list.
5. Prefix Details – Particulars: Type BP/.
6. Suffix Details – Particulars: Type /05-06.
7. Press Y or Enter to Accept the voucher type.
iii. Make an entry of the transaction in a Bank Payment voucher

1. Go to Gateway of Tally > Accounting Vouchers > F5: Payment > Select Bank Payment
from voucher type list to view bank payment entry screen.
3. Debit Particulars: Furniture and Fixtures 150000.
4. Credit Particulars: ICICI Bank amount of 150000 is automatically displayed.
5. Narration: Ch. No.: 123452 being amount paid for furniture and fixtures.
Figure 4.8 Accounting Voucher Creation – Bank Payment Voucher
6. Press Y or Enter to Accept the voucher entry.

4) 8-4-2005 Mr. Rai rented a premise on 1-4-2005 for his business at Rs. 3500 per
month. He paid a security deposit of Rs. 25,000 by cheque. (cheque
number: 123453)

i.Create ledger Security Deposit (under Deposits (Asset))
ii.Make an entry of the transaction in a Bank Payment voucher

1. Debit Particulars: Security Deposit 25000.
5) 10-4-2005 Mr. Rai issued a cheque to purchase the following assets. (Cheque
number: 123454).
Asset Cost Rate of Depreciation
Cell Phone Rs. 5500 15%
Computer Rs. 25000 60%
Electrical Fittings Rs. 5000 10%
Motor Vehicle (2 Wheeler) Rs. 40000 15%
i.Create a multiple ledger Cell Phone, Computer, Electrical Fittings, Motor Vehicle (all under
Fixed Assets)
ii.Make an entry of the transaction in a Bank Payment voucher

1. Debit Particulars: Cell Phone 5500.
2. Debit Particulars: Computer 25000.
3. Debit Particulars: Electrical Fittings 5000.
4. Debit Particulars: Motor Vehicle 40000.
6) 12-4-2005 Mr.Rai hired the following people:
Name Designation Monthly Salary
Rahul Bhatt Sales Executive Rs. 4000
Jairam Sengupta Salesman Rs. 3500
Shishir Mathur Accountant Rs. 2500
Ajith V Nair Clerk Rs. 1500
Ajit is also in charge of petty cash and submitting the statement of
expenses at the end of each month.
Note: No entry is required because this is not an accounting transaction.
7) 20-4-2005 Mr. Rai purchased the following items from A2Z traders on credit.
Items Quantity Rate per Value Input Total
(In Piece VAT Value
Pieces) (Rs.)
High Capacity 100 600 60000 12.5% 67500
Stabilisers

As per accounting conventions

The journal entry for the above transaction is as follows:
Purchases @ 12.5% Dr. Rs. 60000.
Input VAT @ 12.5% Dr. Rs. 7500.
To A2Z Traders Cr. Rs. 67500.
Note: Mr. Rai wants to segregate the local and outstation creditors’ accounts. Hence, he asks
his accountant to create sub-groups under the primary group sundry creditors as depicted in the
chart.
Figure 4.9 Chart representing the primary group (Sundry Creditors) and its subgroups
As per Tally conventions
i. Create group Local Creditors (under Sundry Creditors)
1. Go to Gateway of Tally > Accounts Info. > Groups > Create to view the group creation
screen.
2. Name: Local Creditors.
3. Under: Sundry Creditors.
4. Group behaves like sub-Ledger: Yes.
making changes.
ii. Create ledger A2Z Traders (under Local Creditors)

1. Go to Gateway of Tally > Accounts Info> Ledger > Create to view the ledger creation
screen.
2. Name: A2Z Traders.
3. Under: Local Creditors.
4. Maintain balances bill-by-bill: Yes.
5. Inventory values are affected: No.
making changes.

iii.Create ledger Purchases @ 12.5% (under Purchase Accounts)

1. Go to Gateway of Tally > Accounts Info. > Ledger > Create to view the ledger creation
screen.
2. Name: Purchases @ 12.5%.
3. Under: Purchase Accounts.
4. Used in VAT Returns?: Yes.
5. VAT/Tax Class: Purchases @ 12.5%.
6. Inventory values are affected: Yes.
making changes.
Figure 4.10 Ledger Creation – Purchases @ 12.5%
iv.Create ledger Input VAT @ 12.5% (under Duties and Taxes)

1. Go to Gateway of Tally > Accounts Info > Ledger > Create to view the ledger creation
screen.
2. Name: Input VAT @ 12.5%.
3. Under: Duties and Taxes.
4. Type of Duty/Tax: Select VAT from Types of Duty/Tax list.
5. VAT/Tax Class: Input VAT @ 12.5%.
6. Inventory values are affected?: No.
7. Accept? Yes or No? Press Y or Press Enter.

Note: Since Input VAT @ 12.5% is selected as the VAT/Tax class the percentage of calculation
automatically appears as 12.50. The method of calculation automatically is set to ‘On VAT Rate’
when VAT is selected as the type of duty/tax.
Stock Item
Stock items are the primary inventory entity. Stock items are used while recording receipts and
issues of inventory. This is the lowest level of information of inventory. Each item that is required
to be accounted for needs to be created. A stock ledger account is created for each item and
Tally calls this account 'Stock Item'.
Stock Group
Stock items can be grouped together under stock groups to reflect their classification based on
some commonality. Grouping enables easy location and reporting of stock items in statements.
Hence, items of a particular brand or type can be grouped together so that one can extract stock
of all items of that brand or type. For further analysis, sub-groups of stock groups can be cre-
ated.
Units of Measure
Unit of measure is the basic unit of measurement used to measure stock items. For every stock
item, a unit of measure needs to be created. These can be simple units (for example numbers,
meters, kilograms, pieces) or compound units (for example box, where one box equals ten
pieces). A compound unit is a relation between two simple units. Hence, before a compound unit
is created, ensure that the two simple units are created.
Note: In this level, only simple units are created and used. Creation and use of compound units
will be dealt with in the next level.
v. Create stock group Stabilisers (under Primary)
1. Go to Gateway of Tally > Inventory Info. > Stock Groups > Create to view the stock group
creation screen.
2. Name: Stabilisers.
3. (alias): Skip field.
4. Under: Primary.
5. Can Quantities of items be ADDED? : No.
Figure 4.11 Stock Group Creation – Stabilisers

vi. Create units of measure Numbers

1. Go to Gateway of Tally > Inventory Info. > Units > Create to bring up the unit creation
screen.
2. Type: Select Simple from Types of units list.
3. Symbol: nos.
4. Formal Name: Numbers.
5. Number of Decimal Places: 0.
Figure 4.12 Unit Creation – Simple
vi. Create stock item High Capacity Stabilisers (under Stabilisers)

1. Go to Gateway of Tally > Inventory Info. > Stock Items > Create to bring up the stock item
creation screen.
2. Name: High Capacity Stabilisers.
3. (alias): Skip field.
4. Under: Stabilisers.
5. Units: nos.
6. Rate of Duty: 0.
7. Rate of VAT: 12.50.

Figure 4.13 : Stock Item Creation – High Capacity Stabilisers
vii. Make an entry of the transaction in a Purchase voucher

1. Go to Gateway of Tally > Accounting Vouchers > F9: Purchase displays purchase voucher
entry screen.
3. Click on As Voucher button. (The entry has to be recorded as a purchase voucher.)
4. Credit Particulars: A2Z Traders 67500.
5. Press Enter to view the bill-wise details screen.
6. In the Billwise details screen, select New Ref from Method of Adjustment.
7. Name: Type P-A2Z-01.
8. Retain the other fields as they are and accept the bill-wise details screen.

Figure 4.14 Bill-wise details for A2Z Traders
9. Debit Particulars: Purchases @ 12.5%.

10. Press Enter to view the inventory allocations screen.
11. In the inventory allocations screen, select High Capacity Stabilisers from the list of items.
12. Quantity: 100 nos.
13. Rate: 600.
14. Amount: Amount of 60000 is automatically calculated and displayed.
Figure 4.15 Inventory Allocations for Purchases @ 12.5%

15. Press Enter twice.

16. Press Enter to accept the VAT class details for purchases @ 12.5% as they appear.
17. Debit Particulars: Input VAT @ 12.5%.
18. Press Enter to view the VAT class details screen.
19. In the VAT class details screen, select Input VAT @ 12.5% from the list of VAT/Tax Class list
displayed.
20. Assessable Value: Type 60000.
Figure 4.16 VAT Class Details for Input VAT @ 12.5%
21. Press Enter to accept the VAT class details screen.

22. Narration: Purchases made from A2Z Traders.

Figure 4.17 Accounting Voucher Creation – Purchase Voucher

Items Quantity Rate Per Value Input Total
(In num- number VAT Value
bers) (Rs.)
Low Capacity 100 40 4000 12.5% 45000
Stabilisers
Open Well 50 150 7500 4% 78000
Pumps
Submersible 100 200 20000 4% 208000
Pumps
Gross Total 331000
Purchases @ 12.5% Dr. Rs. 40000
Purchases @ 4% Dr. Rs. 275000
Input VAT @ 12.5% Dr. Rs. 5000
Input VAT @ 4% Dr. Rs. 11000
To A2Z Traders Cr. Rs. 331000


i.Create ledgers Purchases @ 4% (under Purchase Accounts) and Input VAT @ 4% (under
Duties and Taxes)
i. Create stock group Pumps (under Primary)
ii. Create stock items Low Capacity Stabilisers (under Stabilisers), Open Well Pumps and
Submersible Pumps (both under Pumps)
iii. Make an entry of the transaction in a Purchase voucher

1. Go to Gateway of Tally > Accounting Vouchers > F9: Purchase to view the purchase
voucher creation screen.
3. Click on As Invoice button. (The entry has to be recorded as a purchase invoice).
4. Click on Item Invoice button.
5. Party’s A/c Name: Select A2Z Traders.
6. Name of Item: Low Capacity Stabilisers.
8. Rate: 400.
9. Amount: Amount of 40000 is automatically displayed.
10. Press Enter to view the accounting details screen.
11. In the accounting details screen, select Purchases @ 12.5% from the list of ledger accounts.

Figure 4.18 Accounting Details for Low Capacity Stabilisers
12. Retain the amount displayed and accept the accounting details screen.
13. Name of Item: Open Well Pumps.
15. Rate: 1500.
18. In the accounting details screen, select Purchases @ 4% from the list of ledger accounts.
19. Retain the amount displayed and accept the accounting details screen.
20. Name of Item: Submersible Pumps.
22. Rate: 2000.
25. In the accounting details screen, select Purchases @ 4% from the list of ledger accounts.
26. Retain the other fields as they are and accept the accounting details screen.
27. Press Enter and select Input VAT @ 12.5% from the list of ledger accounts displayed.
28. Rest of the details are calculated and displayed automatically.
29. Press Enter and select Input VAT @ 4% from the list of ledger accounts displayed.
30. Rest of the details are calculated and displayed automatically.
31. Press Enter thrice to view the bill-wise details screen.

32. In the bill-wise details screen, select ‘New Ref’ in the ‘Type of Ref’ field.
33. Name: Type P-A2Z-02.
34. Retain the other fields as they are and accept the bill-wise details screen.
Figure 4.19 Accounting Voucher Creation – Purchase Invoice

9) 22-4-2005 Mr. Rai paid carriage inward expenses of Rs. 500 in cash on
purchases made on 20-4-2005 and 21-4-2005.
i.Create Ledger Carriage Inward Expenses (under Direct Expenses)
ii.Make an entry of the transaction in a Payment voucher

Debit Particulars: Carriage Inward Expenses 500.
Credit Particulars: Cash 500.
10) 27-4-2005 Mr. Rai transferred Rs. 10000 to petty cash from cash to meet the day
to day expenses.
The journal entry for the above transaction is as follows.
Petty Cash Dr. Rs. 10000
To Cash Cr. Rs. 10000


i. Create ledger Petty Cash (under Cash-in-Hand)
ii. Make an entry of the transaction in a Contra voucher

Credit Particulars: Cash 10000.
Debit Particulars: Petty Cash 10000.
11) 28-4-2005 Mr. Rai withdrew Rs. 5000 in cash for personal use.
i. Create ledger Anurag Rai Drawings (under Capital Account)
ii. Make an entry of the transaction in a Payment voucher

1. Debit Particulars: Anurag Rai Drawings 5000.
2. Credit Particulars: Cash 5000.
12) 30-4-2005 VAT adjustment entry.
Note: According to the guidance note on Accounting for State-level Value Added Tax issued by
Institute of Chartered Accountants of India (ICAI), the amount of tax paid on purchase of inputs/
supplies and available for VAT credit should be debited to a separate account and this should
not be included in the cost of purchase. As and when VAT credit is actually utilised against VAT
payable on sales, appropriate VAT accounting entries are required to record the adjustment. For
example, in Karnataka a dealer is required to pay VAT and file VAT returns on a monthly basis.
Hence, the VAT adjustment entry is recorded at the end of every month. To record the adjust-
ment, input and output VAT tax accounts are credited and debited, respectively to nullify their
balances and the net balance is transferred to VAT adjustment account. A debit balance of VAT
adjustment account indicates that the excess input credit is being carried forward to the next
month and a credit balance indicates that VAT is payable.
The journal entry for the above transaction is as follows
VAT Adjustment A/c Dr. Rs. 23500
To Input VAT @ 12.5% Cr. Rs. 12500
To Input VAT @ 4% Cr. Rs. 11000


i. Create ledger VAT Adjustment A/c (under Duties and Taxes)
1. Go to Gateway of Tally > Accounts Info > Ledger > Create to view the ledger creation
screen.
2. Name: VAT Adjustment A/c.
3. Under: Duties and Taxes.
4. Type of Duty/Tax: Select VAT from Types of Duty/Tax list.
5. VAT/Tax Class: Not Applicable.
6. Inventory values are affected?: No.
7. Accept? Yes or No ? Press Y or Press Enter.
Note: Since the VAT/Tax class is not applicable the percentage of calculation automatically
appears as 0. The method of calculation automatically is set to ‘On VAT Rate’ when VAT is
selected as the type of duty/tax.
ii. Make an entry of the transaction in a Journal voucher.

To know the tax amount that is to be adjusted, go to Gateway of Tally > Display > Statutory
Reports > VAT Reports > VAT Computation.
1. Debit Particulars: VAT Adjustment A/c 23500.
2. Credit Particulars: Input VAT @ 12.5 % 12500.
3. Credit Particulars: Input VAT @ 4 % 11000.
Figure 4.20 VAT Adjustment Entry

Trial Balance for April 2005
Figure 4.21 Detailed Trial Balance – 1st April 2005 to 30th April 2005

4.6.1 Transactions for May 2005

SL. NO. DATE TRANSACTIONS
MAY 2005
13) 1-5-2005 Mr. Rai paid salaries through cheque for the month of April 2005.
(Cheque number: 123455). The details are as follows.
Name Salary Paid Number of Days
Rahul Bhatt Rs. 2400 18
Jairam Sengupta Rs. 2100 18
Shishir Mathur Rs. 1500 18
Ajith V Nair Rs. 900 18
Note: Cost centre has to be created in each employee’s name. Ensure that ‘Maintain cost
Centres’ is set to ‘Yes’ in F11: Features.
Cost Centre
Cost centres are the cost objects for which expenses are incurred under various accounts head
and the cost control can be effectively established by keeping track of the cost at one place.
Similar to cost centres, we can have revenue centres to keep track of revenues and profit
centres to keep track of profits.
In Tally, cost centres represent all of the above. Tally's concept of cost centres adds an addi-
tional dimension to a transaction. While a ledger account indicates the nature of a transaction, it
does not readily disclose which part of an organisation is involved. By creating cost centres, a
transaction can be allocated to it which would then enable extraction of all transactions for a
cost centre.
Examples of cost centres
Departments of an organisation. For example, Finance, Manufacturing, Marketing.
Products of a company. For example, Tally dss 4.5, Tally eis 5.4, Tally ees 6.3, Tally ies 7.2.
Individuals. For example, Salesman A, Salesman B.
i. Create cost centres Rahul Bhatt, Jairam Sengupta, Shishir Mathur and Ajith V Nair (all
under Primary)
1. Go to Gateway of Tally > Accounts Info > Cost Centres > Multiple Cost Centres > Create
to view the multi cost centre creation screen.
2. Under Cost Centre: All Items.
3. Enter details as shown in table.
Sl. No. Name of Cost Centre Under
1) Rahul Bhatt Primary
2) Jairam Sengupta Primary
3) Shishir Mathur Primary
4) Ajith V Nair Primary

Figure 4.22 Multi Cost Centre Creation
ii. Create ledger Salary Expenses (under Indirect Expenses)

Note: Set the field ‘Cost Centres are applicable?’ to ‘Yes’ at the time of salary expenses
ledger creation.
iii. Make an entry of the transaction in a Bank Payment voucher

1. To make cost centre details available during voucher entry, Set the ‘Show Cost Centre
Details’ field in the voucher configuration settings to ‘Yes’.
2. Go to Gateway of Tally > Accounting Voucher > F5: Payment > Select Bank Payment
from voucher type list.
4. Debit Particulars: Salary Expenses 6900.
5. Press Enter to view the cost centre allocations screen.
6. In the cost centre allocations screen, enter details as shown in table.
Name of Cost Centre Amount
Rahul Bhatt Rs. 2400
Jairam Sengupta Rs. 2100
Shishir Mathur Rs. 1500
Ajith V Nair Rs. 900

Figure 4.23 Cost Centre Allocations for Salary Expenses
7. Press Enter to accept the cost centre allocation entries.

9. Narration: Ch. No.: 123455 being salary paid for April 2005.
Figure 4.24 Accounting Voucher Creation – Bank Payment – Salary Expenses


14) 2-5-2005 Mr. Rai paid Rs. 2500 in cash for stationery, printing invoices and
vouchers to Cannon Traders.
i. Create ledger Printing and Stationery Expenses (under Indirect Expenses)
Note: Set the field ‘Cost Centres are applicable?’ to ‘No’ at the time of printing and stationery
expenses ledger creation.

