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 Accounting :

The art of recording, classifying, and summarizing in a


significant manner and in terms of money, transactions and events which
are, in part at least of financial character, and interpreting the results thereof.
Accounting is famously known as the "language of business". Through the
financial statements, the end-product reports in accounting, it delivers
information to different users.

 Objectives of Accounting:

The broad objects of Accounting may be briefly stated follows:

 To detect the various errors and to rectify those through entries in the journal
proper.
 To maintain various Ledger Accounts to find out the exact amounts of
incomes and expenses or gain and losses or receivables and payables
 To detect any defalcations and to check the frauds and misappropriations of
money.
 The object of Accounting is to help the management in determining and
evaluating the management policies in running the business successfully by
supplying necessary, information, interpreting and analyzing the financial
statements.
 To know the financial position of the company.
Accounting cycle:
1. Identify business events, analyze these transactions, and record
them as journal entries:

This cycle starts with a business event.


Bookkeepers analyze the transaction and record it in the general journal
with a journal entry. Journal entries are the first step in the accounting
cycle and are used to record all business transactions and events in the
accounting system.

2. Post journal entries to ledger accounts:


The second step of accounting cycle is to post the journal
entries to the ledger accounts. The ledger is a collection of accounts
that shows the changes made to each account as a result of past
transactions, and their current balances. After the posting all
transactions to the ledger, the balances of each account can now be
determined.

3. Prepare unadjusted trial-balance:

This is the third step in the accounting cycle.


After the all the journal entries are posted to the ledger accounts, the
unadjusted trial balance can be prepared. An unadjusted trial balance
is a listing of all the business accounts that are going to appear on
the financial statements before year-end adjusting journal entries are
made. That is why this trial balance is called unadjusted.

4. Make end of period adjusting entries:


Adjusting entries, also called adjusting journal entries,
are journal entries made at the end of a period to correct accounts
before the financial statements are prepared. This is the fourth step
in the accounting cycle. Adjusting entries are most commonly used
in accordance with the matching principle to match revenue and
expenses in the period in which they occur. i.e payment, accruals,
non-cash expense.

5. Prepare the adjusted trial balance:

An adjusted trial balance is a listing of


all company accounts that will appear on the financial statements
after year-end adjusting journal entries have been made. Preparing
an adjusted trial balance is the fifth step in the accounting cycle and
is the last step before financial statements can be produced.

6. Prepare financial statements:


Preparing general-purpose financial statements;
including the balance sheet, income statement, statement of retained
earnings, and statement of cash flows; is the most important step in
the accounting cycle because it represents the purpose of financial
accounting. In other words, the concept financial reporting and the
process of the accounting cycle are focused on providing external
users with useful information in the form of financial statements.
These statements are the end product of the accounting system in
any company. Basically, preparing these statements is what
financial accounting is all about.

7. closing entries:
Closing entries, also called closing journal entries, are
entries made at the end of an accounting period to zero out all
temporary accounts and transfer their balances to permanent
accounts. In other words, the temporary accounts are closed or reset
at the end of the year. This is commonly referred to as closing the
books. Temporary accounts are income statement accounts that are
used to track accounting activity during an accounting period. At the
end of the year, all the temporary accounts must be closed or reset,
so the beginning of the following year will have a clean balance to
start with. In other words, revenue, expense, and withdrawal
accounts always have a zero balance at the start of the year because
they are always closed at the end of the previous year. This concept
is consistent with the matching principle.

8. Post-closing trial balance:


The post-closing trial balance is a list of accounts
or permanent accounts that still have balances after the closing
entries have been made. This accounts list is identical to the
accounts presented on the balance sheet. This makes sense because
all of the income statement accounts have been closed and no
longer have a current balance. The purpose of preparing the post
closing trial balance is verify that all temporary accounts have been
closed properly and the total debits and credits in the accounting
system equal after the closing entries have been made.

9. Reversing Entries:
Reversing entries are journal entries made at the
beginning of an accounting period to reverse or cancel out
adjusting journal entries made at the end of the previous
accounting period. Reversing entries are made because previous
year accruals and prepayments will be paid off or used during the
new year and no longer need to be recorded as liabilities and
assets. These entries are optional depending on whether or not
there are adjusting journal entries that need to be reversed.

 Manual accounting system:


Before the age of computerized financial
systems, all accounting processes were performed by hand, using
paper and pencil. Some small businesses still use this old
methodology, also known as the manual accounting system. The
concepts behind both manual and computerized systems are the same,
only the mechanics have changed.
Limitation of accounting:
Estimates: Normal accounting requires estimating
when preparing financial statements, when exact amounts cannot be
established. These estimates reduce the reliability of the accounting
information
Fraud & Errors: As always in statements prepared by
humans, usually more than one, there is always room for errors and/or
fraud. This would completely undermine the credibility and reliability
of the statements and information within them.

