SYLLABUS

Unit 1: Maintaining Chart of Accounts in ERP:

Introduction - Getting started with ERP - Mouse/Keyboard Conventions -

Company Creation - shut a company Select a Company. Alter Company Details -
Company Features and Configurations. F11: Company Features-F12:
configuration-chart of Accounts – Ledger-Group-Ledger Creation - Single Ledger
Creation Multi Ledger Creation - altering and displaying Ledgers-Group Creation-
Single Group Creation - Multiple Group Creation Displaying Groups and Ledgers
Displaying Groups -Display of Ledgers Detection of Groups and Ledgers - P2P
procure to page.

Unit II: Maintaining Stock Keeping Units (SKU):

Introduction - Inventory Masters in ERP - Creating Inventory Masters - creation of

Stock Group Creation of Units of Measure - Creation of Stock Item- Creation of
Godown defining of Stock Opening Balance in ERP Stock Category Reports.

Unit III: Recording Day-To-Day Transactions in ERP:

Introduction Business Transactions Source Document for Voucher-Recording

Transactions in ERP- Accounting Vouchers - Receipt Voucher (F5)-Contra
voucher (F4) - Payment voucher (F5) Purchase voucher (F9) Sales. Voucher (F8)
Debit Note Voucher Credit Note (Ctrl+F8) Journal Voucher (F7).

Unit IV: Accounts Receivable and Payable Management:

Introduction - Accounts Payables and Receivables - Maintaining Bill wise Details -

Activation of Maintain Bill wise Details Feature New Reference - Against
Reference Advance - on Account - Stock Category Report - Changing the
Financial Year in ERP

Unit V: MIS Reports:

Introduction - Advantages of Management Information Systems - MIS Reports in

ERP - Trial Balance - Balance Sheet - Profit and Loss Account - Cash Flow
Statement - ratio Analysis - Books and Report - Day Book - Receipts and
Payments - Purchase Register - Sales Register - Bills Receivable and Bi8lls
Payable.

UNIT-1

Maintaining Chart of Accounts in ERP:

1Q. Define computerized accounting? Explain the features of computerized

accounting?

History of Computerized Accounting

The most common method of keeping the financial records of a company was
manually. A bookkeeper kept the journals, maintains ledger, prepares trial balance
and also prepares final accounts using best of his knowledge, experience and
judgment. In later years, an accounting machine, which was capable of performing
basic bookkeeping functions, such as tabulating in vertical columns, performing
arithmetic functions, and typing horizontal rows was used. Similarly billing
machines was also developed which was designed to typewrite names. addresses,
and descriptions, to multiply and extend, to compute discounts, and to add net
total, posting the requisite data to the proper accounts, and so to prepare a
customer's bill automatically once the operator has entered the necessary
information. Later with invent of personal computers, many accounting software
were developed which maintaining various accounting records. But, earlier
accounting software was very comprising of many modules and information was
recorded by assigning different complex, different ledgers. Moreover, these
systems were capable of recording only basic accounting information. Advanced
functions like ratios, tax calculation, inventory records etc. were not available.
Early accounting machines were marvels of mechanical complexity, often
combining a typewriter and various kinds of calculator elements. The refinements
in speed and capacity made were capable of complex. to use but also capable of
performing not only basic accounting operations but can also perform advanced
functions like budgeting, taxation, inventory control etc.

Computerized accounting meaning

Computerized Accounting System refers to a system wherein the accounts of the
business are maintained using a computer system. With the increasing number of
transactions, the manual method of maintaining accounts has become
unmanageable. That is why, firms are replacing manual method of accounting by
computerized accounting.

Features of Computerized Accounting System

The Computerized Accounting System is based on the concept of database. A

computerized accounting system comprises the following main features.

1. Accounts are maintained using a computer software known as accounting

software e.g. Tally, Quick books etc.

2. Human intervention in accounting process in minimum.

3. Accountant has to record only voucher entry in computerized accounting

system, rest accounting procedure is completed by software itself.

4. It generates different accounting reports quickly.

5. It facilitates grouping of various items.

6. It generates a print out of purchase and sales invoices.

7. It is capable of generating GST returns and records.

8. It is capable of maintaining inventory information also.

2Q. Explain the advantages and disadvantages of computerized accounting?

Computerized accounting meaning

Computerized Accounting System refers to a system wherein the accounts of the

business are maintained using a computer system. With the increasing number of
transactions, the manual method of maintaining accounts has become
unmanageable. That is why, firms are replacing manual method of accounting by
computerized accounting.
Advantages:

1. Computers play a unique role in the area of accounting: Computerized

accounting offers several advantages vis-a-vis manual accounting these are
summarized as follows;

2. Speed: Computer being an electronic device will work faster than human
beings. It turns out large quantum of work with in no time. It converts data into
required information at high speed.

3. Accuracy: The possibility of error is eliminated in a computerized accounting

system because once a particular program is fed, all the results based on such
program would be hundred percent accurate.

4. Reliability: The computer system is well-adapted to performing repetitive

operations. They never feel tiredness, boredom or fatigue. As a result, computers
are highly reliable compared to human beings.

5. Up-to-Date Information: In computerized accounting ledger posting, trial

balance preparation and maintenance of final accounts is done by computer
automatically. So, the accounting records are updated automatically as and when
accounting data is entered and stored.

6. Reduced Paper Work: In computerized accounting system transactions are

computer hard disk, which reduces the paper work. This not only helps in
reduction of paper work but also helps in conservation of environment.

7. Economy: Computerized accounting cheaper when compared with human

labour. Machine once purchased will be lasting for many years but human labour is
to be paid continuously.

8. Legibility: The data displayed on computer monitor is legible. This is because

the characters (alphabets, numerals, etc.) are type written using standard fonts. This
helps in avoiding errors caused by untidy written figures in a manual accounting
system.

9. Timely Reporting: The computerized accounting system facilitates the

generation of the Management Information System (MIS) reports at a very high
speed which enables the management to take quick decisions.
10. Security of Data: Under computerized accounting, the accounting data is safer
in comparison to manual system. Under computerized system secrecy of data can
be maintained by using a password, which means only authorized person will have
access to the data.

11. Large Storage Capacity: The computers have large storage capacity, so
accounts of all the past years are available on one single hard disk, which makes
accessing past information easy.

12. Real Time User Interface: Most of the automated accounting systems are
interlinked through a network of computers. This facilitates the availability of
information to various users at the same time on a real time basis (that is
spontaneously).

13. Scalability: Computerized accounting system is very useful when scale of

business is very large and the number of transactions is very high. Computer
system can very easily handle large scale data.

Disadvantages:

1. Loss of Data: If adequate controls are not built and, where built, are not
followed, it can lead to loss of data. It is important to take back-ups at regular
intervals to avoid such a situation.

2. Data Corruption: The data can get corrupted through viruses that may come in
through the internet or the use of external input devices without scanning them for
viruses.

3. Limitations of Software: The software is developed on the basis of the

experiences of the team of developers. As such, it may not be able to deal with a
specific problem that may arise.

4. Staff Opposition: Whenever computerized accounting system is started in the

concern, generally there is resistance from existing accounting staff, because they
feel that their importance in organization will be reduced and they may lost their
job also

5. Obsolescence: The rate of obsolescence is very high in computer industry.

There is a culture of here today, gone tomorrow' in the computer industry.
Everyday there is latest version of some software, which may or may not be
compatible with old software. So firm has to regularly update their system.

6. Risk of Frauds: In computers it is very difficult to detect the crimes as there are
many ways in which a person can commit the crime. Many a time hackers finds the
password of others and commits the crime. So, security planning is very important
in computerized accounting.

7. Lack of creativity and flexibility: As computers do not have own intelligence.

computer software lacks the creativity. Accounts are maintained only according to
the software guidelines. Moreover, computerized accounting system lacks
flexibility also.

8. Easy to copy and spying: Data in computers can be easily copied using pen
drive or other storage device. So, there are more chances that accounting staff may
copy the data and may leak the information to competitors.

3Q. What are the differences between Manual Accounting and Computerized
Accounting?

Manual Accounting Introduction

Manual accounting systems can still provide an effective and useful way of
recording business transactions and can prove an efficient accounting information
system specially for small business owner, even in todays world where
computerized accounting systems slowly but surely taking over paper based
systems. Manual accounting information systems are mostly used by very small
businesses. The process of accounting includes four basic steps i.e. journalizing the
transactions, posting them to ledger accounts, preparing trial balance, preparing
final accounts. If all these steps are carried out by a person, then such system of
accounting is called as Manual Accounting.

Manual Accounting meaning

Manual accounting is the system in which we keep physical register of journal and
ledger for keeping the records of each transaction

Computerized Accounting meaning

Computerized Accounting System refers to a system wherein the accounts of the
business are maintained using a computer system. With the increasing number of
transactions, the manual method of maintaining accounts has become
unmanageable. That is why, firms are replacing manual method of accounting by
computerized accounting.

Basis of Manual Accounting Computerized Accounting

difference
1. Definition. Manual accounting is the In this system of accounting,
system in which we keep we use computer and
physical register of journal different accounting software
and ledger for keeping the for record of each
records of each transaction transaction.
2. Calculation. In manual accounting of all In computerized accounting,
calculation of adding and our duty is to record the
subtracting are done manually. transactions manually in the
For example, we we find the database. All the calculations
balance of any ledger account. are done by computer
we will calculate the debit and system. We need not to
credit side and then we will calculate each account's
find its difference for showing balance, balance, it is by
balance. calculated automatically
computerized accounting
system
3. Ledger In manual accounting, we Computerized accounting
accounts. check the journal and then we system will automatically
transfer figures to related process the system and will
accounts' debit or credit side make all the accounts ledgers
through manual posting because we have pass the
voucher entries under its
respected ledger account.
4. Adjustment Both adjustments journal Only adjustment entries will
entries record. entries and its posting in the pass in the computerized
ledger accounts will be done accounting system, posting
manually one by one in the ledger will be done
automatically.
5. Financial We have to make the financial We need not prepare
statements. statements manually at the end financial statement manually,
of the Financial Year financial statements will be
 prepared automatically after
each voucher entry in the
system.
6. Scope of Only financial aspect is Record of inventory can also
transaction. recorded. No record is be maintained in
maintained for inventory computerized accounting.
7. Rate of In manual accounting there is In computerized accounting,
obsolescence. no obsolescence. Accounts are rate of obsolescence is very
maintained traditionally using high. Continuous up
copy and pen. gradation of both computer
and software is required
8. Risk of loss of Thre is less risk of loss of data There is more risk of data.
data. as there is no virus problem or
crash of system
9. GST Returns All GST records and returns GST records and returns
and records. are maintained manually thus Are generated automatically,
making the task difficult. thus saving the time
10. suitability It is more suitable for small It is more suitable for large
scale concers scale concers
11. Reporting Financial reports are generated Financial statements are
time only at end of the financial prepared after every
year. Moreover, the process of transaction. Moreover,
preparing financial statements reporting time is very less.
is very time consuming.
12. Modification Modification of original entry Any modification in original
of original data. is very difficult. entry is possible in
computerized accounting
system

GETTING STARTED WITH ERP

4Q. Explain in detail how would you run Tally ERP9.

INTRODUCTION

Modern technology allows accounting professionals to handle their work with

more flexibility and mobility. Computerized systems help business firms to record
financial transactions which can later be tracked anytime anywhere. Accounting
firms can now avail benefits like easy and efficient data collection, improved data
quality, speedy data validation and many more. There are many accounting
software available in market which can help in computerized maintenance of
accounts.

Tally 9 is the wonderful accounting software available in market not only in India
but also in number of foreign markets. It got good reputation in the field of
business. Tally is the world's fastest and most powerful concurrent Multi-lingual
business. Accounting and Inventory Management software. Tally is quick to
install, simple to learn and is designed to meet the needs of small, medium and
large businesses. It provides an integrated business solution involving Sales,
Finance, Purchase, Inventory, Manufacturing, GST and Payroll besides
tremendous reporting, data synchronization, remote capabilities and so on.

Tally is capable to record. different companies' creation, display and alteration. It

can record all ledger accounts under different head or master accounts. Tally is not
only simple to use but also a very secure system to use. There are a number of
security options in Tally which keeps the data secure. It not only helps in recording
the information but also helps in decision making and future planning by providing
number of ratios and other statements like budgets etc.

We can run Tally either by clicking on Tally icon on the windows desktop or
starting it from windows explorer to get first screen of Tally which is shown
below,

Tally. ERP 9 Start-Up

The following are the two methods where we can start tally. ERP9.

Step-1: Click on start on desktop

Step-2: Select Program

Step-3: Click on Tally. ERP9.

OR

Double click on the Tally ERP 9 icon on the desktop.

The welcome screen Tally ERP 9 power of simplicity turns up while the software
loads. As soon as Tally ERP9 startup screen appears user can start exploring Tally.
ERP9.

Tally ERP 9 start-up screen is as follows

Components of Tally ERP 9 Screen

The following are the components of Tally. ERP 9 screen which is displayed
above.

1. Title Bar

Title bar displays the name of the Tally. ERP 9 version number and it is located on
the top of the window. It also displays minimize, maximize and close buttons.

2. Horizontal Button Bar

With the help of horizontal button bar we can select the language key, keyboard
language and Tally. ERP 9 Help.

3. Gateway of Tally
Gateway of Tally shows menus, screens, reports and accepts the choices and
options made by us inorder to display required information.

4. Close Button

Close button will carryout the standard windows operating systems function
(windows 95 onwards) which enables us to minimize Tally. ERP 9 and deal with
another programs. Click on Tally. ERP 9 icon on the task bar to restore it.

5. Buttons Tool Bar

Buttons tool bar shows the buttons which will allows us to interact quickly with
Tally. ERP 9 we can see only the buttons which are related to the present task.

6. Calculator Area

Calculator area will helps us to calculate functions.

7. Info Panel

Info panel will shows version number, licence details, configuration details.

8. Task Bar: It is used to display the task of Tally ERP 9.

5Q. What are the Mouse and Key board conventions in Tally ERP9?

MOUSE CONVENTIONS INTALLY:

1. Click: Press the left mouse button.

2. Double-click: Press and release the left mouse button twice, without moving the
mouse pointer off the item.

3. Choose: Position the mouse pointer on the item and click the left mouse button.

4. Select: Position the mouse pointer on the item and double- click the left mouse
button.

5. Press: Use the keys on the keyboard in the combination shown.

Keyboard Conventions in Tally ERP 9

The following are the keyboard conventions used in Tally. ERP 9,

1. (Alt + F1) F1: Detailed/Condensed

With the help of this key we can add extra level of details to the report or
condenser the report.

2. F2: Period

We can modify the report duration by mentioning from/to dates.

3. F3: Company

In case if we have more than one company to be selected then this button will
allow us to switch from one company to another in order to view the data of the
new company in the current screen format.

4. F4: contra

contra voucher helps user to make an entry that is related cash and bank both. Like
cash deposited or withdrawals from bank. contra voucher is used for fund
transfers between cash and bank accounts only.

5. F5: payment

All transactions related to payment by cash or bank are recorded in payment

voucher.

6. F6: Receipt

All inflow of money in cash or bank are recorded through receipt voucher.

7. F7: Journal

Journal voucher mode is used to record special transaction which cannot be

recorded using contra, payment, receipt, purchase, sales vouchers etc. some of the
examples of such transactions are Adjustment entries, outstanding and prepaid
expenses etc.

8. F8: Sales
Sales voucher is used to record all entries related to sales. Both goods of sales and
services can recorded in sales voucher.

9. F9: Purchase

Purchase refers to Goods purchased by business with the objective of sales or for
use in the production of goods for sales. Thus every item bought in business is not
recorded in purchase. For example purchase of furniture for the purpose of use in
business.

10. Ctrl+F8: Credit Note

Credit Note is used to credit a particular party’s account for sales returns.

11. Ctrl+F9 Debit Note

Debit Note is used to debit a particular party’s account for purchase returns.

12. F11: Company Features

This button deals with setting the options which will influence the voucher entry.

13. F12: Configure

This button is used to view reports and allow us to specify the report specific
options.

14. (Alt + F12) F12: Range

With the help of this button, we can extract information from the displayed data
depending on monetary values.

