TallyPrime – Study Material

Creation of Company:

To start accounting with tally the first and foremost thing you should know is , how to create
company in tally.For users operating multiple business can create several companies in Tally
software at single cost. Creating a Company involves providing basic information about the
company whose books of accounts are to be maintained in tally and details of currency.

How to start Tally

• When we successfully installed Tally prime on Windows or Mac OS, we can start
Tally Prime by using one of the following methods.
• Now, double click on Tally Prime icon from the computer as follows:
• Or we can follow the path: Start menu => Tally Prime=>Double Click

How to create a company in Tally Prime

• In tally, after login double click on the create company option under company
information.
• Go to Top Menu =>Company =>Create =>Enter

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• The following screen displays the company creation window.

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• On company creation screen, update the following details.

• Directory: Directory means the data storage location, This is the place where tally
store all data you entered in tally prime. By default the data storage will be inside the
installation folder. You can change it at your desired location by typing it manually.
For example D:/Tally data
• Name: Update the name of company that identifies in Tally prime.

Primary Mailing Details

• Mailing Name:The mailing name of company will be automatically updated as per

the given name of company, however the mailing name can be changed as per the
requirements.
• Address:Update the complete address details of company
• Statutory Compliance for:Choose the country name as India from the given list of
countries.
• State:Choose the state from the given list of states.
• Pin Code:Update the Pin Code of company, where it is located.

Contact Details

• Telephone No:Update Company landline/ Telephone number

• E-Mail:Update the company e-mail id
• Mobile No:Mobile number for contacting
• Fax no:Update the Fax number
• Website:Update the official website address of company

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Books and Financial Year Details

• Financial Year From:Update the financial year starting date, all Indian companies
financial year start from 1st April and ends on 31st March. Tally considers the 12
months from the date given for financial year. The financial year will be automatically
displayed on Tally system, if financial year starts in middle of year, you can specify
the exact date from here.
• Books beginning from:The date for Books beginning from can be changed, in case
of companies, which are incorporated in the middle of the year. If your company is
new, you can opt to start the books of accounts from the date of actual establishment
of the company (date of incorporation) but close books according to the Financial
Year as specified by you.

Security Control

• Tally Vault Password:This is for security purpose, By enabling this,Tally ERP9

Convert tally data in to encrypted format. Encryption means convert data from
recognized format to unrecognized format. By enabling Tally vault password, the
company data is secured in an encrypted form. The data is not accessible without the
password, if you lost the password that will be not recovered.
• Use Security Control:Enabling securing control helps only authorized users are
allowed to enter/edit/delete the vouchers on Tally.

Base Currency Information

• Base Currency Symbol:This the currency symbol of the country you have
selected.No need to change it if you are using the same currency for accounting.
• Formal Name: This is the formal name of the currency selected in the previous field
• Suffix Symbol to Amount:This data field will ask you whether currency symbol is
required for example: prior to amount like $ 750
• Add spaces between the amount and symbol: This is like $ 750, a space in between
currency symbol and amount

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• Show amount in Millions:If we set this data field to Yes, Tally will display the
amount in millions that are in the Balance sheet or other reports. Amount for example
100,00,000 will be shown as 10. [One million equals 10,00,000].
• Number of decimal Places:Usually 2 decimal places are using, for using Paisa in
Indian currency we use 2 decimal place like Rs 59.12 ,Fifty nine rupees twelve Paisa.
• Word representing amount after decimal:This is used in printing , in Indian
currency decimal portion is said to be Paisa
• No of decimal places for amount in words:No of Decimal place for printing amount
in words: If you set this option 1 in Indian currency, When printing 75 Paisa. prints
seventy Paisa. if you set 2 then it will print second fraction like seventy five Paisa.

To save the details entered in company creation screen

• If you have entered all the details and after verifying it seems to be right, then you
have to accept the screen by pressing Enter and again Enter to accept and save the
details.