1. Debit Particulars: Printing and Stationery Expenses 2500
2. Credit Particulars: Cash 2500
15) 3-5-2005 Mr. Rai received the statement of expenditure from the petty cashier
for the month of April 2005. The statement is as follows:
Nature of Expense Amount
Stationery purchased Rs. 2500
Cell phone bill Rs. 600
Shop maintenance expenses Rs. 450
Conveyance expenses of marketing executives Rs. 250

Stationery Expenses Dr. Rs. 2500
Telephone Expenses Dr. Rs. 600
Shop Maintenance Expenses Dr. Rs. 450
Conveyance Expenses Dr. Rs. 250
.
To Petty Cash Cr. Rs. 3800

i. Create ledgers Conveyance Expenses, Telephone Expenses and Shop Maintenance
Expenses (all under Indirect Expenses)
Note: Set the field ‘Cost Centres are applicable?’ to ‘No’ at the time of ledger creation for all
the ledgers mentioned above.
ii. Make an entry of the transaction in a Journal voucher

1. Debit Particulars: Printing and Stationery Expenses 2500.
2. Debit Particulars: Telephone Expenses 600.
3. Debit Particulars: Shop Maintenance Expenses 450.
4. Debit Particulars: Conveyance Expenses 250.
5. Credit Particulars: Petty Cash 3800.
16) 6-5-2005 Mr. Rai paid Rs. 3500 by cheque towards shop rent for the month of
April 2005 (Cheque number: 123456).

i. Create ledger Rent Expenses (under Indirect Expenses)

Note: Set the field ‘Cost Centres are applicable?’ to ‘No’ at the time of rent expenses ledger
creation.
ii. Make an entry of the transaction in a Bank Payment voucher

1. Debit Particulars: Rent Expenses 3500.
17) 10-5-2005 Mr. Rai sold the following items for cash, details are as follows.
Item Quantity Rate Value Output Total
(in VAT Amount
pieces)
High Capac- 50 850 42500 12.5% 47813
ity Stabilisers
Open Well 15 1700 25500 4% 26520
Pumps
Gross Total 74333
i. Create ledgers Sales @ 12.5%, Sales @ 4% (both under Sales Accounts) and Output VAT
@ 12.5%, Output VAT @ 4% (both under Duties and Taxes)
Note: During the creation of the sales accounts and duties and taxes ledgers, ensure that the
following details are as mentioned.
SALES ACCOUNTS LEDGERS DUTIES AND TAXES LEDGERS
FIELD STATUS FIELD STATUS
Cost centres are No Type of Duty/Tax VAT
applicable
Used in VAT Returns Yes Cost centres are No
applicable
VAT/Tax Class Sales @ 12.5% (4%) VAT/Tax Class Output VAT @
12.5% (4%)
Inventory values are Yes Inventory values are No
affected affected

ii. Make an entry of the transaction in a Sales voucher

1. Go to Gateway of Tally > Accounting Vouchers > F8: Sales displays sales voucher screen.
3. Click on As Voucher button. (The entry has to be recorded as a sales voucher.)
4. Debit Particulars: Cash 74333.
5. Credit Particulars: Select Sales @ 12.5% from the list of ledger accounts.
6. Press Enter to view the inventory allocations details screen.
7. In the inventory allocations screen, select High Capacity Stabilisers from the list of items.
9. Rate: 850.
12. Press Enter to accept the VAT class details for sales @ 12.5% as they appear.
13. Credit Particulars: Select Sales @ 4% from the list of ledger accounts.
14. Press Enter to view the inventory allocations details screen.
15. Select Open Well Pumps from the list of items.
17. Rate: 1700.
20. Press enter to accept the VAT class details for sales @ 4% as they appear.
21. Credit Particulars: Select Output VAT @ 12.5% from the list of ledger accounts.
22. In the VAT class details screen, select Output VAT @ 12.5% from the list of VAT/ Tax Class
list displayed.
25. Amount displayed is 6333, whereas the actual value is 5333. (Calculate the output VAT @
12.55 manually ⇒ [(42500*12.5)/100] = 5312.50 ≈ 5313). Hence, type 5313 in place of 6333.
26. Credit Particulars: Select Output VAT @ 4% from the list of ledger accounts.
27. In the VAT class details screen, select Output VAT @ 4% from the list of VAT/ Tax Class list
displayed.
30. Amount of 1020 is calculated and displayed automatically.
31. Narration: Sales made.

Figure 4.25 Accounting Voucher Creation Sales Voucher 10-5-2005

18) 15-5-2005 Mr. Rai issued a cheque to A2Z traders for Rs. 396500 deducting the
Rs. 2000 discount received. He received discount as he agreed to pay
the entire bill amount. (Cheque number: 123457)
i. Create ledger Discount Received (under Indirect Incomes)
ii. Make an entry of the transaction in a Bank Payment voucher

1. Debit Particulars: A2Z Traders 398500.
2. Press Enter to view the bill-wise details for A2Z Traders.
3. Ensure that the entries in the bill-wise details screen are as given in the table.
Type of Ref Name Due Date or Credit Days Amount Dr/Cr
Agst Ref P-A2Z-01 ⎯ 67500 Dr

5. Credit Particulars: Discount Received 2000.

i. Make an entry of the transaction in a Payment voucher

for the month of May 2005. The statement is as follows.
i. Make an entry of the transaction in a Journal voucher

i.Make an entry of the transaction in a Journal voucher
1. Debit Particulars: Output VAT @ 12.5 % 5313.
2. Debit Particulars: Output VAT @ 4 % 1020.
3. Credit Particulars: VAT Adjustment A/C 6333.

Trial Balance until May 2005
Figure 4.26 Detailed Trial Balance – 1st April 2005 to 31st May 2005
4.6.2 Cheque Printing

A cheque is a written order to any bank to pay a stated sum of money. Conventionally, cheques are
hand written. Tally allows printing of cheques and also accepts user-defined cheque dimensions.
Cheque printing can be done from payment voucher.
Prior to cheque printing, ensure that the following features are set to ‘Yes’.
Set/Modify other company features’ in F11: Features.
Enable Cheque Printing’ in Advanced Company Alterations.

Enter the following details in the company cheque details screen:

Company Name on Cheque: Smart Agencies.
Names of Banks: ICICI Bank.
Cheque dimensions can be configured as required.
A sample format of cheque dimensions is as shown in figure.
Figure 4.27 Cheque Dimensions
To print a cheque:
Go to Gateway of Tally > Display > Day Book
Click on F2: Period to change period. From: 1-5-2005 To: 31-5-2005.
Select a payment voucher. For example, select bank payment voucher dated 15-5-2005.
On enabling cheque printing option, two new fields are included in payment vouchers.
Name on cheque: Type ‘A2Z Traders’.
Cross Cheque using: By default, it shows ‘Account payee’. However, this can be
changed.
Accept the payment voucher screen to view the cheque printing dialog box.
Make sure that ‘With preview’ is enabled and Accept the cheque printing dialog box.
Click Zoom or press ALT + Z to view an enlarged version of the cheque to be printed. An
enlarged version of the cheque to be printed is shown in figure.
Click on Print to generate a hard copy of the cheque format.

Figure 4.28 Printable Cheque Format
Note: Set ‘Enable Cheque Printing’ in Advanced Company Alterations to ‘No’.

4.6.3 Transactions for June 2005

JUNE 2005
22) 3-6-2005 Mr. Rai paid Rs. 3500 in cash towards shop rent for the month of May
2005.
23) 4-6-2005 Mr. Rai issued a cheque of Rs. 11000 to the petty cashier. (Cheque
number: 123458)
i. Make an entry of the transaction in a Contra voucher
2. Debit Particulars: Petty Cash 11000.
24) 6-6-2005 Mr. Rai paid salaries for the month of May 2005 by cheque. (Cheque
number: 123459)
i. Make an entry of the transaction in a Bank Payment voucher
Note: For salary expenses screen in the cost centre allocation, enter the required details.
25) 8-6-2005 Mr. Rai purchased the following goods from Pacific Merchants on
credit for 30 days. Interest is to be calculated at 10% per annum.
Items Quantity Rate Value VAT Total
Rate Amount
High Capac- 200 65 130000 12.5% 146250
ity Stabilisers
Open Well 300 155 480000 4% 499200
pumps
Gross Total 645450
i. Create group Outstation Creditors (under Sundry Creditors)
ii. Create ledger Pacific Merchants (under Outstation Creditors)

Note: Since interest is applicable on late payment, ‘Activate Interest Calculation’ and ‘Use
Advanced Parameters’ have to be set to ‘Yes’ in the F11: Features, while creating the ledger
Pacific Merchants.
In the ledger creation screen, set ‘Activate Interest Calculation’ to ‘Yes’.
Press Enter to view the interest parameters screen and enter the details as shown in the
following figure.

Figure 4.29 Interest parameters – Pacific Merchants

Note: Ensure that As Invoice and Item Invoice buttons are activated. This is because the
purchase entry has to be recorded as an item invoice.
1. Party’s A/c Name: Select Pacific Merchants.
2. Ensure that the purchase invoice details are as given in the table.
Name of Item Quantity Rate Per Amount
High Capacity Stabilisers 200 nos 650 nos 130000
Open Well Pumps 300 nos 1600 nos 480000
Input VAT 12.5% ⎯ 12.50 % 16250
Input VAT 4% ⎯ 4 % 19200
3. Ensure that the accounting details are as given in the table.
Name of Item Particulars VAT/Tax Class Amount
High Capacity Stabilisers Purchases @ 12.5% Purchases @ 12.5% 130000
Open Well Pumps Purchases @ 4% Purchases @ 4% 480000
Type of Ref Particulars Due Date or Credit Days Amount Dr/Cr
New Ref P-PM-01 30 645450 Cr
5. Press Enter to view the interest parameters screen. Make entries as shown.

Figure 4.30 Accounting voucher creation – Purchase item invoice – Interest parameters
6. Accept the interest parameters screen and the purchase invoice entries.
26) 10-6-2005 Mr. Rai paid carriage inwards of Rs. 400 in cash.
1. Debit Particulars: Carriage Inward Expenses 400.
Note: On setting ‘Maintain Cost Centres’ to ‘Yes’ in F11: Features, ‘Cost Centres are applicable’
field is automatically activated in all ledgers grouped under expenses and incomes. Hence,
while recording the above mentioned transaction, select ledger ‘Carriage Inward Expenses’,
highlight it and make an online alteration by pressing Ctrl+Enter. Set the ‘Cost Centres are
applicable’ field to ‘No’.
27) 12-6-2005 Mr. Rai sold the following items to Java Trading Company on credit for
45 days. Interest charged is at 15% per annum, if payment is not made
within the credit period.
Item Quantity Rate Value VAT Total
Rate Amount
High Capac- 25 900 22500 12.5% 25313
ity stabilisers
Submersible 30 2500 75000 4% 78000
Pumps
Gross Total 103313

Note: Mr. Rai wants to segregate the local and outstation debtors’ accounts. Hence, he asks his
accountant to create sub-groups under the primary group sundry debtors as depicted in the
chart.
Figure 4.31 Chart representing the primary group (Sundry Debtors) and its sub groups
i. Create group Local Debtors (under Sundry Debtors)
ii. Create ledger Java Trading Company (under Local Debtors)

Note: Since interest is applicable on late payment, ‘Activate Interest Calculation’ and ‘Use
Advanced Parameters’ have to be set to ‘Yes’ in the F11: Features, while creating the ledger
Pacific Merchants.
In the ledger creation screen, set ‘Activate Interest Calculation’ to ‘Yes’.
Press Enter to view the interest parameters screen and enter the following details.
Figure 4.32 Interest parameters – Java Trading Company

iii. Make an entry of the transaction in a Sales voucher

Note: Ensure that As Invoice and Item Invoice buttons are activated. This is because the sales
entry has to be recorded as an item invoice.
1. Party’s A/c Name: Select Java Trading Company.
2. Ensure that the purchase invoice details are as given in the table.
Submersible Pumps 30 nos 2500 nos 75000
Output VAT 12.5% ⎯ 12.50 % 2813
Output VAT 4% ⎯ 4 % 3000
3. Ensure that the accounting details are as given in the table.
High Capacity Stabilisers Sales @ 12.5% Sales @ 12.5% 22500
Submersible Pumps Sales @ 4% Sales @ 4% 75000
New Ref S-JTC-01 45 103313 Dr
5. Press Enter to view the interest parameters screen. Make entries as shown.
Figure 4.33 Accounting voucher creation – Sales item invoice – Interest parameters
6. Accept the interest parameters screen and the sales invoice entries.
Note: In Tally, method of recording a sales item invoice is similar to that of recording a purchase
item invoice. The only difference is that purchase accounts are replaced with sales accounts.

29) 20-6-2005 Mr. Rai deposited cash of Rs. 40000 to ICICI bank.
2. Debit Particulars: ICICI Bank 40000.
30) 27-6-2005 Mr. Rai paid Rs. 2000 in cash to Mr. Jairam Sengupta as salary
advance.
Note: Salary advance is to be adjusted in four equal instalments.
i. Create ledger Salary Advance (under Loans and Advances (Assets))
Note: Set the field ‘Cost Centres are applicable?’ to ‘Yes’ at the time of salary advance ledger
creation.

1. Debit Particulars: Salary Advance 2000.
3. Ensure that the cost centre allocation details are as given in the table.
Jairam Sengupta 2000
for the month end 30-6-2005. The statement is as follows.
Insurance premium for the period 1-7-2005 to 30-6-2006 Rs. 2400
Electricity expenses Rs. 500
i. Create ledgers Prepaid Insurance (under Current Assets) and Electricity Expenses (under
Indirect Expenses)

1. Debit Particulars: Prepaid Insurance 2400.
4. Debit Particulars: Electricity Expenses 500.
32) 29-6-2005 Mr. Rai sold the following items to Data Tech services on credit.
Rate Amount
Low Capacity 100 550 55000 12.5% 61875
Stabilisers

i. Create ledger Data Tech Services (under Local Debtors)

1. Party’s A/c Name: Select Data Tech Services.
2. Ensure that entries pertaining to the item are as given in the table.
Low Capacity Stabilisers 100 nos 550 nos 55000
Output VAT @ 12.5% ⎯ 12.50 % 6875
3. Ensure that the entries in the accounting details screen are as given in the table.
Particulars VAT/Tax Class Amount
Sales @ 12.5% Sales @ 12.5% 55000
Type of ref Name Due Date or Credit Days Amount Dr/Cr
New Ref S-DTS-01 ⎯ 61875 Dr

Trial Balance until June 2005
Figure 4.34 Detailed Trial Balance – 1st April 2005 to 30th June 2005

4.6.4 Transactions for July 2005

JULY 2005
34) 3-7-2005 Mr. Rai paid the salaries through cheque for the month of June 2005.
Note: Adjust the salary advance of Rs. 500 (1st instalment) given to
Mr. Jairam Sengupta.
Note: In the cost centre allocation for salary expenses screen enter the required details.
2. Credit Particulars: Salary Advance 500.
For salary advance screen in the cost centre allocation, enter the details as given in table.
Jairam Sengupta 500
4. Accept the bank payment entries.
35) 6-7-2005 Mr. Rai paid rent in cash for the month of June 2005.
2. Credit Particulars: Cash 3500
36) 14-7-2005 Mr. Rai purchased the following items under a sales offer. He paid by
cheque.
The offer is as follows.
On purchase of 10 high capacity stabilisers 1 HCS is given
free of cost.
On purchase of 5 low capacity stabilisers 1 LCS is given free
of cost.
Item Pur- Free Total Rate Value Input Total
chased of Qty VAT Amt
Qty cost (%)
High 50 5 55 650 32500 12.5 36563
Capacity
Stabilis-
ers
Low 20 4 24 400 8000 12.5 9000
Capacity
Stabilis-
ers
Gross Total 45563

i. Make an entry of the transaction in a Purchase voucher

Note: Since the items are bought during a promotional offer like ‘annual clearance sale’, the
actual quantity and the billed quantity will be different. Hence, in F11: Features set the field
‘Use different actual and billed quantity’ to ‘Yes’. Ensure that As Invoice and Item Invoice
buttons are activated as the purchase entry has to be recorded as an item invoice.
1. Ensure that the entries in the purchase invoice are as shown in the figure.
Figure 4.35 Accounting voucher creation – Purchase item invoice – 14-7-2005
2. Ensure that the entries in the accounting detail screen are as given in the table.
High Capacity Stabilisers Purchases @ 12.5% Purchases @ 12.5% 32500
Low Capacity Stabilisers Purchases @ 12.5% Purchases @ 12.5% 8000
37) 19-7-2005 Mr. Rai paid by cheque to Pacific Traders towards bill dated 8-6-2005.
Note: Due to late payment (11 days), Mr. Rai has to pay interest (appli-
cable at the rate of 10% per annum) in addition to the bill amount.
i. Create ledger Interest Due (under Indirect Expenses)

ii. View the interest due

1. Go to Gateway of Tally > Display > Statement of Accounts > Interest Calculations >
Ledger > select Pacific Merchants from list of ledgers.
2. Press ALT + F2 to change period. From: 1-4-2005 and To: 19-7-2005.
3. The interest due, Rs. 1945 is automatically calculated and displayed.
4. Press ALT + F1 to view the details of the ledger.
iii. Alter Credit Note

1. Go to Gateway of Tally > Accounts Info > Voucher Types > Alter > Select Credit Note
from voucher types list.
2. Name of Class: Type Simple Interest.
3. Press Enter to view the voucher type class screen.
4. Use Class for Interest Accounting: Yes.
5. Accept both the voucher type class and the credit note alteration screens.
iv. Account for the interest due in a Credit Note

Note: To make debit/credit note available in the accounting voucher creation mode, set ‘Use
Debit/Credit Note’ to ‘Yes’ in F11: Features.
1. Go to Gateway of Tally > Accounting Vouchers > F8: Credit Note.
2. Select voucher class as shown in the figure.
Figure 4.36 Credit Note –Voucher Class Selection

4. Credit Particulars: Select Pacific Merchants from list of Ledgers.
5. Accept the Interest details for Pacific Merchants which appears as shown in the figure.

Figure 4.37 Credit Note — Interest Details
New Ref C/N-001 ⎯ 1945 Cr
7. Ensure that the interest parameters are as given in the table.
Rate Per On
10% 365-Day Year Credit Balances Only
8. Debit Particulars: Interest Due 1945.

Figure 4.38 Accounting voucher creation – Credit note – 19-7-2005
9. Accept the credit note entries.
v. Make an entry of the transaction in a Bank Payment voucher

1. Debit Particulars: Pacific Merchants 647395.
Agst Ref P-PM-01 30 Days 645450 Dr
Agst Ref C/N-001 ⎯ 1945 Dr

38) 20-7-2005 Mr. Rai introduced a sales offer and sold the following items on credit
to Java Trading Company and Data Tech Services.
Item Sold Free Total Rate Value Output Total
Qty of Qty VAT Amt
cost (%)
JAVA TRADING COMPANY
High 20 2 22 750 15000 12.5 16875
Capac-
ity Stabi-
liser
Low 5 1 6 450 2250 12.5 2531
Capac-
ity Stabi-
liser
Gross Total 19406
DATA TECH SERVICES
High 30 3 33 750 22500 12.5 25312
Capac-
ity Stabi-
liser
Low 15 3 18 450 6750 12.5 7594
Capac-
ity Stabi-
liser
Gross Total 32906
i. Make an entry of the transaction in a Sales voucher – Java Trading Company

Note: Since the items are sold during a promotional offer like ‘annual clearance sale’, the actual
quantity and the billed quantity are different. Ensure that in F11: Features, the field ‘Use
different actual and billed quantity’ is set to ‘Yes’. Ensure that As Invoice and Item Invoice
buttons are activated as the sales entry has to be recorded as an item invoice.
1. Ensure that the entries in the sales invoice are as shown in the figure.