Accounting policies: Different accounting policies


with no global standard to follow creates some issues of comparability
between entities. The use of accounting frameworks such as IFRS and
GAPP help but not all companies chose to use one of these.
Geographic locations are another reason there could be differences in
accounting policies that are perfectly legal practices but make it
harder to compare.

 Computerized accounting system:


As its name suggests, "computerized
accounting" is accounting done with the aid of a computer. It tends to
involve dedicated accounting software and digital spreadsheets to
keep track of a business. Computerized Accounting involves making
use of computers and accounting software to record, store and analyze
financial data. A computerized accounting system brings with it many
advantages that are unavailable to analog accounting systems.

 Types of accounting software


 Quick Book
 Tally.Erp 9
 SAP ERP
 SAP Business one
 FreshBooks
 Peachtree
Uses of Tally ERP in SME:

Tally is a well-known software among


small and medium enterprises (SMEs) since more than 2 decades.
Tally is a trusted software for small and medium business because of
Tally’s power of simplicity. The strong capabilities of the product are
further enhanced through regular product updates which provides the
latest Tally technology and powerful connectivity services to your
business.

 Why we use accounting software?

There are many banefits of accounting


software such as : Accounting software can help to increase the
accuracy of your records by reducing or eliminating human errors in
calculation. Using accounting software allows businesses to process
their accounts with greater speed than manual processing. The benefits
resulting from the speed and efficiency of accounting software often go
hand-in-hand with reduced overall costs. Accounting software helps
businesses to supply the necessary members of staff with timely and
accurate financial information.
But every software cannot meet the requirement of the company if the
company size are large they need customized software.

 Tally.ERP 9:
How to create a company in Tally. ERP 9?
To create the company in tally, we have to follow the following procedures:
First of all double click on tally Erp icon
Select “create company”
After selection of “create company” the following screen will appear:

Name Write the suitable name of company.


For example company’s name is
brothers Pvt Ltd.
MAILING ADDRESS Name of company will be shown
automatically.here you have to write the
company’s address for example gulraiz
commercial market phase 2 rawalpindi.

STATUTORY COMPLIANCE FOR Pakistan or any other country.

TELEPHONE NUMBER Here write the telephone number of the


company +923075120697

Fax No Fix number if exit.


Email Enter company’s official
communication mail id.
Atiqkhani388@gmail.com

Website Enter website if exists like


www.brotherco.com

CURRENCY SYMBOL Here we can put any currency for


example dollar $,Rs etc

MAINTAIN There are three options given. 1. Accounts


only. 2. Accounts with inventory.its up to
company if they are service rendering
company they shall select the option 1
accounts only. If they are selling product they
will select the option 2 accounts with
inventory.

FINANCIAL YEAR FROM Here we write the beginning date of our


company’ financial year start from like “1-04-
2017”

BOOKS BEGINNING FROM Most of the company have a book beginning


date same as financial starting date. But may
differ for companies which are starting in the
middle of the financial year

TALLY VAULT PASSWORD, (IF ANY) This is for security purpose, By enabling
this, Tally ERP9 Convert tally data in to
encrypted format. Encryption means
convert data from recognised format to
unrecognised format. It is very difficult to
read the data even if our data is stolen.

USE SECURITY CONTROL In this column say “Yes”. Because you must
have some password for your company so that
the person who knows the password, he only
can open the company.
NAME OF ADMINISTRATOR this option for those person who has the full
access to all the tally options. This person is
called administrator.

PASSWORD A secret password known by administrator


only.

REPEAT PASSWORD Re-type the same password again. Write


password somewhere secretly in order to
overcome the danger of forgetting.

USE TALLY AUDIT FEATURES Enter “No” because this option is required by
auditors or senior persons. So for the time
being for learners, keep it ‘No”

Accept the screen. If you have entered all details,tally vault password will be
asked.Enter Tally Vault Password here.

Tally ERP will create a company and direct you to the Menu Gateway of Tally
Where you can create masters and enter transactions. Following screen will be
appear:
 For alteration of a company,

 Go to the Gateway of tally

 Then enter on “comp info” from right side.

 Then click on “Alter”


 If you want to delete the company
 Go to the Gateway of tally,
 Then select “comp info” from right side.
 Then click on “Alter”
The profile of the company will be open which shown above.
 Then press “Alt+D” the company will be deleted.

Creation of Ledgers
 Go to the Gateway of tally.
 Then select “Account info”
The screen will appear like
 Now select the “ledger” option as shown in above image
After the selection of ledger now you have two option weather create a single ledger
or multiple ledger so its up to you.