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Ledger Creation

Ledger account is a summary statement of all the transactions relating to a person, asset,
liability, expense or income. the transactions recorded in the journal, the ledger account is
prepared. It is a book which contains all sets of accounts, namely, personal, real and nominal
accounts. Account balance can be determined from the ledger. It contains a classified and
permanent record of all the transactions of a business.

Example: Office expenses, Purchase, Machinery, Ravi, bank loan etc..

Note: Cash, profit/loss are default ledgers in tally.

Group

The group is a collection of ledgers of the same natures.

Tally software automatically creates 28 groups.

• Primary Group
• Sub Group

Primary Group

Group Name Example Ledger

Capital
Share capital, Joes capital
Accounts

Loan
Bank loan, loan received from any party
Liabilities

Current
Payables, outstanding amounts
Liabilities

Current Assets Receivables, Prepaid amounts

Fixed Assets Machinery, Factory, Land & buildings

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Investments Investing on shares, any investment names

Sales
Credit sales, sales returns
Accounts

Purchase
Credit purchase, purchase returns
Accounts

Suspense
Suspense ledger
Account

Direct
Wages, Import duty, all purchase & manufacturing expenses
Expenses

Indirect
Office expenses, selling expenses & financial expenses
Expenses

Misc.Expenses Development expenses, advertisement expenses,

Direct Income Income earned from the sale of goods and services

Indirect
Earned by way of Non-business activities (Interest received, discounts)
Income

Branch / This maintains ledger accounts of all your company's branches, divisions,
Division affiliates, sister concerns, subsidiaries and so on.

Sub Group

Group Name Example Ledger

Sundry Creditors Purchase party name or supplier name

Sundry Debtors Sales party name or customer name

Provision Provision for doubtful debts, Provision for tax

Cash in hand Liquid cash in company

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Duties & Taxes Service tax, CGST, IGST,SGST

Deposit(asset) Fixed deposits

Bank Accounts Indian bank, SBI bank (any bank name)

Loans & Advance

Salary advance, loans to partner
(Assets)

Bank OD & OCC

Bank OD, bank OCC
Account

Secured Loans Car loan, Home loan

Unsecured Loans Credit cards, student loan

Stock in hand Opening stock, closing stock

General Reserves , Capital Reserves (Funds set aside to pay future

Reserves & Surplus
obligations )

Group and Ledger

Ledger Name Group Name

Any bank name

Cash at bank Bank Account

Ex: Indian bank. ICICI bank

Bank O/D Bank O/D (Over Draft)

Bank OCC (On Cash Credit or Over Cash

Bank OCC
credit)

Any branch name

Branch/Divisions
Ex: Branch fund, Branch stock

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Any capital name

Capital A/c
Ex: Reliance capital, Ravi capital Drawings
(Dr)

Cash or cash in hand (Default) Cash-in-hand

Bill receivable

Prepaid Expenses

Accrued interest

Petty cash

Subsidiaries

Accounts receivable Current assets

Live in stock

Sports equipment

Works-in-progress

Raw materials

Security deposit (Dr)

Bills payable

Arrears

Unpaid expenses
Current liabilities
Condign liability

Bonus payable

Royalty payable

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Outstanding expenses

Salary due

Commission received in advance

Security deposit (Cr)