Figure 4.39 Accounting Voucher Creation – Sales Item Invoice – 20-7-2005
Low Capacity Stabilisers Sales @ 12.5% Sales @ 12.5% 8000
New Ref S-JTC-02 45 Days 19406 Dr
Rate Per On
15% 365-Day Year Debit Balances Only
ii. Make an entry of the transaction in a Sales voucher – Data Tech Services
Note: Follow the same approach as mentioned for Java Trading Company to account for sales
made to Data Tech Services. Ensure that the corresponding entries are made as given in the
sales details for Data Tech Services.
39) 22-7-2005 Mr. Rai received a cheque from Java Trading Company and Data Tech
Services in settlement of bill dated 20-7-2005.

i. Make an entry of the transaction in a Bank Receipt voucher

1. Credit Particulars: Java Trading Company 19406.
2. Credit Particulars: Data Tech Services 32906.
4. Ensure that the bill-wise details are as given in the table.
Party Type of Ref Name Due Date or Amount Dr/Cr
Credit Days
Java Trading Company Agst Ref S-JTC-02 45 Days 19406 Cr
Data Tech Services Agst Ref S-DTS-02 ⎯ 3600 Cr
40) 28-7-2005 Mr. Rai received cheque from Data Tech Services towards the bill
dated 29-6-2005.
i.Make an entry of the transaction in a Bank Receipt voucher
Agst Ref S-DTS-01 ⎯ 61875 Cr
41) 29-7-2005 Mr. Rai received statement of expenditure from the petty cashier for
the month end, July 2005. The statement is as follows.
Advertising expenses incurred Rs. 1500
Donation to charitable institutions Rs. 600
i. Create ledgers Advertisement Expenses and Donation Expenses (both under Indirect
Expenses)
ii.Make an entry of the transaction in a Journal voucher

1. Debit Particulars: Advertisement Expenses 1500.
3. Debit Particulars: Donation Expenses 600.


1. Debit Particulars: Output VAT @ 12.5% 5812.
3. Credit Particulars: VAT Adjustment A/c 749.
Trial Balance until July 2005
Figure 4.40 Detailed Trial Balance 1st April 2005 to 31st July 2005

4.6.5 Bank Reconciliation

Bank reconciliation is a routine procedure of systematically adjusting the account balance reported
by a bank with the account balance on the company's books and explaining any differences. Differ-
ences can occur if deposits are not yet cleared or cheques are not yet presented.
Bank statement for the period 1-4-2005 to 4-8-2005 sent to Smart Agencies from ICICI bank is as
follows.
DATE PARTICULARS DEPOSITS WITHDRAWALS BALANCE
2-4-2005 Cheque No: 187962 Deposited 1500000 1500000
(Anurag Rai Capital)
3-4-2005 Cheque No: 123451 (Cash With- 50000 1450000
drawn)
8-4-2005 Cheque No:123452 (Furniture 150000 1300000
and Fixtures)
10-4-2005 Cheque No: 123453 (As Security 25000 1275000
Deposit)
13-4-2005 Cheque No: 123454 (For Assets 75500 1199500
Purchased)
2-5-2005 Cheque No: 123455 (Salary 6900 1192600
paid)
6-5-2005 Cheque No: 123456 (Rent paid) 3500 1189100
19-5-2005 Cheque No: 123457 (Issued to 396500 792600
A2Z Traders)
4-6-2005 Cheque No: 123458 (Cash with- 11000 781600
drawn for Petty cash)
7-6-2005 Cheque No: 123459 (Salary 11500 770100
paid)
20-6-2005 Cash (Cash deposited) 40000 810100
4-7-2005 Cheque No: 123460 11000 753537
(Salary paid)
17-7-2005 Cheque No: 123461 (Purchases 45563 81660
made)
1-8-2005 Cheque No: 123462 (Issued to 647395 106142
Pacific Merchants)
3-8-2005 Cheque deposited (Java Trad- 52312 158454
ing Company)
4-8-2005 Cheque deposited (Data Tech 61875 220329
Services)

To reconcile all transactions relating to bank accounts.

Go to Gateway of Tally > Display > Account Books > Ledger > select ICICI Bank
Press ALT + F2 to change period. From: 1-4-2005 To: 31-7-2005.
Click on F5: Reconcile.
Enter the bank dates as shown in the figure.
Figure 4.41 Bank Reconciliation – 1st April 2005 to 31st July 2005
4.6.6 Transactions for August 2005

SL. NO DATE TRANSACTIONS
AUGUST 2005
43) 5-8-2005 Mr. Rai paid salaries by cheque for the month of July 2005.
Note: Adjust the salary advance of Rs. 500 (2nd installment) given to
i.Make an entry of the transaction in a Bank Payment voucher
Note: In the cost centre allocation for salary expenses and salary advance screens enter the
required details.
44) 8-8-2005 Mr. Rai paid rent in cash for the month of July 2005.


45) 10-8-2005 Mr. Rai paid Rs. 7500 in cash to the petty cashier.
46) 12-8-2005 Mr. Rai sold the following items to Seacrest Trading Corporation and
allowed a trade discount at the rate of 5%.
Rate Amount
High Capac- 90 900 76950 12.5% 86569
ity Stabilisers
i. Create ledger Seacrest Trading Corporation (under Outstation Debtors)

Note: To account for the discount allowed on items sold, set ‘Separate Discount column on
Invoices’ to ‘Yes’ in F11: Features. For this transaction, set ‘Use different actual and billed
quantity’ to ‘No’ in F11: Features. Ensure that As Invoice and Item Invoice buttons are
activated as the sales entry has to be recorded as an item invoice.
1. Party’s A/c Name: Seacrest Trading Corporation.
2. Ensure that sales invoice entries are as given in the table.
Name of Item Quantity Rate Per Discount Amount
High Capacity Stabilisers 90 nos 90 nos 5% 76950
Output VAT @ 12.5% ⎯ 12.50 % ⎯ 9619
Sales @ 12.5% Sales @ 12.5% 76950
New Ref S-STC-01 ⎯ 86569 Dr
5. Accept the sales invoice entries.
47) 27-8-2005 Mr. Rai received cheque from Seacrest Trading Corporation towards
the bill dated 12-8-2005.


1. Credit Particulars: Seacrest Trading Corporation 86569.
Agst Ref S-STC-01 ⎯ 86569 Cr
48) 28-8-2005 Mr. Rai received cheque from Java Trading Company towards the bill
dated 12-6-2005.
i. Create ledger Interest Accrued (under Indirect Incomes)
ii. View the interest accrued

1. Go to Gateway of Tally > Display > Statement of Accounts > Interest Calculations >
Ledger > select Java Trading Company from list of ledgers.
2. Press ALT + F2 to change period. From: 1-4-2005 and To: 28-8-2005.
3. The interest due, Rs. 1359 is automatically calculated and displayed.
4. Press ALT + F1 to view the details of the ledger.
iii. Alter Debit Note

1. Go to Gateway of Tally > Accounts Info > Voucher Types > Alter > Select Debit Note from
voucher types list.
2. Name of Class: Type Simple Interest.
3. Press Enter to view the voucher type class screen.
4. Use Class for Interest Accounting: Yes.
5. Accept both the voucher type class and the debit note alteration screens.
iv. Account for the interest accrued in a Debit Note

Note: Ensure that ‘Use Debit/Credit Note’ is set to ‘Yes’ in F11: Features.
1. Go to Gateway of Tally > Accounting Vouchers > F9: Debit Note.
2. Ensure that the voucher type details are as given in the table.
Name Class
Debit Note Simple Interest
4. Credit Particulars: Select Java Trading Company from list of Ledgers.
5. Accept the Interest details for Java Trading Company.
New Ref D/N-001 ⎯ 1359 Dr


Rate Per On
8. Debit Particulars: Interest Accrued 1359.
9. Accept the debit note entries.
v. Make an entry of the transaction in a Bank Receipt voucher

1. Credit Particulars: Java Trading Company 104672.
Agst Ref S-JTC-01 45 Days 103313 Cr
Agst Ref D/N-001 ⎯ 1359 Cr
49) 29-8-2005 Mr. Rai received the statement of expenditure from petty cashier for
the month end, 31-8-2005. The statement is as follows.
Cell phone bill paid Rs. 800
Electricity bills paid Rs. 350


Trial Balance until August 2005
Figure 4.42 Detailed Trial Balance – 1st April 2005 to 31st August 2005

4.6.7 Transactions for September 2005

SEPTEMBER 2005
51) 4-9-2005 Mr. Rai paid salaries and rent by cheque for August 2005.
Note: Adjust the salary advance of Rs. 500 (3rd instalment) given to
required details.

52) 6-9-2005 Mr. Rai purchased items on credit from A2Z Traders. The details are
as follows.
VAT Amount
Low Capacity 110 500 55000 12.5% 61875
Stabilisers
Submersible 50 2100 105000 4% 109200
Pumps
Gross Total 171075
Note: Ensure that As Invoice and Item Invoice buttons are activated. This is because the
purchase entry has to be recorded as an item invoice.
1. Party’s A/c Name: A2Z Traders.
2. Ensure that the invoice entries are as given in the table.
Input VAT @ 12.5% ⎯ 12.50% ⎯ 6875
Input VAT @ 4% ⎯ 4% ⎯ 4200
3. Ensure that accounting details are as given in the table.
Low Capacity Stabilisers Purchases @ 12.5% Purchases @ 12.5% 55000
Submersible Pumps Purchases @ 4% Purchases @ 4% 105000
New Ref P-A2Z-03 ⎯ 171075 Cr
5. Accept the purchase invoice entries.

53) 10-9-2005 Mr. Rai sold items on credit to Data Tech Services and drew a bill of
exchange for 30 days which was duly accepted by them.
Item Quantity Rate Value Input Total
VAT Amount
Low Capacity 100 550 55000 12.5% 61875
Stabilisers
Submersible 50 2500 125000 4% 130000
Pumps
Gross Total 191875
Data Tech Services Dr. Rs. 191875.
To Sales @ 12.5% Cr. Rs. 55000.
To Sales @ 4% Cr. Rs. 125000.
To Output VAT @ 12.5% Cr. Rs. 6875.
To Output VAT @ 4% Cr. Rs. 5000.
Bills Receivable Dr. Rs. 191875.

To Data Tech Services Cr. Rs. 191875.


i. Create ledger Bills Receivable (under Current Assets)

Note: For this transaction, set ‘Separate Discount columns on Invoices’ to ‘No’. Ensure that As
Invoice and Item Invoice buttons are activated. This is because the sales entry has to be
recorded as an item invoice.
1. Party’s A/c Name: Select Data Tech Services.
2. Ensure that the sales invoice entries are as given in the table.
Output VAT @ 12.5% ⎯ 12.50% ⎯ 6875
Output VAT @ 4% ⎯ 4% ⎯ 5000
Low Capacity Stabilisers Sales @ 12.5% Sales @ 12.5% 55000
New Ref S-DTS-03 ⎯ 191875 Dr
iii. Make an entry of the transaction in a Journal voucher

1. Debit Particulars: Bills Receivable 191875.
3. Accept the bill-wise details and the journal voucher entries.
54) 15-9-2005 Mr. Rai withdrew Rs. 6000 from ICICI bank for personal use.

55) 17-9-2005 Mr. Rai sold the following items on credit of 45 days to Java Trading
Corporation.
VAT Amount
High Capac- 80 700 56000 12.5% 63000
ity Stabilisers
Submersible 60 2300 138000 4% 143520
Pumps
Gross Total 206520
i. Make an entry of the transaction in a Sales voucher

1. Party’s A/c Name: Select Java Trading Company.
Output VAT @ 12.5% ⎯ 12.50% ⎯ 7000
Output VAT @ 4% ⎯ 4% ⎯ 5520
5. Ensure that interest parameters are as given in the table.
Rate Per On
56) 22-9-2005 Mr. Rai returned 10 low capacity stabilisers to A2Z Traders purchased
on 6-9-2005 as they were not according to the specifications.


A2Z Traders Dr. Rs. 5625.
To Purchases @ 12.5% Cr. Rs. 5000.
To Input VAT @ 12.5% Cr. Rs. 625.

i. Account for the purchase returns in a Debit Note
Note: Activate ‘Use Debit/Credit Note’ and ‘Use Invoice mode for Debit’ to ‘Yes’ in F11: Fea-
tures.
1. Go to Gateway of Tally > Accounting Vouchers > F9: Debit Note
Name Class
Debit Note Not Applicable
4. Party’s A/c Name: A2Z Traders.
5. Ensure that the debit note entries are as given in the table.
Input VAT @ 12.5% ⎯ 12.50% ⎯ 625
Purchases @ 12.5% Purchases @ 12.5% 5000
8. Accept the debit note entries.
the month-end, 30-9-2005. The statement is as follows.
Electricity charges Rs. 350


58) 29-9-2005 Mr. Rai received bank statement from ICICI bank and found that Rs.
550 had been charged as half yearly bank charges.
i. Create ledger Bank Charges (under Indirect Expenses)

1. Debit Particulars: Bank Charges 550.
2. Debit Particulars: Output VAT @ 4% 10520.
3. Credit Particulars: Input VAT @ 12.5% 6250.
4. Credit Particulars: Input VAT @ 4% 4200.

Trial Balance until September 2005
Figure 4.43 Detailed Trial Balance – 1st April 2005 to 30th September 2005

4.6.8 Transactions for October 2005

OCTOBER 2005
60) 1-10-2005 Java Trading Company returned the following items, out of sales made
on 17-9-2005 as they were in excess of their requirements.
Name of Item Quantity
High Capacity Stabilisers 15
Submersible Pumps 10
Sales @ 12.5% Dr. Rs. 10500.
Sales @ 4% Dr. Rs. 23000.
Output VAT @ 12.5% Dr. Rs. 1313.
Output VAT @ 4% Dr. Rs. 920.
To Java Trading Company Cr. Rs. 35733.

i. Account for the sales return in a Credit Note
Note: Set ‘Use Debit/Credit Note’ and ‘Use Invoice mode for Credit’ to ‘Yes’ in F11: Fea-
tures. Click on ‘As Invoice’ in the buttons bar.
1. Go to Gateway of Tally > Accounting Vouchers > F8: Credit Note
Name Class
Credit Note Not Applicable
4. Party’s A/c Name: Java Trading Company.
5. Ensure that the credit note entries are as given in the table.
Output VAT @ 12.5% ⎯ 12.50% ⎯ 1313
Output VAT @ 4% ⎯ 4% ⎯ 920

8. Accept the credit note entries.
61) 2-10-2005 Mr. Rai issued a cheque of Rs. 7500 to petty cashier.
62) 4-10-2005 Mr. Rai paid salaries and rent of shop by cheque for the month of Sep-
tember 2005.
Note: Adjust the salary advance of Rs. 500 (4th instalment) given to
required details.
63) 10-10-2005 Mr. Rai deposited the bills receivable drawn on Data Tech Services
which was duly honoured.
i.Make an entry of the transaction in a Bank Receipt voucher
1. Credit Particulars: Bills Receivable 191875.
64) 20-10-2005 Mr. Rai sold the following items to Seacrest Trading Corporation on
credit:
Item Qty Rate Value Output Total
VAT Amount
Open Well 200 1900 380000 4% 395200
Pumps

i.Make an entry of the transaction in a Sales voucher

Output VAT @ 4% ⎯ 4% ⎯ 15200
Sales @ 4% Sales @ 4% 380000
65) 21-10-2005 Mr. Rai issued a cheque to A2Z Traders towards the purchases made
on 6-9-2005.
1. Debit Particulars: A2Z Traders 165450.
3. Ensure that the bill-wise details for A2Z Traders are as given in the table.
66) 28-10-2005 Mr. Rai received a cheque from Java Trading Company against sales
made on 17-9-2005.
1. Debit Particulars: Java Trading Company 170787.
3. Ensure that the bill-wise details for Java Trading Company are as given in the table.
4. Accept the bank receipt entries.

for the month end, October 2005. The statement is as follows.

2. Credit Particulars: Output VAT @ 12.5 % 1313.

Trial Balance until October 2005
Figure 4.44 Detailed Trial Balance – 1st April 2005 to 31st October 2005

4.6.9 Transactions for November 2005

NOVEMBER 2005
69) 4-11-2005 Mr. Rai paid salaries and rent by cheque for the month of October
2005.
.
70) 5-11-2005 Mr. Rai issued a cheque of Rs. 8000 to the petty cashier.
ii. Make an entry of the transaction in a Contra voucher
71) 10-11-2005 Mr. Rai received a cheque from Seacrest Trading Corporation in set-
tlement of his bill dated 20-10-2005.
2. Debit Particulars: ICICIBank 395200.
3. Ensure that the bill-wise details for Seacrest Trading Corporation are as given in the table.
72) 12-11-2005 Mr. Rai started trading in a new product and purchased it from Icon
Enterprises on credit.
VAT Amount
Electric 30 400 12000 12.5% 13500
Heater
Note: As the accountant had no information about the electric heater classification, he grouped
it under stabilisers.
i. Create ledger Icon Enterprises (under Outstation Creditors)
ii. Create item Electric Heater (under Stabilisers)


Note: Ensure that As Invoice and Item Invoice buttons are activated. This is because the pur-
chase entry has to be recorded as an item invoice.
1. Party’s A/c Name: Icon Enterprises.
Electric Heater 30 nos 400 nos 12000
Input VAT@ 12.5% ⎯ 12.5% ⎯ 1500
Purchases @ 12.5% Purchases @ 12.5% 12000
New Ref P-IE-01 ⎯ 13500 Cr
73) 13-11-2005 Mr. Rai asks the accountant to alter the voucher as he wants the item
to be grouped under heaters.
Note: The item, electric heater, was wrongly grouped under stabilisers by the accountant while
recording the purchases made from Icon Enterprises. Alter the stock item and group it under
Heaters. For this, create a group called Heaters.
74) 14-11-2005 Mr. Rai paid Rs. 4500 by cheque for the cell phone he purchased for
his sales executive.
1. Debit Particulars: Cell Phone 4500.
credit.
VAT Amount
Open Well 50 1800 90000 4% 93600
Pumps
Note: Mr. Rai asks his accountant to create a voucher class ‘Sales @ 4%’ and record the sales
in a sales voucher. Using voucher class eliminates the process of manually entering accounting
details. Applicable VAT is also displayed automatically.

i. Alter the Sales voucher type

1. Go to Gateway of Tally > Accounts Info. > Voucher Types > Alter > select Sales from the
list of voucher types.
2. In the voucher type alteration screen, type Sales @ 4% in the ‘Name of Class’ field.
3. Retain the rest of the fields as they are.
4. Ensure that voucher type class is defined as shown in figure.
Figure 4.45 Voucher Type Class – Sales @ 4%

1.Go to Gateway of Tally > Accounting Vouchers > F8: Sales > select Sales @ 4% from the
class table to view a sales voucher displaying voucher class as Sales @ 4%.
Output VAT @ 4% ⎯ 4% ⎯ 3600
4.The type and rate of VAT applicable appear the moment voucher class is selected and the
VAT amount appears once the quantity and rate of the item are entered.

for the month of November 2005. The statement is as follows.
Cell phone bill Rs.1100

2. Credit Particulars: Input VAT @ 12.5% 1500.
3. Credit Particulars: VAT Adjustment A/C 2100.

Trial Balance until November 2005
Figure 4.46 Detailed Trial Balance – 1st April 2005 to 30th November 2005

4.6.10 Transactions for December 2005

DECEMBER 2005
78) 4-12-2005 Mr. Rai paid salaries and rent by cheque for November 2005.
79) 8-12-2005 Mr. Rai settled the bill dated 12-11-2005 of Icon Enterprises by
cheque.
1. Debit Particulars: Icon Enterprises 13500.
3. Ensure that the bill-wise details for Icon Enterprises are as given in the table.
Agst Ref P-IE-01 ⎯ 13500 Dr
80) 10-12-2005 Mr. Rai withdrew Rs. 10000 from bank for personal use.
tlement of bill dated 15-11-2005.
3. Ensure that the bill-wise details for Seacrest Trading Corporation are as given in the table.

82) 18-12-2005 Mr. Rai sold the following items for cash in an exhibition organised by
V-Guard company.
High Capac- 35 850 29750 12.5% 33468
ity Stabilisers
Electric 30 550 16500 12.5% 18562
Heater
Open Well 25 1800 45000 4% 46800
Pumps
Submersible 20 2400 48000 4% 49920
Pumps
Gross Total 148751
i. Make an entry of the transaction in a Sales voucher

1. Party’s A/c Name: Cash.
Electric Heater 30 nos 550 nos 16500
Output VAT@ 12.5% ⎯ 12.5% ⎯ 5781
Output VAT@ 4% ⎯ 4% ⎯ 3720
Name of Item Particulars VAT/TAX Class Amount
High Capacity Stabilisers Sales @12.5% Sales @12.5% 29750
Electric Heater Sales @12.5% Sales @12.5% 16500
Open Well Pumps Sales @ 4% Sales @ 4% 45000
83) 19-12-2005 Mr. Rai paid Rs. 2500 in cash for the space provided in the exhibition.
i. Create ledger Exhibition Expenses (under Indirect Expenses)

1. Debit Particulars: Exhibition Expenses 2500.

the month of December 2005. The statement is as follows.