15. (Ctrl + F12) F12: Value

With the help of this button we can filter vouchers

16. New Column (Alt + C)

By using this button we can compare the information in the report by adding and
displaying another columns.

17. Alter Column (Alt + a)

The details which were added previously to new column can be modified by using
this button.

18. Del Column (Alt + d)

With the help of this button, we can delete the column which is not required in the
report.

19. Auto column (Alt + n)

With the help of this button we can add multiple number of columns to a report.

6Q. Explain the steps to create a company in Tally ERP 9?

Meaning of company in Tally:

The concept of 'company' in Tally is very different from the term company in legal
or statutory sense, which is used for Joint Stock Company. In Tally the term
company can be used for any form of organization. The term company in Tally is
used for creation of any entity. This term in context of Tally stands for any entity
for whom a separate set of books of accounts is maintained. It may be a company,
par in software. partnership firm, individual organization even a branch office for
which a separate set of account books is maintained for accounting. For each entity
you create a profile which is termed as "COMPANY" in Tally.

STEPS TO CREATE COMPANY IN TALLY:

Step1. Open Tally Software.

Step2. If you are opening Tally ERP 9,First time after installation, you will be
landed to a menu called company info menu. (If you are in Gateway of Tally Press
Alt+F3 to get that menu).

Step 3. Select Create Company option in the menu and press enter key.

Step 4. The screen dispIayEed in-front of you is company creation screen.

Step 5. Type the name of the company address, Financial year begins and all other
details asked by the creation screen.
Step 6. Press Enter Key, Finally the program will ask you the confirmation to
Save, Yes or No.

Step 7. To save and create company do Press Enter Key, Press Y Key or click on
Yes. The program will create a company and you will be entered into it.

CREATION OF COMPANY IN TALLY:

Whenever we want to maintain accounts in Accounting Software for a particular

entity, the first step is to create the record of that entity in the software package.
This is known as creation of company. Tally provides the facility of creating any
number of companies in Tally. It means in one Tally package we can maintain
accounts for any number of business entities. For that we just have to create that
entity in Tally.

In this screen, enter all the details asking by software to create a company. These
details will be used in your report printing, and for complying statutory
requirements. Let's examine each option in the list.

1. Directory: This is the data path, where Tally ERP9 store company data. You
can change it if required. But the cursor by default rests on second option 'Name'.
Because normally there is no need to change the data directory if you are taking a
regular data backup by default Tally data will save in C:\Users\Public\Tally ERP9\
Data Keep it same recommended.

2. Name: Name of your company.

3. Mailing Name: If you have different mailing name enter that name here.

4. Address: Enter Address of the company.

5. Country: Country name where your business exists.

6. State: Enter state name, in which business is carries.

7.Pincode: The Pin code of the area.

Contact Details

Enter contact details like

1. Phone No. 2. Mobile No. 3. Fax No. 4. Email 5. Website details.

Books and Financial Year Details

1. Financial Year Begins From: Normally financial year starts from 1st April and
ends at 31st March. But in some cases starts from 1st January to 31st December.
Enter whatever your case is.

2. Book beginning from: In most cases book beginning date is the financial year
starting date, but sometimes it different like, starting a company in the middle of a
financial year and migrating from manual accounting to Tally ERP9 may change
the book beginning date. Enter the book beginning date here.

Security Control:

1. Tally Vault password: If you are giving password in this option, The Tally
ERP9 data will encrypted and losing password will render data unusable.

2. Use Security control: This is another section where administrator can be

created, administrator can create users and define their rights, tracking their
activity in Tally ERP9. Enable by typing yes will create some more option in the
screen. Enter name of Administrator and password here.
Base Currency Information

Under this option, the currency details of selected country will populated
automatically. Like Base currency symbol, Formal name of currency etc, change if
your are dealing with different currency.

1. Base Currency Symbol: Country currency symbol appears () as we selected

India as Country.

2. Formal Name: The full name of the Currency display in this option which INR
shown in this Column.

3. Suffix Symbol to Amount: By enabling this option, currency symbol will

display just before the amount in reports and data entry columns and rows.

4. Add space between amount and symbol: This put a space in between amount
and symbol.

5. Show amount in millions: For larger companies dealing with big figure, this
option is useful.

6. Number of decimal places: If you are dealing with fraction of currency number
of decimal places used to show the fraction of currency, normally two.

7. Word used to print decimal portion of amount: This is used in While

priniting the fraction name like cent, paisa etc.

8. Decimal place for printing amounts in words: Here you can mention the
decimal places to print in report.

7Q. Explain the procedure to Alter and Delete company in Tally ERP9?

Meaning of company in Tally:

The concept of 'company' in Tally is very different from the term company in legal
or statutory sense, which is used for Joint Stock Company. In Tally the term
company can be used for any form of organization. The term company in Tally is
used for creation of any entity. This term in context of Tally stands for any entity
for whom a separate set of books of accounts is maintained. It may be a company,
par in software. partnership firm, individual organization even a branch office for
which a separate set of account books is maintained for accounting. For each entity
you create a profile which is termed as "COMPANY" in Tally.

Alter the company in Tally ERP9

In Tally we have the option of Alteration of the company. By Alter of company we

mean making some change in profile of some existing company in the Tally. Such
change could be related to any data which we entered at the time of creation of
company such as name of the company, change in address of company, change
from accounts with inventory etc.

Following are steps in alteration of company

Step 1: From Gateway of Tally press Alt+F3 to select Company Info option.

Step 2: Select Alter option from Company info

Step 3: After selecting Alter option the following screen will display on the screen.
Step 4: Select the name of the company from the list of company which is
displayed on the screen. After selecting company the following screen will be
display.

Step 5: Move the cursor on the specific field and Alter the information and then
press Crtl+ A or Enter button to save the changes.

DELETE THE COMPANY IN TALLY

Deleting a company is the thing that user should take more care about. Once
deleted company cannot be recovered if user do not have back-up of data. When
we delete a company, all the entries, voucher or other records entered in Tally are
also deleted.

Following are the steps in Deleting of a Company.

Step 1: From Gateway of Tally press Alt+F3 to select Company Info option.

Step 2: Select Alter option from Company info

Step 3: After selecting Alter option the following screen will display on the screen.
Step 4: Select the name of the company from the list of company which is
displayed on the screen. After selecting company the following screen will be
display.

Step 5: Press Alt+D to delete the selected company. The following screen will
display.
Step 6: Press Enter button or Yes to delete company.

Then again a dialog box will be opened asking you like “Are you sure?”

Step 7: Press Enter key or Ctrl+A to finally delete the company.

8Q. What are the steps to shut and select company?

Meaning of company in Tally:

The concept of 'company' in Tally is very different from the term company in legal
or statutory sense, which is used for Joint Stock Company. In Tally the term
company can be used for any form of organization. The term company in Tally is
used for creation of any entity. This term in context of Tally stands for any entity
for whom a separate set of books of accounts is maintained. It may be a company,
par in software. partnership firm, individual organization even a branch office for
which a separate set of account books is maintained for accounting. For each entity
you create a profile which is termed as "COMPANY" in Tally.

SHUT THE COMPANY IN TALLY

Shutting the Company means just closing the company after data entry is
completed. Again when a person needs to enter some data, he can reopen the
company. If you already opened the multi-companies and working on them and
want to close any of them or two then there is two ways to close them.

1.With the help of button F1: Shut company (Alt + FI). ( OR )

2.By pressing enter on shut company menu option on the company info menu.

The company gets shut and it will not be visible in the list of selected companies.
In order to deal with the company again the company should be selected once
again.

It is better to shut the current company if we wanted to deal with another company
and then select other company. In this manner we select only one company at a
time which enables to enter data in correct company.

SELECT THE COMPANY IN TALLY

For recording transactions in the books of accounts of a business, first step is to

Select the Company in which transactions are to be recorded. Following are steps
for Selection the Company in Tally.

Step 1: From Gate way to Tally Click F1: Select Cmp button (list out the
companies in directory).
Step 2: From the list of companies choose any one company by moving a cursor
on the company name and press Enter or Double click on the company name.

9Q. Explain the steps of configuration of company in tally?

Configuration of compny:

Every business has own requirements related to maintenance of accounts. Tally

provides the flexibility to adjust books of accounts according to particular needs of
the business. Making transactions is known as Configuration of the software. The
Configuration is used for altering adjustments of various accounting and other
features of software before recording various some setting in tally software, like
date format, company name on report, symbols, numbers to be used and many
more. To configure the company that we have created earlier Press F12 Button on
the button panel or F12 function key from the keyboard, you get the following
screen

Gateway of tally > press F12 function key

1.General configuration: In general configuration screen you can configure
country details, style of names, dates and numbers in the general configuration
screen.

Go to Gateway of tally > F12 configure > general

2.Numeric and Symbols and Credit

Creation and Configuration of Company in Tally Symbols - In Numeric Symbols

screen, you can configure Number Styles used to represent Positive Numbers,
Negative Numbers, Debit Amounts Amounts and credit amounts by using Numeric
Symbols.

Go to Gateway of Tally > F12: Configure > Numeric Symbols

3.Accts/ Inventory Info. Configuration - The Accts/ Inventory Configuration is
used to enable additional settings/options/ configurations in Accounting and
Inventory masters. You can also configure Accts/ Inventory Info. configurations
from Accounts and Inventory voucher entry screens, by pressing F12: Configure.

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

4. Voucher entry configuration: voucher configuration is used to configure

additional settings and options during voucer entry.

Go to Gateway of Tally > F12 configure >invoice / order entry.

5. Invoice / order entry configuration: The invoice entry and order entry screens
can be configured for additional information such as export details, shipping
details.

6.Payroll Configuration - The Payroll Configuration screen allows you to enable

additional configurations for entering infor-mation related to Statutory Details.
Passport & Visa Details. Contract Details and Resigned / Retired Employees.

Go to Gateway of Tally > F12: Configure > Payroll Configuration

7.Banking configuration: This configuration helps you to to configure settings

related to bank reconciliation statement.

Go to Gateway of Tally > F12: Configure > Banking configuration.

8. Printing Configuration - This configuration helps you to configure the print
settings for various Accounting, Inventory vouchers and other MIS related
statements. Go to Gateway of Tally > F12: Configure > Printing

9. E-Mailing Configuration - This configuration helps you to define settings

related to email such Email Server, Server Address, Authentication details and so
on. Go to Gateway of Tally > F12: Configure > E-Mailing

10. Data Configuration - This configuration helps you to define location of

Language Files, Tally Configuration File, Export Files, Data Files and details of
the companies to be loaded on startup.

Go to Gateway of Tally > F12: Configure > Data Configuration

11. TDL Configuration - This screen provides details regarding TDL

Configuration viz., Local TDLs, Account TDLs & Remote TDLs enabled for the
product. Go to Gateway of Tally > F12: Configure > TDL
Configuration

12. Advanced Configuration This configuration helps you to specify

Client/Server Configuration, Connection configuration and Proxy configuration for
ODBC connectivity and Synchronisation of Data.

10Q. Explain the company features (F11) in Tally ERP 9

Features of Tally:

Features gives option to enable or disable features provided by Tally. ERPS

features of a company can be selected or modified such as Accounting, Inventory,
St. by using the F11 Button on the button panel or F11 function key from the
keyboard, following screen.
1.Accounting Features

By using the Accounting Features, we can enable or disable various options

required for transactions for company. To enable the accounting features following
are the steps:

Go to Gateway of tally > F11: Features > F1: Accounts

Enable or disable the required options accordingly. Press Ctrl +A to accept.

2.Inventory Features

This feature enable to set the Inventory Features required for the transactions. To
enal Inventory features following are the steps:

Go to Gateway of tally > F11: Features > F2: Inventory

Enable or disable the required options accordingly. Press Ctrl +A to accept.

3.Statutory Features

This feature enable to set the Statutory and taxation features required for the
transactions To enable the Statutory features following are the steps:

Go to Gateway of tally F11: Features > F3: Statutory.

Enable or disable the required options accordingly. Press Ctrl +A to accept.

11Q. What is ledger? Explain the steps to create, display, alter ledgers single
mode in Tally ERP9?

Meaning of Accounting Ledgers -

After creating the company in Tally, Ledger creation is the preliminary steps to
start with recording of transactions. Ledger is a device used to record the effect of
transactions on the assets, liabilities and capital of an enterprise. We can define
Ledger as "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".

A Ledger is the actual account head to which you identify a transaction and must
be used in all Accounting Vouchers. Without a ledger we cannot record any
transactions. For example: Purchase, sales, cash, salary, etc, all these accounts
heads are l…is not accurately classified in group, it may lead to error in Financial
Statement. For example: if Furniture is grouped under Purchase, it will be shown in
P&L account instead of Asset side of Balance Sheet.

Pre-defined Ledgers in Tally Erp.9

In Tally we have to create all Ledgers before recording the transactions. However,
there are two pre-define ledgers in Tally. It means we need not to create these are
two ledgers, available in Tally by default. These ledgers are:

record all cash receipt and payments. This Ledger

1. Cash: This Ledger is maintained to record all cash receipt and payments. This
Ledger is created under the Group Cash-in-hand.

2. Profit & Loss Account: This Ledger is created under the Group Primary.
Previous year's Profit or Loss is entered as the opening balance for this ledger. You
cannot delete this ledger, but you can modify the ledger.

Creation of Accounting Ledgers

When we record transactions first time in Tally, we have to create Ledgers.

However, once a Ledger is created in particular company, it need not to be created
again whenever we have to record transactions. In Tally ERP9, we can create the
ledgers in two ways given below:

1. Single Ledger Creation

2. Multiple Ledger Creation

1. Single Ledger Creation: Here we can create one ledger at a time. Following are
steps Tally for creating single

1. Go to Gateway of Tally > Accounts Info. > Ledgers > Create (Single Ledger
Creation)

2. Enter Name of the ledger

3. Select Group from the List of Groups

4. press enter to save ledger

4. Press Enter to save the ledger

Step: 1 From Gateway of Tally select Accounting Info option. The following
screen will display
Step: 2 from the Accounting Info select ledgers option.

Step: 3 In the next ledgers screen, choose the option create under single ledger
Step 4: On ledger creation screen, update the following details
 Name: Enter the name of ledger account, and the name should be unique.

 Under: Choose the group name from list of group, that pertains to ledger

account.

After enter all the details of ledger press Enter button or Ctrl +A to save it.

DISPLAY THE LEDGER IN SINGLE LEDGERS

After creation of single ledger account in Tally, you view the details of ledger by
choosing the option display. Refer below steps how to display single ledger
Path: Gateway of Tally –> Accounts Info –> Ledgers –> Single Ledger –>
Choose Display
Choose the ledger account from list of ledgers
Now the complete details of ledger account display in the screen as shown below
image.

Edit or Alter a Ledger in single mode

There certain situations we need to modify existing ledger created. For example:
changing of name or address, selection of wrong group in under field etc. In such
case user will have to modify existing details. Tally provides facility of making
changes in ledgers already created. For making modifications/Edit of ledger
following are the steps:

1. Go to Gateway of Tally>Accounts info>Ledger>Alter

2. Ledger alteration screen will appear, press enter.

3. Make necessary changes save the screen.

Path: Gateway of Tally –> Accounts Info –> Ledgers –> Single Ledger –> Choose
Alter

On select ledger screen, choose the ledger account from the list of ledgers
Now modify/ alter the required details for ledger account and click on A:Accept to
save the changed details in Tally ERP9.

Delete a Ledger:

User can delete any ledger created by him if it is not required in future. However,
not permit to delete an account with transactions. That is if you have entered any
voucher the ledger, that ledger cannot be deleted. If you want to delete a ledger
with transactions need to remove the ledger from those transactions by editing a
voucher.

To delete an account to go to the following screen

1. Gateway of Tally –> Account info –> Ledgers–> Alter

2. Select the account to be deleted.

3. Now press delete button from bottom bar or Use key board shot cut Alt+D.
4. A confirmation will be asked.

5. Press Yes.

12Q. What is ledger? Explain the steps to create, display, alter ledgers
multiple ledgers in Tally ERP 9?

Step 1: Go to Gateway of Tally and then choose Accounts Info as follows:

Step 2: Choose the option Ledgers under Accounts Info.