Accounts payable

Provident fund

Proposed dividend

Any deposit name

Deposit (Assets
Ex: Bank deposit, Fixed deposit

Wages

Fright charges

Factory rent

Inward charges

Carriage inward charges

Direct Expenses
Import duty

Gas & fuel & power

Royalty on production

Factory lighting

Any factory Expenses

It is not possible Direct income

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Sales tax

Service tax

Surcharges on tax

Excise duty

TDS Duties & Taxes

TCS

VAT

FBT

CST

Plant & machinery

Land & building

Typewriter

Motor van & car & bike

Furniture & fittings

Computer Fixed Assets

Electric fan

Loose tools

Free hold property

Lease hold property

Good will

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Factory

Plant

Office expense

Salaries

Bank charges

Rent , rates

Printing & stationery

Postage & telegram

Telephone charges

Legal charges

Audit fee
Indirect expense
Insurance

General expenses

Interest on capital

Interest on loan

Discount allowed

Discount on bill

Advertisement charges

Traveling expenses

Commission

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Bad Debit

Bad and doubtful debts

Discount on debtors

Fright outward

Godown rent

Carriage outward

Agent commission

Export expenses

Depreciation

Repair chares

Maintenance charges

Trade expense

Interest received

Dividend received

Discount received

Commission received
Indirect income
Rent received

Income on investment

Interest on debentures

Miscellaneous revenue

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Interest on

debentures

Miscellaneous

revenue Interest on

Drawing Sundry

income

Bad debit recovered

Appreciations

Investing on shares

Investment
Investment
Capital of partnership firm

Any investment name

Loan issued to customers

Loans and advance (Assets)
Employees, Advance paid

Bank loan

loan (liability)
Loan (liability) or Secured loan
loan received from any party’s

secured loan, debentures

Preliminary Expenses
Misc. Expenses (Assets)
Misc. Expenses

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Development exp

Any Provision name

Provision for Bad debit

Provisions
Provision for Depreciation

Provision for Tax

Cash purchase

Credit purchase Purchase Account

Purchase return (Cr)

Reserve fund

Reserves
Reserves & surplus
Reserves & surplus

Reserve for bad debit

Cash sales

Credit sales Sales Account

Sales return (Dr)

Purchase party name

Sundry creditor
Suppliers name

Sales party name (OR) Customer name Sundry Debtors

Suspense A/c Suspense A/c

Bank loan (un secured loan) Unsecured loan

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Stock in hand, Opening stock Stock in Hand

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Overview of Masters in Tally Prime

Introduction

Masters are the containers of the Accounting Data. These are the heads, which will be set
once and used in many places such as Accounting Voucher Creation, Reports Generation etc.
Data stored in Masters is independent.
Account Masters are the principal Accounting entities representing similar transaction
(Account Ledgers) and similar accounts (Account Groups) along which all transaction date
are compiled, summarized and balanced, to be reflected in various Accounting Reports
&Financial statement ( profit &Loss Account &Balance sheet).

Types of masters

• Accounting Masters
• Inventory Masters
• Payroll Masters and
• Statutory Masters

Accounting Masters

Account Ledger are entities representing similar transactions.

Account Groups are just convenient & systematic grouping of ledger Accounts of similar
nature.
Tally automatically creates 28 Reserved Account Groups and 2 Reserved Ledger Accounts.

• Group
• Ledger
• Cost category
• Cost centre
• Currency
• Rates of Exchange
• Budget
• Voucher Type

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• Credit limits

Inventory masters

To maintain inventory system, first, you need to create masters in respect.

• Stock Group
• Stock category
• Stock item
• Unit
• Godown
• Price levels

Payroll Masters

Activation & set Up of payroll Features for the company.

• Employee category
• Employee Group
• Employee
• Units(Work)
• Attendance/ production type
• Pay Heads
• Payroll voucher type

Statutory master

• GST classification
• TDS Nature of payments
• TCS Nature of Payment
• VAT classification
• Tax Units
• Excise Duty Classification
• Excise Classification
• Excise Book
• Service Category

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Trial Balance in Tally Prime

Example Trial Balance Sum

Prepare an Trial Balance of ABC PVT LTD for the following financial year of 1.4.2020 to
31.3.2021

S.No Particulars Rs

1 Capital 22000

2 Stock 10000

3 Debtors 8000

4 Creditors 12000

5 Machinery 20000

6 Cash in hand 2000

7 Bank OD 14000

8 Sales 44000

9 Misc.Exp 12000

10 Sales Return 8000

11 Purchase 26000

12 Wages 10000

13 Salary 12000

14 Prepaid Insurance 200

15 Purchase Return 4000

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16 Bills Payable 10800

17 Outstanding Salary 1400

How to Start Trial Balance

Gateway of Tally->Create

Cash and Profit & Loss are default ledger in Tally.