85) 31-12-2005 VAT adjustment entry
86) 31-12-2005 Provision entry to transfer balance from VAT adjustment account to
VAT Payable account.
i. Create ledger VAT Payable (under Provisions)

2. Credit Particulars: VAT Payable 8952.

4.6.11 Trial Balance until December 2005
Figure 4.47 Detailed Trial Balance – 1st April 2005 to 31st December 2005

4.6.12 Transactions for January 2006

JANUARY 2005
87) 1-1-2006 Mr. Rai paid salaries and rent by cheque for the month of December
2005.
88) 2-1-2006 Mr. Rai deposited Rs. 120000 cash in ICICI bank.
89) 5-1-2006 Mr. Rai paid VAT due for the month of December 2005 by cheque.
1. Debit Particulars: VAT Payable 8952.
90) 8-1-2006 Mr. Rai purchased the following items on credit from X-Tech Services,
Orissa.
CST Amount
Submersible 50 1800 90000 4% 93600
Pumps
i. Create group Tax on Purchases (under Purchases Account)
Note: Select ‘Appropriate by Value’ in the field ‘Method to Allocate when used in Purchase
Invoice’. Retain default settings for the other fields and accept the group creation.
ii. Create ledgers X-Tech Services (under Outstation Creditors)

Note: In the mailing and related details select state as ‘Orissa’.
Purchases - CST (under Purchases Account)
Note: Set the field ‘Used in VAT returns’ to ‘Yes’ and select ‘Inter-State Purchases’ as the
‘VAT/Tax Class’.
Input CST @ 4% (under Tax on Purchases)
Note: Set the field ‘Used in VAT returns’ to ‘Yes’ and select ‘Inter-State Purchases’ as the
‘VAT/Tax Class’.


1. Party’s A/c Name: X-Tech Services.
Input CST @ 4% ⎯ 4% ⎯ 3600
Purchases - CST Inter-State Purchases 90000
4. Form to Issue: Select C Form.
New Ref P-XTS-01 ⎯ 93600 Cr
Figure 4.48 Purchase Invoice — CST

91) 12-1-2006 Mr. Rai decides to have a price list for his customers, levels were
decided on the basis of old and new customers and also the volume of
items purchased by customers.
PRICE LIST FOR OLD CUSTOMERS
Items 0-20 Dis- 20-50 Dis- 50- Dis-
count count above count
High Capac- 850 Nil 850 5% 850 7%
ity Stabilisers
Open Well 1600 2% 1600 5% 1600 6%
Pumps
PRICE LIST FOR NEW CUSTOMERS
Submersible 2500 Nil 2500 4% 2500 8%
Pumps
i. Create price list for Old customers and New customers

To allow multiple price levels for customers in the company’s account books, in Tally, Set the fol-
lowing fields to ‘Yes’.
1. ‘Set/Modify other Company features?’ in F11: Features.
2. ‘Use Multiple Price Levels for Invoicing?’ in Advanced Company Operations screen.
3. Enter details as shown in figure below in the company price levels screen.
Figure 4.49 Company price levels

To create price list for customers:

1. Go to Gateway of Tally > Inventory Info. > Price List > select All Items from name of
group list to view the price list screen.
2. Enter the price level details as shown in the figure.
Figure 4.50 Price list – Old customers
The method of creating price list for new customers is same as that for old customers. Ensure
that the price list details for new customers are as given in the table.
Name of Item Quantities Rate Discount % (if any)
From Less than
⎯ 20 nos 2500/nos ⎯
Submersible Pumps 20 nos 50 nos 2500/nos 4%
50 nos ⎯ 2500/nos 8%
92) 14-1-2006 Mr. Rai sold the following items to Soft Touch traders.
Item Qty Rate Dis- Value Output Total
count VAT Value
Submersible 30 2500 4% 72000 4% 74880
Pumps
i. Create ledger Soft Touch Traders (under Outstation Debtors)

Note: Pricing level applicable: select New Customers from price levels list at the time of
ledger creation.


entry has to be recorded as an item invoice. Activate ‘Separate Discount column on Invoices’
in F11: Features. Record the sales transaction in a sales voucher using voucher class 'Sales @
4%'.
1. Party’s A/c Name: Soft Touch Traders.
2. Price level: New customers, is automatically displayed on selecting the party.
Name of Item Quantity Rate Per Discount % Amount
Submersible Pumps 30 nos 2500 nos 4% 72000
Output VAT @ 4% ⎯ 4% ⎯ ⎯ 2880
New Ref S-STT-01 ⎯ 74880 Dr
94) 20-1-2006 Mr. Rai withdrew capital of Rs. 500000 from the firm by cheque.
1. Debit Particulars: Anurag Rai Capital A/c 500000.
95) 25-1-2006 Mr. Rai received a cheque from Soft Touch Traders for sales made on
14-01-2006.
1. Credit Particulars: Soft Touch Traders 74880.
3. Ensure that the bill-wise details for Soft Touch Traders are as given in the table.
Agst Ref S-STT-01 ⎯ 74880 Cr

the month of January 2006. The statement is as follows:


Trial Balance until January 2006
Figure 4.51 Detailed Trial Balance – 1st April 2005 to 31st January 2006

4.6.13 Transactions for February 2006

FEBRUARY 2006
99) 3-2-2006 Mr. Rai paid VAT due for the month of January 2006 by cheque.
1. Debit Particulars: VAT Payable 2880.
100) 4-2-2006 Mr. Rai paid salaries and rent by cheque for the month of January
2006.
Note: In the cost centre allocation for salary expenses screen, enter the required details.
101) 8-2-2006 Mr. Rai purchased the following items from Pacific Merchants. Pacific
Merchants drew a bill of exchange which was accepted by Mr. Rai.
VAT Amount
High capacity 50 500 25000 12.5% 28125
stabilisers
Open well 30 1500 45000 4% 46800
pumps
Gross Total 74925

Purchases @ 12.5% Dr. Rs. 25000.
Purchases @ 4% Cr. Rs. 45000.
Input VAT @ 12.5% Dr. Rs. 3125.
Input VAT @ 4% Dr. Rs. 1800.
To Pacific Merchants Cr. Rs. 74925.
Pacific Merchants Dr. Rs. 74925.

To Bills Payables Cr. Rs. 74925.


i. Create ledger Bills Payable (under Current Liabilities)
ii. Make an entry of the transaction in a Purchase voucher

1. Party’s A/c Name: Pacific Merchants.
Input VAT @ 12.5% ⎯ 12.50% ⎯ 3125
Input VAT @ 4% ⎯ 4% ⎯ 1800

Purchases @ 12.5% Purchases @ 25000
12.5%
Purchases @ 4% Purchases @ 4% 45000
New Ref P-PM-02 ⎯ 74925 Cr
5. Ensure that the interest parameters are as given in the table below:
Rate Per On
10% 365-Day Year Credit Balances Only
iii. Make an entry to record the bill of exchange in a Journal voucher

1. Debit Particulars: Pacific Merchants 74925.
2. Credit Particulars: Bills Payable 74925.
3. Ensure that the bill-wise details entries are as given in the table.
Agst Ref P-PM-02 ⎯ 74925 Cr

102) 12-2-2006 Mr. Rai sold the following items to Java Trading Company on credit
Item Qty Rate Dis- Value Input Total
count VAT Amount
High 30 850 5% 24225 12.5% 27253
Capacity
Stabilisers
Open well 40 1600 5% 60800 4% 63232
pumps
Gross Total 90485
Note: Create sales voucher class - 'Sales @ 12.5%' and record the sales transactions in differ-
ent sales vouchers using the corresponding voucher class.
i.Alter the Sales voucher type
1. Go to Gateway of Tally > Accounts Info. > Voucher Types > Alter > select Sales from the
list of voucher types.
2. In the voucher type alteration screen, highlight 'Sales @ 4%' and use down arrow key to add
another class 'Sales @ 12.5%' in the 'Name of Class' field.
3. Retain the rest of the fields as they are.
4. Ensure that voucher type class is defined as shown in figure.
Figure 4.52 Voucher Type Class – Sales @ 12.5%

ii. Make an entry of the transaction in a Sales voucher - voucher class 'Sales @ 12.5%'
1. Go to Gateway of Tally > Accounting Vouchers > F8: Sales > select Sales @ 12.5%
from the class table to view a sales voucher displaying voucher class as Sales @ 12.5%.
2. Party’s A/c Name: Java Trading Company.
3. Price level: Old Customers.
High Capacity Stabilisers 30 nos 850 nos 5% 24225
Output VAT @ 12.5% ⎯ 12.50% ⎯ ⎯ 3028
Rate Per On
iii. Make an entry of the transaction in a Sales voucher - Voucher class 'Sales @ 4%'
Note: Follow the same approach as mentioned for voucher class 'Sales @ 12.5%'. Replace
12.5% with 4% and ensure that the corresponding entries are made as given in the sales
details for the item open well pumps.
103) 14-2-2006 Mr. Rai purchased the following items from WinTech Information Sys-
tems, Hyderabad on credit.
CST Amount
Low capacity 50 450 22500 4% 23400
stabilisers
i. Create ledgers WinTech Information Systems (under Outstation Creditors)
Note: Pricing level applicable: select Not Applicable from price levels list at the time of ledger
creation. In the mailing and related details select state as ‘Andhra Pradesh’.
ii. Make an entry of the transaction in a Purchase voucher

1. Party’s A/c Name: WinTech Information Systems.


Input CST @ 4% ⎯ 4% ⎯ 900
Purchases - CST Inter-State Purchases 22500
4. Form to Issue: Select C Form.
New Ref P-WIS-01 ⎯ 23400 Cr
105) 18-2-2006 Mr. Rai purchased the following items from Icon Enterprises on credit.
VAT Amount
Submersible 30 2200 66000 4% 68640
Pumps

1. Party’s A/c Name: Icon Enterprises.
Input VAT @ 4% ⎯ 4% ⎯ 2640


Purchases @ 4% Purchases @ 4% 66000
New Ref P-IE-02 ⎯ 68640 Cr
106) 25-2-2006 Mr. Rai sold the following items to Mumbai State Trade Corporation
(Government Department) on credit.
CST Amount
Submersible 40 2500 100000 4% 104000
Pumps
Note: CST is exempted if the sale is made to government depart-
ments.
i. Create ledger State Trade Corporation, Mumbai (under Outstation Debtors)
creation. In the mailing and related details select state as ‘Maharashtra’.
Sales - CST (under Sales Account)
Note: Set the field ‘Used in VAT returns’ to ‘Yes’ and select ‘Inter-State Sales’ as the ‘VAT/Tax
Class’.

ii. Make an entry of the transaction in a Sales voucher.

Note: As the sales entry has to be recorded as an item invoice, ensure that As Invoice and
Item Invoice buttons are activated. Voucher class is not applicable for this transaction.
1. Party’s A/c Name: State Trade Corporation, Mumbai.
2. Price level: Not applicable.
Submersible Pumps 40 nos 2500 nos ⎯ 100000
4. Ensure that the accounting details are as given in table below.
Sales - CST Inter-StateSales 100000
5. Form to Receive: Select D Form.
New Ref S-MTC-01 ⎯ 100000 Dr
Figure 4.53 Sales Voucher - CST

for the month end, February 2006. The statement is as follows.
Conveyance expenses Rs. 700


Trial Balance until February 2006
Figure 4.54 Detailed Trial Balance – 1st April 2005 to 28th Febraury 2006

4.6.14 Transactions for March 2006

MARCH 2006
109) 5-3-2006 Mr. Rai paid salaries and rent by cheque for the month of February
2006.
1. Debit Particulars: Salary Expenses 11500
2. Debit Particulars: Rent Expenses 3500
3. Credit Particulars: ICICI Bank 15000
Note: In the cost centre allocation for salary expenses screen, enter the required details.
110) 10-3-2006 Mr. Rai honoured the bills payable which was drawn by Pacific Mer-
chants by issuing cheque.
Bills Payable Dr. Rs. 74925
To ICICI Bank Cr. Rs. 74925

1. Debit Particulars: Bills Payable 74925.
111) 15-3-2006 Mr. Rai sold the following items on credit to Sun-Shine Traders, Ker-
ala.
Item Qty Rate Output Total
CST Amount
High capacity stabilisers 30 850 4% 25500
Open well pumps 50 1550 4% 77500
Gross Total 107120

i. Create ledger Sun-Shine Traders (under Outstation Debtors)

creation. In the mailing and related details select state as ‘Kerala’.
1. Output CST @ 4% (under Duties and Taxes)
2. Type of Duty/Tax: CST.
3. VAT/Tax Class: Inter-State Sales.
4. Percentage of Calculation: 4.
5. Method of Calculation: On Total Sales.
i. Make an entry of the transaction in a Sales Voucher

Note: As the sales entry has to be recorded as an item invoice, ensure that As Invoice and
Item Invoice buttons are activated. Voucher class is not applicable for this transaction.
1. Party’s A/c Name: Sun-Shine Traders.
2. Price level: Not Applicable.
High Capacity Stabilisers 30 nos 850 nos ⎯ 25500
Open Well Pumps 50 nos 1550 nos ⎯ 77500
Output CST @ 4% ⎯ 4% ⎯ ⎯ 4120
4. Ensure that the accounting details are as given in table below.
High Capacity Stabilisers Sales - CST Inter-State Sales 25500
Open Well Pumps Sales - CST Inter-State Sales 77500
5. Form to Receive: Select C Form.
6. Ensure that the entries in the bill-wise details screen are as given in the table below.
New Ref S-SSC-01 ⎯ 107120 Dr
credit.
VAT Amount
High capacity 5 950 4750 12.5% 5343
stabilisers
Low capacity 15 750 11250 12.5% 12657
stabilisers
Gross Total 18000

i.Make an entry of the transaction in a Sales voucher - Voucher class Sales @ 12.5%
1. Go to Gateway of Tally > Accounting Vouchers > F8: Sales > select Sales @ 12.5% from
the class table to view a sales voucher displaying voucher class as Sales @ 12.5%.
2. Party's A/c Name: Seacrest Trading Corporation.
3. Price level: Not applicable.
High Capacity Stabilisers 5 nos 950 nos ⎯ 4750
Low Capacity Stabilisers 15 nos 750 nos ⎯ 11250
Output VAT @ 12.5% ⎯ 12.5% ⎯ ⎯ 2000
114) 30-3-2006 Mr. Rai received the statement from the petty cashier for the month of
March 2006. The statement is as follows:
Shop maintenance Rs. 350
1. Debit Particulars: Output CST @ 4 % 4120.
3. Credit Particulars: VAT adjustment A/c 6120.

Note: As per guidance note on accounting for state-level Value Added Tax issued by the ICAI,
the debit balance in VAT credit receivable (inputs) account, at the year end, should be shown
on the "Assets" side of the balance sheet under the head "Loans and Advance".
At the year end, if the VAT adjustment account has a debit balance, a new ledger 'VAT Credit
Balance Account' under 'Loans and Advances (Asset)' is created and the debit balance is trans-
ferred to the new account created to adhere to the guidance note issued by ICAI.
4.6.15 Provision Entries

All provision entries are depicted using a Journal voucher.
Note: Provision Entries, Depreciation Entries and Adjustment Entries are all recorded on 31-3-2006.
SL. NO. TRANSACTIONS
1) Shop rent for March 2006.
i. Create ledger Rent Expenses Payable (under Provisions)

2. Credit Particulars: Rent Expenses Payable 3500.
2) Salaries for March 2006.
i. Create ledger Salary Expenses Payable (under Provisions)
Note: Set ‘Cost Centres are applicable’ to ‘Yes’.

2. Credit Particulars: Salary Expenses Payable 11500.
Note: Enter the cost centre details for salary expenses and salary expenses payable.
3) Electricity bill charges for March 2006 – Rs. 350.
i. Create ledger Electricity Expenses Payable (Under Provisions)
ii. Make an entry of the transaction in the Journal voucher.

2. Credit Particulars: Electricity Expenses Payable 350.

4.6.16 Depreciation Entries

Sl. Asset Name Value to be Date of Rate of Depreciation for
No. depreciated Purchase Depreciation 2004-05
(a) (b) (a) *(b)=(c)
1) Cell phone 1 5500 10-4-2005 15% 825
Cell phone 2 4500 14-11-2005 7.5% 338
2) Computer 25000 10-4-2005 60% 15000
3) Electrical Fittings 5000 10-4-2005 10% 500
4) Furniture and Fixtures 150000 5-4-2005 10% 15000
5) Motor Vehicle 40000 10-4-2005 15% 450
Total 37663
Note: Assets are depreciated by using Written Down Value (WDV) Method.
Rate of depreciation is 10% (Smart Agencies follows the depreciation rate and the method as
provided under the Income Tax Act). As per the Income Tax Act, depreciation is allowed in full if
the asset is used for more than 180 days in a year and if asset is used for less than 180 days in
a year depreciation is allowed at one half.
Note: * Cell phone 2 is purchased on 14-11-2006. It is used for less than 180 days; hence
depreciation is allowed on half of the rate only.
i. Create ledger Depreciation Expenses (under Indirect Expenses)

1. Debit Particulars: Depreciation Expenses 37663.
2. Credit Particulars: Cell Phone 1163.
3. Credit Particulars: Computer 15000.
4. Credit Particulars: Electrical Fittings 500.
5. Credit Particulars: Furniture and Fixtures 15000.
6. Credit Particulars: Motor Vehicle 6000.

4.6.17 Adjustment Entries for Prepaid Expenses

All adjustment entries are depicted using a Journal voucher.
Nature Payment Period Amount Prepaid Prepaid Amount for
Date of Insurance Period Amount current year
Insurance 28-6-2005 1-7-2005 2400 1-4-2006 to 600 1800
to 30-6-2006 30-6-2006
(12 months) (3 months)
i. Create ledger Insurance Expenses (under Indirect Expenses)

1. Debit Particulars: Insurance Expenses 1800.
2. Credit Particulars: Prepaid Insurance 1800.
4.6.18 Other Adjustment Entries

SL. NO. NATURE OF ADJUSTMENT
1) Transfer balance of withdrawals account to Anurag Rai Capital account.
1. Debit Particulars: Anurag Rai Capital A/c 53000.
2. Credit Particulars: Anurag Rai Drawings 53000.
Closing Entry
SL. NO. TRANSACTION
1) Transfer of profit and loss account to Anurag Rai capital account.
1. Debit Particulars: Profit & Loss A/c (pre-defined ledger) 20155.
2. Credit Particulars: Anurag Rai Capital A/c 20155.

Trial Balance until March 2006
Figure 4.55 Detailed Trial Balance – 1st April 2005 to 31st March 2006


Tally is multi-currency enabled.
Each company may have different features activated as features are specific to the current
company only.
Configuration settings of one company will affect all companies maintained in the same data
directory.
Tally provides16 different predefined voucher formats for recording various transactions per-
taining to both accounting and inventory.
In Tally, user defined voucher types can be created using the predefined voucher types.
Stock items are the primary inventory entity used while recording receipts and issues of
inventory.
Stock items can be grouped together under stock groups to reflect their classification based
on some commonality.
Unit of measure is the basic unit of measurement used to measure stock items.
A cost centre can be any unit of an organisation to which transactions (generally revenue)
can be allocated.
Tally allows printing of cheques and also accepts user defined cheque dimensions.
Cheque printing can be done only from payment voucher.
Bank reconciliation is a routine procedure of systematically adjusting the account balance
reported by a bank with the account balance on the company's books and explaining any
differences.