 Single Ledger option


 Select on create
Ledger creation screen will displayed
Let’s fill the required details

Name: Name of the ledger account for example ‘fuel expense’


Alias: This is an alternative name you can enter an alternative name or code number
for this ledger account. For Example (IE001)
Under: The group in which the ledger accounts comes under. This is selected in
accordance with the nature of account, whether it is an income, expense, asset,
liability account. Here this fuel expense comes under “Indirect expense”.
Opening balance: Enter the opening balance at the time of entering accounts in
tally, leave blank if there is no opening balance.

Now save the screen you are successfully created a ledger as shown below.

 View created account:


 Go to Gateway of Tally>Account info>Ledger>Display

Select the ledger account to see. Ledger display screen will be in front. You cannot
modify anything from this screen. Here is the view of ‘fuel expense ‘ I have
created earlier.

 Edit or alter an account.


There certain situations we need to modify existing ledger created.For example
changing of name, Or you might be chosen wrong group in under field. or mis typed
address, phone numbers, PAN Numbers etc. In such case you will have to modify
existing details.To do modifications /Edit of ledger go to
 Gateway of Tally>Accounts info>Ledger>Alter
Ledger alteration screen will appear, press enter key to move forward and
Backspace to move backward through the screen.
Make necessary changes and save the screen.

 Delete an account:
To delete an account go to the following screen
Gateway of Tally>Account info>Ledgers>Alter

Select the account to be deleted. For example we want to delete the ledger
“fuel expense” that we have created in above example.
Now press Alt+D and A confirmation will be asked.
 create multiple ledger

 Go to Gateway of Tally>>Account info>>Ledgers>>CReate


 Select create under Multiple Ledgers

You will have a screen like this


 At top of the screen there is an option “Under Group”
 Select the group name. sundry Debtors is the group in our example.
 Press enter to move on to the next field called Name of the Ledger type the ledger
name “adil brothers “ and press enter key.
 The next is “Under” Automatically filled with Debtors.
 Again Press Enter Key to type opening balance. in this example Rs 25000.00.
In the same manner mentioned above enter all debtors name and balance. The final
screen will be as follows.
Now save the screen.

 Maintain Inventory:
First of all all you have to enable some features of inventory from the
inventory features

 Go to the tally of gateway


 Now click on features or F11 key
The following screen will be appear
 Click on inventory features

Select the following options to create inventories in general


 Integrate Accounts and Inventory – Select – Yes
 Allow Invoicing – Yes
 Enter Purchase in Invoice Format – Yes
 Use Debit/Credit Notes – Yes
 Use Invoice Mode for Credit Notes – Yes
 Use Invoice Mode for Debit Notes – Yes
 After selecting all the options press “Yes”
 Unit of measure Creation
Examples of units are Numbers, Litters, Pieces, Boxes, bottles, each etc.

Go to Gateway of Tally>>Inventory info>>Unit of Measure>>Create

Following screen will be appear.

 Type: By default it is Simple


 Symbol: This is the Formal symbol of the units creating, the symbol of Liter
Is L ,The symbol of Number is No, Piece is PCS and so on.
 Formal Name: In the case of symbol L The Formal Name of L is Liter, No
formal name number.
 Number of Decimal Places: Suppose you are selling milk 1.325 Liters, in
this case the decimal places are three digits.One set decimal places, you can
increase the decimal places to a higher number but cannot decrease to a
lower number decimal places.

Here we are creating a simple unit of measure Liter, in three decimal


places the screen will look like this.

 How to alter a Unit?


To edit a unit of measure, For example you have wrongly typed the formal
name of unit number.

To rectify this you have to go to.

Gateway of Tally> Inventory Info>Unit of Measure>Alter


Select the desires units,you want to make changes.Press enter.

Make necessary changes in the screen and save. You are done.

 How to delete a unit in tally?


It is very rare that we want to delete a unit of measure.Before knowing deleting a
unit, you must know when can you delete a unit.
1. You cannot delete a unit by which you have entered a voucher ( purchase, sales,
receipt note)
2. You cannot delete a simple unit by which you have created a compound unit out
of it.
In above criteria matches, the delete button will not be active in the screen.

TO delete a unit go to

Gateway of Tally> Inventory Info>Unit of Measure>Alter


You will directed to the same unit alteration screen. In the bottom of the screen
you can see a delete button active.

Click on Delete button or use short cut key Alt+D . a confirmation will be asked to
delete yes or no.
Click Yes or Press Enter to complete the deletion.

