Friday, 20 March 2015

Basic Accounting Notes in Tally

Basic Accounting in Tally
Basic concept of accounting

Accounting: It is an art of recording, classifying and summarizing in significant manner and in terms of money, transactions and events which are of financial character and interpreting the results thereof.

Business transaction: A business transaction is “The movement of money and money’s worth form one person to another”. Or exchange of values between two parties is also known as “Business Transaction”.

Purchase: A purchase means goods purchased by a businessman from suppliers.

Sales: Sales is goods sold by a businessman to his customers.

Purchase Return or Rejection in or Outward Invoice:  Purchase return means the return of the full or a part of goods purchased by the businessman to his suppliers.

Sales Return or Rejection out or Inward Invoice:    Sales return means the return of the full or a part of the goods sold by the customer to the businessman.

Assets: Assets are the things and properties possessed by a businessman not for resale but for the use in the business.

Liabilities: All the amounts payable by a business concern to outsiders are called liabilities.

Capital: Capital is the amount invested for starting a business by a person.

Debtors: Debtor is the person who owes amounts to the businessman.

Creditor: Creditor is the person to whom amounts are owed by the businessman.

Debit:  The receiving aspect of a transaction is called debit or Dr.

Credit: The giving aspect of a transaction is called credit or Cr.

Drawings: Drawings are the amounts withdrawn (taken back) by the businessman from his business for his personal, private and domestic purpose. Drawings may be made in the form cash, goods and assets of the business.

Receipts: It is a document issued by the receiver of cash to the giver of cash acknowledging the cash received voucher.

Account: Account is a summarized record of all the transactions relating to every person, every thing or property and every type of service.

Ledger: The book of final entry where accounts lie.

Journal entries: A daily record of transaction.

Trail Balance: It is a statement of all the ledger account balances prepared at the end of particular period to verify the accuracy of the entries made in books of accounts.

Profit: Excess of credit side over debit side.
Profit and loss account:          It is prepared to ascertain actual profit or loss of the business.

Balance Sheet:            To ascertain the financial position of the business. It is a statement of assets and liabilities.
Types of accounts

Personal account:       Personal accounts are the accounts of persons, firms, concerns and institutions which the businessmen deal.

Principles:                                           Debit the receiver
                                                            Credit the giver
Real Account:             These are the accounts of things, materials, assets & properties. It has physical existence which can be seen & touch.
 Ex. Cash, Sale, Purchase, Furniture, Investment etc.

Principles:                                           Debit what comes in
                                                            Credit what goes out

Nominal account: Nominal account is the account of services received (expenses and Losses) and services given (income and gain) Ex. Salary, Rent, Wages, Stationery etc.

Principles:  Debit all expense/losses
                   Credit all income/ gains

Tally is a complete business solution for any kind of Business Enterprise. It is a full fledged accounting software.

Procedure for creating company in Tally
Double click on Tally icon on desktop. Alt+F3 Company info-Create company.

Accounts Only: To maintain only the financial accounts of the company. Inventory (stock) management is not involved in it.

Account with Inventory:      This is the default option, which allows maintaining both the financial account of the company as well as the inventory of the company.

Select Company:       We can choose the company which is already created.
Shortcut key - F1.

Shut Company:         It is used to close the company which is opened. Shortcut key - Alt+F1.

Alter:  It is used to make alterations in the company creation like name, date, maintain etc.

Quit:            Exits from Tally. 1. Click on quit button.
                                                      2. Esc, Esc, Esc and enter.
                                                      3. Ctrl+Q

Short cut keys

Alt+F3                        Company information menu
 Enter                           To accept information typed into a field.
                                    To accept a voucher or master.
                                    To get a report with further details of an item in a report.
 Esc                              To remove what has been typed into a field.
                                    To exit a screen.
                                     To indicate you do not want to accept a voucher or master.

Ctrl+A                         To accept a form wherever you use the key combination the screen or report will be accepted as it is on this screen.

Ctrl+Q                         It quits the screen without making any changed to it.

Alt+C                          To create a master at a voucher screen.
When working within an amount field presses Alt+C to act as a calculator.

Alt+D                          To delete a voucher.
                                    To delete a master.
Ctrl+Enter                   To alter a master while making an entry or viewing report.

F2                                Date
Alt+F2                       Change period
Alt+F1                       To see detail
F11                            Features company
F12                  Configuration options are applicable to all the companies in a data directory.
Ctrl+N             Calculator screen.
Ctrl+V             Voucher mode (Cr. Dr)
                                    Invoice mode (name of item, rate, quantity, and amount)
Gateway of tally-Accounts info-Group
Bank account                                                              Bank  Account
Bank Od account                                                                    Branch/division
Capital account                                                                       Cash in hand
Current asset                                                               Current liability
Deposit                                                                                    Direct expenses
Direct income                                                              Indirect expense
Indirect income                                                                       Duties and tax
Fixed asset                                                                              Investment
Loans and advance                                                     Loan (liability)
Miscellaneous expenses                                                          Provisions
Retained earning                                                                     Reserves and surplus
Purchase account                                                                    Sales account
Secured loan                                                               Stock in hand 
Sundry debtor’s                                                                      Sundry creditors
Suspense                                                                           Unsecured account

Accounting Terms

Current asset:             
It is converted into cash with in a year. Ex. Bills receivable

Direct expenses:        
These are the expenses which are directly related to manufacturing of goods.
Ex. Wages, factory rent, heating, lighting etc

Indirect expense:      
These are the expenses which are indirectly related to manufacturing of goods.
Ex. Salary, rent, stationery, advertisement, printing

Depreciation:             Decrease the value of the asset.         
Sundry debtors:        The person who is the receiver or customer
Sundry creditors:      The person who gives or supplier.

Expenses Outstanding or Unpaid expenses or Expenses due:
Expenditure incurred during current year but the amount on which is not yet paid. (Added to the expenditure on the debit side and entered on the liability side.)

Income received in advance or Income received but not earned
Income received during the current year but not earned or a part of which relates to the next year. (Deducted form the concerned income on the credit side and entered on the liability side)

Prepaid advance or Expenses or Prepaid Expenses
Expenditure paid during current year but not incurred or a part of which relates to the next year is called expenditure prepaid. (Deducted form the concerned expenditure on the debit side and entered on the assets side)

Income outstanding or income earned but not received or Income accrued
Income outstanding means income earned during the current year but the amount on which is not yet received (added to the concerned income on the credit side and entered on the asset side)