Step 3: Under multiple ledgers, click on Create option to create multi ledgers in
Tally.

Step 4: Enter the following details under a multi ledger creation screen.

Under Group: Under the list of Groups, choose the Bangalore Debtors. However,
we can search the group by entering the group name under the group text field.
Step 5: Update the following details under the Group Bangalore Debtors screen.

1. Name of Ledgers: Enter the ledger name that we like to create in Tally.
2. Under: The under group field will be automatically filled by Tally as
Bangalore Debtors.
3. Press Enter to continue after entering the details. We will get a message
as Accept: Yes or No. To accept the updated details in Tally, choose "Yes".
How to Display Multiple Ledgers in Tally

In Tally application, after ledgers are created, we can check multiple ledgers by
choosing the display option.

Step 1: Use the following path to display multiple ledgers.

Gateway of Tally → Accounts Info → Ledgers → Multiple Ledgers → Display

Step 2: Under the List of Groups, choose the group name as "Bangalore Debtors".
Step 3: Now, the multi ledgers screen displays, as shown below.

How to Alter Multi Ledgers in Tally

Use the following step to alter the multi ledgers in Tally.

Step1: Using the following path, we can alter the change the details as per the
requirements:

Gateway of Tally -> Accounts Info -> Ledgers -> Multiple Ledgers -> Choose
Alter

Step 2: Choose the required group name under the list of the groups.

Step 3: We can update the following details on multi ledgers alteration screen:

Add or delete the ledgers

Opening Balance - Dr/Cr

After alter the ledgers press enter button or Ctrl+A to save the data.

13Q. What is groups? Explain the steps to create, display, alter multiple
groups in Tally ERP 9?

Meaning of Accounting Groups

In Tally, accounts are maintained with help of the groups. Groups are collection of
Ledgers of the same nature. Basically, the group is the alternative name of
schedules. Like we have different schedules prepared while making P&L account
or Balance Sheet in manual accounting, similarly we have concept of groups in
Tally. Schedules are the support details of final accounts.

Create a single group

1. Go to Gateway of Tally > Accounts Info. > Groups.

2. Click the option Create under Single Group. The Group Creation screen appears.

3. Enter the Name of the group.

4. Enter the Alias name, if required.

5. In the field Under, from the List of Groups displayed, select the parent group
under which the group has to be classified. For example, Indirect Expenses.
Step 1: Go to Gateway of Tally and then choose Accounts Info as follows:

Step 2: Choose the option Groups under Accounts Info.

Step 3: In Tally ERP 9, choose the option Create under Single Group Menu to
create a single group.
Step 4: Update the following details on the Group creation screen:

Name: Specify the name of the group and then press enter to continue.

After entering the details press Enter button or Crtl+A to save it

Display the groups in tally

In Tally ERP 9, after creating the group, we can display all the created groups in
detail. However, users are not allowed to edit/alter the data in display mode.

Step 1: Use the following path to display groups in Tally

Gateway of Tally → Accounts Info → Groups

Step 2: Under Single Group, click on the option display to display groups in Tally.
Step 3: Choose the required group name under List of Groups name and then
click on that particular group to display on the screen as follows:
Step 4: Now the ledger (Bangalore Administrative expenses display on the screen
as:

Step 5: To close the screen, click on Q: Quit.

Alter Group in Tally ERP 9

In Tally ERP 9 application, after creating the group, we can alter the details as per
the requirements. Refer the following steps to modify/alter group in Tally:

Step 1: Use the following path to alter groups in Tally

Gateway of Tally → Accounts Info →Groups

Step 2: Click on Alter option under Single Group

Step 3: From the given search field, we can search the group and then click on that
group name to modify the details.
Step 4: Update the required details on the Group Alteration screen and then click
on Crtl+A to save the details.

14Q. What is procure to pay (P2P? Explain the steps involved in P2P Cycle.

Procure to Pay (P2P)

The term procure to pay refers to the procedure of getting the raw materials
required for manufacturing a product of offering a service and making payment for
the above. Procure to pay is also known as P2P. If any manufacturing company of
service provider is thinking to manage their cash flow continuously, to build
goodwill with suppliers and make profits then they should operate P2P cycle very
efficiently.

steps involved in P2P Cycle.

Step-1: Requirement Planning

The first and the foremost step in procure to pay cycle is requirement planning. In
this step, planning is done relating to requirement of materials, time at which they
are required and price which company can pay for it. After completion of this the
company prepares the vendors list from whom they can purchase materials.

Step-2: Request for Quotation

After completion of planning, the company demands quotation from each vendor
which comprises of price, terms delivery, quality of materials and any other
information required for making their decision. This steps involves negotiation w
the vendors for the best deal.

Step-3: Creation of Purchase Order

After selecting the vendor, the buyers will create a purchase order which includes
information regarding description of goods and services, authorized managers
signatures, department account number, delivery instructions and quotation given
by the authorized vendor.

Step-4: Goods Receipt

A formal purchase order with instructions is being sent to the vendor to supply the
goods as per the terms under which they should be supplied.

Step-5: Preparation of Goods Receipt

After receiving the goods from the supplier, the purchase department prepares a
goods receipt which is a significant document that can be used for later verification
of goods.
Step-6: Creation of Payment Voucher

After the completion of verification of goods, the payment invoice is created and
gets necessary approvals from the project managers.

Step-7: Payment

After making payments to the vendor by the company completely, the cycle comes
to an end.

Step-8: Reporting

Reporting is the final step for P2P cycle. In this step all the information will be
recorded and reported in Tally ERP 9.

UNIT 2

MAINTAINING STOCK KEEPING UNITS

1Q. Define inventory? Explain the types of inventory?

MEANING OF INVENTORY:

Inventory is the stock that firm maintains to meet its future requirement for
production and selling. The basis reason for holding inventory is to keep up the
production activities unhampered. Inventories are a part of current assets, which
are used within one year. In dictionary meaning of inventory is a "Detailed list of
goods, furniture etc." Many understand the word inventory, as a stock of goods,
but the generally accepted meaning of the word 'goods' in the accounting language,
is the stock of finished goods only. In a manufacturing organization, however, in
addition to the stock of finished goods, there will be stock of partly finished goods,
raw materials and stores. The collective name of these entire items is 'inventory'.

TYPES OF INVENTORY

The term inventory may be classified into two types namely:

Direct Inventories:
Direct inventories are those inventories that play a major role in the production for
direct sale Direct inventories may be categorised into three parts.

(i) Raw materials: Raw materials are the physical resources to be used in the of
finished products. It include materials that are in their natural or raw form. For
example, cotton in the case of textile mill, sugarcane in the case of sugar factory,
oil seeds in the case of an oil mill etc. The chief objective of keeping raw material
is to ensure uninterrupted production in the event of delays in delivery and also to
enjoy the economies of large scale buying.

(ii) Semi-finished Goods: Semi-finished goods are those materials which are not
hundred per cent complete in all respects i.e., some processing still remains to be
done before the product can be sold.

(iii) Finished Goods: Inventory of finished products are the stock of goods which
are ready for sales. Stock of finished goods is required for smooth marketing
operations of the products.

(iv) Spare Parts: Spare parts means duplicate parts of a machine. Usually, almost
all the industrial concerns maintain spare parts of various machines which they use
for manufacture. This will enable them to ensure smooth running of machines
which in turn provide for uninterrupted production.

Indirect Inventories:

Indirect inventories include those items which are necessary for manufacturing but
do not become component of the finished goods. They normally include petrol,
maintenance materials. office materials, grease, oil lubricants etc. These
inventories are used for ancillary purposes to the business and cannot be assigned
to specific, physical units. These inventories may be used in the factory, the office
or the selling and distribution divisions.

2Q. What are the basic inventory masters in Tally ERP9?

1.Stock Groups:

Grouping of stock items can be done effectively in tally.ERP9 depending on

various parameters. Stock Grouping means placing all the items having similar
characteristics under same category. It not only provides information regarding one
category of goods but also helps in decision making.

2.Stock Items

Stock items is the main inventory master. In traditional accounting system, a stock
ledger account is prepared for each item and this account is known by the phrase
'stock items' in Tally. "Stock items' option is used at the time of recording receipts
and issues of stock items. Every item which need to be accounted for must be
created.

3.Units of Measure

The way of measurement differs from stock to stock. Therefore, to set unit of
measurement for each stock units of measure' option is used.

The various items under inventory info on Tally screen is as follows

3Q, Explain the steps to create the single stock group in Tally ERP 9?

1.Stock Groups:
Grouping of stock items can be done effectively in tally.ERP9 depending on
various parameters.Stock Grouping means placing all the items having similar
characteristics under same category. It not only provides information regarding one
category of goods but also helps in decision making.

Creation of Single Stock Group

The steps for creating a single stock group are as follows,

Step-1: Double click on Tally. ERP 9 icon to open it.

Step-2: From the Company Info', click on 'Select Company'.

Step-3: After selecting company of your choice, you will get a dialog box Gateway
of Tally. From this dialog box, click on Inventory Info`.

Step-4: Under 'Inventory Info, click on 'Stock Groups'. The following dialog box
will appear on the screen.

Step 5 click on create under single stock group. The following screen will display
1.Name: Specify the stock group name that has to be created in Tally. In the
following image, we have given Television as a new single stock group.

2.Alias: Apart from primary name i.e., Television you can give additional name
for your stock group (if necessary). For example, TV. End number of additional
names can be created.

3.Under: In this, choose the stock group as primary.

4.Should Quantities of Items be Added: This field is set 'Yes' to obtain total
stock quantity of the child stock items under the stock group. If stock group
quantity is not calculated then this field is set 'No'.

4Q, Explain the steps to create the single stock group in Tally ERP 9?

1.Stock Groups: Grouping of stock items can be done effectively in tally ERP9
depending on various parameters. Stock Grouping means placing all the items
having similar characteristics under same category. It not only provides
information regarding one category of goods but also helps in decision making.

Gateway of Tally → Inventory Info → Stock groups → Multiple stock groups

→ Create
Step 1: Choose the option Inventory Info under the Gateway of Tally screen.

Step 2: Under Inventory Info, choose the Stock Groups option.

Step 3: It displays two types of groups under Stock Groups.

1. Single stock group 2.Multiple stock groups

In Tally, we already created single stock groups. Here we will create multiple stock
groups. Now, under multiple stock groups, choose the 'Create' option.
Step 4: Under the List of Groups, we need to choose the Group. Here we have
given Television as under Group.

Step 5: Now, we will update the Stock Group, as shown below.

Stock group name Under Should Quantities of Items

be Added
Sony TV Television Yes
Samsung TV Television Yes
Xiami TV Television Yes
Philips TV Television Yes
1. Name: Specify the stock group name that has to be created in Tally. In the
following image, we have given Television as a new single stock group.

2. Under: In this, choose the stock group as primary.

3. Should Quantities of Items be Added: This field is set 'Yes' to obtain total
stock quantity of the child stock items under the stock group. If stock group
quantity is not calculated then this field is set 'No'.

In Tally, after maintaining the required details for the creation of multiple stock
groups press Enter button or Crtl+A to save it.

1. Gateway of Tally → Inventory Info → Stock groups → single stock groups

→ Display

2. Select the Stock Group whose particulars you want to display from the List of
Groups. The Stock Group Display screen is displayed as shown.
1.Gateway of Tally → Inventory Info → Stock groups → Multiple stock
groups → Display

2.Select the Stock Group from the List of Groups.

If you select All Items from the List of Groups, all the Groups and sub Groups are
displayed.
5Q, Explain the steps to Alter and Delete the stock group in Tally ERP 9?

Altering, Deleting single Stock Groups:

Go to Gateway of Tally > Inventory Info. > Stock Groups > Alter (under
Single Stock Group)
Select the Stock Group from the List of Groups. The Stock Group Alteration
screen is displayed as shown.

6:36

10

Make the necessary changes and click Yes to accept or press Ctrl+A to Save.
Deletion is possible only in the mode,. For deleting the Stock Group,
Press ALT+D.
 Altering Multiple Stock Groups:
Go to Gateway of Tally > Inventory Info. > Stock Groups > Alter (under
Multiple Stock Groups)
Select the Stock Group from the List of Groups. The Multi Stock Group
Alteration screen is displayed as shown.

Make the necessary changes and click Yes to accept or Press CTRL+A to save.
NOTE: You cannot delete a stock group from multiple mode.

6Q. Explain the steps to create the stock item single and multiple mode in
Tally ERP 9?

Stock items in Tally

In Tally, stock items are referred to goods or services that a company manufactures
or trade.
Stock items in Tally can be created by two methods, i.e.
1. Single stock item 2, Multiple stock item

Groups Name of Item Unit Opening Qty Rate Amount

Television MI 32 Inch TV Nos 2 15,000 30,000

MI 42 Inch TV Nos 2 20,000 75,000

 Sony 32 Inch TV Nos 3 25,000 75,000

LG 32 Inch TV Nos 4 20,000 80,000

Music System Sony 5.1 Music System Nos 2 20,000 40,000

Phillips DVD player Nos 5 15,000 75,000

Sony Blue Ray Player Nos 10 25,000 250,000

create single stock item in Tally

Gateway of Tally → Inventory Info → Stock Items → Single stock item →

Create

Step 1: Go to Gateway of Tally and then Choose Inventory Info.

Step 2: Choose Stock items under Inventory Info.

Step 3: Choose "Create" under the Single Stock Item.

Step 4: Enter the following details on the next screen, "Single Stock Group
Creation".

Name: Specify the name of the stock item.

Alias: It can be short name of stock item or product id or another name.

Under: Specify the stock group under which this stock item is to be specified.

Category: Specify the stock category of stock items.

Units: It specifies the units of measure to count the stock items.

Opening Balance: Specify the opening balance of the stock items.

Quantity: Specify the quantity of stock items.

Rate: When we are entering the values of the rate for stock items, a new window
opens. Update the following details, as shown below:

Value: This is filled in by Tally. ERP 9 automatically by multiplying quantity and

rate.

After specifying all required details, press enter to continue. In Tally ERP 9,
choose 'Yes' or Crtl+A to save the details.

Creation of Multiple Stock Items

The following path to create multiple stock items:

Gateway of Tally.ERP 9 > Inventory Info > Stock Items > Multiple stock
items > Create

Step 1: Choose the "Create" option under multiple stock items, as shown below.

Step 2: Enter the following details in the next screen, "Multi Stock Item Creation".

Under group: Choose under group as all items to update the different types of
stock items with different category groups.

Now update all the required details: Specify the name of items, stock group, stock
category, stock units, stock opening qty, and rates.
.

After specifying all required details, press enter to continue. In Tally ERP 9,
choose 'Yes' or Crtl+A to save the details.

7Q. Explain the steps to display and alter the stock item in single and multiple
mode in Tally?

Display the stock item:

You can display the existing Single Stock Item master and Multiple Stock Item
masters, since it is only display you are not allowed to alter any information in
display mode.

Gateway of Tally → Inventory Info → Stock Items → Single stock item →

Display
Select the stock item you want to display from the list of items.The stock item
display screen is displayed as shown under

To display the multiple stock item

Gateway of Tally → Inventory Info → Stock Items → Multiple stock item →

Display
2. Select a Stock Group or All Items from List of Groups to display the Stock
Item under the selected group or All Items. The Multi Stock Item display screen
is displayed as shown below:
This option allows you to view and change the details for the existing Single Stock
Item master and Multiple Stock Item masters. If a transaction is entered for a
stock item, it is not possible to alter the units or delete the stock item.

Alter the single stock item:

Gateway of Tally → Inventory Info → Stock Items → single stock item →

Alter

2. Select the required Stock Item from the List of Items. The Stock Item
Alteration screen appears as shown below:
After selecting required stock item the stock item screen will display like above
press Ctrl+A to save alter information.

Alter the multiple stock item:

Gateway of Tally → Inventory Info → Stock Items → single stock item →

Alter
2. Select a stock group from the List of Groups to alter the stock item under the
selected group or under All Items. The Multi Stock Item Alteration screen
appears as shown below:

After selecting required stock item the stock item screen will display like above
press Ctrl+A to save alter information.

8Q. What is units of measure? Explain the steps to create ,diplay and alter
units in Tally ERP 9?

