MODULE NO: 05 ACCOUNTING SOFTWARE INTRODUCTION A financial accounts package keeps track of an organisation's finances by recording and processing transactions within a business. ‘At the centre of such systems, there is usually a general ledger, a facility for handling accounts payable and receivable, 4 payroll module, and a reporting function. Some accounting packages will also offer functions specifically for certain types of organisations or businesses. This introduction to accounting software will explain its main functions, benefits, and what solutions are available. ‘Accounting Software is vital for a business to fully understand their situation, determine the success of their business performance, and run a successful venture. To get the best out of your purchase, you will need to answer some simple questions, The answers will ensure that you can analyse the available options and select the solution with the best possible fit to your organisations. MEANING Accounting software is a fundamental application that allows an organization to record the flow of money for internal and external review and auditing. It is the primary tool for assessing the financial health of an organization and for meeting legal compliance through tools like general ledgers, account payables and ing. receivables, purchase orders, stock management, and bi TYPES ACCOUNTING SOFTWARE Generally, accounting software are classified based on the types of operations the business handles, and accordingly, they are classified under the following different categories BILLING/ INVOICING SOFTWARE ‘Accounting software in the operational field of invoicing/billing takes care of companies Basic billing activities. And they also serve the day-to-day tasks which a business undertakes including cheque writing and informing customers on their due payments etc., PAYROLL MANAGEMENT SYSTEM This category of accountng software India manages the companies’ payroll registers, performs an array of different tasks, including calculating employees’ salaries, cutting deductions, depositing the salary directly into'staff members’ bank accounts, producing tax forms and payslips and more. ERP SYSTEMS ‘This category of accounting software solution handles the operational portfolio that combines all systems used for product planning, material purchasing, inventory management and control, distribution, accounting, marketing, finance and Human Resource. __|ACCOUNTING SOFTWARE TALLY Tally is powerful accounting software, which Is driven by a technology called concurrent multi- lingual accelerated technology engine. It is easy to use software and is designed to simply complex day to dlay activities associated in an enterprise. Tally provides comprehensive solution around accounting principles, inventory and data integrity. Tally also has feature encompassing global business. Tally software comes with easy-to-use interface thus making it operationally simple. Tally accounting software provides a solution around inventory management, stock management, invoicing, purchase order management, discounting, stock valuation methodology, ete, ‘Tally accounting software also comes with drill down options, which can track every detail of transaction. It helps in maintaining simple classification of accounts, general ledger, agcounts receivable and payable, bank reconciliation, etc. ‘The technology employed by tally makes data reliable and secure. Tally software supports all the major types of file transfer protocols. This helps in connecting files across multiple office ions. Tally accounting software is capable of undertaking financial analysis and financial management, It provides information around receivables turnover, cash flow statement, activity consolidation and even branch accounting. ‘Tally accounting software is east to set up and simple to use. A single connection can support multiple users. It can be easily used in conjunction with the Internet making possible to publish Global financial reports Tally accounting software can seamlessly connect with various Microsoft applications. Benefits of Tally Accounting Software ‘Any business owner understands the importance of maintaining proper books of account, this practice ensures that finance for the company is always in order and are correct at all given points of time. Company should always be aware of its financial positions. Earlier, most of the businesses were employing manual practice in maintaining books of account, However, with the advent of modem information technology, this task can be performed by accounting software. Tally is one such all-powerful accounting software. ‘Tally accounting software provides a solution to all the problems real businesses have to encounter, Single software takes cae of ll asks requited for enterprise management, Accounting task such as records Keeping, accounts receivable and payable management and bank reconciliation are made simple through tally. Financial management is also made simpler