 Stock items creation:


Here we are going to create stock item of Computer.
Fill the field as follows
 Name: Type stock item name in our case Computer
 Alias: It is the additional name for the same stock item; you can
access this stock item either by typing name or alias. Commonly
people are using Alias to add code like AC-4500 to a stock item.
 Under : Here we are grouping stock items based on its brand, so create
a stock group in its brand name “Acer “.If you don’t know how to
create stock group click here
 Units: Computer can be sold in the units Numbers or each, Lets
choose each here,
 Rate of Duty: Specify the rate of duty for the item; this option is to
calculate excise duty.
 Opening Balance: This is the stock in hand at the end of previous
financial year or the stock in hand before you computerizing the
accounts.
 Enter the opening quantity and rate the value will be calculated
automatically, Press enters to save the stock item created.
 Multiple Stock Groups Creation

 Go to>>Gateway of Tally>>Inventory Info>>Stock Group

 Select create under Multiple Stock Groups


And fill as following

Select ‘Inventory Info’ under ‘Gateway of Tally’


Select ‘stock item’ under ‘Inventory Info’
Select ‘Create’ under “Multiple Stock Items”. Screen will appear like this

Select “All items” under “Under Group”

Now create stock items that business is dealing with.

At the end press “Yes” to carry on.

 View stock item

Go to>> gateway of tally>>inventory info>>stock item>>display

Screen will appear like this


Click on “display”

The list of stock item will be shown


 Edit or Alter stock item:

 Go to>> gateway of tally>>inventory info>>stock item>>Alter

Screen will be shown like this

Select the stock you want to edit,Make necessary changes required and save.

 Stock Group Creation

 single stock group Creation:

To create a group in single stock group mode,

Go to Gateway of Tally>>Inventory info>>Stock Group

Press enter and select Create under single stock group


When you click on “create” the screen will shows like this

Name: Television

Under: Primary,(Primary meaning the prime group or the first level group)

Can quantities of item be added? : By enabling this option you can calculate the
sum total of all item quantity. For example you can find out the total number of
TV’s grouped under “Television” group Which includes the products under its sub
groups. The unit of measure must be same for all items.
 Creation of Godowns:

go to>>gateway of tally>>inventory info>>GoDowns

after the slection of godowns screen will appear like this

Name: In this field enter the Name of the Godown. Like gulraiz
commercial market.

Under: In this field select “Primary”

Our Stock with Third Party: Set this option to No


.

after the filling the detail then save the screen.

 Multiple GoDowns

Go to Tally Gateway
Select “Inventory info”
Then select “Godowns”
Then select “Create” under “Multiple Godowns” Now your screen will
look as under:
Select “All items” under “Under Godowns”

Write Name of Godowns , which you want to create.

Select “Primary” in “Under” section

Likewise, make all Godowns which you want. Now your screen will look as
under:
after the creation of multiple godowns then save the screen.

 REORDER LEVEL:

Reorder level is that level of inventory at which we send the order of


buying inventory. In simple words, it is the level between minimum and
maximum level. It is fixed on the basis of demand and supply of inventory.
It should neither be very low nor very high.

First of all we have to enable all the required option for maintaining reorder
level. To activate reorder level, follow these steps:

Goto>>gateway of tally>>features>>inventory features

Now the following screen will be shown


Enable the order processing heading

After the enable of reorder Now set the reorder level through the following steps :

Go to Gateway of Tally > Inventory Info. > Reorder Levels

Select a group of Stock Items from the List of Groups, to specify Reorder Levels
for the Stock Items in the Specify Reorder Levels screen. For each item in stock,
you can define a Reorder Level and the Minimum Order Quantity

The Reorder Levels screen appears as follows:


Name of item: here we put the stock item name

Reorder quantity: reorder Quantity is the quantity which has to be maintained in


stock at any given point of time and if stock goes below the re-order quantity,
order has to be placed for the same.

Minimum Order quantity: This indicates the minimum quantity that has to be
ordered in each order raised for that stock item, even though the required quantity
is less than the minimum re-order quantity.

After all the detail of reorder level the screen will look like this

Then save the screen.


 Sale Order

Here we first of all enable the sale order processing

To enable the sale order Goto>>gateway of tally>>features>>inventory


features

After enable the sale order and purchase then save the screen.

 Sale cycle
 Sale order:

Sales order entry is exactly like the Purchase Order Entry. Sales Order details will
also depend on configuration settings.

To create a Sales Order,


Go to Gateway of Tally > Inventory Vouchers > press Alt + F5 or click on Sales
Order
after that the following screen will be appear :

Party's A/c Name: Select the Customer’s name from the List of Ledger Accounts.
Press Alt + C to create a new account. After party’s name ther will be some basic
information of customer for example buyer’s detail, order detail, dispatch detail.

Order No: The Order number is automatically displayed. By default it will take
the Voucher number as Order No. You can change this number if required.

Name of the Item: Select the Item for which the order is to be placed from the List
of Stock Items. The Item Allocations sub-screen is displayed as shown.

Enter the details as shown.