UNITS OF MEASURES:

Unit of Measure is very important part of inventory management in Tally. It is not

possible study inventory management in Tally without study Unit of Measure,
because any stock item to be measured in some specific units for e.g. liquids will
be measured in liters, solid will be measured in kg or items or nos or pieces and so
on. We have to create a specific unit of measure whatever type of goods that we
stock in our Business.

We can create two types of units in Tally that is Simple Unit & Compound Unit.

1. Simple Unit of Measure: A unit of measure that consists of only one Single
Unit is called 'Simple Unit of Measure'. For example: Meters, Kilograms, Inches
etc.

2. Compound Units of Measure: Many units are usually a combination of two or

more units. For For example, dozen of 12 pieces or box of 10 numbers. They are
units with multiple factors. Such units are called 'Compound Units of Measure'.
Creation of Simple Unit of Measure

Tally does not provide any pre defined Units of Measure under Inventory. User
must create own Units of Measure in Tally before creating inventory items. A user
can create any number of Units of Measure in Tally depending upon need and
requirement of the business. Following are steps for creating Simple Units of
Measure:

1.Go to Gateway of Tally > Inventory Info. > Units of Measure

Step 1: Firstly, log in to Tally, then Go to Gateway of Tally and choose Inventory
Info.

Step 2: Under Inventory Info, choose 'Unit of Measures'.

Step 3: Choose 'Create' option under Units to create units of measures in Tally.

Step 4: Update the following details in the next screen 'Unit Creation'.

Symbol: Specify the symbol of units in which stock items are identified. For
Example, No's indicates numbers.

Formal name: It refers as another name of the units. It is used to match the
symbols with their respective names.

Number of decimal places: Decimal numbers can be used to detect units. For
Example, 5.20 Kg refers to 5Kg and 200 gm.
Press Crtl+A after entering all the required details to save the details in Tally.

Display of units of measure:

User can display the existing Units of Measure, since it is only display, Tally.ERP
9 does not allow you to alter any information in display mode. To display Units of
Measure,

1. Go to Gateway of Tally > Inventory Info. > Units of Measure > Display

2. Select the Unit of Measure you would like to view from the Units list. You can
select a compound unit or a simple unit from the list.

3. The Unit Display screen is displayed as shown.

Alter/ Delete of Unit of Measure

User can make changes in Units of Measure already created by him or he can
delete the unit. To alter/delete Units of Measure:

1. Go to Gateway of Tally > Inventory Info. > Units of Measure > Alter
2. Select the Unit of Measure you want to alter from the Units list. The Unit
Alteration screen is displayed as shown.

3. Make the necessary changes and accept Yes to save or Press CTRL+A for
altering unit8

4. Press [ALT]+[D] to deleting the units of measure.

9Q. What is stock godown? Explain how to create stock godowns in Tally
ERP 9 in single and multiole mode?

STOCK GODOWNS IN TALLY:

Tally provides the option of maintaining location wise inventory of the business.
Now days even a small business firm could have inventory in more than one
physical location. As the size of the business firm increase there is need to
maintain inventory on more and more location known as 'Godown' in Tally. A
Warehouse / Godown is a place where stocks/materials are stored. A company can
create any number of Godown in Tally. Whenever company makes any purchase,
it will specify the Godown where the item will be stored and in the similar manner
while entering a sales

Transactions, company will specify the godown from where the goods are issued.
Tally. ERP 9 also allows transfer of materials from one godown to another.
Company can view stock reports for a godown or compare a godown with another
and can also get consolidated stock report of all the Godowns.

By default Godown option in Tally is disabled and company cannot enter Godown
information without enabling such option. So, a company must activate the
Godowns option from the Inventory Info. menu. Following are steps for enabling
Godown option in Tally:
Perform the following steps to activate the Godowns option:

Step 1. Click the F11: Features button in the button bar of the Inventory Info. The
Company Features menu appears. menu.

Step 2. Select the Inventory Feature

Step 3. The Company Operations Alteration screen appears. To create multiple

godowns, set the Maintain Multiple Godowns option under Storage &
Classification to Yes.

Step 4. Set the other options according to your requirement and click Yes, as
shown in the figure.

Transactions, company will specify the godown from where the goods are

Step 5.The Godown option now activated.

Creation of Godowns in single mode:

Step 1: Choose the option Inventory Info under Gateway of Tally.

Step 2: Choose GoDowns option under Inventory Info to create Godowns in Tally
as per company requirements.

Step 3: Choose the "Create" option under Single Godowns to create Godowns in
Tally.
Step 4: Enter the following details in the next screen GoDown creation.

Name: Specify the Godown name. We can enter the Godown name as the name of
location where it has been located.

Under: Specify under which godown comes.

We will press Enter after entering the details and to accept the configured Godown
in Tally, press 'Y' or Enter.
In the above image, we created a new Godown with the name "Amravathi" under
Primary.

How to Create Multiple Godowns in Tally:

Step 1: Use the following navigation path to create multiple Godowns:

Gateway of Tally → Inventory info → Godowns and click on create under

multiple Godowns.

Step 2: Enter the following details in the next screen Multi Godown Creation.
Name: Specify the name of Godown/ name of Location

Under: In this, choose Primary.

In Tally, after updating all the Godowns/ locations, choose Yes or Crtl+A to
accept the data.

10Q. How to alter and delete stock godowns in Tally ERP 9?

Display the Godowns in Tally

After creating a godown, user can view its details. Following are steps to display a
godown in Tally:

1. Select the Display option from the Godowns. The List of Godowns menu
appears.

2. Select the godown whose details you want to view.

3. The Godown Display screen appears, displaying the detail of the shown in
figure.

4. Press the Ese key to close the Godown Display.

Alter the Godowns in Tally

If you want, you can alter the detail of an exiting godown by using the alter option.
Perform the following steps to alter the detail of a godown:

1. select the Alter option under Single Godown from the Godowns. the list of
godown menu appears Godowns menu appears.

2. Select the godown that you want to alter from the List of Godowns. The
Godown Alteration screen appears.

3. Make the required change in the detail of the godown and click Yes or Ctrl+A
to save the changes. as shown in figure.
 UNIT-3

Recording Day-To-Day Transactions

1Q. Define business transaction? Explain the different types of business

transactions?

Business Transaction

A business transaction is an event or activity which can be measured in terms of

money. It has an affect on the company's operations or financial position.
Types of Business Transaction

The business transactions of a company include the following,

1. Buying goods and services.

2. Selling goods and services.

3. Obtaining cheques or cash for goods/services provided by the company.

4. Payment of payables to suppliers or other entities.

5. Borrowing of cash from other entities for business purpose.

6. Giving salary to the employees of the company

7. Acquisition of assets or services.

8. Payment of borrowings.

9. Investment of cash or other assets and so on.

10. Giving loans to other companies.

2Q. Discuss various types of source documents or vouchers?

The various types of source documents are discussed as follows,

1. Receipt

A receipt is generally issued by a business or company that receives amount. The

receipt shows the payment amoun payer details, payment purpose and date. The
receipts carbon copy is used as source document for the receipt of the amount
Similary, when a payment is made, the business or company will receive receipts
and the payment made is recorded in the books of accounts.

2. Cash Memo

Cash memo is a document that shows the date, amount and details of cash sales
and cash purchases. A business issues cash memo on sales and receives cash memo
on cash purchases. In the books of accounts, the cash purchases, cash sales and
cash memos are recorded based on these cash memos.

3. Pay-in-Slip

If we want to deposit cash and cheques in the bank, we are required to fill up a
deposit slip (Pay-in-Slip). The bank keeps the main body of the pay-in-slip and it
returns the counterfoil duly signed and stamped to the customer. For recording
deposits, this counterfoil is used as source document.

4. Invoices and Bills

For credit purchases and credit sales, the invoices and bills are used. For credit
sales of goods, the invoices or bills are issued which show the amount, date and
sale details. Three copies of invoice are prepared. The first copy is sent to the
buyer through bank, the second copy is kept in packets or bundles of the goods and
the third copy remains with the sellers. This third copy is used as source document
to record credit sale. For credit purchases of goods, the business receives
invoice/bills and records purchases on its basis.

5. Cheques

For making different payments, a person or business issues cheques. The

counterfoil of the cheque or note on cheque book having payment details is used to
record the withdrawal or payment for self. The received cheques are deposited into
the bank through pay-in-slip, which is used as source document.

6. Credit Note

The businesses issue credit note in case of sales return by the customers. It means
that the account of customer is credited with the amount of sales return. This credit
note is used as source document.

7. Debit Note

The businesses issue debit note to the seller in case of the return of goods
purchased on credit. It means that the accour of seller is debited with the amount of
purchases return. The debit note is used as source document.

8. Miscellaneous
The other important documents include water, telephone, electricity, tickets,
conveyance bills, registration deeds, salaries, wages, counterfoils etc.

3Q. Explain the voucher entry screen components in Tally ERP 9?

VOUCHER ENTRY SCREEN COMPONENTS

The Voucher Entry screen is divided into three parts:

1. Main Voucher Entry

2. Button Bar

3. Calculator

1. Main Voucher Entry Area

The Main Voucher Entry Area is where you enter all your transactions. This area
has fields for Date, Ledger Name and Amount etc. Following are main parts of
main entry area:
a) Type of Voucher: It is essential to check if you are using the right voucher for
the transaction. You can change the voucher type by selecting a new type from the
button bar, if required.

b). Voucher Number: Tally. ERP 9 automatically sets the voucher number. You
can change the voucher number manually, if required.

c). Reference: You can enter a reference of your choice. A purchase order number
or an invoice number can be entered as a reference.

d). Date of Voucher: The date of the voucher you enter is displayed at the top-
right of the voucher creation screen. The date is taken initially from the Gateway of
Tally but user can change such date.

e). Effective Date: A voucher type can be configured to allow for an effective
date. The line below the date of voucher displays the date when the voucher will be
effective.

f). Particulars: This is where you enter the ledger names and the debit and credit
amounts. Each line displays a prompt of Dr or By for debit entries and Cr or To for
credit entries.

g). Amount: Amount of transaction is recorded here.

h). Narration: Here you type whatever appropriately describes the transaction.

2. Button Bar

The Button Bar area displays buttons that provide quick links to various functions
and features of Tally. ERP 9. Buttons that are relevant to the current task are
enabled and the other buttons are disabled.

3. Calculator Area

The Calculator area provides a working space where you can enter any number of
mathematical formulae for complex calculations. Press Ctrl+ N to activate the
calculator area.

4Q. What is voucher? Explain the different vouchers available in Tally ERP
9?
Voucher meaning: In a company, the transactions are recorded on the basis of
some documentary proofs, called as the source documents popularly known as
vouchers. These documents show the nature and amount of the transaction.

Vouchers are the bills, invoices, receipts, cash memos, wage bills, registration
deeds, counterfoils of cheques, travelling allowance bills, salaries bills and any
other written proof which indicates that the transaction has taken place and can be
checked from the documents.

Vouchers are mainly classified into two types

(1). Supporting Vouchers

2. Accounting Vouchers

1.Supporting Vouchers:

Supporting vouchers act as documentary evidence in support of transaction which

has taken place. Supporting vouchers are divided into,

(i). Internal Supporting Vouchers:

The organisation prepares these vouchers and the third parties authenticate and
validate it such as counter foils of challan and pay-in-slip etc.

(ii). External Supporting Vouchers:

The third parties prepare these vouchers and send it to the business/company in the
form of cash memo, invoice obtained from supplier of goods. It can also be rent
receipt obtained from landlord, debit note, credit note etc.

2. Accounting Vouchers

Accounting vouchers are the secondary vouchers which are prepared based on
supporting vouchers issued by third party. The Accountant prepares these vouchers
and are signed by the authorized signatory of the company. These vouchers are
divided into,

(i). Cash Vouchers

Cash vouchers are the documentary evidence of cash payments and cash receipts,
cash vouchers are classified as debit voucher and credit voucher,
(a). Debit (Payment) Voucher

Debit voucher is the documentary evidence of cash payment. The examples of

debit voucher include cash purchases of goods and assets, cash payment of
salaries, payment to employees, creditors and bank. This voucher may be prepared
on the basis of supporting voucher. If the supporting voucher is unavailable, the
voucher's receipt portion is filled in and used as supporting voucher.

(b). Credit (Receipt) Vouchers

Credit voucher is the documentary evidence of cash receipt. The example of credit
voucher includes cash sales of goods, assets and investments, cash receipt of
interest, loans borrowed, rent or any other income, collection from debtors, amount
withdrawn from bank.

(ii). Non-Cash Vouchers

Here, all the documents are entered through the budgetary control module instead
of general ledger module for recording non-cash entries against different types of
accounts including fund balances, expenses, revenues, assets.

5Q. Explain the predefined vouchers in Tally?

PREDEFINED VOUCHERS IN TALLY

In computerized accounting, we record transactions through voucher entry. A

voucher is a basic recording document. To input any data in Tally we must use a
voucher. Recording data through the voucher entry mode may be called creating a
voucher or voucher entry. Tally is preprogrammed with a variety of accounting
vouchers, each designed, to perform a different job. Tally gives us two types of
voucher:

1. Conventional

2. Unconventional

1. Conventional Vouchers

Conventional vouchers are used to record all accounting transactions. These

vouchers directly affect to your final Account. It tally we have different types of
conventional vouchers:

vouchers shortcuts Functions

Contra F4 Contra entry is used to transfer amount from
cash a/c to bank a/c & vise versa.it involves
following

Cash a/c to cash a/c

Cash a/c to bank a/c

Bank a/c to cash a/c

Bamk a/c to bank a/c

Payment F5 Payment voucher is used to record all
payments by cash or bank.
Receipt F6 Receipt voucher is used to record all
money/fund received by cash or bank.
Journal F7 Journal voucher is used to make adjustments
in the accounts.
Sales F8 Sales voucher is used to record all sales
transactions
Purchase F9 Purchase voucher is used to record all
purchase transactions.
Debit note Crtl+F9 Debit note is used to debit a particular party’s
account for purchase returns.
Credit note Crtl+F8 Credit note is used to credit a particular
party’s account for sales returns.
2. Unconventional Voucher

These are special vouchers and are used to record provisional or non-accounting
transactions. These Vouchers does not affect the profitability or financial position
of the business. These vouchers are not part of main books of accounts, but still
provides the important information. These vouchers enable valuable reports in
terms of provisional accounts and forecasting.

vouchers shortcuts Functions

Memos Ctrl+F10 To create memorandum voucher.
Rev. journal F10 To create reversing journal vouchers.
Optional Ctrl+L To make a voucher as optional voucher.
Post dated Ctrl+T To make a voucher as post dated voucher.

1. CONTRA VOUCHER (F4)

Contra voucher helps user to make an entry that is related to cash and bank both.
Like Cash deposited into bank account, Cash withdrawals from bank account
either or transfer from one bank account to another bank account. Contra Voucher
is used for fund transfers between Cash and Bank accounts only. 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 etc. like:

(i). Cash account to Cash account (Main Cash to Petty Cash).

(ii). Cash account to Bank account.

(ii). Bank account to Cash account.

(iv). Bank account to Bank account.

Step1. Select Accounting Vouchers' at the 'Gateway of Tally' menu and press
Enter.

Step 2. This brings up the 'Accounting Voucher Creation' screen.

Step 3. Press 'F4' at the 'Accounting Voucher Creation' screen to pass a 'Contra
Voucher'.

Step 4. For the field To' under Particulars', press 'C' and select 'Cash' from 'List of
Ledger Accounts' menu and press Enter.

Step 5. The cursor will jump to 'Credit' column, enter the amount and press Enter.

Step 6. Press Enter at the field 'By' which will take the cursor to the Particulars'
field. There, press 'P’ and select 'Petty cash’ from the 'List of Ledger Accounts'
menu and press Enter.

Step 7. This will take the curser to the 'Debit' field. By default '5000.00' appears in
the debit amount column. Press Enter.
Step 8. This brings the cursor to the 'Narration' field. Here, press Enter.

Step 9. Accept the details by pressing 'Yes' at the end of the screen.