under Tally software. The software allows management of finances across multiple locations can handle multiple curreney transactions, manage cash flow and interest payment. “Thus, Tally software is flexible, reliable, secure, easy to use and affordable.Features of Tally ‘The features of Tally are as follows Tally is largely considered the best because it is easy to use, has no codes, robust and powerful, executes in real-time, operates at high speed, and has full-proof online help. ‘Tally is also called multi-lingual tally software because Tally ERP 9 supports multi-languages. In ‘Tally, accounts can be maintained in one language, and reports can be viewed in other languages. Using the Tally, you can create and maintain the accounts up to 99,999 companies. Using the feature of payroll, you can automate the employee records management. ‘Tally has the synchronization feature, so the transaction which is maintained in, multiple locations offices can be updated automatically. Tally is used to generate consolidated financial statements as per the requirements of the company. Tally can manage single or multiple groups. ‘Tally software is used to handle financial and inventory management, invoicing, sales and purchase management, reporting, and MIS The feature of Tally customization makes the software, suitable for distinctive business functions. Creating a New Company In this section, we will learn how to create a company using a simple step by step methods. {he first step to get started is to ereate a company. In Tally, the creation of a company involves basic information about the company, books, and details of currency. HOW TO CREATEA COMPANY IN TALLY STEP 1: In tally, after login double click on the create company option under company information. The following navigation path is used to create the company in Tally: Gateway of Tally — Company Info —Create Company STEP 2: The following screen displays the company creation window STEP 3; Enter the “Company's Mailing Name”. This is an important field because it shows al] the printouts. This is shown on all printouts. Thus, it is an important field. STEP 4: Enter the “Company's Full Address STEP 5: Choose the “Name of the Country” as India from the given countries list. STEP 6: Choose the “State” from the given list of states. STEP 7: Update the “Company's Pin Code”, where it is located. STEP 8: Update the “Telephone Number" landline of the company. STEP 9: Update the “E-Mail id” and “Website” of the company. STEP 10: Update the financial year starting date of the company. In India, the financial year of the company starts on 1*! April and ends on 31% March. =—_———_— 4 STEP 11: Update the date from which accounting is allowed in Tally. Generally, this date and the starting date of the financial year are the same. But if the company has been formed on any other date ofthe year, that date will be mentioned. For example: If books have been set to begin from 1-Dee 2019, the Tally will not allow the entries for the 1-April-2019 to 30-Nov-2019, STEP 12: If we want to use Tally Vault, enter a password, Itis a secure feature that encrypts data STEP 13: Repeat the password of Tally Vault, Tally ERP matches this password with the previously entered password to ensure that the password we typed previously Was the intended password, which means there is no typing error, Here the bar indicates the password strength. Strong passwords indicate with,a green bar. A strong password is better. Basie Currency Information Many companies transact in more than one currency. Such transactions have to be recorded either in the base (home) currency or foreign currency. At times you need to record the transaction in the foreign currency itself when you maintain the balance of the concemed account in foreign currency. Note: Tally.ERP9 uses the term base currency for the currency in which your books of accounts are maintained. Forelgn Exchange Is used interchangeably with forelgn currency. The base currency Is specified while creating the company. } ‘Tally. ERP 9 makes it easy to manage multiple currencies, automatic calculations of exchange rates, automatic conversion of any currency used to record a transaction (o the currency of the account, etc, To record transactions in multiple currencies, you have to enable Multi Curreney feature in Tally. ERP9. To enable multi-Currency feature 1. Go to Gateway of Tally ——> F11: Features——> Accounting Features 2, Set the option Allow Multl-Currency? (o Yes. Once the Multi-Currency feature is enabled in Accounting Features, you can view, the Currencles menu from Gateway of Tally — Accounts Info. > Currencies. To create currency 1, Go to Gateway of Tally — Accounts Info. - Currencies — Create + Symbol: Enter the currency symbol. This symbol appears in your reports, wherever applicable * Formal Name: In this field enter the name of the currency. US Dollars * Number of Decimal Plac : Enter the number of decimal places for the currency in Number of Decimal Places. * Show Amounts In Millions: Tally. ERP 9 has two formats for displaying an amount, viz., in millions and in lakhs. 