Due on: Enter the due date for the Delivery of the items. This monitors outstanding
Delivery of the items.If orders are split for different dates, then specify the due
date for the first lot to be received.

Quantity, Rate and Amount: Enter the quantity of the item and its rate. The
amount will be calculated automatically.

Narration: This field is optional. You can give some particulars about the order.

 Delivery Note Voucher


To create delivery note, follow these steps:

 Goto Gateway of tally >>“Inventory voucher”>>Then press “Alt F8”.


Now our screen will show under:
Reference: Enter reference no. from which you can find the delivery note of
particular order.
Party’s A/c Name: Enter the name of person or company who sent you order. When
you enter the party’s a/c name, Tally will ask you further information, as shown
below:
Once you accept the Order details, the cursor will move to Name of Item column.
On pressing Enter, the ‘Item Allocations screen is displayed.
You may select an existing Tracking number or create a new Tracking Number.
Tracking number is the reference to have a link between transactions.

After filling all the detail of the delivery thn accept the screen.

 Rejection in:
A Rejections In Voucher is used to record goods that are rejected and returned
by the customer.
To enter the Rejections In Voucher,
From F11: Inventory Features, Enable the option Use Rejection Inward / outward
Notes.
Go to Gateway of Tally > Inventory Vouchers
Press Ctrl+F6 or select the button F6: Rej. In from the Button Bar
For example, Customer A returns Item A delivered by the company.

Ledger Account: Select the Party’s name from the List of Ledger Accounts, from
whom the goods have being returned.
Customer’s Name and Address: Once Party’s name is selected under Ledger
Account, this column will be automatically populated with address, if provided in
the Ledger Master creation screen.
Name of Item: Select the Item from the List of Stock Items. Press Enter button on
the Item, it will display the Item Allocations screen.
Under the List of Tracking Numbers, the details of Delivery note along with
Tracking number will be displayed, select the same. Mention the quantities returned.
Narration: Give the narration, if required.
 Record Sales:
to record the sale order follow thes steps
 Goto>>gateway of tally>>accounting voucher>>press F8
The screen will appear like this:
Reference no: it neccessory to track the particular sale voucher.
Party’s A/c Name: Enter the name of the customer . When you enter the party’s a/c
name, There will be further information, as shown below:

Enter the delivery note number other information will automatically entered. Press
“Enter”And write narration. Then save the screen.
 Receipt voucher
In the sale order cycle receipt is the last step in which payment are received from the
customer. To record receipt, follow these steps:

 Go to Gateway of tally
 Select “Accounting Voucher”
 And press “F6” Now your screen will look like:

Enter the Party’s name from whom you are receiving the payment and then enter
the amount. Then press “Enter”, there will be further information as shown
below:
Enter the reference type “On Account” the amount will auto placed, press “Enter”.

Now enter the account name through which you are receiving.

At the end, save the screen.

 View the sales order cycle:

 Go to Tally Gateway>>Select “Display”>>day book


After that the screen will look like this
Here we have list of voucher like sale order and purchase order etc.

 Purchase Order cycle:


 Purchase order:
To create the purchase order the following steps should be follow:
Goto>>gate of tally>>order voucher>> press Alt+4 or enter purchase order
After that the following screen will be appear:

Change the date of Voucher using F2 Function Key or Click on Date button.
Party A/c Name: Select the Suppliers name from the list. Press enter .
Suppliers Details screen will appear. Enter all information
Order No: Enter the order number.
Purchase Ledger: Select the purchase ledger where you are going to account after
delivery.
Name of Item: Select the name of stock item to be ordered, Here first item is electric
Iron.
Item allocation for the particular stock item will appear.
Due date: When the item is required to be delivered.
Enter Quantity, Rate in the respective columns.

save by pressing enter key.


The screen will look like this:
Now save the screen.
 Receipt Note:
To create Receipt note, follow these steeps:
Go to Tally Gateway>>“Inventory voucher”>> press “Alt F9” or receipt note
The screen will appear like this :
 Select Party A/c Name from the List of Ledger Accounts.
 Select Order No(s) from the List of Orders, if a purchase order exists for that
supplier.
The Party Details screen appears as shown:

 Enter the required information in the Party Details screen.


 Select the Order No(s).
 Press Enter. The Stock Item Allocations screen appears as shown:
 Select existing Tracking No. or create a new tracking number.
 The Receipt Note appear as shown below:

Now save the screen.

 Rejection Out:
The Rejections Out Voucher records goods that are rejected and returned to a
supplier.
Creation of rejection out voucher
 From F11: Inventory Features, Enable the option Use rejection inward and
outward notes.
 Go to Gateway of Tally > Inventory Vouchers
 Press Alt+F6 or Select the button F6: Rej. Out from the Button Bar.

For example, the company returns Item A received from Supplier A.