2. PAYMENT VOUCHER (F5)

All transaction related to payment (by cash or bank) are recorded in payment
voucher. Such payments can be towards purchases, expenses, acquisition of fixed
assets, dues to creditor, loans/advances given by you or repayment of
loans/advances taken by you earlier etc. While creating Payment Voucher', all
payment vouchers must have at least one Credit to Cash or a Bank account.

Payment vouchers can be divided into two categories:

1. Cash Payment: Cash payments are the transactions that settle through cash.
Payments are made by cashier through immediate cash.

2. Bank Payment: These are transactions that settle through bank or by way of
issuing cheque. Normally big transactions are settled through cheque. However
there is no rule regarding this, business is free to issue cheques of any amount
Step 1. Select 'Accounting Vouchers' at the 'Gateway of Tally' menu and press
Enter.

Step 2. This brings up the 'Accounting Voucher Creation' screen.

Step 3. Press 'F5' at the 'Accounting Voucher Creation' screen to get a 'Payment'
Voucher.

Step 4. Enter Cash or Bank account from where the payment is made under the
field account.

Step 5. For the field 'Particulars' enter name of expenditure and press Enter.

Step 6. In this way one by one write name of all the accounts for which payment
is done.

Step 7. For the field 'Narration', enter as being the amount paid as conveyance' and
press Enter.

Step 8. Accept the details by pressing 'Yes' at the end of the screen.
RECEIPT VOUCHER (F6)

All inflow of money(in cash or through bank) are recorded through receipt
voucher. Such

receipts may be towards any income or from your debtors or loans/ advances
given earlier etc. The voucher is similar to the payment voucher except that you
debit cash or bank A/cs and credit the ledger form which you receive. Receipt may
be divided into two categories:

(a) Cash receipt: A cash receipt is the one in which transaction is settled through
cash or money receiving through cash

(b) Bank receipt: Bank receipt are the amount received through bank using
instruments like Cheque, DD, Online transfer like NEFT,RTGS etc. When
receiving a check or DD, we will deposit this into our bank account, bank credit
the money in our account after collecting this money from drawer's bank.
Step 1. Press F6 ‘At the accounting voucher creation’ screen to make a ‘Receipt’
voucher.

Step 2. Write Cash under Account option if amount is received in cash, or Bank if
amount is received through Cheque etc. and press enter

Step 3. For the Particulars' write name of account from which amount is received
like sale or name of customer etc, and press enter

Step 4. Write the amount against name of ledger in amount column.

Step 5. This brings the cursor to the 'Narration' screen.

Step 6. For the field 'Narration', enter as being the amount received from sale and
press Enter.

Step 7. Accept the entry by pressing 'Yes' at the end of the screen.

4. SALES VOUCHER (F8)

Sale is the most important part of every business. This voucher is used for
recording all entries related to sales. Both sales of goods and services can be
recorded in sales voucher. Beside including amount of sale in this voucher, we can
include other expenditures related to sales like packing expenses, carriage etc. in
this voucher. A sale can be classified into two.

(a) Cash Sale: This term does not require much explanation as its name suggests
the meaning of the term. When goods are sold on cash is called cash sale. In case
of cash sales, you receive payment immediately by cash or by cheque or credit card
and since you do not require to track outstanding.

(b) Credit sale: It is situation when goods or services are sold for Credit, that
means consideration of sale not received at the time of selling and customer agreed
to pay the money at a later period.

Tally provides the facility to create cash and credit sales entries from Sales
voucher. You have to press F8 function key to activate this type of voucher in tally
accounting software. Entry of sales is done in tally in two ways:
1. As Voucher - It means that bill is not prepared in tally package. The sale bill is
made either manually or in some other software. The accountant prepares the
voucher with the help of sales bill then he enters the voucher in tally accounting
software.

2. As Invoice – It means that invoice is to be generated in tally software itself and

there is no need to generate invoice separately. Under this option Tally issues the
invoice automatically record the Voucher entry also.

Recording Sales Transaction in Voucher Mode

Step 1. Select Accounting Vouchers' at the 'Gateway of Tally' menu and press
Enter.

Step 2. This brings up the 'Accounting Voucher Creation' screen.

Step 3. Press 'F8' at the 'Accounting Voucher Creation' screen to get a 'Sales'
Voucher.
Step 4. Select 'As Voucher' option in the side Button Bar.

Step 5. Write date of transaction in the date option

Step 6. In By Particular Column write name of party to which goods are sold.

Step 7. In Debit amount column write amount of the sales value and then press
‘Enter, key

Step 8. In To Particulars press 'Sales Account'.

Step 9. In Credit amount write amount of sales and press 'Enter' key.

Step 10. In narration column write any narration which you think fit then press
'Enter key'

Step 11. Tally asks you 'Yes' or 'No'. Here, you just stop for a while and check that
every detail is correct.

Step 12. If there is no mistake than press 'Y' or press 'Enter' key.

2. As Invoice – It means that invoice is to be generated in tally software itself and

there is no need to generate invoice separately. Under this option Tally issues the
invoice automatically record the Voucher entry also.
Recording Sales Transaction in As Invoice

Step 1. Select Accounting Vouchers' at the 'Gateway of Tally' menu and press
Enter.

Step 2. This brings up the 'Accounting Voucher Creation' screen.

Step 3. Press 'F8' at the 'Accounting Voucher Creation' screen to get a 'Sales'
Voucher.

Step 4. Select 'As Invoice' option in the side Button Bar.

Step 5. Write date of transaction in the date option

Step 6. Under Party's Name' write name of party to whom goods have been sold.

Step 7. Under 'Sales Ledger' write 'Sales Account'

Step 8. Under Particulars' write 'Sales Account' if you are maintaining accounts
only or name of items if you are maintaining accounts with inventory.

Step 9. Under 'amount' write amount of transaction.

Step 10. In 'Narration' write any narration and press 'Enter'

5. PURCHASE VOUCHER (F9)

In accounting Purchase refers to Goods purchased by business with the objective

of sales or for use in the production of goods for sales. Thus every item bought in
business is not recorded in purchase. For example purchase of furniture for the
purpose of use in business is recorded in furnitureaccount and not under purchase
account. Purchase can be made on cash basis or credit basis. In Tally purchase can
be recorded in two modes.

(a) As Voucher: 'Voucher Mode' is a style of recording the transaction as it is

done in case of manual accounting system by entering Debit and Credit accounts.

(b) As Invoice: This is mode where you can enter transactions in the style of an
invoice. You can choose any mode for entering transactions. Further voucher mode
has two options that is item invoice and accounting invoice. Item Invoice is the
invoice in which stock item can be selected and its movement can be recorded.
Also item wise bills can be printed. In Accounting Invoice only the purchase
ledger can be selected and no stock item during voucher entry. This type is useful
for entering service transactions as there will not be any stock item.

Following are steps for recording 'Purchase Voucher in Tally'

Step 1. Select Accounting Vouchers' at the 'Gateway of Tally' menu and press
Enter.

Step 2. This brings up the 'Accounting Voucher Creation' screen.

Step 3. Press 'F9' at 'Accounting Voucher Creation' screen to pass a 'Purchase'

Voucher.
Step 4. For the field 'Ref.:', press Enter. It is optional.

Step 5. For the field 'Name', enter name of vendor and press Enter.

Step 6. For the field 'Particular', enter Purchase Account and press Enter.

Step 7. In the 'Amount' field write the amount of Transaction and press enter.

Step 8. It will take the cursor to the 'Narration' field.

Step 9. For the field 'Narration', enter narration of the transaction and press Enter.

Step 10. Accept the details by pressing 'Yes' at the end of the screen.

6. CREDIT NOTE (Ctrl+F8)

A Credit Note is a document sent by a seller to the buyer or, in other words, a
vendor to a purchaser, notifying that a credit has been made to their account
against the goods returned by the buyer. Credit note is issued for value of the
goods returned by the customer. Under this a form or letter sent by a seller to a
buyer, stating that a certain amount has been credited to the buyer's account. A
credit note is issued in various situations to correct a mistake, such as when
(1) an invoice amount is overstated,

(2) correct discount rate is not applied,

(3) goods spoil within guaranty period, or

(4) they do not meet the buyer's specifications and are returned. It is also called
credit memo.

By default this feature is disabled in Tally. So for making entry through this
voucher first, we need to enable the feature. For enabling the feature from Gateway
of Tally, press F11 or click on Features Button from Right Side Button Menu.
Accounting Features Screen will appear.

Select 'Yes' to option Use Debit/Credit Notes as shown below screen:

Following are steps for recoding Credit Note:

Step 1. Go to Gateway of Tally > Accounting Vouchers.

Step 2. Click on Ctrl+F8: Credit Note on the Button Bar or press Ctrl+F8.

Step 3. Change the date by pressing F2 in which debit note is entered.

Step 4. In Original Invoice No write the Invoice number of sale bill.

Step 5. Under Original Invoice Date write the date of Sales invoice.

Step 6. In Party A/c Name write the name of party who returned the goods.

Step 7. In Sales Ledger write the Sales Return Account or Return Inward Account.

Step 8. In Name of Item write the name ofcommodity retuned by customer.

Step 9. Enter amount of the commodity returned.

Step 10. Enter narration if required.

Step 11. Press enter and accept.

7. DEBIT NOTE (Ctrl+F9)

Debit note is a document issued by the purchaser of goods to the seller. Usually it
takes place in returning the goods that are purchased on credit basis. Debit note
consists of many details about the Goods returned. Like total number of quantity
and price, any trade discounts, special discounts allowed at the time of purchase.
From accounting point of view Debit note indicates that the account of the party to
whom it is being issued, is debited in the books of the sender of debit note. Debit
note is used for reducing the receivables that we have to get from any party like
our debtors. Following are common Reasons for which Debit Note is issued:

By buyer, on purchase return

By buyer, on receiving damaged goods or short quantity

By buyer, if he is overcharged or seller agrees to give discount

By seller, if he by mistake undercharged the buyer

Following are steps for recording Debit Note

Step 1. Select "Accounting Vouchers' under 'Gateway of Tally'

Step 2. Select 'Debit Note' by pressing 'CTRL F9 - Debit Note'

Step 3. Now, select date icon or press'F2' key.

Step 4. Write the date of voucher then press 'Enter' key.

Step 5. In Original Invoice No write the Invoice number of purchase bill.

Step 6. Under Original Invoice Date write the date of purchase invoice.

Step 7. In Party A/c Name write the name of party to whom return is made.

Step 8. In Purchase Ledger write the Purchase Return Account or Return outward
Account.

Step 9. In Name of Item write the name of commodity retuned to vendor.

Step 10. Enter amount of the commodity returned.

Step 11. Enter narration if required.

Step 12. Press enter and accept.

8.JOURNAL (F7)

Journal voucher entry mode is a special voucher mode in Tally where we can pass
almost all types of accounting transactions. However, there are separate voucher
mode for each type of transactions are available in Tally such as- Contra mode for
Cash and Bank transaction, Payment mode for all Cash and Cheque payments,
Receipt mode for all Cash and Cheque receipts, Purchase mode, Sales mode,
Purchase Return mode, Sales Return mode and so on. All these transactions can
also be passed through one single voucher mode that is Journal Voucher mode.
However, generally these transactions are recorded through specific vouchers.
Normally Journal voucher mode is used to record special transaction which cannot
be recorded using Payment, receipt, contra, sales, purchase vouchers etc. Some of
the examples of such transactions are

●Adjusting journal entries

●Outstanding Expense

● Pre-paid Expense

●Accrued Income

● Unearned Income

● Transfer journal entries

●Correcting entries

●Purchase and sale of fixed Asset on account

●Depreciation on Asset

Following are steps for recording Journal Voucher in Tally

Step 1. Select "Accounting Vouchers' under 'Gateway of Tally

Step 2. Select F7 - Journal' from the list of Journals.

Step 3. Now, select date icon or press'F2' key.

Step 4. First, in Dr. Particular Column, write name of account to be debited

Step 5. In Debit amount column write amount of transaction and then press 'Enter,
key.

Step 6. In Cr. Column name of account to be credited.

Step 7. In Credit amount write amount of transaction and press 'Enter' key.

Step 8. In narration column write any narration which you think fit then press
'Enter key'

Step 9. Finally, Tally asks you 'Yes' or 'No'

Step 10. If there is no mistake then press 'Y' and accept.

Unit 4

Accounts receivable and payable management

Receivable management

The term 'receivables' refers to debt owed to the firm by the customer resulting
from sale of goods or services in the ordinary course of business. These are the
funds blocked due to credit sales. Receivables are also known as trade receivables,
accounts receivables, book debt, sundry debtor and bills receivables etc.
 According to Robert N. Anthony, "Accounts receivables are amounts owed to the
business enterprise, usually by its customers. Sometimes it is broken down into
trade receivables and accounts receivables; the former refers to amounts owed by
customers, and the latter refers to amounts owed by employees and others".
Management of receivables is also known as management of trade credit. It is the
money receivable on some future date for the credit sale of goods and services
made at present.

1Q.What is receivable management? Explain the objectoves of receivable

management?

Receivable management meaning:

Receivables are one of the important elements of current assets of the firm. The
word receivables can be explained as debt owed to the firm by customers arising
from sale of goods or service in the ordinary course of business'.

When payment for sale of goods or services is due then firm provides trade credit
to its customers and creates accounts receivables which can be acquired in future.
Receivable management is also known as trade credit management. Hence,
accounts receivable express the adequate time period in which customer must
make payment for goods purchased. The firms provide trade credit in order to
protect the sales from the competitors and attract customers who can purchase their
products at reasonable prices.

Following are some of the main objectives of Receivable management:

1. Increase in Sales:- Credit policy of any firm has direct bearing on the sales
made by the firm. So, the main objective of receivables management is to increase
the total sale volume of the business. Offering goods on credit attract those
customers who are not having ready cash for making the cash purchases. So, it this
way it can increase the sales.

2. Increase in Profits: Selling goods on credit basis increase the sales on one hand
but also increase cost on the other hand. Offering goods on credit not only results
into blockage of funds leading to financial costs but also results into losses due to
bad debts. The main objective of receivables management is to ensure
maximization of profits earned by the business.

3. Retaining Customers: In today's competitive business world, almost every

business concern is offering goods on credit basis. So, Goods are sold on credit to
protect the current sales against emerging competition. If a business fails to sold
goods on credit. the customer may shift to the competitor who allow credit facility
to them.

4. Reducing Administrative Costs: When a firm sells goods or services on credit,

it has to bear some administrative costs. These cost include cost of making
collection from the customers and cost of maintaining records of the customers like
additional staff. Accounting records, stationery etc. Company also incurs some cost
on acquiring information about the credit worthiness of the customer. One of main
objective of Receivables management is to minimize these costs.

5. Minimizing Capital Investment: There is a time gap between sales of goods

and its collection from the customers. Meanwhile, the firm has to pay for purchase,
wages. salary and other expenses. Therefore, the firm needs additional funds,
which may be arranged either from external sources or from retain earnings.
Offering huge credit may lead to high capital investment in receivables. So, one of
the key objective of Receivable Management is to minimize such capital
investment.

6. Minimizing Default cost:-Despite all the effort by the management, the firm
may not be able to recover full amount due from the customers. Such dues are
known as bad debts or default cost. Receivables management aims at minimizing
such default cost by proper analysis of credit worthiness of the customer

7. Maximizing Shareholder's Wealth: Credit policy of a firm directly affects its

goodwill and hence value to share in the market. So, one of the key objective of the
receivables management it to maximize the wealth of the shareholders.

2Q. Explain the factors affecting size of receivables?

Receivable management meaning:

Receivables are one of the important elements of current assets of the firm. The
word receivables can be explained as debt owed to the firm by customers arising
from sale of goods or service in the ordinary course of business'.

When payment for sale of goods or services is due then firm provides trade credit
to its customers and creates accounts receivables which can be acquired in future.
Receivable management is also known as trade credit management. Hence,
accounts receivable express the adequate time period in which customer must
make payment for goods purchased. The firms provide trade credit in order to
protect the sales from the competitors and attract customers who can purchase their
products at reasonable prices.

Factors Affecting Size of Receivables

There are a number of factors that influence the size of receivables of a firm. The
following are some of the factors that affect the size of receivables.

1. Size of credit sales: The volume of credit sale is the first factor which increase
or decrease the size of receivables. The higher the ratio of credit sales to total sales,
figures of receivables will also be higher.