1000000 (one followed by six zeroes) in millions format would appear as 1,000,000 and lakhs would—— appear as 10,00,000. Select the required parameter inthis fie. If you select No, the amounts will appear in Lakhs, by default. + Is Symbol SUFFIXED to Amounts: Set this field to Yes for the symbol appear after the amount. Sett to No, for the symbol to be prefixed to the amount. « Put a SPACE between Amounts and symbol: Set this field to Yes to apply a space between amounts and symbol. + Symbol for Declmal Portion of Amount: In this field enter the Symbol for Decimal portion of currency. Decimal Places for Printing Amounts in Words: In this field enter the number of decimal places for printing the amounts in words. 2. Press Enter to accept and save. Company features and Inventory features Using the Inventory Features, you can enable various options required for making transactions in your business. ‘To enable the inventory features 1. Go to Gateway of Tally > F11: Features — F' : Inventory. 2. Enable the required options 3, Press Cirl+A to accept WORKING IN TALLY: GROUPS Groups are collection of ledgers ofthe same nature. Account groups are maintained to determine the hierarchy of Ledger Accounts, which is helpful in determining and presenting meaningful and compliant reports. Using this you can generate reports, which are meaningful as well as compliant with laws. [Atthe highest level, accounts are classified into Capital or Revenue - and more specifically into Assets, Liabilities, Income and Expenditure. Tally. ERP 9 provides you with 28 pre-defined Groups. Of these 15 are Primary Groups and 13 are Sub-Groups. You can also create your own groups, either as Subgroups or Primary groups. Groups can be sub-classified to an unlimited level to give a virtual accounting tree. The lowest level would be the Ledger Account, All Voucher entries are passed using ledgers. You can create the required chart of accounts. You can group the Ledger accounts under the required Groups atthe time of ereating the chart of accounts oF you can alter them at any time. Ledgers A ledger is the actual account head to identify your transactions and are used in all accounting vouchers, For example, purchase, payments, sales, receipts, and others accounts heads are ledger accounts, Without a ledger, you cannot record any transaction. |COO Predefined Ledgers All ledgers have to be classified into groups. These groups and ledgers are classified into profit and loss or balance sheet. There are two pre-defined ledgers in Tally. ERP 9: * Cash ledger « Profit and loss account ‘CASH LEDGER PROFIT AND LOSS LEDGER “The cash Tedger Is grouped under cash in | The profit and loss account ledger is grouped under primary. hand. ‘You can enter the opening balance as on the | The previous year's profit or Toss is entered as opening day the books begin, balance of the ledger. The balance entered is the opening profit/loss. tis shown in the balance sheet as opening of the profit and loss account in the liabilities. This ledger can be altered and deleted This ledger can not be deleted but it can be modified. Create Ledgers one-by-one 1. Go to Gateway of Tally > Accounts Info. > Ledgers > Create (Single Ledger). 2. Enter the Name of the ledger account, Duplicate names are not allowed. 3, Enter the alias of the ledger account, if required. You can access the ledgers using the original name or the alias name. 4, Select a group category from the List of Groups. 5, Enter the Opening Balance. The opening balance is applicable when the ledger is an asset or a liability, and also if it has a balance in the account as on the date of beginning of books. Display, Alter and Delete Ledgers ‘You can alter any information of the ledger master with the except for the closing balance under the group’s tock-in-hand. Display/alter a ledger * Goto Gateway of Tally > Accounts Info. > Ledgers > Display or Alter. Modification of account ledgers is possible for single ledgers as well as multiple ledgers. However, for multiple ledgers, all the fields are not available for alteration. Delete a ledger + Go to Gateway of Tally > Accounts Info. > Ledgers > Alter > Press Alt+D. Button options in Ledger masterBUTTONS KEYS DESCRIPTION AND USAGE G: Groups Guilt G | Click to create account Group from the Ledger creation screen. E: Currency Cir | Click to create Currency from the Ledger creation screen. ‘S: Cost Category Gils S | Click to create cost category from the Ledger creation screen ©: Cost Centre Cir +C | Click to create Cost Centre from the Ledger Creation Screen B: Budget Cirl+ B | Click to create Budget from the Ledger Creation Screen V: Voucher Types Tire V | Click to create Voucher types from the Ledger creation screen. CURRENT LIABILITIES AND CURRENT ASSETS LEDGERS ilities and other minor liabilities can be created Accounts like Outstanding Liabilities, Statutory