Gateway of Tally->Create->Ledger

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Gateway of Tally->Create->Ledger->Ledger Creation

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To use the default ledger press pageup button

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Gateway of Tally->Chart of Accounts

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Gateway of Tally->Chart of Accounts->Ledger

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Gateway of Tally->Chart of Accounts->Ledger-Ledger View

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Gateway of Tally->Chart of Accounts->Ledger->Ledger View->Finally View Trial Balance

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Accounting Voucher

What is Vouchers

Every business ought to have transactions where their ultimate profit and loss bring up. So,
managing the transactions smarter gives a boost to the organizations. As many organizations
moved toward , the voucher is the primary online document used to record the transactions.
Example:a purchase invoice, a sales receipt, a petty cash docket, a bank interest statement.

Types of Accounting Vouchers:

• Payment Voucher
• Receipt Voucher
• Contra Voucher
• Journal Voucher
• Sales Voucher
• Purchase Voucher
• Credit Note Voucher
• Debit Note Voucher

Double entry system

Example: giving the benefit and the other receiving the benefit.

• A transaction has two-fold aspects.

Example: giving the benefit and the other receiving the benefit.

• One account needs to be debited and the other is to be credited.

• Every debit must have its corresponding and equal credit.

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Golden Rules

Basic Accounting Equation

Assets = Liabilities + Owners Equity(capital).

Credit & Debit rules

Example You paid rent (₹1000).

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Example for accounting equation

Accounting Voucher Entry in Tally Prime

Shortcut Keys in Accounting Voucher Entry

• Payment Voucher-F5
• Receipt Voucher-F6
• Contra Voucher-F4
• Journal Voucher-F7
• Sales Voucher-F8
• Purchase Voucher-F9
• Credit Note Voucher-Alt+F6
• Debit Note Voucher-Alt+F5
• Stock journal–Alt+F7
• Physical stock–Alt+F10

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Click Other Voucher->Credit Note Voucher (or) Debit Note Voucher (or) Stock journal (or)
Physical stock

TO Check the Profit and Loss (or) Balance Sheet

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Profit and Loss

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Balance Sheet

Sample Sum

Capital 300000

Cash 150000

Furniture’s 100000

KVB Bank 150000

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Bills payable 100000

Prepaid expenses 25000

Unpaid expenses 50000

Machinery 150000

Bank loan 120000

Sundry Creditors
M/s. ANU ENTERPRISES was Rs.30000 Date: 28.03.2011 bill no: 21 (40days)

Sundry Debtors
M/s.RIYAS & CO was Rs. 25000 Date: 18.03.2011 bill no: 010 (35days)

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Cost Center in Tally Prime

Cost Centre Introduction

A cost Centre is units of an organization to which transaction can be allocated. Cost Centre
are the most flexible tools for management information system, which allows a analysis of
financial information.

How to Activate Cost Centre and Cost Category

Gateway of Tally->Masters->Create->Cost Category (or) Cost Centre

Gateway of Tally->Masters->Create->Show More->Cost Category (or) Cost Centre

Cost Category

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1.Gateway of Tally->Masters->Create->Cost Category

2.Enter the name
3.Set the option Allocate Revenue Items toYesto allocate all sales, purchase, expanses and
income->related transaction to cost Centres created under this cost category
4.Set the option Allocate No-Revenue Items to Yes to allocate transaction related to capital
account and other non-revenue accounts to cost Centres created under this cost category

Cost Centre

1.Gateway of Tally->Masters->Create->Cost Centre

2.Select the Cost Category
3.Enter name
4.Select the Cost Centre Under which the Cost Centre has to be grouped
5.Enter the Cost Centre

1.Gateway of Tally->Masters->Create->Cost Centre

2.Select the Cost Category
3.Enter name
4.Select the Cost Centre Under which the Cost Centre has to be grouped
5.Enter the Cost Centre

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1.Gateway of Tally->Masters->Create->Cost Centre