2. Credit policy: A firm may have strict or liberal credit policy. Strict credit policy
means firm is not allowing much credit to the customers. On the other hand, liberal
credit policy means offering more credit to the customers. A firm with
conservative credit policy will have a low size of receivables while a firm will
liberal credit policy will be having more receivables.

3. Terms of Trade: The size of receivables also depends upon the term of trade.
The period of credit allowed and terms and conditions of payments offered to
customers are linked with receivables. If credit Period allowed is more than
receivables will be also more.

4. Expansion Plans: When a concern wants to expand its activities, it will have to
enter new market. To attract more customers, it will give incentives in the form of
credit facilities. So, during the early stages of expansion more credit to customer
will result into increase in size of receivables.

5. Relation with profits:The amount of credit allowed to customer depends upon

the amount of profit margin available to the firm. In case firm is working on high
profit margin, they have more scope of offering credit to the customers. On the
other hand, firms working on low profit margin can't offer more credit due to costs
associated with credit sale.

6. Credit Collection Efforts: Size of receivables depends upon the efforts put in
by the business for collection of credit given to the customers. The collection of
credit should be streamlined. The customers should be sent periodical reminders if
they fail to pay in time. If firm is putting more efforts in collection of customers,
its receivables will be less or otherwise it will be more.
7. Habits of Customers: The paying habits of the customers also affects the size
of receivables. The customer may be in the habit of delaying payments even
though they are financially sound. The concern should remain in touch with such
customers and should make them realize the urgency of their needs.

8. Seasonal nature of Sales: Some business have stable sale throughout the year
and some business have seasonal nature of sale. Stability of sales refers to the
elements of continuity and consistency in the sales. In other wordsthe seasonal
nature of sales violates the continuity of sales in between the year. So, the sale of
such a business in a particular season would be large needing a large a size of
receivables.

9. Cash Discount: Cash discount refers to the amount offered as deduction by the
business to customers for making payment before the due date. Cash discount
attracts the customers for payments before the lapse of credit period and reduces
the working capital requirements of the concern.

10. Bills Discounting and Endorsement: Sometime firm opts for discounting its
bills, with the bank or endorsing the bills to the third party, for meeting its
obligations. In such circumstances, it would lower the level of receivables required
in conducting business.

3Q. What is accounts receivable? Explain the advantages of bill wise details?

Accounts Receivable

Accounts receivables are the outstanding amount which a company or trader has to
receive from their customers (debtors) after supplying goods or services on credit.
These are considered as assets of the company and recorded in company's balance
sheet (asset side).

Advantages of Maintaining Bill-Wise Details

The following are the advantages of bills-wise details in Tally ERP-9,

1. It helps to manage the outstanding reports of creditors and debtors.

2. It helps in recording the transactions of bills receivable and bills payable.

3. It helps in maintaining age wise analysis report for the debtors and creditors of
the company.

4. It helps in enhancing the speed by enabling bill wise details in Tally ERP9

5. It helps to find the invoice with the accurate reference number.

6. It helps to examine the group wise outstanding summary of accounts receivable

and accounts payable.

7. It helps to cross check the ledger account of debtors and creditors at invoice
level. As a result managers can easily verify the pending bills.

8. It helps to maintain ledger balances of sundry debtors and sundry creditors.

4Q. What is accounts payable? Explain payable management in accounting

software?

Accounts Payable Management

Accounts payable refers to the money due by a company to its creditors as the
goods or services purchased on credit. It includes purchase order control, payment
selection and handling. forecasting, cash requirements, invoice processing, check
writing and control. It verifies the efficiency of the vendor's invoice.

In simple words, to summarize the transactions or vendor invoices of accounts

payable, general ledger is used in the organization. It is a bill of exchange which is
to be paid back within a short period of time.

It records the amount that is due to creditors, discounts and payment terms i.e.,
monthy, quarterly, halfyearly or annually for all the invoices. It maintains a record
which contains all the information of the creditor such as name, address, phone
number, email etc.

Accounts payable management helps in accurate payment of bills and prevention

from making the payments twice or fraud invoice.

Factors to be Considered for Account Payable Management

The factors to be considered for account payable management are as follows,

1.Create Credit Policies

Creating the credit policies is the essential factor in account payable management.
The accounts payable department must assure that the payments will be done on
time. In order to prevent their reliability. Payments which are not made on time
suffer from bad credit rating as the businessmen do not prefer the transactions
which are delayed.

2. Promote Communication

The accounts payable and receivable department discusses the terms of purchases
and sales. After discussing, if there is more demand in market, the payable
department may order more items. If the company is in loss, payable department
wants to control the acquisition until they get balanced. Paying the money on time
maintains a good relationship among the customers and clears the conflicts easily.

3.Automation to Record the Accounts

9 It is difficult to lead the organization without any mistake, but a leading position
software like Tally ERP may help to generate the essential reports innovatively and
correctly. It also helps to record the deviations, like irresponsible accounts or
interference in workflow of organization. It includes the documents such as
receipts. Invoices, orders, shipping, purchase orders etc.

4. Improving Accounts Payable

It is very important to pay off the debts as soon as possible or on the due date by
the creditor. As it helps to increase the credit score, when the creditors offer
different terms and discounts.

5Q. Explain the differences between accounts receivable and accounts

payable?

Accounts Receivable management

Receivables are one of the important elements of current assets of the firm. The
word receivables can be explained as debt owed to the firm by customers arising
from sale of goods or service in the ordinary course of business'
Accounts Payable Management

Accounts payable refers to the money due by a company to its creditors as the
goods or services purchased on credit. It includes purchase order control, payment
selection and handling. forecasting, cash requirements, invoice processing, check
writing and control. It verifies the efficiency of the vendor's invoice.

Differences between accounts receivable and accounts payable

s.no content Accounts receivable Accounts payable

1 Meaning Accounts receivable refers to Accounts payable refers to
the amount of money yet to the amount of money at to
be received the company for be paid by the company for
the goods sold on credit. goods purchased on credit.
2 payment of In case of accounts In case of accounts
money receivable, debtor need to payable, company need to
pay money to the company. pay money to the creditor.
3 Short form Accounts receivable is Accounts payable is shortly
shortly known as AR or A/R known as AP or A/P
4 Current asset/ Accounts receivable is Accounts payable is
current liabilty considered as current asset considered as current
liability.
5 Outcome Accounts receivable is an Accounts payable is an
outcome of credit sales. outcome of credit
purchases.
6 Represent Accounts receivable Accounts payable
represents money to be represents money to be
collected. paid.
7 consequence Accounts receivable Accounts payable reduces
increases cash in the cash in the business i.e. it is
business i.e. it is a cash cash outflow
inflow.
8 Position in the Accounts receivable is taken Accounts payable is taken
balance sheet on the assets side of balance on the liabilities side of
sheet balance sheet
9 Components Accounts receivable Accounts payable
comprises of bills receivable comprises bills payable and
and debtor creditors
10 Counter Accounts receivable can be Accounts payable cannot
balance counter balanced by an be counter balanced by an
 allowance for doubtful allowance for doubtful
accounts accounts

6Q. Explain different types of bill wise details available in Tally?

Bill wise details:

Bill wise detail feature in Tally maintains details of all pending credit bills of
customers and suppliers. The various details include a) Original date of each bill b)
due date of each bill c) adjusted amount against each bill d) pending amount of
each bill e) no. of overdue days etc. At the time of raising the invoice terms and
conditions of sale and payment are decided with the customer supplier. When there
are pending bills from a customer and he makes payment this amount should be
adjusted against the pending bills according to the terms and conditions settled
with the customer.

Tally provides various types of 'Reference' in this regard:

1. New Reference: This reference is used whenever a new sale or purchase

transaction take place. If you mark the bill as a new reference, it is add to the list of
outstanding. Suppose we have purchased goods from Supplier A against Bill No.
101 than such bill no. can be used as new reference or we can create any other
number as new reference. In the field, you can give the voucher number, the
reference number, or any alphanumeric set of characters that would identify the
reference and help set it off later using against reference. You are not allowed to
give the same name for two new references. In other words, new references must
be unique.

2. Against Reference: Select this when adjusting against a previous reference is

done. For example: we are making payment to supplier A' for purchase made
against Bill Number 101. Now at the time of making payment we will use 'Against
Reference' in bill wise detail so that such amount can be adjusted against Bill No.
101. In case here we use New Reference', then such payment will not be adjusted
against Bill No. 101. When selecting against reference, a list of pending references
(bills) for the party comes up from which you select. You may adjust the whole bill
or part of it. The rest of the bill remains unadjusted. You can use Against
Reference even to adjust advance with an invoice. This you would do when
entering a purchase or sales voucher. If there are no pending bills, the option will
not be available.
3. Advance: This is relevant where you receive or pay monies in advance. For
example: we are making payment in advance to supplier 'A' from whom goods are
yet to be purchased. In such case we will use reference 'Advance' while recording
the transaction. When later purchase is made, advance amount will be adjusted
against such purchase.

4. On account: On Account is selected when you are unable to mark a payment or

a receipt against specific pending references. Some time we are making payment to
supplier but not against particular bill. Typically, you would do this in cases of
lump sum payments where a number of bills are pending but you are not instructed
against which bill the money should be adjusted.

7Q. Explain the steps to activate bill wise details in Tally?

ACTIVATING BILL WISE DETAIL IN TALLY

The Bill-wise facility is made functional by setting this option to Yes. By

activating the Bill wise feature, the ledger masters under Sundry Debtors and
Sundry Creditors automatically displays an additional option called Maintain
balances bill-by-bill. On setting this option to Yes, an additional option Default
Credit Period is displayed. When you enter details of sales and purchases with the
Bill-wise option activated, Tally. ERP 9 prompts you to identify the invoice with
an appropriate reference number.

The reference can then be used to allocate payments to the correct invoice to
maintain an accurate account of outstanding. However, tally maintain this
information for trading accounts only such as purchase account, sales account,
purchase return etc. Sometime business man is also interested in knowing bill wise
detail of non-trading account such as machinery account etc. Bill wise Details for
Non-Trading Accounts is useful in those cases where one needs to track either an
installment to be paid or a loan amount to be received over a certain period of time.
If you want to maintain bill wise details for Non-Trading Accounts also, set this
option to Yes.

Following are steps of activating bill wise detail in Tally.

1. Enable the feature maintain bill wise detail by selecting the features of
Company>press F11 then accounting feature >select F1 and then set value YES in
maintain bill wise details and accept the settings.
2. Create/alter party ledger account under the group Sundry Debtors' for
Receivable, while creating/altering these ledger accounts activate the option
Maintain Balances bill by bill'. Here we can set credit period for the party under
'Default Credit Period' option.

3.now enter the opening balance of the amount due in the column at end of the
screen.

4. Press enter, a new screen appears, enter the bill-wise details of opening balance
of that particular customers. In the screen you can find the following options.

 Date: Enter the date on which invoice was issued.

 Name: Here name refers the bill number.
 Due date or credit days: Enter bill due date or total credit period. In case
credit period is given, the system will automatically calculate the due date
and display just below of credit days.
 Amount: Write the amount due of the bill.
5. Press enter and save both the screen.

6. Go to Gateway of Tally>accounting Vouchers > Sales (f8). While entering the

sales transaction, when selecting customer, Tally display a warning message if the
customer bill is overdue (if the effect of activating 'Check for credit days during
voucher entry in the ledger creation screen).

ENTERING BILL WISE DETAILS FOR 'NEW REFERENCE'

Bill wise detail 'New Reference' is made when a new transaction of sale or
purchase is being entered in the system. For example: we have purchased goods
from M/s. Subash Traders worth *5,00,000 on 1st July on a credit of 30 days
against invoice no. 501. As this is a new purchase transaction, 'New Reference' will
be used in the bill wise detail while recording the transaction.

Following are the steps:

Step 1. Create supplier account under Sundry Creditors with Maintain balances
bill-by-bill set to Yes first if it is not already created.

Step 2. Create Purchase Voucher: Go to Gateway of Tally > Accounting Vouchers

> F9: Purchase

Step 3. Select as Voucher mode.

Step 4. Enter 501 in the Reference field below the Purchase voucher number.

Step 5. Bill-wise details have to be given when M/s Subash Traders account is
credited.

Step 6. On selecting New Ref, 501 is displayed automatically in the field and not
the voucher number.

Step 7. In the Credit period field enter 15, which is 15 days from the effective date
of the invoice. The Bill-wise Details screen in the Purchase voucher is displayed as
shown below:
Step 8. Accept the bill-wise allocation, and type the details of the transaction in the
Narration field.

Step 9. Press Y or Enter to accept the voucher. The completed Purchase Voucher
appears as shown below:

ENTERING BILL WISE DETAILS FOR 'AGAINST REFERENCE'

This reference is used when some bill is already entered in the Tally. For example:
we have already made purchase from the supplier M/s Subash Traders against
Reference no. 501 for

which transaction is already recorded in Tally. Now we want to make payment of

₹ 3,00,000 against this reference number. We will use 'Against Reference' is bill
wise detail in Tally because such reference is already recoded and payment is
against that reference no. 501. Following are the steps:
step 1. Go to Gateway of Tally > Accounting Vouchers > F5: Payment > select
Bank Payment.

step 2. In the Account field, select Bank Account from where cheque is issued.

step 3. Under Particulars, select M/s Subash Traders.

step 4. Enter 3,00,000 in the amount column.

step 5. In the Bill-wise details screen, select Agst Ref and press Enter

step 6. Tally.ERP 9 displays list of pending bills. The screen appears as shown
below:

1.Select 501 and keep pressing Enter until the Narration field is highlighted.

2. In the Narration field, type Cheque Number.

3. The Bank payment voucher appears as shown below:

Press Y or Enter to accept voucher.

ENTERING BILL WISE DETAILS FOR 'ADVANCE'

This reference is used when we are making or receiving some advance payment.
As no bill is due at the time of making or receiving payment, Reference 'Advance'
will be used at the time of payment/receipt. Later when some purchase or sale will
be made, such advance will be adjusted. For example we are making advance
payment to the supplier SS Electronics 1,00,000 on reference no. ADV-1 against
which goods will be purchased later on. We will use 'Advance' is bill wise detail in
Tally because no reference exists at the time of making payment.

Following are the steps:

1. Go to Gateway of Tally > Accounting Vouchers > F5: Payment > select Bank
Payment.

2. In the Account field, select Bank Account from where cheque is issued.

3. Under Particulars, select SS Electronics.

4. Enter 1,00,000 in the amount column.

5. In the Bill-wise details screen, select 'Advance' and press Enter

6. Tally.ERP 9 screen appears as shown below:

7. Select ADV-1 and keep pressing Enter until the Narration field is highlighted.

8. In the Narration field, type Cheque Number.

9. The Bank payment voucher appears as shown below:

10. press Y or Enter to accepy voucher.

UNIT-5

MIS REPORTS

INTRODUCTION TO MIS

Management Information System, commonly referred to as MIS is a phrase

consisting of three words: management, information and systems. Looking at these
three words, it's easy to define Management Information Systems as systems that
provide information to management. Management information system can thus be
analyzed as follows:

Management: Management covers the planning, control, and administration of the

operations of a concern. The top management handles planning; the middle
management concentrates on controlling; and the lower management is concerned
with actual administration.

Information: Information, in MIS, means the processed data that helps the
management in planning, controlling and operations. Data means all the facts
arising out of the operations of the concern. Data is processed i.e. recorded,
summarized, compared and finally presented to the management in the form of
MIS report.

System: Data is processed into information with the help of a system. A system is
made up of inputs, processing, output and feedback or control.

MIS Meaning

Thus MIS means a system for processing data in order to give proper information
to the management for performing its functions. Management Information System
or 'MIS' is a planned system of collecting, storing, and disseminating data in the
form of information needed to carry out the functions of management.

Q. Define MIS? Explain the advantages of MIS?

MIS Meaning

Thus MIS means a system for processing data in order to give proper information
to the management for performing its functions. Management Information System
or 'MIS' is a planned system of collecting, storing, and disseminating data in the
form of information needed to carry out the functions of management.