Lesson 5: Display and Reports
Lesson Objectives
Upon completion of this lesson you will be able to.
Generate accounting and inventory reports.
Print accounting and inventory reports.
View statutory masters in Tally.
Introduction
Report generation is a powerful tool in Tally, which puts the user in charge of his business information
The display of information entered in Tally, helps the user
prepare his financial statements based on the vouchers entered to date
present strategic information in a manner that would aid his decision making and control.
Tally reports are generated in real-time, and the user has infinite options to display the information in
the manner that he requires. .

Display and Reports
5.1 Accounting and Inventory Reports in Tally
Figure 5.1 Tally Menu for Accounting and Inventory Reports

Display and Reports
5.2 Accounting Reports

5.2.1 Balance Sheet
To view balance sheet of Smart Agencies with percentage column
Go to Gateway of Tally > Balance Sheet > F12: Configure
Activate 'Show Percentages', in the balance sheet configuration screen.
The resultant balance sheet appears as shown.
Figure 5.2 Detailed Balance Sheet with Percentage Column

In this view, each group is expressed as a percentage of the total of the balance sheet.
To enter closing stock value manually in the balance sheet:

In Tally, the value of closing stock depicted in the balance sheet is based on cost and the cost
method adopted for each item. The general principle of accounting is to value the stock at purchase
cost or market value, whichever is lower. Tally allows the user to enter closing stock value manually.
For example, consider that the market value of stock on 31-3-2006 is Rs. 40000. To depict this
amount as the closing stock value:
Deactivate 'Integrate Accounts and Inventory' in F11: Features.
Create ledger Stock (under Stock-in-Hand).
Alter ledger Stock
In the field, Closing Balance: Specify date as March 31, 2006 and value as 40000.

Display and Reports
The resultant balance sheet appears as shown.
Figure 5.3 Detailed Balance Sheet with altered Closing Stock Value
When the balances are carried forward to the next year, the opening value of stock would be taken
as 40000. This is applicable only when 'Integrate Account and Inventory' in F11: Features is
deactivated. Once this feature is activated, the manual entry is overwritten by the value calculated
automatically by Tally. Tally allows the flexibility of toggling between integration and disintegration of
accounts and inventory.
Note: As all other reports explained in this lesson consider integration of accounts with inventory,
activate 'Integrate Accounts and Inventory' in F11: Features.
5.2.2 Profit and Loss Account

To view the profit and loss account of Smart Agencies in vertical format with percentage column
Go to Gateway of Tally > Profit & Loss A/c > F12: Configure
Activate 'Show vertical profit and loss' and 'Show percentages' in profit and loss configu-
ration settings.

Display and Reports
The resultant profit and loss appears as shown.
Figure 5.4 Detailed Profit and Loss Account in Vertical Format with Percentages
The vertical form always shows the trading account and the income statements separately. Each line
(in condensed view) is expressed as a percentage of sales accounts. Sales accounts will be 100%
and the rest of the lines will be a percentage of sales accounts.
5.2.3 Account Books

Sales Register
Sales register displays the monthly summary of sales made.
To view sales register

Go to Gateway of Tally > Display > Account Books > Sales Register.

Display and Reports
Figure 5.5 Sales Register

On drilling down further into each month, sales voucher register for that month is displayed, which
finally takes the user to the accounting voucher alteration (secondary) screen.
Different ways to view sales register

To view sales register summary on a quarterly basis, click on F5: Quarterly.
To go to other voucher types from sales register click on F4: Vch Type.
Use F12: Configure to alter the sales register configuration settings and observe the differ-
ent ways a sales register can be viewed.
To view sales voucher register in a columnar form

Go to Gateway of Tally > Display > Account books > Sales Register > select month >
Voucher register > F5: Columnar
For example, select February and press enter to view the sales voucher register for Febru-
ary 2006.
Ensure that the columnar register settings for sales register is as shown in figure 5.6.

Display and Reports
Figure 5.6 Columnar Register Alteration – Sales

Click on F1: Detailed.
The resultant sales voucher register appears as shown.
Figure 5.7 Sales Voucher Register – Columnar View

Display and Reports
To view an extract of all sales vouchers for a particular month

Go to Gateway of Tally > Display > Account books > Sales Register > select month >
Voucher Register > F6: Extract.
For example, select March and press enter to view the sales voucher register for March
2006.
Click on F1: Detailed.
The resultant sales voucher register appears as shown.
Figure 5.8 Extract of Sales Vouchers

The extract gives a break-down of the sales vouchers and groups them to provide totals for each
group and ledger used in all sales vouchers for the period. The information one can obtain from this
report is:
How much each group of customers bought?
What is the tax component?
What is the total value of each sales ledger?
To view inventory-wise extract of sales register, click on F12: Configure and alter settings as
required.
Purchase Register
Purchase register displays the monthly summary of all purchases made.
To view purchase register

Go to Gateway of Tally > Display > Account Books > Purchase Register

Display and Reports
Figure 5.9 Purchase Register
Different ways to view purchase register:

To view purchase register summary on a quarterly basis, click on F5: Quarterly.
To go to other voucher types from purchase register click on F4: Vch Type.
Use F12: Configure to alter the purchase register configuration settings and observe the
different ways a purchase register can be viewed.
To view purchase voucher register in a columnar form, click on F5: Columnar.
To view an extract of all purchase vouchers for a particular month, click on F6: Extract.
To view inventory-wise extract of purchase register, click on F12: Configure and alter set-
tings as required.
5.2.4 Statement of Accounts

In Tally, display of statement of accounts, pertain to cost centres and outstanding analysis. These
are derived from individual transactions but are not statutory requirements.
Cost Centres
Cost centre reports are primarily performance reports.

Display and Reports
To access cost centre reports
Go to Gateway of Tally > Display > Statements of Accounts > Cost Centers.
Cost Centre Break-up

Cost center break-up shows the ledger accounts used in vouchers and allocated to the cost centre,
their total transaction values and their balance.
To view cost centre break-up:

Go to Gateway of Tally > Display > Statements of Accounts > Cost Centres > Cost
Centre Break-up.
Select the cost centre from the list of cost centres. For example, select Jairam Sengupta
and press enter to view break-up of cost centre.
The break-up of cost centre, Jairam Sengupta is as shown in figure.
Figure 5.10 Detailed Cost Center Break-up – Jairam Sengupta
Ledger Break-up
Ledger break-up is another view of a cost centre report. It enables the user to analyse the distribution
of a ledger account amongst different cost centres.
To view ledger break-up

Go to Gateway of Tally > Display > Statements of Accounts > Cost Centres > Ledger
Break-up

Display and Reports
Select a ledger from the list of ledgers. For example, select Salary Expenses and press
Enter to view cost break-up of ledger.
The cost break-up of ledger, Salary Expenses is as shown in figure.
Figure 5.11 Detailed Cost Break-up of Ledger – Salary Expenses
Outstandings
Receivables and payables are two important components of any firm's working capital and indeed its
business activity. Receivables are a part of current assets whereas payables are a part of current lia-
bilities. Each influences the short-term liquidity and financing of the company. Effective control of
both types of outstandings is necessary for the financial health of the firm. Tally provides many
reports and analysis to aid credit control.
Receivables
Receivables are amounts which are outstanding from debtors.
To view receivables
Go to Gateway of Tally > Display > Statements of Accounts > Outstandings > Receiva-
bles

Display and Reports
Figure 5.12 Detailed Bills Outstanding – Receivables

This report is for all receivables invoice by invoice outstanding on the current date. This report takes
into consideration only those accounts that have 'bill-by-bill' option activated.
Payables
Payables are amounts which are outstanding to the creditors.
To view payables
Go to Gateway of Tally > Display > Statements of Accounts > Outstandings > Payables

Display and Reports
Figure 5.13 Detailed Bills Outstanding – Payables

F4: Receivables in the payable screen switches to receivables report. Likewise, when in receivables
screen, F4: Payables button is available to switch to payables report.
5.2.5 Age-wise Analysis

Age wise analysis is a feature which can be used to generate statements which display receivables
and payables in the order of their maturity.
There are two approaches to view outstanding receivables and payables.

Ageing by bill date: Generates a statement taking bill date as base to display different bills
falling under different criteria.
Ageing by due date: Generates a statement taking due date as base to display different
bills falling under different criteria.
To view the age wise analysis of bills payables

Go to Gateway of Tally > Display > Statements of Accounts > Outstandings > Payables
> F6: Age wise
Select 'Ageing by due date' from ageing methods list.
Ensure that the company ageing settings are as shown in figure.

Display and Reports
Figure 5.14 Company Ageing Alteration Screen

The resultant payable details are as shown in figure.
Figure 5.15 Detailed Bills Outstanding – Payables – Age-wise Analysis

Similarly, age wise analysis for receivables can be observed. Select ageing by bill date and note the
manner in which the age wise analysis is displayed for both receivables and payables.
Interest Calculations
In Tally, interest is automatically calculated if 'Activate Interest Calculation' and 'Use Advanced
Parameters' features are activated in F11: Features and the related parameters are set as required
for individual ledger accounts.

Display and Reports
There are two types of interest calculations

Interest on loans and deposits.
Interest on overdue receivables/ payables.
To view interest calculation statement:

Go to Gateway of Tally > Display > Statements of Accounts > Interest Calculations.
User can opt to view interest receivable, interest payable, interest ledger wise or interest
group wise.
To view interest calculation statement of Java Trading Company

Go to Gateway of Tally > Display > Statement of Accounts > Interest Calculation >
Ledger > select Java Trading Company
Figure 5.16 Interest Calculations – Java Trading Company
5.2.6 Statutory Masters

VAT Classifications
VAT Classification is a list of VAT rates, which describes the nature of the business activity and the
type of transaction. These are in-built in the system and will be updated if and when any statutory
changes take place. Some of the classifications are
Input VAT @ 4%
Input VAT @ 1%
Input VAT @ 12.5%
Output VAT @ 1%

Display and Reports
Output VAT @ 4%
Output VAT @ 12.5%
Purchases – Capital Goods
Purchases – Exempt
Purchases from unregistered dealers
Depending on the type of the business, type of transaction, and the statutory requirements of a state,
appropriate classifications have to be selected from the list during ledger creations, voucher entries,
etc.
The sales and purchase transactions are segregated based upon the classification selected during
voucher entry and shown in the VAT computation.
To view the VAT classification details

Go to Gateway of Tally > Display > Statutory Masters > VAT Classifications
Select one of the VAT/ Tax classification from the list displayed. For example, select Input
VAT @ 12.5%.
Figure 5.17 VAT Classification Display
5.2.7 Statutory Reports

VAT Reports
VAT Computation
VAT computation report is based on VAT classification and displays the net VAT position for the given
period.
To view VAT computation report

Go to Gateway of Tally > Display > Statutory Reports > VAT Reports > VAT Computa-
tion.

Display and Reports
Figure 5.18 VAT Computation
VAT Forms
VAT returns are to be filed in the forms prescribed by each state. The form discussed here is Form
100, which is the VAT form for Karnataka. Tally enables printing of VAT form in the specified format.
To view the VAT form:

Go to Gateway of Tally > Display > Statutory Reports > VAT Reports > VAT Forms
Click on 'With Preview' button to view the VAT form before taking a print copy.
Press ALT+Z to view an enlarged version of the VAT form.

Display and Reports
The VAT form appears as shown in figure.
Figure 5.19 VAT Form 100

Display and Reports
CST Reports
CST Reports display forms to be received and issued. It allows you to track pending forms and
reconcile forms.
To view CST Reports:

Go to Gateway of Tally > Display > Statutory Reports > CST Reports
The menu displays

Form Receivable.
Form Issuable.
Form Receivable
This displays the CST forms receivable for the statutory reports from the CST Party Ledgers.
Go to Gateway of Tally > Display > Statutory Reports > CST Reports > Form Receiva-
ble
Select a CST party ledger from the list of ledgers displayed. For example, select State Trade
Corporation, Mumbai.
Forms to be received for the selected ledger are displayed in the Forms Receivable screen.
Figure 5.20 CST Reports – Form Receivable – State Trade Corporation, Mumbai
Enter in the Form Number and Date for forms received.
Accept to save.

Display and Reports
Form Issuable
This displays the CST forms issuable for the statutory reports from the CST Party Ledgers.
Go to Gateway of Tally > Display > Statutory Reports > CST Reports > Form Issuable
Select a CST party ledger from the list of ledgers displayed. For example, select WinTech
Information Systems.
Forms to be issued for the selected ledger are displayed in the Forms Issuable screen.
Figure 5.21 CST Reports – Form Issuable – WinTech Information Systems

Enter the Form Number and Date for forms issued.
Accept to save.
5.2.8 Day Book

Range Features
Display and reports in Tally can be customised as per user's requirements using filters. This filter can
scan through the range of information provided and give a precise summary of the information that
the user is looking for.
To view customised day book

Click on F2: Period to change period From: 1-4-2005 and To: 31-3-2006.
Click on F12: Range to view the filters screen where the range of information can be speci-
fied.
Ensure that the filter details are as shown.

Display and Reports
Figure 5.22 Filters – Range Feature

The resultant day book appears as shown in figure.
Figure 5.23 Customised Day Book

Display and Reports
5.2.9 Exception Reports

Optional Vouchers
Optional voucher is a non-accounting voucher. It is not a separate voucher type. An existing voucher,
(for example, a payment voucher or a receipt voucher) can be marked as optional. By marking a
voucher as optional, the voucher does not get posted anywhere but remains in the optional voucher
register.
If a transaction has not been completed, the user may not want it to affect the accounts. In such a
case, record it and at a later time simply modify the voucher and remove the 'optional' by 'regular-
ising' it.
To designate any voucher type as 'optional'

Activate 'Use Reverse Journals and Optional Vouchers' in F11: Features.
Click on F2: Period to change period From: 1-4-2005 To: 31-3-2006.
Select vouchers dated 1-4-2005 and 5-4-2005.
Mark them optional by pressing CTRL+L or click on the optional button.
View the balance sheet to see the effect of marking two vouchers as optional vouchers.
Figure 5.24 Detailed Balance Sheet Showing Effect of Optional Vouchers

Note that the capital account is on the assets side and furniture and fixtures (under fixed assets)
have a negative balance.

Display and Reports
To view the list of optional vouchers:

Go to Gateway of Tally > Display > Exception Reports > Optional Vouchers.
Figure 5.25 List of Optional Vouchers

Once all optional vouchers are regularised, the list of optional vouchers will be empty.
To regularise the vouchers

Select vouchers dated 1-4-2005 and 5-4-2005.
Regularise them by pressing CTRL+L or click on the regular button.
5.3 Inventory Reports

Tally prepares inventory reports based on the vouchers entered till date. The appearance of reports
can be varied according to a users needs. For example, to make comparisons between different
companies, periods of the financial year and so on. Inventory operates in exactly the same way as
accounting regarding displaying, modifying and printing of reports.
Stock Summary
Stock Summary is a statement of stock in hand on a particular date. The statement is updated with
every transaction to provide stock position at any given time.
Tally treats stock summary as one of the primary statements and makes it accessible directly from
the Gateway of Tally.

Display and Reports
The statement can be drilled down as with all Tally reports and configured to view different details.
Indeed, it is possible to see the total flow of stock on a single report.
Experiment with the different buttons for this purpose.
To view stock summary

Go to Gateway of Tally > Stock Summary
Figure 5.26 Detailed Stock Summary
Inventory Books
Stock Item
Stock item summary is a statement which displays the inwards, outwards and the closing balance
details of a selected stock item on a monthly basis.
To view the stock item summary

Go to Gateway of Tally > Display > Inventory Books > Stock Item
Select a stock item from the list of items. For example, select High Capacity Stabilisers.

Display and Reports
Figure 5.27 Stock Item Monthly Summary
Different ways to view stock item summary

To view stock item on a quarterly basis, click on F5: Quarterly.
To view other stock item's summary, click on F4: Item
To view the gross profit earned on sales made, click on F7: Show Profit. The gross profit is
calculated and displayed automatically.
Use F12: Configure to alter the stock item configuration settings and observe the different
ways a stock item summary can be viewed.
5.4 Point of Sale

POS or PoS is an acronym for point-of-sale. Point of Sale can be a retail outlet, a checkout counter in
a shop, or any other location where a sale transaction takes place.
POS system is a computerised cash register which adds up the sales totals, calculates the balance
to be returned to buyer and automatically adjusts the inventory levels to reflect the quantity sold. The
equipment required for POS to work effectively are cash registers, card readers, bar-code scanners
and so on.
Advantages of a Point of Sale system are

It helps to calculate sales and operate the cash drawer.

Display and Reports
It manages inventory and facilitates the barcode scanner operations.

It offers a flexible and simpler way of querying your inventory and sales database.
It helps you track product movement and the cost to push certain brands over others.
It tracks and records the date and time of every sale made at your point of sale .
Tally’s Point of Sale module makes it easy to streamline your retail operations by automating the
‘Check out’ process for your customers. It takes a one-time configuration in Tally for POS features to
be activated.
Point of Sale (POS) features in Tally ies 7.2

Generates POS Invoice with date and time of the transaction.
Generates POS related reports such as Cash Registers, Sales Registers and Inventory
reports.
Ensures management of gift cards, vouchers, admissions, discounts and so on .
Allows multiple mode of payment for a single invoice.
Eases Cash and Credit/Debit transactions and tracks balances to be tendered to buyers.
Provides quantified tracking of sales and promotions.
Allows for real time updation of inventory and the optiion of quickly matching inventory with
floor counts.
Helps in identifying consumer-purchasing patterns.
Facilitates bar-code scanning of Stock Keeping Units (SKU’s) or items.
Ensures multi-level security control of cash and Inventory.
Increases efficiency and productivity at the point of sale .
Tally’s point of sale application can search your inventory database not only on item description or
SKU but by alias name, part number, keywords and so on. Stock summary reports can be used for
viewing group-wise, category-wise, godown-wise, batch-wise, supplier-wise details of the stock
items.
Illustration for POS

Consider M/s. Choice Supermarkets, a leading retail chain, which deals in grocery products including
fresh foods, ready to eat foods and other Non-Food items.

Display and Reports
Create a new company in Tally 7.2 with ‘Accounts with Inventory’. The completed Company
Creation screen will appear as shown in figure.
Figure 5.28 Company Creation – Choice Supermarkets
Press CTRL+A to Accept.
5.4.1 Creating Voucher Type

The first step to enable POS Invoicing is to create a POS Invoice Voucher Type. Using Voucher
class, you can pre-define accounts, limit the list of ledgers for selection during voucher entry,
automate ledger posting associated with stock items and create auto selection for duties, discounts
and rounding off .
Go to Gateway of Tally > Accounts Info > Voucher Types > Create
In the Voucher Creation screen,
Type the name of the Voucher Type as ‘POS Invoice’.
Select the Voucher Type as ‘Sales’ from the list of voucher types.
Type the Abbreviation as ‘POS’.
Set Use for POS Invoicing to Yes.
Specify the Default Print Title as ‘INVOICE’.
Method of Voucher Numbering is set by default to Automatic, but can be set to Manual or
None.
The Start number field is set to 1 by default.
Print after saving is set to Yes by default. You have the option to set it to No.

Display and Reports
Use Common narration will be by default set to No.

You will find two additional fields for messages and can use them as per your requirements.
Type *Thank You – Visit Again* in the print Message 1 field.
The completed POS Invoice Voucher Type screen appears as shown.
Figure 5.29 Voucher Type Creation – POS Invoice
Press Enter to Accept.