 Select the Party’s name from the List of Ledger Accounts, to whom you are
returning the goods.
 Once Party’s name is selected under Ledger Account, this column will be
filled up automatically with the address, if provided in the Ledger Master
creation screen.
 Select the Item from the List of Stock Items. Press Enter on the Item, it will
display the Item Allocations screen.
 Under the List of Tracking Numbers, the details of Receipt note along with
Tracking number will be displayed, select the same and mention the quantity
rejected.
After all the detail and specific item are rejected the screen will shown like:

 Record Purchase:
To record a purchase voucher.
 Go to Gateway of Tally > Accounting Vouchers > F9: Purchase
The below screen will be appear:
 Enter the reference number in the Ref field if any.
 Select the Party’s A/c Name from the List of Ledger Accounts.
The following detail will be appear on screen :
 Here enter the order number and the supplier’s detail will appear press enter
the item will generated automatically
 Item allocation will be appear as shown below

 Now set the godown, quantity, rate and amount will calculate
automatically
The following screen will be appear:
 Accept the screen to save.

 Payment:
To record Payment, follow these steps:
Go to Gateway of tally>> “Accounting Voucher”>> press “F5” or enter
payment voucher
Now your screen will look lik:
 Enter the supplier name and further information will be appear as shown
below

 Enter the reference type “On Account” the amount will auto placed, press
“Enter”.
 Save the screen.
 Credit note:
When a customer returned to the seller,Seller has to account the return as sales
return and issue a credit note to the buyer.
In Seller books of Accounts:
When a customer returned to the seller, Seller has to account the return as sales
return and issue a credit note to the buyer.
In Buyer Books of account
When a buyer is returning goods to the seller. The buyer treat the transaction as
purchase return and have to raise a debit note and send to seller along with goods.

How to Activate Credit Note


You should go to the following screen.

F11 Features> Inventory Features


 Enable Use debit and credit notes
 Record credit note in invoice mode: Set yes if required
 Save and accept the Features screen. Credit not voucher will have activated.

Create Credit note


Gateway of Tally>Accounting Voucher> Credit Note
Shortcut Key to Access this is voucher is Ctrl + F8. The voucher will look like this
image.

To enter in Invoice mode,

 Click on item invoice button for entering withstock item


 Click on As invoice button to enter as Invoice mode.
Ledger Required for the Entry.
We need the following Ledger Account.

 Customer (Sundry Debtors) Ledger


 Sales Return Ledger
Create a sales return ledger under group sales if not already created.
 In the credite note, now you have to credited the cash or bank and debited the
debtor which are show below in the picture.

 Save the screen

 Debit Note
Debit note is an accounting document Issued by the buyer to the seller
informing that his account has been debited due to purchase return.

Create debite note:

 Go to Gateway of tally
 Click on “Accounting Voucher” and press “CTRL F8”

Now your screen will look under:


 Here Credit the supplier’s account and Debit the bank or cash account through
which you received payment, as shown above.
 Accept the screen

 Contra entry
As per the Accounting Principles, a Contra entry is a transaction involving
transfer of cash between one Cash A/c to another or one Cash A/c to another
Bank A/c.

Creation of contra entry

Go to Gateway of Tally > Accounting Vouchers > Select F4: Contra


For example, to transfer funds from Cash Account to Bank Account:
 Accept the screen.

 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.

Create POS Voucher Type


The first step of POS invoice creation is POS Voucher type creation, to create
voucher type

Goto>Gateway of Tally> Accounts Info>Voucher type> Create

In the voucher type creation screen give the following details.

Name: POS Invoice, You can give any name for voucher type.
Select type of voucher: Sales, you must select sales as we are creating sales
invoice for our POS terminal.
Method of voucher numbering : keep it Automatic here.
In Printing Option, Select print after saving ,This will print sales voucher
immediately after saving.
Use For POS Invoicing : Yes, Activate the most wanted option in this lesson.
Immediately after activating POS invoicing option,Tally will display two
additional space for typing messages to print in the Invoice. Here you can type
whatever we want like, Thank You,Visit again etc.
Default Print Title : Default Print Title is the title of Invoice You can put
TAX INVOICE or INVOICE.
Set/alter declaration: If you want to add declaration in the invoice. activate
this option by typing Yes.
The final screen will look like below screen.

Name of Class: enter name of class as “point of sale” and press “enter”
Now your screen will look like:
Now add up all the relevant information and save the screen.
 How to use Point of sale voucher?
We have created a POS Voucher type, Now let’s learn how to use point of sale
voucher.
Go to>Gateway of Tally> Accounting Voucher > press F8 Sales
Immediately after pressing F8, the list of voucher type will appear as in the below
picture.
After that you select the pos invoice the sale voucher will be appear like this:

Put all the information and product then save it.