Li directly under Current Liabilities and Assets can be classified as Current assets and Fixed assets. To create Fixed Assets ledger: 1. Go to Gateway of Tally > Accounts Info. > Ledgers > Create 2. Enable Inventory values are affected option if you maintain accounts with inventory. However, you can use this option for accounts like Customs Duty, direct expenses related to purchases such as Freight Inwards and so on. 3, Enable Cost Centres are applicable to allocate transactions to a particular Cost Centres. You have to set the option Maintain cost centres to Yes in F1: Accounting Features, to get this option in the Ledger creation screen. Note: Set the option Activate interest calculation (o Yes to calculation of interest automatically based on the interest rate and style of calculation specified for this ledger account. Set the option Use advanced parameters to Yes to use advanced parameters when interest rates change from time to time. TAX LEDGER Tax Ledgers should be created under Duties and Taxes group which contains all tax accounts like VAT, CENVAT, Excise, Sales and other trade taxes and total liability. 1, Go to Gateway of Tally > Accounts Info. > Ledgers > Create. 2. The option Type of Duty/Tax is based on statutory compliance of the company, For Indian statutory, by default, Others is displayed, Depending on features in FA: Statutory & Taxation, more options can be included in the Type of Duty/Tax. 3, Enable Inventory values affected option if you maintain accounts with inventory, However, you can use this option for accounts like Customs Duty, direct expenses related to purchases such as Freight Inwards and so on. 4. Enable Cost Centres are applicable to allocate transactions to a particular Cost Centre, you have to set the option Maintain cost centres to Yes in Fil: Accounting Features, to get this option in the Ledger creation screen.r interest automatically based on the interest rate and style of calculation specified for this ledger account. Set Note: In Fil; Accounting features, set the option Activate interest calculation to Yes to calculation of the option Use advanced parameters to Yes to use advanced Parameters when interest rates change from time to time. 5 Select the Percentage of Calculation the rate of tax e.g., 5%, 10%, 12.5% ete. You can use an automatic discount calculation facility by specifying a negative percentage in this field. The Group Duties and Taxes is used for automatic tax calculation. 6. On entering a percentage. a new field Method of Calculation is displayed. From the Method of Calculation, select appropriate options to calculate the Tax/Duty. Different types of vouchers ‘There are numerous types of accounting voucher in Tally ERP 9 which help in executing various important accounting tasks. Here, we have listed the accounting voucher in Tally examples: SALES VOUCHER IN TALLY Sales voucher is one of the most used accounting vouchers in Tally. Users can create this voucher in two different formats; as an invoice, or as a voucher. The invoice format enables users to print a copy of invoices for customers. The voucher format can be used to store transactional records electronically and it doesn’t need a paper copy for the customer. PURCHASE VOUCHER IN TALLY Like sales vouchers, purchase voucher belongs to the accounting category and is available in both invoice and voucher formats. Editing and modifying receipt entries in Tally are easy, as its voucher format helps accountants to do so quickly. Moreover, Tally also helps in converting a purchase voucher in the invoice format to the voucher format, PAYMENT VOUCHER IN TALLY ‘The payment voucher is another accounting voucher in Tally that helps create and print cheques against the order, Once the payment voucher gets passed, the corresponding cheque can be printed by clicking on “banking” and then on ‘cheque printing’. RECEIPT VOUCHER IN TALLY When accountants make a receipt voucher in Tally, all the invoices which have pending payments pop up asia reminder. As soon asthe client makes the payment through any mode the receipt can be updated with the payment method details. In addition, all the details ofthis receipt canbe sent tothe customer. Thus, receipt vouchers make payment monitoring easy. CONTRA VOUCHER IN TALLY Contra vouchers are used to withdraw or deposit money in banks with the help of instruments such as cheques/ATM/DD or e-transfer to another account through NEFT/ IMPS. With the help of contra vouchers in Tally, accountants can also generate deposit slips for recordkeeping.