Creation of Masters
Create the sales and purchases ledgers in the books of M/s. Choice Supermarkets
Go to Accounts Info > Ledgers > Create
LEDGER UNDER GROUP INVENTORY VALUES ARE AFFECTED
Purchases Purchase Accounts Yes
Sales Sales Accounts Yes
Creation of Stock Item

Create stock items with standard price. To set standard rates for stock items, activate ‘Allow
Standard Rates for Stock Items’ in F12: Configure.
Go to Gateway of Tally > Inventory Info > Stock Items > Create
Name: Type Pepsodent - 150g
Under: Select FMCG. (Press ALT+C to create stock group - FMCG under primary)
Units: Select nos. (Press ALT+C to create a simple unit of measure - nos)

Display and Reports
Set Standard Rates?: Set ‘Yes’. This displays a screen where the standard rates can be
specified.
Under Standard Cost, specify the rate as 15 and under Standard Selling Price
specify the rate as 20.
The date in the field Applicable from is 1-4-2005.
The Standard Rates screen appears as shown.
Figure 5.30 Setting Standard Rates
Press Enter to Accept the standard rate settings.

The completed Stock Item creation screen appears as shown.
Figure 5.31 Stock Item Creation – Pepsodent – 150g

Display and Reports
Press CTRL+A to Accept the stock item creation screen.
Note:
To view the field Set Standard Rates’, activate Allow Standard Rates for Stock Items in
F12: Configure.
In the alias column, the bar code details can be captured by simply scanning the bar code
of the stock item using a bar code reader.
Recording Transactions
Choice Supermarkets purchased 100 numbers of ‘Pepsodent 150g’ at the rate of Rs. 15 on 1-4-
2005. Make an entry in a purchase voucher to record this transaction.
Choice Supermarkets sold 5 numbers of ‘Pepsodent 150g’ for a total of Rs. 100 on 2-4-2005. The
customer pays Rs. 50 by credit card, Rs. 30 by cheque and Rs. 20 by cash. The sales voucher to
record this transaction is entered as follows
Go to Gateway of Tally > Accounting Vouchers > F8: Sales
Select the voucher type as POS Invoice.
Press F2 and change the date to 2-4-2005.
Click on the button Multi Mode Payment.
Select the sales ledger as Sales.
Select the Name of Item as Pepsodent - 150g.
(Alternatively, the bar code on the stock item can be scanned with the help of the bar code
reader and all the details are captured automatically. This is useful when there are
numerous stock items and manual entry of each item proves to be a time consuming task.)
By default, Tally displays the rate and amount for one unit of the stock item selected. To
change the quantity, use the backspace key to shift the cursor on to the quantity column.
Type 5 and press Enter to update the rate and amount details.
Note: If Set Standard Rates is activated, Tally does not allow manual entry of rate for stock
items.
In the columns pertaining to payment details make the following entries.
Gift Vouchers: Payment received through gift vouchers is entered here. Select Not
Applicable.
Credit/Debit Card Payment: Select the name of the bank with which you have the
arrangement for collecting the card receivables. Select HSBC Bank. (Press ALT+C to
create the ledger HSBC Bank - under Bank Accounts). The amount is automatically
filled with the amount of the invoice, 100. Type 50 . This will prompt you to enter the
card number. Type ‘7007526477100088’ and press Enter.
Cheque: Enter the name of the bank in which you deposit the cheques. Select HSBC
Bank. The amount column is automatically filled with the balance amount receivable,
Type ‘30’ and press Enter. This will take you to the column ‘Bank Name’. Enter the
name of the bank on which the cheque has been drawn. Type ‘Citibank’.Tally will ask
you to fill in the cheque no. Type ‘475630’ and press Enter.

Display and Reports
Cash: Select the ledger ‘Cash’ (pre-defined). Tally automatically fills the balance
amount receivable, 20 . Enter the cash tendered by the customer, which is 50. Tally
automatically calculates and displays the balance amount to be refunded as 30.
Skip the narration field by pressing Enter.
The completed POS Invoice screen will appear as shown.
Figure 5.32 POS Invoice – Sales
On saving the voucher, Tally asks for a confirmation to print the invoice.
Click With Preview button to see a preview of the invoice and press Enter.

Display and Reports
The printed invoice will appear as shown.
Figure 5.33 POS – Invoice

Note:
You can configure the printer to alter paper dimensions. The standard paper size for a POS
invoice is 4 inches by 11 inches.
To accelerate the process of recording the sales invoice entries, create a voucher class by
specifying the default ledger allocations for the payment details. If voucher classes are
defined, Tally will automatically display the ledger accounts for gift vouchers/ card/ bank/
cash in the POS Invoice.
5.5 Printing Reports

Reports and documents generated through Tally's extensive display capabilities can also be printed.
In Tally, one has to explore the print option to understand its flexibility and ease of use.
Printing can be done in two ways

Using the print button.
Multi-account printing.
Both will yield the same output.
Using the Print Button

User can obtain a printed version of the screen that is displayed by selecting Print from the button
bar menu. This brings up new button bar options and the Print Configuration screen for the report,

Display and Reports
which asks Print? Yes or No. Select Yes print the report using the options specified on the screen. If
selection is No, the print options can be changed before printing.
Multi-Account Printing
Multi-account printing is principally geared towards printing the primary books of accounts, like the
Cash and Bank Books, Account Ledgers, Sales and Purchase Registers etc without needing to
select the accounts one at a time and pressing ALT+P. The facilities provide for printing one account
at a time, all accounts, or all accounts in a selected group. Before printing, the date range and other
selections may also be set up.
5.5.1 Types of Print Configuration Options

Common Printing Options
Common printing options affect the printing of all reports and are changed by selecting the appropri-
ate button from the button bar:
With Preview: To view the report in print preview mode before actual printing.
Titling: To change the title of the report.
Page Nos: To specify the starting page number and page number range.
Pre-Printed / Plain Paper: Toggle to make the selection.
Print Format: A pop-up list containing the printing formats available in Tally is displayed. The
formats provided are Dot-Matrix Format, Neat Format and Quick (Draft) Format.
With Colour: This option is relevant only if a colour printer is used.
Copies: To specify the number of copies to be printed.
Printer: To change the printer. This also displays the default paper size that is set for the printer.
Dynamic – Report Specific Options

If there are report specific options available for a report, they are displayed in a sub-screen when the
print option is selected. User is permitted to change various options before taking a final print.
5.5.2 Print Format

User can specify print format settings as required. Tally displays a list of print formats. The print
formats available in Tally are Dot matrix format, Neat mode and Quick/Draft.
Dot matrix format allows the user to print Tally reports in text format using the dot matrix printers. As
Tally is a Windows-based software, it has a print format compatible with dot matrix printers consider-
ing that time taken to print reports should be quick. By default, the Epson printer drivers have been
defined. Any dot matrix printer may be used, but ONLY the Epson printer drivers (LQ and FX series)
should be used for dot matrix format printing of Tally.
The neat mode and quick/draft print modes are compatible with most of the printer drivers installed
on the Windows Operating System. The default behaviour of Tally is to print in neat mode. This can
be altered by pressing ALT+F just before printing. All subsequent reports will be printed in quick/draft
format, until ALT+F is pressed again at the Printing Screen. Almost every report can be printed in
quick/draft mode (except for Cheques).

Display and Reports

Sales register displays the monthly summary of sales made.
Purchase register displays the monthly summary of all items bought.
The extract feature gives a break-down of the sales/ purchase vouchers and groups them to
provide totals for each group and ledger used in all sales/ purchase vouchers for the period.
Statement of Accounts pertains to cost centers and outstanding analysis. These are derived
from individual transactions but are not statutory requirements.
Cost centre break-up shows the ledger accounts used in vouchers and allocated to the cost
centre, their total transaction values and their balance.
Receivables are a part of current assets whereas payables are of current liabilities.
Receivables are amounts which are outstanding from debtors.
Payables are amounts which are outstanding to the creditors.
Age wise analysis is a feature which can be used to generate statements which display bills
receivables and bills payables in the order of their maturity.
VAT returns are to be filed in the forms prescribed by each state. The form discussed here is
Form 100, which is the VAT form for Karnataka. Tally enables printing of VAT form in the
specified format.
VAT Classification is a list of VAT rates, which describes the nature of the business activity
and the type of transaction. These are in-built in the system and will be updated if and when
any statutory changes take place.
Optional voucher is a non-accounting voucher. It is not a separate voucher type. An existing
voucher, (for example, a payment voucher or a receipt voucher) can be marked as optional.
Stock item summary is a statement which displays the inwards, outwards and the closing
balance details of a selected stock item on a monthly basis.
Print formats available in Tally are Dot matrix format, Neat mode and Quick/ Draft.

Appendix
a.1 List of Transactions

a.1.1 Sample Exercise
Anurag Rai’s transactions for the year 2005 - 06 are as follows. You are required to
Record the transactions.
Prepare financial statements.
LIST OF TRANSACTIONS – LEVEL 2 – SAMPLE EXERCISE

SL.NO. DATE TRANSACTIONS
APRIL 2005
1) 1-4-2005 Anurag Rai started Smart Agencies by bringing in capital of
Rs. 1500000 by cheque and deposited the same in ICICI bank by
opening a new account.
2) 3-4-2005 Mr. Rai withdrew Rs. 50000 by cheque for shop expenditure from
ICICI bank.
3) 5-4-2005 Mr. Rai purchased furniture and fixtures worth Rs. 150000 for the
shop by cheque.
4) 8-4-2005 Mr. Rai rented a premise on 1-4-2005 for his business at Rs. 3500 per
month. He paid a security deposit of Rs. 25000 by cheque. (cheque
number: 123453)
5) 10-4-2005 Mr. Rai issued a cheque to purchase the following assets.
Asset Cost Rate of Depreciation
Cell Phone Rs. 5500 15%
Computer Rs. 25000 60%
Electrical Fittings Rs. 5000 10%
Motor Vehicle (2 Wheeler) Rs. 40000 15%

Appendix
6) 12-4-2005 Mr. Rai hired the following people:

Name Designation Monthly Salary
Rahul Bhatt Sales Executive Rs. 4000
Jairam Sengupta Sales man Rs. 3500
Shishir Mathur Accountant Rs. 2500
Ajith V Nair Clerk Rs. 1500
Ajit is also in charge of petty cash and submitting the statement of
expenses at the end of each month.
Items Quantity Rate per Value Input Total
(In Piece VAT Value
Pieces) (Rs.)
High Capacity 100 600 60000 12.5% 67500
Stabilisers
Items Quantity Rate Per Value Input Total
(In num- number VAT Value
bers) (Rs.)
Low Capacity 100 40 4000 12.5% 45000
Stabilisers
Open Well 50 150 7500 4% 78000
Pumps
Submersible 100 200 20000 4% 208000
pumps
Gross Total 331000
9) 22-4-2005 Mr. Rai paid carriage inward expenses of Rs. 500 in cash on
purchases made on 20-4-2005 and 21-4-2005.
10) 27-4-2005 Mr. Rai transferred Rs. 10000 to petty cash from cash to meet the day
to day expenses.

Appendix
MAY 2005
13) 1-5-2005 Mr. Rai paid salaries through cheque for the month of April 2005.
(Cheque number: 123455). The details are as follows:
Name Salary Paid Number of Days
Rahul Bhatt Rs. 2400 18
Jairam Sengupta Rs. 2100 18
Shishir Mathur Rs. 1500 18
Ajith V Nair Rs. 900 18
14) 2-5-2005 Mr. Rai paid Rs. 2500 in cash for stationery, printing invoices and
vouchers to Cannon Traders.
for the month of April 2005. The statement is as follows
Stationery purchased Rs. 2500
16) 6-5-2005 Mr. Rai paid Rs. 3500 by cheque towards shop rent for the month of
April 2005.
17) 10-5-2005 Mr. Rai sold the following items for cash details are as follows.
(in VAT Amount
pieces)
High capacity 50 850 42500 12.5% 47813
Stabilisers
Open well 15 1700 25500 4% 26520
pumps
Gross Total 74333
18) 15-5-2005 Mr. Rai issued a cheque to A2Z traders for Rs. 396500 deducting the
Rs. 2000 discount received. He received discount since he agreed to
pay the entire bill amount.

Appendix
for the month of May 2005. The statement is as follows
JUNE 2005
22) 3-6-2005 Mr. Rai paid Rs. 3500 in cash towards shop rent for the month of May
2005.
24) 6-6-2005 Mr. Rai paid salaries for the month of May 2005 by cheque.
25) 8-6-2005 Mr. Rai purchased the following goods from Pacific Merchants on
credit for 30 days. Interest is to be calculated at 10% per annum.
Items Quantity Rate Value VAT Total
Rate Amount
High capacity 200 65 130000 12.5% 146250
stabilisers
Open well 300 155 480000 4% 499200
pumps
Gross Total 645450
26) 10-6-2005 Mr. Rai paid carriage inwards of Rs. 400 in cash.
27) 12-6-2005 Mr. Rai sold the following items to Java Trading Company on credit for
45 days. Interest charged is at 15% per annum, if payment is not
made within the credit period.
Rate Amount
High capacity 25 900 22500 12.5% 25313
stabilisers
Submersible 30 2500 75000 4% 78000
pumps
Gross Total 103313
29) 20-6-2005 Mr. Rai deposited cash of Rs. 40000 to ICICI bank.
30) 27-6-2005 Mr. Rai paid Rs. 2000 in cash to Mr. Jairam Sengupta as salary
advance.

Appendix
for the month end 30-6-2005. The statement is as follows
Insurance premium for the period 1-7-2005 to 30-6-2006 Rs. 2400
32) 29-6-2005 Mr. Rai sold the following items to Data Tech services on credit:
Rate Amount
Low capacity 100 550 55000 12.5% 61875
stabilisers
JULY 2005
34) 3-7-2005 Mr. Rai paid the salaries through cheque for the month of June 2005.
35) 6-7-2005 Mr. Rai paid rent in cash for the month of June 2005.
36) 14-7-2005 Mr. Rai purchased the following items under a sales offer. He paid by
cheque.
The offer is as follows
On purchase of 10 high capacity stabilisers 1 HCS is given
free of cost.
On purchase of 5 low capacity stabilisers 1 LCS is given free
of cost.
Item Pur- Free Total Rate Value Input Total
chased of Qty VAT Amt
Qty cost (%)
High 50 5 55 650 32500 12.5 36563
capacity
stabilisers
Low 20 4 24 400 8000 12.5 9000
capacity
stabilisers
Gross Total 45563
37) 19-7-2005 Mr. Rai paid by cheque to Pacific Traders towards bill dated 8-6-2005.

Appendix
38) 20-7-2005 Mr. Rai introduced a sales offer and sold the following items on credit
to Java Trading Company and Data Tech Services:
Item Sold Free Total Rate Value Output Total
Qty of Qty VAT Amt
cost (%)
JAVA TRADING COMPANY
High 20 2 22 750 15000 12.5 16875
capacity
stabiliser
Low 5 1 6 450 2250 12.5 2531
capacity
stabiliser
Gross Total 19406
DATA TECH SERVICES
High 30 3 33 750 22500 12.5 25312
capacity
stabiliser
Low 15 3 18 450 6750 12.5 7594
capacity
stabiliser
Gross Total 32906
39) 22-7-2005 Mr. Rai received a cheque from Java Trading Company and Data
Tech Services in settlement of bill dated 20-7-2005.
40) 28-7-2005 Mr. Rai received cheque from Data Tech Services towards the bill
dated 29-6-2005.
the month end, July 2005. The statement is as follows
Advertising expenses incurred Rs. 1500
Conveyance expenses of marketing executive Rs. 600
Donation paid to charitable institution Rs. 600

AUGUST 2005
43) 5-8-2005 Mr. Rai paid salaries by cheque for the month of July 2005.
44) 8-8-2005 Mr. Rai paid rent in cash for the month of July 2005.
45) 10-8-2005 Mr. Rai paid Rs. 7500 in cash to the petty cashier.

Appendix
46) 12-8-2005 Mr. Rai sold the following items to Seacrest Trading Corporation and
allowed a trade discount at the rate of 5%.
Rate Amount
High capacity 90 900 76950 12.5% 86569
stabilisers
47) 27-8-2005 Mr. Rai received cheque from Seacrest Trading Corporation towards
48) 28-8-2005 Mr. Rai received cheque from Java Trading Company towards the bill
dated 12-6-2005.
the month end, 31-8-2005. The statement is as follows

SEPTEMBER 2005
51) 4-9-2005 Mr. Rai paid salaries and rent by cheque for August 2005.
52) 6-9-2005 Mr. Rai purchased items on credit from A2Z Traders. The details are
as follows
VAT Amount
Low capacity 110 500 55000 12.5% 61875
stabilisers
Submersible 50 2100 105000 4% 109200
pumps
Gross Total 171075

Appendix
53) 10-9-2005 Mr. Rai sold items on credit to Data Tech Services and drew a bill of
exchange for 30 days which was duly accepted by them.
VAT Amount
Low capacity 100 550 55000 12.5% 61875
stabilisers
Submersible 50 2500 125000 4% 130000
pumps
Gross Total 191875
55) 17-9-2005 Mr. Rai sold the following items on credit of 45 days to Java Trading
Corporation
VAT Amount
High capacity 80 700 56000 12.5% 63000
stabilisers
Submersible 60 2300 138000 4% 143520
pumps
Gross Total 206520
56) 22-9-2005 Mr. Rai returned 10 low capacity stabilisers to A2Z Traders purchased
on 6-9-2005 as they were not according to the specifications.
the month-end, 30-9-2005. The statement is as follows.
58) 29-9-2005 Mr. Rai received bank statement from ICICI bank and found that Rs.
550 had been charged as half-yearly bank charges.
OCTOBER 2005
60) 1-10-2005 Java trading corporation returned the following items, out of sales
made on 17-9-2005 since they were in excess of their requirements.
Name of Item Quantity
High Capacity Stabilisers 15
Submersible Pumps 10
61) 2-10-2005 Mr. Rai issued a cheque of Rs. 7500 to petty cashier.

Appendix
62) 4-10-2005 Mr. Rai paid salaries and rent of shop by cheque for the month of Sep-
tember 2005.
63) 10-10-2005 Mr. Rai deposited the bills receivable drawn on Data Tech Services
which was duly honoured.
credit
Item Qty Rate Value Output Total
VAT Amount
Open well pumps 200 1900 380000 4% 395200
65) 21-10-2005 Mr. Rai issued a cheque to A2Z Traders towards the purchases made
on 6-9-2005.
66) 28-10-2005 Mr. Rai received a cheque from Java Trading Company against sales
made on 17-9-2005.
for the month end, October 2005. The statement is as follows

NOVEMBER 2005
69) 4-11-2005 Mr. Rai paid salaries and rent by cheque for the month of October
2005.
tlement of his bill dated 20-10-2005.
72) 12-11-2005 Mr. Rai started trading in a new product and purchased it from Icon
Enterprises on credit.
VAT Amount
Electric heater 30 400 12000 12.5% 13500
73) 13-11-2005 Mr. Rai asks the accountant to alter the voucher since he wants the
item to be grouped under heaters.
74) 14-11-2005 Mr. Rai paid Rs. 4500 by cheque for the cell phone he purchased for
his sales executive.

Appendix
credit.
VAT Amount
Open well pumps 50 1800 90000 4% 93600
for the month of November 2005. The statement is as follows
Cell phone bill Rs.1100

DECEMBER 2005
78) 4-12-2005 Mr. Rai paid salaries and rent by cheque for November 2005.
79) 8-12-2005 Mr. Rai settled the bill dated 12-11-2005 of Icon Enterprises by
cheque.
tlement of bill dated 15-11-2005.
82) 18-12-2005 Mr. Rai sold the following items for cash in an exhibition organised by
V-Guard company
High capacity 35 850 29750 12.5% 33468
stabilisers
Electric 30 550 16500 12.5% 18562
heater
Open well 25 1800 45000 4% 46800
pumps
Submersible 20 2400 48000 4% 49920
pumps
Gross Total 148751
83) 19-12-2005 Mr. Rai paid Rs. 2500 in cash for the space provided in the exhibition.