Advantages of MIS

Following are some of advantages of MIS:

1. With help of MIS the instant messaging, emails, voice and video calls becomes
quicker, cheaper and much efficient.

2. It facilitates planning. MIS improves the quality of plans by providing relevant

information for sound decision making
3. In minimizes information overload. MIS change the larger amount of data in to
summarize form and there by avoids the confusion which may arise when
managers are flooded with detailed facts.

4. MIS encourages decentralization. Decentralization of authority is possible when

there is a system for monitoring operations at lower levels. MIS is successfully
used for measuring performance and making necessary change in the
organizational plans and procedures.

5. It brings Co-ordination. MIS facilities integration of specialized activities by

keeping each department aware of the problem and requirements of other
departments. It connects all decision centers in the organization.

6. It reduces the risk in decision making by providing accurate information for

decision making.

7. It provides information about the various aspects of business.

8. It helps the executives to avail the information regarding the functional areas
like marketing, finance, human resource etc. quickly.

9. The database helps in inducting research. The data stored are used as secondary
data.

10. It provides sound information regarding the financial health of business

organization.

11. It helps in preparing corporate report.

12. It helps the HRD manager in finding out the requirement of the human
resource, their wages and salary, performance appraisal, training, promotion,
absenteeism and employee's turnover, which is useful in drafting sound HRD
polices.

13. The data regarding production helps the production manager in deciding about
capacity. utilization, number of rejections per batch, frequency of break down,
status of shipment of processed order and product, region wise.

14. It provides information regarding inventory position, and ensures that the
chances of inventory out of stock may be minimized.
15. It provides information regarding product, price, promotion, segmentation,
demand, sale etc. to marketing manager instantly and ensures smooth functioning
of that department.

Q.

MIS Reports in ERP

The MIS reports prepared in Tally. ERP 9 are of different types. They are,

1.Accounting Reports

Accounting reports are prepared to gather information relating to financial

position, operational performance and economic activities of the business.

2. Inventory ReportS

Inventory reports are prepared to effectively manage inventory as reports provide

actual status of stock items.

3. Management Control Reports

Management control reports are prepared to control activities by using budgets,

cost centre reports, scenario reports, etc.

4.Financial Reports

Financial reports are prepared to analyze the financial condition of an organization

which is utilized by shareholders, creditors and government units.

Some of the financial MIS reports are as follows,

(a). Receivables

Bills receivable are those on which payment should be received in future date. This
report exhibits all outstanding receivables invoice till due date.

(b). Payables
Bills payable are those bills which are due for payment at a future date. This report
exhibits all outstanding payables till future date.

(c). Cost Centre Reports

Cost centre reports are basically performance reports which provide different
perspectives to transactions.

(d). Ratio Analysis Report

Ratio analysis report involves principal groups and principal ratios. It enables the
analysts to measure the liquidity position of the firm.

(e). Cash Flow Report

Cash flow report exhibits the inflow and outflow of cash during an accounting
period. It is useful for non-profit organizations.

(f). Fund Flow Report

Fund flow report exhibits the movements in funds during accounting period. It
involves sources of funds and application of funds.

(g). Exception Reports

Exception reports are useful in tracking transactions or balances which are not
usual in nature. Exception reports are of different types such as negative stock,
negative ledgers, overdue receivables, overdue payables, memorandum vouchers,
reversing journals, optional vouchers and post-dated vouchers.

Q. Define trial balance? Explain the features and how display trial balance in
Tally ERP9?

TRIAL BALANCE IN TALLY

According to the dual aspect concept, the total of debit balance must be equal to
the credit balance. It is a must that the correctness of posting to the ledger accounts
and their balances be verified. This is done by preparing a trail balance. Trial
balance is a statement prepared with the balances or total of debits and credits of
all the accounts in the ledger to test the arithmetical accuracy of the ledger
accounts. As the name indicates it is prepared to check the ledger balances. If the
total of the debit and credit amount columns of the trail balance are equal, it is
assumed that the posting to the ledger in terms of debit and credit amounts is
accurate. The agreement of a trail balance ensure arithmetical accuracy only, A
concern can prepare trail balance at any time, but its preparation as on the closing
date of an accounting year is compulsory.

TRIAL BALANCE MEANING

"Trail balance is a statement containing the balances of all ledger accounts, as at

any given date, arranged in the form of debit and credit columns placed side by
side and prepared with the object of checking the arithmetical accuracy of ledger
postings".

Features of Trial Balances

Following are the main features of Trial balance.

(i) A trial balance is prepared as on a specified date.

(ii) It contains a list of all ledger accounts including cash account.

(iii) It may be prepared with the balances or totals of Ledger accounts.

(iv) Total of the debit and credit amount columns of the trial balance must tally.

(v) It the debit and credit amounts are equal, we assume that ledger accounts are
arithmetically accurate.

(vi) Difference in the debit and credit columns points out that some mistakes have
been committed.

(vii) Tallying of trail balance is not a conclusive proof of accuracy of accounts.

Display of Trial Balance in Tally

A Trial Balance is a summary of all ledger balances to check whether the figures
are correct and balanced. Considering that the journal entries are error-free and
posted correctly to the general ledger, the total of all debit balances should equal
the total of all the credit balances. In Tally.ERP 9, the matching of the Trial
Balance is a foregone conclusion since all voucher entries are in Debit - Credit
format and must balance at the entry points. Trial Balance is not directly shown in
'Gateway of Tally', rather it is shown under the 'Display' menu available in
'Gateway of Tally.

Step1: Open Tally program.

Step2: Select your Company.

Step3: Select 'Display' under gateway of tally.

Step4: Select 'Trial Balance'

Step5: Press Enter key'

After selecting Trial balance the following screen will be display on the screen.

Configuration of Trial Balance in Tally

User can configure the Trial Balance in Tally according to his requirement. Press
F12' to change the configuration of the default Trial Balance Screen. The
Configuration Screen is shown here.
 1. For the field 'Show Opening Balances', enter 'Yes' and press Enter to view the
Trial Balance' with 'Opening Balances'. In case 'No' is selected, opening balance
will not be shown in Trial Balance.

2. For the field 'Show transactions?' enter 'Yes' and press Enter to view the
transactions in 'Trial Balance'. Once entered, a new field comes up as 'Net
transactions only?', enter 'No' and press Enter. In case of Show Transaction, Trial
Balance will show both Debit and Credit Balance of Transactions and also the Net
balance of Transactions, as shown in following Screen:
1. For the field Show Closing Balances', enter 'Yes' and press Enter to view the
Closing Balances in 'Trial Balance'.

2. For the field Show Percentages', enter 'Yes' and press Enter to view the
Percentages in Trial Balance'.

3. For the field 'Appearance of Names', select 'Name Only' from 'Display Name
Style' and press Enter as it is selected by default.

4. For the field 'Scale Factor for Values', select 'Default' from 'Scale Factors' and
press Enter.

5. For the field 'Sorting Method', select 'Alphabetical (Increasing)' from 'Sorting
Methods' and press Enter.

6. For the field 'Expand all levels in Detailed Format', enter 'Yes' and press Enter.

Q. Define Balance sheet? Explain the types of Assets and Liabilities?

BALANCE SHEET IN TALLY

In addition to finding out profit earned by him during the year, the businessman is
also anxious to know his financial position as at the end of the year. For this
purpose he prepares a statement known as Balance Sheet. Balance sheet is a
statement that shows the financial position of the business as on a given date. It is
rightly called as "mirror" of the business wherein the business can see its face i.e.,
its true position.

BALANCE SHEET DEFINATION

According to Antony, "Balance sheet is a statement which reports the property

values owned by the enterprise and the claims of the creditors and owners against
the properties. It shows the status of the business as at a given moment of time, in
so far as a counting of figures can show its status."

Classification of Assets
A Clear and correct understanding of the basic divisions of the assets and liabilities
and the meanings which they signify and the amounts which they represent is very
essential for a proper perspective of financial position of a business concern.
Assets are classified on the basis of their nature. The various types of types are as
under

(i) Fixed assets: Fixed Assets are the assets which are acquired and held
permanently and used in the business with the objective of making profits. Land
and building, Plant and machinery Furniture and Fixtures are examples of fixed
assets.

(ii) Current assets: The assets of the business in the form of cash, debtors, bank
balances, bill receivable and stock are called current sets as they can be realized
within an operating cycle of one year to discharge liabilities.

(iii) Tangible assets: Tangible assets have definite physical shape or identity and
existence; they can be seen, felt and have volume such as land, cash, stock etc.
Thus tangible assets can be both fixed assets and current assets.

(v) Fictitious assets: Fictitious assets are not real assets. Past accumulated losses
or expenses which are capitalized for the time being, expenses for promotion of
organizations (Preliminary expenses), discount on issue of shares, debit balance of
profit and loss account etc. are the examples of fictitious assets.

(vi) Wasting assets: These assets are also called depleting assets. Assets such as
mines, Timber forests. quarries etc, which become exhausted in value by way of
excavation of the minerals, cutting of wood etc, are known as wasting assets. Such
assets are usually natural resources with physical limitations.

(vii) Contingent assets: Contingent assets are assets, the existence, value and
possession of which is based on happening or otherwise of specific events. For
example, if a business firm has filed a suit for a particular property now is
possession of other persons, the firm will get the property if the suit is decided in it
favour. Till the suit is decided, it is a contingent asset.

Classification of Liabilities

A liability is an amount which a business firm is 'liable to pay' legally. All the
amounts which are claims by outsiders on the assets of the business are known as
liabilities. They are credit balances in the ledger. The capital and liabilities of the
business are shown on the left hand side in the balance sheet. Liabilities are
classified into four categories as given below.

(i) Owner's capital: Capital is the amount contributed by the owners of the
business. In addition to initial capital introduced, proprietors may introduce
additions capital and withdraws some amounts from business over a period of time.
Owner's capital is also called 'net worth'.

(ii) Long term Liabilities: Liabilities repayable after specific duration of long
period of time are called long term liabilities. They do not become due for payment
in the ordinary operating cycle of business or within a short period of time.
Examples are long term loans and debentures. Long term liabilities may be secured
or unsecured, though usually they are secured.

(iii) Current liabilities: Liabilities which are repayable during the operating cycle
of business, usually within a year, are called short term liabilities of current
liabilities. They are paid out of current assets or by the creation of other current
liabilities. Examples of current liabilities are trade creditors, bills payable,
outstanding expenses, bank overdraft, taxes payable and dividends payable.

(iv) Contingent liabilities: Contingent liabilities will result into liabilities only if
certain events happen. Examples are bills discounted and endorsed which may be
dishonored, unpaid calls on investments.

Q. Explain how to display the Balance sheet in Tally ERP9?

BALANCE SHEET DEFINATION

According to Antony, "Balance sheet is a statement which reports the property

values owned by the enterprise and the claims of the creditors and owners against
the properties. It shows the status of the business as at a given moment of time, in
so far as a counting of figures can show its status."

Display of Balance Sheet in Tally

A Balance Sheet is a financial statement that reports a firm's financial position at a

specific time. The term balance sheet implies that a report shows the balance
between two figures. It shows a balance between the assets and liabilities of a firm
and the owner's funds. The fundamental accounting equation applicable is
therefore, Assets = Liabilities + Owner's Equity In Tally Balance Sheet is
automatically generated and shown in the 'Gateway of Tally.
To view the Balance Sheet in Tally:

Step1. Open Tally program.

Step2. Select your Company.

Step3. Select 'Display' under gateway of tally.

Step4. Select Balance Sheet'. After you select 'Balance Sheet' then the screen shall
appear as under.

If you see the Balance Sheet in above format, you will find that all the ledger
accounts are shown in groups. For example: Fixed Assets, Investments etc. Now if
you want to see the Balance Sheet in more detailed form then click the 'Detailed'
button on side button tool bar. Now the Balance Sheet will appear like this:
Schedule VI (Schedule III of Companies Act 2013) Balance Sheet in Tally

Tally provides the option of displaying Balance Sheet according to Revised

Schedule VI of Companies Act 1956, which is similar to the schedule III of New
Companies Act 2013. For this purpose there is a button on the side button panel of
Balance Sheet of Tally. By clicking this button, Balance Sheet automatically get
converted into Revised Schedule VI pro-forma.
Q. Explain the configuration of Balance sheet in Tally?

Configuration of Balance Sheet in Tally

User can configure the Balance Sheet in Tally according to his requirement. Press
F12 to change the configuration of the default Balance Sheet. The Configuration
Screen is shown here.

1. For the field 'Show Vertical Balance Sheet?" type 'No' and press default Balance
Sheet is in the horizontal format. If the user enters 'Yes' then, the Balance Sheet
will be in the form of 'Sources of Funds' and 'Application of Funds' as shown
follows:
2. For the field 'Profit or Loss, both as Liability?' enter 'No' and press Enter. If 'Yes'
is chosen, both the Profit or Loss will be shown as 'Liability'. In case of loss it will
be shown as deduction from liability side.

3. For the field 'Show Percentages?' type 'No' and press Enter. If 'Yes' is chosen,
the groups will display percentages along with the balances.

4. For the field 'Show Working Capital Figure?' type 'No' and press Enter. Set this
option to 'Yes' when 'Working Capital Analysis' is required.

5. For the field Method of showing Balance Sheet?' select 'Liabilities/Assets' from
the Type of Balance Sheet' and press Enter. Usually, in Balance Sheet 'Liabilities'
will be shown on the left side of a Balance Sheet and 'Assets' on the right side. By
setting 'Assets/Liabilities' the display will be interchanged. 'Assets' will appear on
the right side and 'Liabilities' will appear on the left side

6. For the field 'Appearance of Names?' select 'Name Only' from the 'Display
Name Style' and press Enter. This will display only the names everywhere.

7. For the field 'Scale Factor for Values?' select 'Default' and press Enter. If the
user does not wish to present the actual figures in the 'Balance Sheet', the user may
'round them off to the nearest 'Scale Factor' like 'Crores', 'Hundreds', 'Lakhs',
'Millions', 'Ten Lakhs', Ten Million', 'Ten Thousands' and 'Thousands'.

Q. Define profit and loss account? Explain the contents in profit and loss
Account?

PROFIT AND LOSS ACCOUNT IN TALLY

It is quite natural that the businessman is interested in knowing whether his

business is running on Profit or Loss. The main aim of accounting is to inform the
Proprietor, about the business profits or losses at the right time and in the right
way. For ascertaining the profit or loss made by the business, we prepare income
statement. Income statement shows all incomes and expenditures of business for a
particular period. Income statement is further divided into two parts i.e. Trading
Account and Profit & Loss Account.

Trading Account

A concern which purchase goods and sell the same is known as merchandising
concern. To know to trading results of the business an account is prepared at end of
the accounting period which is called as trading account. Trading account is a
nominal account, therefore expenses will appear on debit side and incomes will
appear on credit side.

Items shown on the debit side of Trading Account:

(i) Opening stock: The stock at the beginning of the year is called opening stock.
It may include raw materials, work-in-progress and finished goods. Opening stock
is the closing stock as per the last balance sheet, and it is available from the current
year trial balance. This item is usually shown as to first item on the debit side of
the Trading account.

(ii) Purchase: Any materials and goods made buy during the year which is meant
for resale is known as purchase. Purchased goods returned to the suppliers due to
any reason are deducted from purchase.

(iii) Direct expenses: Expenses which are incurred to make the goods saleable, is
known as direct expenses. Factory rent, wages, fright on purchase, octroi, import
duty, customs duty, clearing and forwarding charges, dock dues, motive power, oil,
grease, waste, wages and salaries, Carriage inward and royalty on production.
These all direct expenses are shown on the debit side of trading account.

Items appearing on the credit side of trading account:

(i) Sales: Sales made during to year is called Gross sales, it includes both cash and
credit sales of goods. If sales return subtracted from the gross sales the balance is
known as net sales. (ii) Closing stock: The unsold goods which are lying in the
godown at the end of the accounting year is known as closing stock. It may include
raw materials, work-in-progress and finished goods at end of the year.

The balance of this account shows gross profit or gross loss. If credit side total is
more, the difference is gross profit and if debit side total is more, the difference is
gross loss. Following is the sample format of Trading Account.