2.Select the Cost Category
3.Enter name
4.Select the Cost Centre Under which the Cost Centre has to be grouped
5.Enter the Cost Centre

Transaction

1.Go to Gateway of Tally->Transaction->Vouchers

2.Select Receipt Voucher Click (F6)

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Voucher->Alt+C Click->To Create Ledger->Enter

1.The Cost Centre Allocations screen appears as shown:

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Cost Centre Sum

The Following Would Be Recording In Journal Using Double Entry System. Do The Posting
Process from Journal Entries and Prepare the Trial Balance, Trading A/C, Profit & Loss A/C
and Balance Sheet and cost canter In The Books Of M/S. TUTOR JOES COMPUTER
EDUCATION Ltd for the following year 2020 to 2021.

SBI bank 800000

Cash in hand 100000

Furniture 200000

Building advance 150000

Computer 500000

Stock in hand 150000

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Software deposit 10000

Capital 1000000

O/S building rent 20000

O/S salary 80000

Loan from bank 700000

Sundry Creditors
M/s. Hindustan Computer ltd Rs.150000 bill no:2112 (25days)
M/s. Pavai books & note Printers Rs.50000 bill no: 2209 (25 Days)

Cost Category and Cost Centre:

Application fee:

Computer application

Entrance application

Course fee:

DCA:

Course fee (DCA)

Course material (DCA)

DCA forenoon

DCA afternoon

DCA w/k

TALLY:

Course fee (tally)

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Course material (tally)

TALLY forenoon

TALLY afternoon

TALLY day time

DTP:

Course fee (DTP)

Course material (DTP)

DTP forenoon

DTP afternoon

DTP day time

DIT:

Course fee (DIT)

Course material (DIT)

DIT forenoon

DIT afternoon

DIT day time

Transaction During The Period

1. Course fee received for tally (f/n) Rs.22000 and tally (a/n) Rs.14000
2. Course fee received for tally (a/n) Rs.30000 and computer application for Rs.5000 by
cheque
3. Course fee received for tally (day time) Rs.120000, DCA (w/k) Rs.75000 DTP (Day time)
Rs.90000, DIT (Day time) Rs.110000 and summer offer for discount 2% for each course
4. Course fee received for DIT (f/n) Rs.15000 and DIT(day time) Rs.13000

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5. Entrance application received Rs.10000

6. Course fee received for DTP (a/n) Rs.36000 and DTP(f/n) Rs.14500
7. Course fee for tally (a/n) refund Rs.5000
8. Course material to tally , DIT, and DTP purchased 50 copies @ Rs.5000, Rs.3000,
Rs.1000 each
9. Amount paid to Ms. Hindustan ltd for Rs.75000 part settlement
10. Course fee for DIT(f/n) refund Rs.15000 and DCA (a/n) Rs.5000
11. Depreciation of furniture and fittings @ 10%
12. Computer stolen @ Rs.10000
13. Interest received from bank balance Rs.5000

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Accounts receivables - Definition

Accounts receivable refers to the amount that a company is entitled to receive from its
customers for goods or services sold on credit. In other words, it is the amount that your
customer owes you with respect to contractual obligations.

Accounts receivables are also known as debtors, trade debtors, bills receivables or trade
receivables.

Accounts payables – Definition

Accounts payable is any sum of money owed by a business to its suppliers shown as a
liability on a company's balance sheet. In simple words, when you buy goods or services with
an arrangement to pay later, such an amount till it is paid, is referred to as accounts payable.

Accounts payable is also called as bills payable and the total amount that a company is liable
to pay is shown as liability under the head ‘sundry creditor’ in the balance sheet.

What is the difference between accounts receivables and accounts payables?

Sound management of accounts receivables and accounts payables is crucial to assess a
company’s financial health. While the two types of accounts are recorded in more or less
similar way, it is imperative to keep in mind that one is an asset account and the other is a
liability. Now, with the definition above, it can easily be concluded that accounts receivable
is the money owed to your business by customers whereas, accounts payable is the money
you owe to the suppliers. This gives us a clear understanding of which account is recorded
under what criteria in the financial statement of a company. Since accounts receivable is the
money owed to you, this will be recorded under assets, and since accounts payable is the
money you owe, this will be recorded under liabilities.