Appendix
the month of December 2005. The statement is as follows:

JANUARY 2005
87) 1-1-2006 Mr. Rai paid salaries and rent by cheque for the month of December
2005.
88) 2-1-2006 Mr. Rai deposited Rs. 120000 cash in ICICI bank.
89) 5-1-2006 Mr. Rai paid VAT due for the month of December 2005 by cheque.
90) 8-1-2006 Mr. Rai purchased the following items on credit from X-Tech Services,
Orissa.
CST Amount
Submersible 50 1800 90000 4% 93600
pumps
91) 12-1-2006 Mr. Rai decides to have price list for his customers, levels were
decided on the basis of old and new customers and also the volume
of items purchased by customers.
PRICE LIST FOR OLD CUSTOMERS
High capacity 850 Nil 850 5% 850 7%
stabilisers
Open well 1600 2% 1600 5% 1600 6%
pumps
PRICE LIST FOR NEW CUSTOMERS
Submersible 2500 Nil 2500 4% 2500 8%
pumps

Appendix
92) 14-1-2006 Mr. Rai sold the following items to Soft Touch traders
Item Qty Rate Dis- Value Output Total
count VAT Value
Submersible 30 2500 4% 72000 4% 74880
Pumps
94) 20-1-2006 Mr. Rai withdrew capital of Rs. 500000 from the firm by cheque.
95) 25-1-2006 Mr. Rai received a cheque from Soft Touch Traders for sales made on
14-01-2006.
the month of January 2006. The statement is as follows

FEBRUARY 2006
99) 3-2-2006 Mr. Rai paid VAT due for the month of January 2006 by cheque.
100) 4-2-2006 Mr. Rai paid salaries and rent by cheque for the month of January
2006.
101) 8-2-2006 Mr. Rai purchased the following items from Pacific Merchants. Pacific
Merchants drew a bill of exchange which was accepted by Mr. Rai.
VAT Amount
High capacity 50 500 25000 12.5% 28125
stabilisers
Open well 30 1500 45000 4% 46800
pumps
Gross Total 74925

Appendix
102) 12-2-2006 Mr. Rai sold the following items to Java Trading Company on credit
Item Qty Rate Dis- Value Input Total
count VAT Amount
High 30 850 5% 24225 12.5% 27253
capacity
stabilisers
Open well 40 1600 5% 60800 4% 63232
pumps
Gross Total 90485
103) 14-2-2006 Mr. Rai purchased the following items from WinTech Information Sys-
tems, Hyderabad on credit.
CST Amount
Low capacity 50 450 22500 4% 23400
stabilisers
105) 18-2-2006 Mr. Rai purchased the following items from Icon Enterprises on credit.
VAT Amount
Submersible 30 2200 66000 4% 68640
Pumps
106) 25-2-2006 Mr. Rai sold the following items to Mumbai State Trade Corporation
(Government Department) on credit.
CST Amount
Submersible 40 2500 100000 4% 104000
Pumps
for the month end February 2006. The statement is as follows.

Appendix
MARCH 2006
109) 5-3-2006 Mr. Rai paid salaries and rent by cheque for the month of February
2006.
110) 10-3-2006 Mr. Rai honoured the bills payable which was drawn by Pacific Mer-
chants by issuing cheque.
111) 15-3-2006 Mr. Rai sold the following items on credit to Sun-Shine Traders, Ker-
ala.
Item Qty Rate Output Total
CST Amount
High capacity stabilisers 30 850 4% 25500
Open well pumps 50 1550 4% 77500
Gross Total 107120
credit.
VAT Amount
High capacity 5 950 4750 12.5% 5343
stabilisers
Low capacity 15 750 11250 12.5% 12657
stabilisers
Gross Total 18000
114) 30-3-2006 Mr. Rai received the statement from the petty cashier for the month of
March 2006. The statement is as follows:
Shop maintenance Rs. 350

Appendix
a.1.2 Provision Entries

SL. NO. TRANSACTIONS
1) Shop rent for March 2006.
2) Salaries for March 2006.
3) Electricity bill charges for March 2006 – Rs. 350.
a.1.3 Depreciation Entries

Sl. Asset Name Value to be Date of Rate of Depreciation for
No. depreciated Purchase Depreciation 2004-05
(a) (b) (a) *(b)=(c)
1) Cell phone 1 5500 10-4-2005 15% 825
Cell phone 2 4500 14-11-2005 7.5% 338
2) Computer 25000 10-4-2005 60% 15000
3) Electrical Fittings 5000 10-4-2005 10% 500
4) Furniture and Fixtures 150000 5-4-2005 10% 15000
5) Motor Vehicle 40000 10-4-2005 15% 450
Total 37663
a.1.4 Adjustment Entries for Prepaid Expenses

Nature Payment Period Amount Prepaid Prepaid Amount for
Date of Insurance Period Amount current year
Insurance 28-6-2005 1-7-2005 2400 1-4-2006 to 600 1800
to 30-6-2006 30-6-2006
(12 months) (3 months)
a.1.5 Other Adjustment Entries

SL. NO. NATURE OF ADJUSTMENT
1) Transfer balance of withdrawals account to Anurag Rai Capital account.
Closing Entry
SL. NO. TRANSACTION
1) Transfer of profit and loss account to Anurag Rai capital account.

Appendix
a.1.6 Practice Exercise

Soft Tech Computers is a partnership firm with two partners - Jayaram Gupta and Jayasree Gupta.
The firm will deal in trading of various computer peripherals.
The closing balance sheet of Soft Tech Computers as at March 31, 2005 appears as follows:
Note: The closing balances as on March 31, 2005 are treated as opening balances on April 1, 2005
for the financial year, 2005-06. All the opening balance amounts provided in the following table must
be entered as opening balances in the corresponding ledger accounts that you create. In the sample
exercise you have learnt to create ledgers and stock items wherein you were asked to skip the
opening balance field. In this exercise you must enter the opening balance amounts and opening
stock details (both quantity and value) and then accept the ledger creation and stock item creation
screens.
When ledger accounts of debtors and creditors are created with opening balances, Tally will ask for
Bill wise outstanding details of opening balances. Enter the details provided in the tables below
the opening balances table.
OPENING BALANCES – LEVEL 2 – PARTNERSHIP FIRM
PARTICULARS AMOUNT PARTICULARS AMOUNT
Partners Capital Account Fixed Assets
Jayaram Gupta 300000 Motor Vehicle 100000
Jayasree Gupta 300000 Furniture 25000
Office Equipments 23000
Secured Loans Office Building (including show room) 250000
Serve Well Technologies 45000
Current Assets
Sundry Creditors Deposits
Omega Info Tech 100000 Electricity 10000
Pigeon One Tech Services 20500 Phone 3000
Provisions Sundry Debtors

Electricity Charges 2500 Tech Savvy Technologies 40000
Payable Ganesh Technologies 25000
Salary Payable (Staff) 10000 Cash/Bank Balances
Telephone Charges Payable 3000 Cash in hand 1340
Income Tax Payable (2004- 15000 UTI Bank 50000
05)

Appendix
Stock of computer peripherals as on 255000

31-3-2005.
Processors 10 50000
Hard disk 15 40000
Printers 10 50000
Monitors 10 100000
UPS 10 15000
796000 796000
BILL WISE OUTSTANDING DETAILS FOR DEBTORS

Name Date Bill No Amount
Tech Savvy Technologies 17-3-2005 Bill-020 40000
Ganesh Technologies 24-3-2005 Bill-008 25000
BILL WISE OUTSTANDING DETAILS FOR CREDITORS

Name Date Bill No Amount
Omega Infotech 14-2-2005 OI-102 100000
Pigeon one Tech services 5-3-2005 POS-210 20500
Additional Information
The profit and losses are shared equally by the partners.
Interest on capital is paid to the partners @ 6% per annum on the opening balances of their
respective capital accounts.
Partners are paid monthly salary of Rs. 4000 each.
Partners decide to have separate vouchers for bank payments and receipts. Hence, two
new voucher types Bank Payment under Payment and Bank Receipt under Receipt have
to be created.
Activate ‘Maintain Cost Centers’ in F11: Features. Here cost centers are used for salary
expenses and incentives to staff.
Activate ‘Integrate Accounts with Inventory’ in F11: Features.
Partners decide to maintain their accounts on Tally ies 7.2 from 1-4-2005. The transactions
of the firm for the year 2005-06 are as under. You are required to
Enter opening balances from the balance sheet as at 1-4-2005.
Record the transactions.
Prepare financial statements.

Appendix
LIST OF TRANSACTIONS – LEVEL 2 – PARTNERSHIP FIRM

APRIL 2005
1) 1-4-2005 Partners paid salaries of Rs. 10000 for the Month of March 2005 by
cheque. The details of employees are as follows:
Name of Employee Amount
Ganesh Menon Rs. 3000
Zahir Ahmed Rs. 2500
Anand Krishna Rs. 2000
Subhash Chandra Rs. 1500
Sandeep Raghunath Rs. 1000
Note: Cost centers to be created salary expenses.

2) 4-4-2005 Partners paid Rs. 2500 in cash to Management Training Institute for
attending a trade seminar which was useful to their business.
3) 10-4-2005 Partners sold the following items to Ganesh Technologies on credit for
a period of 30 days.
Rate
Processors 6 7000 42000 4% 43680
UPS 5 2500 12500 4% 13000
Printers 5 6500 32500 4% 33800
Total Amount 90480
4) 11-4-2005 Partners paid carriage outwards Rs. 1200 in cash to a transport

company.
5) 20-4-2005 Partners received cheques from Ganesh Technologies for Rs.25000
and Tech Savvy Technologies for Rs. 40000 towards outstanding bills
of previous trading year.
6) 24-4-2005 Partners purchased the following items from “Bonafide Peripheral and
Systems” and accepted the bills of exchange drawn by them to be
honoured after 3 months.
Rate
Processors 50 5100 255000 4% 265200
Hard disks 25 2800 70000 4% 72800
Printers 20 5100 102000 4% 106080
Total Amount 444080

Appendix
7) 25-4-2005 Partners paid carriage inwards on purchases of Rs.1000 in cash.

8) 26-4-2005 Partners paid electricity charges for the month of March 2005
Rs. 2500 in cash.
9) 27-4-2005 Partners paid Rs. 3000 by cheque towards telephone bill charges for
the month of March 2005.
10) 29-4-2005 Partners received salaries for the month of April 2005 by cheque.
Note: Partners will be cost centers.
TRIAL BALANCE FOR APRIL 2005
Figure A.1 Detailed Trial Balance – 1st April 2005 to 30th April 2005
MAY 2005
12) 2-5-2005 Partners paid salaries to staff for the month of April 2005 by cheque.

Appendix
13) 5-5-2005 Partners paid telephone bill of Rs. 1200 in cash for the month of April
2005.
14) 9-5-2005 Partners received cheque from Ganesh Technologies in settlement of
15) 12-5-2005 Partners sold the following items to Paramount Services and Peripher-
als on credit of 14 days.
Rate
Processors 20 6500 130000 4% 135200
Hard disks 20 4000 80000 4% 83200
Printers 5 11500 57500 4% 59800
Total Amount 278200
16) 13-5-2005 Partners issued cheque for Income Tax (2004-05) amounting to
Rs. 15000.
17) 15-5-2005 Partners withdrew cash from the bank Rs. 15000 for office use.
18) 27-5-2005 Partners received Rs. 278200 by cheque from Paramount Services
and Peripherals for the sales made on 12-05-2005.
19) 28-5-2005 Partners paid Omega Infotech Rs. 100000 and Pigeon One Tech
Services Rs. 20500 towards purchases made in the last year. Both the
payments are made by cheque.
20) 30-5-2005 Partners received salaries for the month of May 2005 by cheque.

Appendix
TRIAL BALANCE UNTIL MAY 2005
Figure A.2 Detailed Trial Balance – 1-4-2005 to 31-5-2005

JUNE 2005
22) 3-6-2005 Partners paid salaries to staff for the month of May 2005 by cheque.
23) 5-6-2005 Partners paid telephone bill of Rs. 2500 in cash for the month of May
2005.

Appendix
24) 25-6-2005 Partners purchased the following items from Pigeon One Tech Serv-
ices on credit.
Rate
Monitor 15 10200 153000 4% 159120
UPS 22 1600 35200 4% 36608
Total Amount 195728
25) 26-6-2005 Partners settled the bill of Pigeon One Tech Services dated 25-6-2005
by cheque.
26) 27-6-2005 Partners paid Rs. 1100 towards electricity charges for the month of
April and May by cheque.
27) 28-6-2005 Purchased the following item from X–Vault Computers paying by
cheque.
Rate Amount
UPS 25 1550 38750 4% 40300
28) 29-6-2005 Partners received salaries for the month of June 2005 by cheque.

Appendix
TRIAL BALANCE UNTIL JUNE 2005
Figure A.3 Detailed Trial Balance – 1-4-2005 to 30-6-2005

JULY 2005
30) 1-7-2005 Partners took unsecured loan of Rs. 500000 from Parmeet Kaur by
cheque.
31) 2-7-2005 Partners paid salaries to staff for the month of June 2005 by cheque.
32) 3-7-2005 Partners withdrew Rs. 15000 in cash from bank for office use

Appendix
33) 4-7-2005 Partners purchased the following items from Estrada Tech on credit for
90 days. Interest is payable @10% per annum.
Note: Use advanced parameters for interest calculation, specify that
interest is calculated from the ‘Due Date’ on ‘Credit Balances only’.
Rate Amount
Monitors 25 10000 250000 4% 260000
34) 5-7-2005 Partners paid telephone bill of Rs. 1500 in cash for the month of June
2005.
35) 24-7-2005 Partners honoured the bill of exchange by issuing a cheque to Bon-
afide Peripherals and Systems.
36) 26-7-2005 Partners sold the following items to I-Tech Peripherals on credit for a
period of 15 days with a trade discount @ 5%.
Note: Set Yes to separate discount column in F11 features.
Item Qty Rate Discount Value VAT Amount
Rate
Processor 15 7500 5% 106875 4% 111150
Monitors 10 12500 5% 118750 4% 123500
UPS 5 2800 5% 13300 4% 13832
Total Amount 248482
37) 28-7-2005 Partners paid Rs. 1200 towards electricity charges for the month of
June 2005 in cash.
38) 30-7-2005 Partners received salaries for the month of July 2005 by cheque.

Appendix
TRIAL BALANCE UNTIL JULY 2005
Figure A.4 Detailed Trial Balance – 1st April 2005 to 31st July 2005
AUGUST 2005
40) 2-8-2005 Partners paid salaries to staff for the month of July 2005 by cheque.
41) 5-8-2005 Partners paid telephone bill of Rs. 1500 in cash for the month of July
2005.
42) 10-8-2005 Partners received a cheque of Rs. 248482 from I-Tech Peripherals in
settlement of bill dated 26-7-2005.

Appendix
43) 11-8-2005 Partners purchased the following items from X-Vault Computers on
credit for a period of 45 days.
Rate
Processors 10 5100 51000 4% 53040
Hard disks 15 2700 40500 4% 42120
Monitors 10 10100 101000 4% 105040
Total Amount 200200
44) 12-8-2005 Partners sold the following items to Tech Savvy Technologies on credit
for a period of 30 days.
Note: Interest will be charged @ 10% per annum, use advanced
parameters where specify that interest is calculated from the ‘Due
Date’ and ‘ Debit balances only’
Rate
Processors 15 6500 97500 4% 101400
Hard disks 10 4000 40000 4% 41600
Total Amount 143000
45) 22-8-2005 Partners paid Rs. 2000 in cash towards electricity charges for the
month of July 2005.
46) 26-8-2005 Partners issued a cheque for Rs. 198000 to X-Vault Computers for the
purchases made on 11-08-2005 and received a cash discount of Rs.
2200.
47) 30-8-2005 Partners received salaries for the month of August 2005 by cheque.

Appendix
TRIAL BALANCE UNTIL AUGUST 2005
Figure A.5 Detailed Trial Balance – 1st April 2005 to 31st August 2005
SEPTEMBER 2005
49) 2-9-2005 Partners paid salaries to staff for the month of August 2005 by cheque.
50) 5-9-2005 Partners withdrew Rs. 15000 from the bank for office use.
51) 10-9-2005 Partners paid telephone bill of Rs. 1200 by cheque for the month of
August 2005.

Appendix
52) 14-9-2005 Partners sold the following items to Ganesh Technologies on credit
period of 15 days.
Rate
Monitor 10 12500 125000 4% 130000
UPS 15 2000 30000 4% 31200
Total Amount 161200
53) 28-9-2005 Partners received a cheque of Rs. 161200 from Ganesh Technologies
for the sales made on 14-9-2005.
54) 29-9-2005 Partners received salaries for the month of September 2005 by
cheque.

Appendix
TRIAL BALANCE UNTIL SEPTEMBER 2005
Figure A.6 Detailed Trial Balance – 1st April 2005 to 30th September 2005
OCTOBER 2005
56) 2-10-2005 Partners paid salaries to staff for the month of September 2005 by
cheque.
57) 5-10-2005 Partners paid telephone bill of Rs. 1250 in cash for the month of
September 2005.

Appendix
58) 10-10-2005 Partners paid electricity bill of Rs. 1100 in cash for the month of August
and September.
59) 12-10-2005 Partners received a cheque from Tech Savvy Technologies in settle-
ment of bill dated 12-8-2005.
Note: Interest received Rs. 1215 for late payment.
Set Yes to “Use Debit -Credit notes” in the F11 features.
Then alter the debit note by defining voucher class ‘simple interest’
record entry in debit note with voucher class ‘simple interest’. Finally
pass separate entry for receipt.
60) 20-10-2005 Partners purchased the following items from Omega Infotech in an
offer sale made by them; The offer was that on every purchase of 5
items, one item is given free. He purchased the following items and
agreed to make payment within 10 days. 4% VAT is applicable on all
the items.
Items Pur- Free Total Rate Value Total
chased of Qty
Qty Cost
Processors 25 5 30 5200 130000 135200
Hard Disks 20 4 24 3000 60000 62400
Printers 20 4 24 5100 102000 106080
Monitor 20 4 24 10500 210000 218400
UPS 20 4 24 1700 34000 35360
Total Amount 557440
61) 25-10-2005 Partners introduced the offer sale and sold the following items on
credit. 4% VAT is applicable on all the items.
PARAMOUNT SERVICES AND PERIPHERALS
Items Pur- Free Total Rate Value Total
chased of Qty
Qty Cost
Processors 25 5 30 6800 170000 176800
Hard Disks 20 4 24 3500 70000 72800
Total Amount 249600
I-TECH PERIPHERALS
Printers 20 4 24 6000 120000 124800
Monitors 20 4 24 1100 220000 228800
0
UPS 20 4 24 2300 46000 47840
Total Amount 401440

Appendix
62) 27-10-2005 Partners received the cheques in full settlement from I-Tech Peripher-
als and Paramount Services and Peripherals for the bill dated 25-10-
2005.
63) 28-10-2005 Partners issued a cheque of Rs. 557440 for the purchases made on
20-10-2005 to Omega InfoTech.
64) 30-10-2005 Partners received salaries for the month of October 2005 by cheque.

Appendix
TRIAL BALANCE UNTIL OCTOBER 2005
Figure A.7 Detailed Trail Balance – 1st April 2005 to 31st October 2005
NOVEMBER 2005
66) 2-11-2005 Partners paid salaries to staff for the month of October 2005 by
cheque.
October 2005.