Profit and Loss Account

Profit and loss Account is an account prepared to ascertain to net profit earned or
net loss incurred by the business concern for an accounting period. This account
starts with gross profit brought down form trading account on the credit side. It is
debited with the all indirect expenses both operating and non- operating expenses
and losses and credited with all revenue incomes and profits. The balance of this
account is net profit or net loss

Items shown in the debit side of Profit and Loss Account

(i) Gross loss (if any) is the first item appearing on the debit side of profit and loss
account.

(ii) Operating expenses: These expenses are incurred to operate the business
efficiently. They are incurred in running the organization. Operating expenses
include administration, selling, distribution, depreciation and maintenance
expenses.

(iii) Non operating expenses: These expenses are not directly associated with day
to day operations of the business concern. They include loss on sale of assets,
extraordinary losses, etc.

Items shown in the credit side of Profit and Loss Account

(i) Gross profit: It is the first item appearing on the credit side of profit and loss
account.

(ii) Operating incomes: These incomes are incidental to business and earned from
usual business carried on by the concern. Examples: discount received,
commission received.

(iii) Non operating incomes: These incomes are not related to the business carried
on by the firm. Examples are profit on sale of fixed assets, refund of taxes etc.

Q. Explain the steps how to display and configuration of profit and loss
account in Tally?

Trading Account

A concern which purchase goods and sell the same is known as merchandising
concern. To know to trading results of the business an account is prepared at end of
the accounting period which is called as trading account. Trading account is a
nominal account, therefore expenses will appear on debit side and incomes will
appear on credit side.

Profit and Loss Account

Profit and loss Account is an account prepared to ascertain to net profit earned or
net loss incurred by the business concern for an accounting period. This account
starts with gross profit brought down form trading account on the credit side. It is
debited with the all indirect expenses both operating and non- operating expenses
and losses and credited with all revenue incomes and profits. The balance of this
account is net profit or net loss

Steps to display profit and loss account in Tally

Profit and Loss Account or Income Statement is a periodic statement, which shows
the net result of business operations for a specified period. The profit and loss
account in Tally.ERP9 displays the information based on the default primary
groups. It is updated instantly with every transaction/ voucher that is entered and
saved. No special processing is required to produce a profit and loss account in
Tally. ERP 9.

Step1. Open Tally program.

Step2. Select your Company.

Step3. Select 'Display' under gateway of tally.

Step4. Select Profit & Loss Account'. After you select 'Profit & Loss Account' then
the screen shall appear as under:

Configuration of Profit and Loss Account in Tally

Tally give option of configuration of Profit and Loss Account according to need to
the user. There is an icon on gateway of tally i.e. 'Configuration'. Select the same
or press F-12. After you select configuration:

Show vertical profit If you want see P&L a/c in vertical form (statement Form)
and loss account then write ‘yes’, in our you want to see in horizontal form
(T Form) then select ‘No’.
Show percentage Select ‘No’.
Show with gross profit Select ‘Yes’ if you want to see trading account separately.
Appearance of name Select ‘Name only’.
Scale factor for value Select ‘Default’.

Now your screen shall appear as under

After you press enter on last command then format of your profit and loss account
will change into parts i.e. it will show trading account and profit & loss account in
two parts. Now, you can see gross profit and net profit separately. This screen will
appear as under:
If you see the Profit & Loss Account in above format, you will find that all the
ledger accounts are shown in groups. For example - direct expenses, indirect
expenses etc. Now' you want to see the profit and loss account in more detailed
manner then you just select 'Detailed' on screen. Now, your screen shall appear as
under:

Cash Flow Statement

A cash flow statement concentrates on the transactions that have a direct impact on
cash. It deals with the inflow and outflow of cash between two Balance Sheet
dates. That is, it explains the changes in cash position between the two periods.
Here the term cash stands for cash, bank balances and cash equivalents. Every
enterprise has to prepare a Cash Flow Statement to report cash flows during the
period classified by Operating, Investing and Financing activities in a manner
which is most appropriate to its business. An enterprise can report cash flows using
either

1. Direct method Where the major classes of gross cash receipts and gross cash
payments are disclosed.

2. Indirect method Where the net profit or loss is adjusted for the effects of
transactions of a non-cash nature, any delays or accruals of past or future operating
cash receipts or payments, and items of income or expense associated with
investing or financing cash flows. -

Following are the steps for viewing Fund Flow Statement.

1. Go to Gateway of Tally

2. Go to Display Menu

3. Enter on Cash / Funds Flow

4. Press Enter on Cash Flow Menu

5. Now Select any month for which you want to view Cash Flow Statement 6.
Then Press Enter
Funds Flow Statement

A fund flow statement is useful tool for analysis of funds The basic purpose of this
statement if is to indicate the source and application of funds for a given period. It
is a financial statement which reveals how a particular business has been financed
and how resources were used between the opening and closing balance sheet date.
Thus a funds flow statement is a report that explains the movement of funds during
a particular accounting period. It consists of two parts.

Source of funds

Application of funds.

The difference between these two shows the net change in the working capital for a
particular period. It shows all those transactions which effect the net working
capital of the firm.

Following are the steps for viewing Fund Flow Statement.

1. Go to Gateway of Tally

2. Go to Display Menu

3. Enter on Cash / Funds Flow

4. Press Enter on Funds Flow Menu

5. Now Select any month for which you want to view Fund Flow Statement 6.
Then Press Enter
Q. What is Ratio? Explain the different types of Ratios?

RATIO ANALYSIS IN TALLY

The term ratio' simply means one number expressed in terms of another. It shows
the quantitative relationship between two numbers. In accounting ratio analysis
refers to the analysis and interpretation of the figures appearing in the financial
statements (i.e., Profit and Loss Account, Balance Sheet and Fund Flow statement
etc.)

RATIO ANALYSIS DEFINATION

The term 'Accounting ratio' is used to describe significant relationships between

figures shown on a Balance Sheet, in a Profit and Loss Account, in a Budgetary
Control System or in any other part of the accounting organization.

Types of Ratios

The use of ratio analysis is not confined to financial manager only. There are
different parties interested in the ratio analysis for knowing the financial position
of a firm for different purposes. In view of various users of ratios, there are many
types of ratios which can be calculated from the information given in the financial
statements.

(a) Classification According to Sources:

Accounting ratios can be further classified into following three groups:

1.Balance Sheet Ratios: These ratios are also known as financial ratios. These
ratios deal with relationship between two items or group of items which are both
available in Balance sheet. Balance Sheet Ratios are those ratios the components of
which are taken from Balance Sheet values/figures as appeared in a balance sheet
of a firm, i.e. assets and liabilities. Examples of these ratios are: Current ratio,
Liquid ratio, Debt Equity ratio, Capital bearing ratio, Proprietary ratio, etc.

2. Profit and Loss Account Ratios: These ratios deal with the relationship
between two items or group of items which are usually taken out from the profit
and loss account. Examples of these ratios are: Gross profit ratio, Net profit ratio,
Operating ratio, Operating profit ratio, Interest coverage ratio etc.

3. Inter-statement Ratios or Combined Ratios: These ratios deal with the

relationship between items, one of which is drawn from profit and loss account and
other is from balance sheet. Examples of these ratios are: Stock turnover ratio,
Debtors turnover ratio, Creditors turnover ratio, Assets turnover ratio. Return on
capital employed, etc.

(b) Classification According to Nature:

Under this classification, ratios are grouped as:

1. Liquidity Ratios: The terms liquidity and short-term solvency are

synonymously used. The liquidity ratios indicate the liquidity position of the
enterprise. These ratios. analyse the ability of the firm to meet its current liabilities
out of current assets. Liquid ratios are of help in ascertaining the effectiveness of
the working capital management. Examples of these ratios are: Current ratio,
Quick ratio etc.

2. Leverage Ratios: It refers to those financial ratios which measure the long-term
solvency and capital structure of the firm. They show the mix of funds provided by
the owners and lenders and also the risk involved in debt financing. Examples of
these ratios are: Debt-Equity ratio, Capital gearing ratio, Fixed assets to Net worth
ratio, Interest coverage ratio etc.

3. Turnover or Activity Ratios: These ratios measure the efficiency with which
the funds have been employed in the business. They indicate frequency of sales
with respect to its assets. These are computed with reference to sales or cost of
goods sold and expressed in terms of times or rates. Examples of these ratios are:
Stock Turnover ratio, Debtors Turnover ratio, Creditors Turnover ratio, Fixed
Assets Turnover ratio, etc.

4. Profitability Ratios: Profitability is an indication of the efficiency with which

the operations of the business are carried on. Profitability ratios show the effect of
business transactions on the profits. A lower profitability ratio may arise due to
lack of control over business expenses. Examples of these ratios are: Gross profit
ratio, Net profit ratio, Operating ratio, Operating profit ratio, Return in capital
employed, etc.

Different Ratios in Tally

Following ratios can be viewed in Tally

(i) Current Ratio: (Current Assets Current Liabilities) - Current Ratio shows the
liquidity position of a business and may be defined as the ratio of current assets to
current liabilities. It is also known as Working Capital Ratio. The ideal ratio is 2
under normal business conditions.

(ii) Quick Ratio - (Current Assets - Stock in Hand: Current Liabilities) - Liquid
Ratio may be defined as the ratio of liquid assets to liquid liabilities or current
liabilities. It is concerned with the relationship between liquid assets and liquid or
current liabilities. The other terms used for liquid ratio are 'Quick ratio' and 'Acid
Test Ratio'. This ratio is useful in planning future cash requirements.

(iii) Debt Equity Ratio - (Loans (Liabilities): Capital + Net Profit) - This ratio
measures the claims of outsiders and the owners, i.e. shareholders against the
assets of the firm. It is also known as External-Internal Equity Ratio. In short, it
expresses the relation between the external equities and internal equities, or the
relationship between borrowed capital and owner's capital. It is a measure of long-
term solvency of the business.

(iv) Gross profit Ratio: (Gross Profit: total Turnover) - It is the ratio of gross
profit to net sales expressed as a percentage. It expresses the relationship between
gross profit margin and sales. The basic components are gross profit and sales. Net
Sales means total sales minus sales returns. Gross profit would be the difference
between net sales and cost of goods sold. This ratio is useful, where an enterprise
produces more than one product, in identifying the order of profitability and
making decisions such as increasing production capacity, continuance of a product
etc.
(v) Net Profit Ratio: (Net Profit: Total Turnover) - This is the ratio of net income
or profit after taxes to net sales. Net Profit as used here, is the balance of Profit and
Loss Account, which is arrived at after considering all non-operating income such
as interest on investments, dividends received, etc., and all non-operating expenses
like loss on sale of investments, provision for contingent liabilities, etc. This is
useful in identifying the overall profitability of the enterprise.

(vi) Operating Cost (Operating Cost: Turnover) - This is the ratio of operating
cost to net sales. The term 'operating cost' refers to cost of goods sold plus
operating expenses. This is closely related to the ratio of operating profit to net
sales. For example, if the operating ratio is 80%, then the operating profit ratio
would be 20% (i.e., 1 - operating cost ratio). This ratio is useful in making
decisions in the areas of cost control, cost reduction etc.

(vii) Receivables Turnover This ratio is an analysis of debtor wise payment

performance and a useful tool in identifying the most preferred and least preferred
customers or agents and planning the receivables collection process. This ratio
indicates the efficiency of the credit and collection policies of the firm.

(viii) Return on Investment – It is referred to as a percentage of net profit /

capital + net profit. Return on Investment is considered to be the best measure of
profitability in order to assess the overall performance of the business. A
comparison of the ratio with similar firms, with the industry average and over time
would provide sufficient insight into how efficiently the long-term funds of owners
and creditors are being used. The higher the ratio, the more efficient use of the
capital employed.

(ix) Return on working capital - It is referred to as the percentage of net profit to

working capital (current assets - current liabilities).

(x) Working capital turnover ratio - It indicates how effectively working capital
is used in terms of turnover it can help to generate. It is a useful tool in identifying
the level of deployment of funds with respect to sales.

(xi) Inventory turnover ratio (turnover: inventory) - It is also known as Stock

Turnover Ratio. Normally, it establishes a relationship sales during a period and
inventory held. in that period. This ratio indicates whether investment in inventory
is within proper limit or not. Inventory turnover ratio indicates the efficiency of
inventory management. It shows how fast inventory is used/sold. It is an effective
tool to measure the liquidity of inventory and thereby to avoid any danger of over-
stocking.
Q. What is Ratio? Explain the steps to display the Ratio Analysis in Tally?

RATIO ANALYSIS IN TALLY

The term ratio' simply means one number expressed in terms of another. It shows
the quantitative relationship between two numbers. In accounting ratio analysis
refers to the analysis and interpretation of the figures appearing in the financial
statements (i.e., Profit and Loss Account, Balance Sheet and Fund Flow statement
etc.)

RATIO ANALYSIS DEFINATION

The term 'Accounting ratio' is used to describe significant relationships between

figures shown on a Balance Sheet, in a Profit and Loss Account, in a Budgetary
Control System or in any other part of the accounting organization.

Display Ratio Analysis Report in Tally

Ratio analysis is a powerful tool for financial analysis. A meaningful analysis of a

financial statement is made possible by the use of ratios. There are a number of
ratios which can be computed from a single set of financial statements. The ratios
to be computed depend on the purpose for which these ratios are required. Tally
automatically calculates many ratio for the purpose of analysis.

Following are the steps to view the Ratio Analysis report in Tally:

Step1: Go to Gateway of Tally.

Step2: select Ratio analysis from Gateway of Tally

The Ratio Analysis screen is displayed as shown.

BOOKS AND REPORTS IN TALLY

Day Book

For recording the business transactions, first of all, the vouchers are prepared by
accountants. As we know that different types of vouchers are prepared for different
type of transactions. After preparation of vouchers, now, question arises for
entering the vouchers in proper day books. Day Book means a register where all
the vouchers of same nature are recorded date-wise or in proper order. From the
help of day book the summary of all the vouchers can be seen at one place. In
absence of day book, no one can get further details easily. So the day book is a
proper way to enter the transactions from voucher and further, to make the entries
from day book to the ledgers. The Day Book is a list of all transactions for a
particular day, by default the current date. It can also list all the transactions for a
period. Transactions include all financial vouchers, reversing and memorandum
journals as well as inventory vouchers.

In Tally. ERP 9, the Day Book is by default displayed for the current date (as on
the last date of voucher entry). However, user may specify the required period, as
per your requirements. Following are the steps to view the Day Book:
1. Go to Gateway of Tally

2. Then go to Display Menu

3. Then press enter on Day Book Menu

4. Now you can change period by pressing Alt+F2 Button.

5. Now Specify the required period to view transactions entered for that particular
day, week and year or for any specified period.

SALE REGISTER

Sales Register displays the monthly summary of sales transactions and closing
balances. The list of transactions pertaining to each month can be viewed by
selecting that month and viewing its details. Tally. ERP 9 permits you to change
the display according to the information required. The period of the report and the
content details can be modified. Columnar periodic reports can be generated using
Alt +N: Tally. ERP 9 also allows you to compare similar data of two or more
companies stored in the same data directory.

Following are some of the uses of Sales Register:

1 The periodic turnover can be analysed using the F2: Period button.

2. The periodic taxes on such turnovers can be easily computed.

3. Errors made while recording the transactions can be easily traced.

4 Sales returns during the year can be analysed and timely action can be taken to
remove the undesirable causes.

5. Performance analysis of godown, salesperson, sales area etc. can be done with
the help of cost centre and cost category report

Following are steps of checking sales register in Tally:

Go to Gateway of Tally.

Then go to Display Menu.

Then go to Account Books Menu.

Then Sale Register Menu.

Now Press Enter on the required month to view Sale Transactions for a month.

Now all entries will be display for the required month.

PURCHASE REGISTER

A Purchase Register displays the information on the periodic purchases of a

business concern. Purchase register helps in analyzing the details of movement of
purchased goods to various godowns, on the basis of which the stock movement at
each godown is determined. It also gives detail of the goods purchased and
returned during the year. A business could get item wise detail or party wist detail
in the purchase register.

Following are steps of checking Purchase register in Tally:

Go to Gateway of Tally.

Then go to Display Menu.

Then go to Account Books Menu.

Then Purchase Register Menu.

Now Press Enter on the required month to view Purchase Transactions for a
month.

Now all entries will be display for the required month.