>| Tally also provides exact currency denominations to monitor and print the deposit slip while also depositing the amount. JOURNAL VOUCHER IN TALLY Unlike other vouchers, a journal voucher in Tally can come under the roof of both accounting and inventory vouchers. There are multiple uses of a journal voucher in Tally depending on the type of business it is being used for. It can be found as an optional voucher in Tally to make sales and purchase by accountants. Professionals can also use it for the adjustment or transferring of stock from one warehouse to the other. CREDIT NOTE VOUCHER IN TALLY Credit note voucher in Tally has to be enabled manually. It is usually enabled by pressing FI and they manually configuring its features. Credit note can also be passed by checking the original invoice. When a client is selected, Tally shows the transaction invoice history that have been raised. DEBIT NOTE VOUCHER IN TALLY Debit note voucher is one of the most-used types of voucher in Tally ERP 9, that is used for managing purchase returns. With the help ofthis, accountants can generate a debit note for invoicing as well as a voucher, Like credit note voucher in Tally, debit note too can easily be configured by pressing FI and configuring it manually: TRAIL BALANCE ‘Atrial balance is a summary of all ledger balances, and helps in checking whether the transactions are correct and balanced. If journal entries are error-free and posted correctly to the general ledger, the total of all debit balances should be equal the total of all credit balances. Note: By default, the Trial Balance repor will be generated as on the date of the last voucher entry ‘You can change the date to view the report for the required period. View Trial Balance 1. Go to Gateway of Tally > Display > Trial Balance. 2. Press F12 to configure the Trial Balance, as required, Note: As per accounting principles. the Trial Balance does not display the closing stock. 3. Press Ctrl+A to accept. Statements of Accounts are derived from the transactions recorded in the books of accounts. In Tally. ERP 9, they are generated for cost centres and ‘outstanding accounts Outstanding’s ‘The Outstanding Statement in Tully. ERP 9 displays the status of receivables and payables of the business concern. These are the two important components of the working capital of every business entity. Receivables Both form a major component of current whereas payables form a component of current liabilitc__ =| determine the short-term liquidity and financial health of the company considerably. Therefore, effective control of the receivable and payable is a must for the financial soundness of a business concern. ‘The Outstanding Statement Display in Tally ERP 9 can be any one of the following Receivables This statement displays the sundry debtor's bill-wise balance tll date. It is to be noted here that since this statement displays the information bill by bill, the same needs to be activated while recording the transactions in Tally. ERP 9. This statement provides the following information: * The effective date of the invoice. + The reference number given in the invoice while providing the bill-wise details. ' * The party name and the outstanding balance of a particular invoice. Payable Payable outstanding displays the outstanding bill-wise balance of the sundry creditors. Again, this information can be viewed only on activating and entering the bill-wise details while recording the transactions, The information provided is similar to the receivables outstanding. ‘The uses of a payable outstanding statement are as follows: +The pending party-wise bills and the number of days by which they are over-due can be viewed. The interest liability that is likely to arise can be estirhated with the help of the number of days over-due. The credit period allowed by the party can be analysed and the need for arranging short term funds can be evaluated. LEDGER ‘ ‘This summarises and displays the outstanding balance information with respect to each party. Thus, the bill status ofa particular party account can be viewed with the help ofthis statement. Some of the uses of a ledger outstanding statement are: + Te displays information similar to the receivable and payable outstanding statements, but with respect [0 & particular party ledger. Thus, this statement can be put toa similar use as Stated above, Ic facilitates the viewing of the address and contact details of the party selected, by using the Alte € button. vu gan be used to generate reminder letters to be sent to the party specifying the details of outstanding bills. Itis one of the very useful features in Tally. ERP9 used with the Print Option. GROUP: Ttdisplays.a summarised view of the balances of all the ledgers under a particular group. For example, Sundry Debtors Group will display all the party ledgers with their agcount balances. It can further be drilled down to each account to show the bill-wise outstanding for that account. Some of the uses of a group outstanding statement are as follows: |—_ + Another group can be displayed in a column using the Alt+C: New Column button on the screen and * Summarised information can be viewed and analysed for euch group. comparisons can be made * Group details can be printed and submitted as a supporting schedule to the financial statements. "The detailed break-up of parties under the chosen group and their pending balances can be viewed.