After saving further it ask about the print if you want to print it press yes or no
 Pay Roll:
Payroll refers to the employees you pay, along with employee information.
Payroll is also the amount you pay employees during each pay period. payroll
can refer to the process of actually calculating and distributing wages and taxes.
First of all we have to enable payroll from accounting features
 Goto>>gateway of tally>>features>>accounting features

Enable the payroll features and save it.


there are some steps to create a complete payroll cycle
1. payroll heads
2. Employees Groups
3. Employee Creation
4. Create link with payroll voucher
5. Payment of Salaries.
1. Payroll heads:
The salary components constituting an employee’s pay structure are
Pay Heads. A pay head may be a benefit, or a deduction from the salary.
The value of these pay heads could be fixed or variable for each payroll
period.
The default pay head types in Tally.ERP 9 are:

 Earnings for Employees

 Deductions from Employees

 Employees’ Statutory Deductions

 Employer’s Statutory Contributions

 Employer’s Other Charges

 Bonus

 Gratuity

 Loans and Advances

 Reimbursements to Employees

Now lets create a pay head for an example: basic pay


Goto>> gateway of tally>>payroll info>>pay heads
The following screen will be appear
Name: first type the name of head for example basic pay
Pay Head Type: The Statutory Pay Head Type field is enabled when you choose
one of the following Pay Head Types:
 Earning for employees
 Employees’ Statutory Deductions
 Employer’s Statutory Contributions
 Employer’s Other Charges etc
So here we will choose earning for employees.
Under: Specify the group as Indirect Expenses,direct expense, tax and duty etc.
Set Affect Net Salary: enter yes
Use for Gratuity: Set this to Yes for those pay head components that are used
for calculating gratuity (For example, Basic Pay).
Calculation Types: The value of a pay head component is derived based on the
Calculation Type chosen. The List of Calculation types includes:
 As Computed Value
 As User Defined Value
 Flat Rate
 On Attendance
 On Production
Her we choose flat rate for the basic pay head.

 As Computed Value
Use the As Computed Value if the pay head value is dependent on another
pay component.
You can define a pay component by
 Specifying a formula
 Calculating the pay head based on the
 Current sub-total
 Current earning
 Total deduction

 As User defined Value


You can use the As User defined Value field to manually enter the value
at the time of processing the salary. This calculation type is applicable
when the value of pay is not fixed, and does not depend on any pay
component. You can also choose a calculation period, as is applicable.
 Flat Rate
 Use Flat Rate when the value of the pay head is a fixed amount for a
period. If you choose this, pro-rata calculation is not applicable.
For example,
Basic pay of 15000 per month.
 On Attendance
Use On Attendance type to calculate the pay head component based on
the attendance details of employees.
For example: Basic salary is calculated on attendance.
 Attendance/Leave with pay
Select Present to calculate the pay head value.
 Leave without Pay
Select Not Applicable in the Attendance/Leave with Pay field, and select
Absent in the Leave without Pay field to calculate the pay head value.
 On Production
Use On Production to calculate the pay head value based on the
production/work done.

Calculation Period
Calculation Period refers to the periodicity of pay head calculation. Four pre-
defined calculation periods are available in Tally.ERP 9:
 Days
 Fortnights
 Months
 Weeks
After all the information and detail save the screen. Now the screen will look like:
2. Employees Groups
To create a Employee Group (for example, Sales)
 Go to Gateway of Tally > Payroll Info. > Employee
Groups > Create (under Single Group).
 Tab to the Category field, select the appropriate Employee Category from
the List of Categories.
 Enter the Name of the Employee group.
 Tab to the Under field, and select the group under which the employee
group is to be added.

 Set the option Define Salary Details to Yes, and press Enter to view
the Salary Details Creation screen.
 Specify the salary details applicable to the employee group in this screen.
The Salary Details Creation screen appears as shown below:

After defining the salary structure, press enter save the screen.
 Employee Creation

To create an Employee follow these steps


Go to Gateway of Tally > Payroll Info. > Employees > Create
The following screen will be shown.

 Name : Enter the Name of the employee. By default, the system displays the
same value in the Display name in reports as.

 Modify the Display name in reports as: if required.

 Under: Select the Employee Group in the field Under.

 Enter the Date of joining: enter the joining date of employee

 Define salary details: set this option to Yes, and press Enter to open Salary
Details Creation screen.
 Select the relevant Pay Heads from the List of Pay Heads under the Pay
Head column, and enter values for the required pay heads.

 Define the salary structure, and press Enter to navigate to the Employee
Creation screen.
 Enter the employee General Information of employee ( employee no, name,
age, function etc) employee’s Bank Details for salary processing, Payment
Details, Statutory Details, Passport & Visa Details and Contract Details.