Accounts Receivables Accounts Payables

Money owed to your business Money you own to your supplier
Current Asset Current Liability
Sundry Debtors Sundry Creditors

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How to record accounts receivables?

Recording of accounts receivables is extremely simple with TallyPrime. If you have a good
relationship with your parties and trust them, and have sold goods or services on credit,
TallyPrime takes care of tracking all your outstanding receivables from the parties. By
referring to the corresponding reports, you can simply follow up with your parties, when
needed, for recovery of the due amounts.

The following are journal entry to account and adjust the accounts receivables in the books of
account
When a sale is made on credit
Deepak Sales Corporation (Customer) 4,83,800
Cr Sales a/c 4,83,800
When a sale bill is paid
Dr Bank/Cash a/c 4,83,800
Cr Sundaram Pipes and Fittings a/c 4,83,800
Once all the relevant ledgers of your accounts receivables have been recorded, you can view
all your receivables at a glimpse. You can also change the view of these transactions as per
your preference.

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You can also view ledger-wise bills and understand the payment performance of your debtors
and keep a track of your receivables to maintain optimum cash flow for your business.

How to record accounts payables?

The outstanding payables report in TallyPrime gives you an overview of what your business
owes for supplies, inventory, and services. You can get an overview of the amount and the
creditors to whom you owe money and how much you owe each creditor and how long the
money has been owed. Managing your outstanding payables will help you to know the time-
to-time expenses, avoid overseeing the payments that you owe to the creditors, and help you
manage the cash-flow in your business.

When a purchase is made on credit

Crompton Greaves Consumer Electricals (Supplier) 30,03,550

Cr Purchase a/c 4,83,800

When the purchase bill is paid by you

Dr Sundaram Pipes and Fitting a/c 4,83,800

Cr Crompton Greaves Consumer Electricals (Supplier) 4,83,800

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Similar to the receivables report, TallyPrime gives you the liberty to choose a view based on
your choice. With pre-built configurations to customise viewing of reports, TallyPrime
allows you to analyse and slice and dice the reports the way you want.

With various options available you can see your credit period, maintain vouchers bill-wise for
a particular party and even settle bills, at a click of a button. When you make a purchase of
large amount and unable to pay at a time and have agreed to make partial payments in regular
intervals, you can split such purchases into multiple bills. This helps you to track the payment
breakup against the bills created and manage your outstanding payables systematically.

Example of accounts receivables

Let’s say on 1st August, 2020, Giri Enterprises sold goods worth 50,000 to Hinduja Traders
with a credit period of 30 days. From 1st August to the date the bill is paid, 50,000 will be
treated as accounts receivables against Hinduja Traders account.

Let’s say, on 15th Hinduja Traders paid 25,000 to Giri Enterprises. This will be reduced from
Hinduja Traders’ account. Post adjustment, the overall accounts receivable will be 25,000.

Likewise, when you sell on credit to different customers, it will be added to the overall
accounts receivable and when you receive from the customers, it will be reduced.

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Example of accounts payables

Giri Enterprises purchased goods worth 1,00,000 from Falcom Traders. Falcom Traders
offered a credit period of 30 days within which the bill should be paid by Giri Enterprises.

Here, till the date Giri Enterprises pays Falcom Traders, INR 1,00,000, it will be called as
accounts payables and be shown as a liability towards creditors in the balance sheet.

Managing your accounts receivables and payables helps businesses maintain their working
capital. While accounts receivables lead to the generation of cash in-flow in the financial
books, maintain a good relationship between you and your vendor and hold a good credit
score, accounts payables help in assessing the payment performance of debtors and improve
liquidity. Keep your accounts receivables and payables at an all-time steady with
TallyPrime.

Dr. J. Vinoth Kumar. Ph.D