Appendix
68) 10-11-2005 Partners paid electricity bill of Rs. 1500 in cash for the month of
October 2005.
69) 15-11-2005 Partners purchased the following items from Bonafide Peripherals and
Systems on credit period of 10 days.
Note: Set ‘No’ to “Use different actual & billed Quantity” in F11
features.
Rate
Processors 30 5000 150000 4% 156000
Printers 20 5200 104000 4% 108160
Hard disks 10 3000 30000 4% 31200
Total Amount 295360
70) 20-11-2005 Partners sold the following items to Ganesh Technologies and drew a
bill of exchange on them for 15 days which was duly accepted by
them.
Rate
Processors 26 6000 156000 4% 162240
Printers 28 6500 182000 4% 189280
Monitors 15 11500 172500 4% 179400
UPS 15 2000 30000 4% 31200
Total Amount 562120
71) 22-11-2005 Partners settled the bills of Estrada Tech towards dated 4-7-2005,
including payment of interest Rs. 3633 on delayed payment.
Note: Make an entry in a credit note using voucher class ‘simple
interest’. Then make a payment entry.
72) 29-11-2005 Partners received salaries for the month of November 2005 by
cheque.

Appendix
TRIAL BALANCE UNTIL NOVEMBER 2005
Figure A.8 Detailed Trial Balance – 1st April 2005 to 30th November 2005
DECEMBER 2005
75) 2-12-2005 Partners paid salaries to staff for the month of November 2005 by
cheque.
76) 3-12-2005 Partners paid the VAT payable for the month of November by cheque.

Appendix
77) 4-12-2005 Partners paid telephone bill of Rs. 2500 in cash for the month of
November 2005.
78) 5-12-2005 Partners paid electricity charges for the month of November 2005 Rs.
1500 in cash.
79) 6-12-2005 Ganesh Technologies honoured the bill of exchange drawn on
20-11-2005 by issuing a cheque.
80) 15-12-2005 Partners purchased the following items from Swift Computers on credit
of 30 days.
Item Quantity Rate Value CST @ Total
4%
Processors 15 5000 75000 4% 78000
Monitors 10 10100 101000 4% 105040
UPS 20 1600 32000 4% 33280
Total Amount 216320
81) 29-12-2005 Partners received salaries for the month of December 2005 by
cheque.
82) 30-12-2005 Bank charged the charges for the period of 6 months amounting to
Rs. 400.

Appendix
TRIAL BALANCE UNTIL DECEMBER 2005
Figure A.9 Detailed Trail Balance – 1st April 2005 to 31st December 2005
JANUARY 2005
84) 2-1-2006 Partners paid salaries to staff for the month of December 2005 by
cheque.
85) 5-1-2006 Partners paid electricity bill of Rs. 1200 in cash for the month of
December 2005.

Appendix
December 2005.
87) 14-1-2006 Partners returned one Processor and one Monitor to Swift Computers,
purchased on 15-12-2005 as they were not according to the specifica-
tions.
Note: Set yes to ‘use Invoice mode for debit notes’ in F11 features.
Use debit note in invoice mode to pass this entry.
88) 26-1-2006 Partners withdrew Rs. 5000 by cheque for office use.
89) 30-1-2006 Partner received salaries for the month of January 2006 by cheque.

Appendix
TRIAL BALANCE UNTIL JANUARY 2006
Figure A.10 Detailed Trail Balance – 1st April 2005 to 31st January 2006
FEBRUARY 2005
91) 2-2-2006 Partners paid salaries to staff for the month of January 2006 by
cheque.

Appendix
92) 5-2-2006 Partners Paid electricity bill of Rs. 1500 in cash for the month of
January 2006.
January 2006.
94) 9-2-2006 Partners decided to have the price list for customers, levels were
based on quantity purchased.
WHOLESALE PRICE
Hard disks 3500 Nil 3500 5% 3500 10%
Monitors 10500 2% 10500 5% 10500 7%
Processors 6500 2% 6500 5% 6500 10%
UPS 2600 2% 2600 5% 2600 8%
RETAIL PRICE
Items 0-5 5-15 15-30 30-above
Hard disks 3450 3400 3350 3300
Monitors 10400 10300 10250 10200
Printers 5200 5100 — —
Processors 6400 6300 6200 6100
UPS 2550 2500 2450 2400
95) 10-2-2006 Partners sold the following items to E-Comp Systems on credit of 30
days. CST @ 4% for all the items.
Note: Whole sale price list
Item Qty Rate Discount Value Total
Processors 18 6500 5% 111150 115596
Hard disks 15 3500 5% 49875 51870
Monitors 8 10500 2% 82320 85613
UPS 10 2600 5% 24700 25688
Total Amount 163171
96) 27-2-2006 Partners received salaries for the month of February 2006 by cheque.

Appendix
TRIAL BALANCE UNTIL FEBRUARY 2006
Figure A.11 Detailed Trial Balance – 1st April 2005 to 28th February 2006
MARCH 2006
99) 2-3-2006 Partners paid salaries to staff for the month of February 2006 by
cheque.

Appendix
February 2006.
101) 4-3-2006 Partners paid VAT payable for the month of Febraury 2006 by cheque.
102) 5-3-2006 Partners paid electricity charges for the month of February 2006
Rs.1800 in cash.
103) 6-3-2006 Partners paid Rs. 5000 by cheque as incentive to employees.
104) 10-3-2006 Partners sold the following items to Ganesh Technologies on credit of
30 days
Note: Sold using Retail price list
Item Qty Rate Value VAT Total
Rate
Hard disks 4 3450 13800 4% 14352
Printers 4 5200 20800 4% 21632
Monitors 15 10250 153750 4% 159900
UPS 4 2550 10200 4% 10608
Total Amount 206492
105) 15-3-2005 Ganesh technologies returned one Hard disk and one Monitor as they
were not according to the specification out of sales made on 10-3-
2005.
106) 29-3-2006 Partners received salaries for the month of March 2006 by cheque.
107) 30-3-2006 Partners paid Parmeet Kaur a part of loan taken on 1-7-2005 Rs.
250000 as principle and Rs. 15000 interest for period ending 31-03-
2006 by cheque.
108) 31-3-2006 Partners paid unsecured Loan to ‘Serve Well Technologies’ amounting
to Rs. 50000 by cheque. Amount is inclusive of interest for the year
2005-2006 Rs. 5000.
Provision Entries
SL. NO. TRANSACTION
1) Telephone bill paid - Rs. 950
2) Electricity charges paid - Rs. 700.
3) Provision for Income Tax(2005-2006) - Rs. 5000
3) Paid salaries to staff.

Appendix
Interest on capital to be credited to the respective capital accounts of partners as calculated here-
under:
PARTNER’S NAME AMOUNT (A) INTEREST (B) INTEREST AMOUNT
(A)*(B)-100=(C)
Jayaram Sengupta 300000 6% 300000*6/100=18000
Jayasree Gupta 300000 6% 300000*6/100=18000
Depreciation Entries
SL. NO. ASSET NAME OPENING DEPRECIATION DEPRECIATION
BALANCE (A) PERCENTAGE (B) (A)*(B)-100=(C)
1) Furniture 25000 10% 2500
2) Motor Car 100000 15% 15000
3) Office Equipments 23000 25% 5750
4) Office Building 250000 10% 25000
Total 48250
Closing Entry
SL. NO. TRANSACTION
1) Divide the profit earned and transfer it to the partners accounts. Both partners
share the profit earned equally.

Appendix
TRIAL BALANCE UNTIL MARCH 2006
Figure A.12 Detailed Trial Balance – 1st April 2005 to 31st March 2006

Appendix
a.2 Chart of Accounts

a.2.1 Sample Exercise
CHART OF ACCOUNTS – LEVEL 2 – SAMPLE EXERCISE
SL. NO. LEDGER UNDER GROUP
ASSETS
1) Cell Phone Fixed Assets
2) Computer Fixed Assets
3) Electrical Fittings Fixed Assets
4) Furniture and Fixtures Fixed Assets
5) Motor Vehicle Fixed Assets
6) Data Tech Services Local Debtors
7) Java Trading Company Local Debtors
8) Seacrest Trading Corporation Outstation Debtors
9) Soft Touch Traders Outstation Debtors
10) State Trade Corporation, Mumbai Outstation Debtors
11) Sun-Shine Traders Outstation Debtors
12) Bills Receivable Current Assets
13) Prepaid Insurance Current Assets
14) Salary Advance Loans and Advances (Asset)
15) Security Deposit Deposits (Asset)
16) Stock Stock-in-Hand
17) ICICI Bank Bank Accounts
18) Cash Cash-in-Hand
19) Petty Cash Cash-in-Hand
LIABILITIES
20) Input VAT @ 12.5% Duties and Taxes
21) Input VAT @ 4% Duties and Taxes
22) Output CST @ 4% Duties and Taxes
23) Output VAT @ 12.5% Duties and Taxes
24) Output VAT @ 4% Duties and Taxes
25) VAT Adjustment A/c Duties and Taxes
26) Electricity Charges Payable Provisions
27) Rent Expenses Payable Provisions
28) Salary Expenses Payable Provisions
29) VAT Payable Provisions

Appendix
30) A2Z Traders Local Creditors

31) Icon Enterprises Outstation Creditors
32) Pacific Merchants Outstation Creditors
33) WinTech Information Systems Outstation Creditors
34) X-Tech Services Outstation Creditors
35) Bills Payable Current Liabilities
CAPITAL
36) Anurag Rai Capital A/c Capital Account
37) Anurag Rai Drawings Capital Account
REVENUE
38) Sales @ 12.5% Sales Accounts
39) Sales @ 4% Sales Accounts
40) Sales - CST Sales Accounts
41) Discount Received Indirect Incomes
42) Interest Accrued Indirect Incomes
EXPENSES
43) Input CST @ 4% Tax on Purchases
44) Purchases @ 12.5% Purchase Accounts
45) Purchases @ 4% Purchase Accounts
46) Purchases - CST Purchase Accounts
47) Carriage Inward Expenses Direct Expenses
48) Advertisement Expenses Indirect Expenses
49) Bank Charges Indirect Expenses
50) Conveyance Expenses Indirect Expenses
51) Depreciation Expenses Indirect Expenses
52) Donation Expenses Indirect Expenses
53) Electricity Expenses Indirect Expenses
54) Exhibition Expenses Indirect Expenses
55) Insurance Expenses Indirect Expenses
56) Interest Due Indirect Expenses
57) Printing and Stationery Expenses Indirect Expenses
58) Rent Expenses Indirect Expenses
59) Salary Expenses Indirect Expenses
60) Shop Maintenance Expenses Indirect Expenses
61) Telephone Expenses Indirect Expenses

Appendix
a.2.2 Practice Exercise

CHART OF ACCOUNTS – LEVEL 2 – PRACTICE EXERCISE
SL. NO. LEDGER UNDER GROUP
ASSETS
1) Furniture Fixed Assets
2) Motor Vehicle Fixed Assets
3) Office Building Fixed Assets
4) Office Equipments Fixed Assets
5) E-Comp Systems Sundry Debtors
6) Ganesh Technologies Sundry Debtors
7) I-Tech Peripherals Sundry Debtors
8) Paramount Services and Peripherals Sundry Debtors
9) Tech Savvy Technologies Sundry Debtors
10) Bills Receivable Current Assets
11) Security Deposit (Electricity) Deposits (Asset)
12) Security Deposit (Telephone) Deposits (Asset)
13) UTI Bank Bank Accounts
14) Cash Cash-in-hand
LIABILITIES
15) Serve Well Technologies Secured Loans
16) Parmeet Kaur (Loan) A/c Unsecured Loans
17) Electricity Charges Payable Provisions
18) Income Tax Payable (2004-05) Provisions
19) Income Tax Payable (2005-06) Provisions
20) Salary Payable (Staff) Provisions
21) Telephone Charges Payable Provisions
22) VAT Payable Provisions
23) Bonafide Peripherals and Systems Sundry Creditors
24) Estrada Tech Sundry Creditors
25) Omega Info Tech Sundry Creditors
26) Pigeon One Tech Services Sundry Creditors
27) Swift Computers Sundry Creditors
28) X-Vault Computers Sundry Creditors
29) Bills Payable Current Liabilities

Appendix
CAPITAL
30) Jayaram Gupta Capital A/c Capital Account
31) Jayasree Gupta Capital A/c Capital Account
REVENUE
32) Sales @ 4% Sales Accounts
33) Sales-CST Sales Accounts
34) Discount Received Indirect Incomes
35) Interest Received Indirect Incomes
EXPENSES
36) Input CST @ 4% Tax on Purchases
37) Puchases @ 4% Purchase Accounts
38) Purchases-CST Purchase Accounts
39) Carriage Inward Expenses Direct Expenses
40) Bank Charges Indirect Expenses
41) Carriage Outward Expenses Indirect Expenses
42) Depreciation Expenses Indirect Expenses
43) Electricity Expenses Indirect Expenses
44) Incentive Expenses Indirect Expenses
45) Interest Expenses Indirect Expenses
46) Interest on Partners’ Capital Indirect Expenses
47) Partners’ Remuneration Indirect Expenses
48) Provision for Income Tax (2005-06) Indirect Expenses
49) Salary Expenses (Staff) Indirect Expenses
50) Seminar Expenses Indirect Expenses
51) Telephone Expenses Indirect Expenses

Appendix
a.2.3 List of Function Keys

FUNCTION KEY
Sl. No. Key Functionality Availability
1) F2 To change the menu period At almost all screens in Tally.
2) F4 To select the contra voucher At accounting voucher creation and altera-
tion screens.
To view the list of groups At the trial balance, cash/bank summary,
group summary and group vouchers
screens.
To view the list of ledgers At the ledger vouchers screen.
To change voucher type At the sales, purchase and journal register
and day book screens.
To switch between bills At the bill receivable and payable report
receivable and payable screens.
report.
To view other stock item’s At the item monthly screen.
summary
To show/hide gross profit At the item monthly screen.
earned on sales made
3) F5 To select the payment At accounting voucher creation and altera-
voucher tion screens.
To switch between grouped At the trial balance, cash/bank summary and
and ledger wise display group summary screens.
To reconcile bank accounts At the ledger vouchers screen, where the
ledger is the bank ledger.
4) F6 To select the receipt voucher At accounting voucher creation and altera-
tion screens.
To view the age wise analy- At the bill receivable and payable report
sis of bills payables screens.
5) F7 To select the journal voucher At accounting creation and alteration
screens.
To view the monthly sum- At the ledger vouchers screen.
mary
To switch between group At the group summary and group voucher
summary and group vouch- screens.
ers
6) F8 To select a sales voucher At accounting voucher creation and altera-
tion screens
7) F9 To select a purchase At accounting voucher creation and altera-
voucher tion screens

Appendix
8) F10 Navigate between account- At the reports screens, trial balance, account
ing reports books and day book screens.
9) F11 To select the features At almost all screens in Tally.
screen
10) F12 To select the configure At almost all screens in Tally.
screen
SPECIAL FUNCTION KEY COMBINATION

11) ALT + F1 To close a company At all the menu screens.
To view detailed report At almost all report screen.
To explode a line into its At almost all screens in Tally.
details
12) ALT+ F2 To change the system At almost all screens in Tally.
period
13) ALT + F3 To select the company info At Gateway of Tally screen.
menu
To create/alter/shut a com-
pany
14) ALT + F5 To view sales and purchase At the sales and purchase register
register summary on a quar- screen.
terly basis.
15) ALT + F12 To view the filters screen At all the report screens.
where the range of informa-
tion can be specified.
16) ALT + C To create a ledger at a At accounting voucher and alteration
voucher screen screens, at a field where you have to
select a ledger from a list. If the neces-
sary account has not been created ear-
lier, use this key combination to create
the ledger without quitting from the
accounting voucher screen.
To add a new column to At all the reports, trial balance, cash/
reports bank book(s), group summary and jour-
nal register screens.
17) ALT + N To add multiple columns to a At all the reports, trial balance, cash/
report (Auto column) bank book(s), group summary and jour-
nal register screens.
18) ALT + P To print reports At all reports screens in Tally.
19) ALT + Z To zoom At all the print preview screens.

Appendix
20) CTRL+ F8 To select a Credit note At accounting voucher creation and

alteration screens.
21) CTRL+ F9 To select a Debit note At accounting voucher creation and
alteration screens.
22) CTRL + Q To quit a screen – wherever At almost all screens in Tally.
you use this key combina-
tion, it quits that screen with-
out making any changes to
it. It also does not ask for
confirmation from user
before quitting.
23) CTRL + L To mark a voucher as At accounting voucher creation and
optional or regular alteration screens.
KEY COMBINATION USED FOR NAVIGATION

24) ENTER To accept anything you type into a field You have to use this key at most
To accept a voucher or master areas in Tally.
To get a report with further details of
an item in a report
25) ESC To remove what you typed into a field At almost all screens in Tally.
To come out of a screen
To indicate you do not want to accept a
voucher or ledger
26) SHIFT To view next level details and con- At the balance sheet, profit and
+ dense the next level details loss account, trial balance,
ENTER cash/bank book(s), group sum-
mary, group vouchers, voucher
register, day book and list of
accounts screens.

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Tally Financial Accounting Program

© Tally Solutions Pvt Ltd 1988-2005

©Tally Solutions Pvt. Ltd. 1988 - 2005 Edition

© Tally Solutions Pvt Ltd 1988-2005

© Tally Solutions Pvt Ltd 1988-2005

Lesson: 1 Introduction to Trading Organisations

Lesson: 2 Purchases and Sales

Lesson: 3 Overview of Tally Features

i © Tally Solutions Pvt Ltd 1988-2005

Lesson: 5 Display and Reports

ii © Tally Solutions Pvt Ltd 1988-2005

iii © Tally Solutions Pvt Ltd 1988-2005

Recap of Level One

© Tally Solutions Pvt Ltd 1988-2005 1

1.1 Trading Organisations

Traders can be broadly classified as:

1.1.1 Nature of Trading Organisations

Accounting in Trading Organisations

Figure 1.1 Accounting in a Trading Organisation

2 © Tally Solutions Pvt Ltd 1988-2005

1.1.2 Difference between Trading and Service Organisations

1.1.3 Activities in a Trading Organisation

1.1.4 Accounting and Commercial Terms

Cost of Goods Sold

© Tally Solutions Pvt Ltd 1988-2005 3

Operating Profit (PBIT)

1.2 Introduction to Inventory

1.2.1 Kinds of Inventory

As per the Institute of Chartered Accountants of India

Costs of Purchase (Para 7 of Accounting Standard 2)

4 © Tally Solutions Pvt Ltd 1988-2005

Cost of Inventories (Para 6 of Accounting Standard 2)

1.2.2 Introduction to Inventory Valuation

The valuation of stock has to serve the following objectives:

Inventory Costing Methods

LIFO: (Last in First Out)

Advantages of LIFO Method

Disadvantages of LIFO Method

© Tally Solutions Pvt Ltd 1988-2005 5

Weighted Average Cost

Calculation of average prices is done as given below:

1.2.3 Inventory Systems

Perpetual and Periodic Inventory Systems

6 © Tally Solutions Pvt Ltd 1988-2005

Perpetual system of inventory is preferable in cases where

Periodic Inventory System

1.2.4 Determining Inventory Levels

1.3 Points to Remember

© Tally Solutions Pvt Ltd 1988-2005 7

8 © Tally Solutions Pvt Ltd 1988-2005

© Tally Solutions Pvt Ltd 1988-2005 9

2.1 Cash and Credit Purchase

2.2 Three Way Matching Principle

10 © Tally Solutions Pvt Ltd 1988-2005

2.3 Cash and Credit Sales

At the time of collecting the amount, the entry passed is:

2.4 Price Levels

2.5 Revenue Recognition Principles

© Tally Solutions Pvt Ltd 1988-2005 11

2.6 Accounting and Commercial Terms Associated with Purchases and

Trade Discount and Cash Discount

TYPE OF ISSUE SOLUTION

12 © Tally Solutions Pvt Ltd 1988-2005