 Create link with payroll voucher

In this step we have to create link with payroll voucher. go to the payroll
info open the voucher type here we don’t need to create any voucher we
must alter the existing payroll voucher. and in the head of ‘Name of
class’ create a new class named like staff salary, as shown below:
Enter on staff salary after that following screen will be appear:

Now go to the payroll voucher and press Alt+A for the autofill salary and following
screen will be shown
After all the information employees salary will be automatically generated.
 Payment of Salaries
This is the last step of payroll cycle payment of salaries
Go to the gateway of tally
Click on accounting voucher and select the payment voucher

Now accept the screen.

 How to print pay slip


To print the play slip follow the steps:
Goto>>gatway of tally>> Display>>Payroll reports>> Statement of payroll>> Pay
slip>> “Single Pay slip”
Now press Alt+P and payslip will be print which are shown below:
 What is Bank Reconciliation?
A bank reconciliation statement is a document that matches the cash balance on a
company’s books to the corresponding amount on its bank statement. Reconciling
the two accounts helps determine if accounting changes are needed. Bank
reconciliations are completed at regular intervals to ensure that the company’s cash
records are correct. They also help detect fraud and any cash manipulations.
 How to reconcile a bank statement in tally?
To reconcile the bank statement follow the steps:
Goto>>Gateway of Tally>Banking>Bank Reconciliation
Select the bank which you want to reconcile and the following screen will shown.

Now you see the amount not reflected in bank now you put the bank date as
required. After that the amount will be equal as shown below:
Now you see the balance are equal. Now save the screen.

 Budgeting:
A budget is a quantitative plan used as a tool for deciding which activities
will be chosen for a future time period.

 In a business, the budgeting for operations will include the following:


 preparing estimates of future sales
 preparing estimates of future cash collections and disbursements
 preparing estimates of the future day-to-day activities of the
organization
 summarizing these estimates into an income statement and balance
sheet
 maintain budget in tally:
To maintain budget in tally follow the steps:
Goto>> gateway of tally>>accounting info>>budget>>create
After that the following screen will be appear
Name: type the name for example fuel expense
Under: keep it under the primary
Period of budget: Give the starting date to ending date of budget.
Set / alter budget of: In tally accounting software you can set budget for Groups,
Ledger a/c. after that will appear like this:

Account name: type her account name like fuel expense


Type of budget: here we have two options :
1- ON NET TRANSACTION: If you set net transaction budget then the budget
variance show only to last entry date.
2- ON CLOSING BALANCE: This type of budget show variance total set amount
of the budget.
Amount:
Now save the screen.
Now go to the payment voucher and made some transaction of payment as we
already did above. for example payment of fuel expense
After the payment if we want to see variance of budget the
Goto>>gatway of tally>>Profit & loss a/c>>indirect expense>>press Alt+B or
budget variance
The following screen will be appear

After that we will able to see the actual amount which occure and the forcast
amount which company forcast for particular expense.in the below image it will
explain clearly:
So her the actual and variance are shown the image above and the month wise
graph is also drawn above in the image.

 Discount:
There are two types of discount
 Discount Allowed
The discount when the seller of goods or services gives a discount to
the buyer upon payment.

 Discount received
The discount received is discount on purchases.

 Discount in sales and purchase invoice in tally:


Discount in sale invoice (discount allowed): first of we have to create the
ledger of discount under the indirect expense which we already created
above ( creation of ledger) then

Goto>>gatway of tally>>accounting voucher>> sale voucher


Following screen will be appear:
Enter the name of buyer to whom your selling goods.
Select the items in the last enter the discount ladger and discount rate which
your giving to the buyer but remember the rate should be in the minus. After
that the below image will be shown :

Now save the screen.

 Discount in purchase invoice


Discount received in purchase, for that we have to create first a ledger as we
discussed above how to create a ledger then
Goto>> gate way of tally>> accounting voucher>>purchase voucher
The below screen will be shown:

Enter the party name from whom we purchasing the products select the product,
quantity and rate of per product. In the last enter the discount rate which we
received from the supplier keep in mind the discount rate should be written with
negative sign after all the detail the following image will be shown:

Now accept and save the screen.


 Financial statements:

 Display and report:


 Trail balance
A trial balance is a list of all the general ledger accounts (both revenue and
capital) contained in the ledger of a business. This list will contain the name of
each nominal ledger account and the value of that nominal ledger balance. Each
nominal ledger account will hold either a debit balance or a credit balance. The
debit balance values will be listed in the debit column of the trial balance and
the credit value balance will be listed in the credit column. The trading profit
and loss statement and balance sheet and other financial reports can then be
produced using the ledger accounts listed on the trial balance.

 Trail balance in tally erp


after all the transaction in tally the trail balance will look like: