What is Tally

Tally is Financial Accounting Package. Financial

Accounting software is used to store and maintain
daily business transaction like purchase, sales,
receipts, payment, purchase return, sales return,
deposits, withdrawals etc.
 Definition of Accounting.

Accounting is defined as “the art of

recording, classifying and summarizing
in terms of money transactions and
events of financial character and
interpreting the result thereof”
 Journal
• The basic book of accounting is
called Journal. Journal means Day
book, Dairy or log book. Trader
records his total daily transactions in
it. The process of recording the
transaction into journal is called
Journalizing.
 Ledger
Ledger is the most important book of
accounting. It contains summarized,
classified description of all the
business transactions. It is divided into
various parts and each part is termed
as account.
 Debit (Dr.) and Credit (Cr.)
Account is divided into two parts. Left-
hand side is known as debit side and
right hand side is known as credit side.
Debit means to make an entry in the
left hand side of an account. Credit
means to make an entry in the Right
hand side of an account
 Classification of Accounts

Account
Personal Impersonal

Real Nominal
 * Personal Account

Accounts recording transaction

relating to individuals or firms or
company are known as personal
accounts
 * Real Account
• Accounts recording transaction relating to
tangible things (which can be touched,
purchases and sold) such as goods, cash,
Building, Machinery etc.
• Whereas Accounts recording transaction
relating to intangible things (which do not
have touched or physical shape) like
goodwill.
 * Nominal Accounts.
The account recording transaction
relating to the losses, gain,
expenses, and income- Rent,
Salary, Wages, commission,
interest etc are classified as
nominal accounts.
 * Rules of Debit and Credit
• Personal Accounts  Debit the receiver
Credit the giver
• Real Account  Debit what comes in
Credit what goes out.
• Nominal Account  Debit expenses and
losses
Credit incomes and gains.
 Method of Accounting system
There are two methods of Accounting System
1) Single Entry System
2) Double Entry System.
Single Entry System is purely based on cash
transactions are taken into account and credit
transactions are eliminated.

In Double Entry System, both cash and

credit transactions are entered. All
commercial organizations follow this
method. Tally follow Double Entry System of
Accounting
 VAT
VAT is a system of indirect taxation, which has been
introduced in lieu of sales tax. It is the tax paid by the
producers, manufacturers, retailers or any other dealer
who add value to the goods and that is ultimately
passed on to the consumer. It benefits the common
man (consumer), businessman and the Government.
VAT is applicable only to local sales. A sale
originates in one state and gets terminated in the same
state is called as a local sales. Vat full form is Value
Added Tax
 Input tax A/C
This is a tax paid on purchases.
Output tax A/C
This is a tax charged on sales
Input Credit
The amount of Input tax that is
permitted to be set off against
Output tax.
 Trading A/C
Dr. Amt Cr. Amt
Purchase A/C Sales A/C
Less P. Return Less S. Return
Direct Expenses Direct Income
Carriage Inward
Professional Service
Unloading charges Charge
Wages
Service Charges
Coolie Charges
Fuel
Freight
 Profit and Loss Account
Dr. Amt Cr. Amt

Indirect Expenses Indirect Income

Salary Interest on Deposits
Rent Rent
Advertisement Commission
Traveling Expenses Dividend
Maintenance & Cleaning Exp. Receive
Electricity Exp. Packing and Forwarding chrg
Telephone Expenses. Distribution Charges
Printing And Stationary
Postage and Stamps
Depreciation
Commission
Interest on loan
 Balance Sheet
Liabilities Amt Assets Amt
Capital A/C Fixed Assets
Partner Capital Plant
Share Capital Machinery
Proprietors Capital Building
Less Drawings Furniture
Reserve and Surplus Immovable Properties
Loans Accumulated Depreciation
Bank OD(OCC) A/C Trade Right
Bill Discounting Investment
Secured Loan Shares, Bonds, Debenture
Unsecured Loan Current Assets
Current Liabilities Deposits,Stock in hand (closing stock)
Duties And Taxes Loan and Advance
Provision for bad debts -Salary advance, Loan to empl.
Prov. Depre., Dividend Sundry Debtors
Sundry Creditors (Seller's Name)
( Purchaser's Name) Cash in hand
Bank A/C
Branch/Division
Misc. Expenses
 Amar started business with Rs.10,000
Ledger:- Amar’s Capital A/c and Cash A/c

Amar is personal A/c and he is giver to business. Business has

receiver cash, As per rules, Debit- what comes in and credit the
giver
Personal Accounts  Debit the receiver

Credit the giver

Real Account  Debit what comes in

Credit what goes out.

By Cash A/C ----------------Dr. 10000
To Amar’s Capital A/c ---Cr. 10000
 Out of the above RS. 2000 are deposited in bank
Bank A/C may be considered as personal A/C hence
receiver is debited. cash goes out therefore credit
Ledger:- Bank A/c and Cash A/c

Personal Accounts  Debit the receiver

Credit the giver

Real Account  Debit what comes in

Credit what goes out.

By Bank A/c ---------------------------Dr. 2000
To Cash A/c --------------Cr. 2000
 Purchase office furniture for cash worth Rs1000

Furniture is tangible goods. In Real A/c- Debit What comes in

 Furniture and Credit What goes out  Cash

Ledger :- Furniture A/c and Cash A/c

Real Account  Debit what comes in

Credit what goes out

By Furniture A/c -------------------- Dr. 1000

To Cash A/c --------Cr. 1000
Purchase of goods for cash Rs. 1500
Goods are Real A/c- Debit means What comes in and
paid cash in exchange- Credit means What goes out.

Ledger :- Purchase A/c and Cash A/c

Real Account  Debit what comes in

Credit what goes out.

By Purchase A/c --------------------------- Dr. 1500

To Cash A/c ------- Cr. 1500
Purchase of goods from Bikash on
credit for Rs2000
Purchase A/c be Real A/c and Debit means What comes
in (Purchase of goods) & Bikash be personal A/c and
giver of goods ,
Ledger :- Purchase A/c and Bikash A/c

Personal Accounts  Debit the receiver

Credit the giver
Real Account  Debit what comes in
Credit what goes out.

Purchase A/c -------------------- Dr. 2000

To Bikash A/c------------- Cr. 2000
 Sold of Goods for cash Rs3000
Sold of goods and cash are Real A/c- Credit what goes out.
Received cash in exchange of goods- Debit what comes in

Ledger :- Cash A/c And Sales A/c

Real Account  Debit what comes in

Credit what goes out.

By Cash A/c ------------- Dr. 3000

To Sales A/c --------- Cr. 3000
Sold goods on credit to Chetan for Rs3000
Sold of goods be Real A/c –Credit what goes out . Chetan be
Personal A/c- Debit the receiver

Ledger :- Chetan A/c and Sales A/c

Personal Accounts  Debit the receiver

Credit the giver

Real Account  Debit what comes in

Credit what goes out.

By Chetan A/c -------------- Dr. 3000

To Sales A/c ------ Cr. 3000
 Paid Salary Rs5000
Salary is an expenses, Nominal A/c, Expenses are debit ,
Cash is a Real A/c , goes out , Credit what goes out

Ledger :- Salary A/c And Cash A/c

Real Account  Debit what comes in

Credit what goes out.

Nominal Account  Debit expenses and

losses

Credit incomes and gains.

By Salary A/c ----------------- Dr. 5000
To Cash A/c ----------- Cr. 5000
 Commission received Rs.1000
Commission received means cash received and what comes
in (cash)- Debit. commission received is income. Income is
credit
Ledger :- Cash A/c and Commission A/c

Real Account  Debit what comes in

Credit what goes out.

Nominal Account  Debit expenses and

losses

Credit incomes and gains.

By Cash A/c ------------------- Dr. 1000
To Commission A/c ------ Cr. 1000
Charged Depreciation on furniture
Rs1000
Depreciation means decrease the value asset (loss). It is an
nominal A/c and the rule is debit the losses. The value of
asset has decreased hence credit Furniture A/c
Ledger :- Depreciation A/c and Furniture A/c

Real Account  Debit what comes in

Credit what goes out.

Nominal Account  Debit expenses and

losses
Credit incomes and gains.
By Depreciation A/c ----------------- Dr 1000
To Furniture A/c ----------------- Cr. 1000
 Types of voucher
Accounting Voucher and Inventory voucher

Accounting Voucher
• Contra voucher F4
• Payment voucher F5
• Receipt voucher F6
• Journal voucher F7
• Sales voucher F8
• Credit note Ctrl+F8
• Purchase voucher F9
• Debit note Ctrl+F9
• Reversing voucher F10
 Contra Voucher F4
Cash or cheque deposited into bank ,
cash, withdraw from bank, transfer of fund
from one bank to another bank. Here debit
and credit accounts can be only Cash A/c
and Bank A/c
 Payment Voucher F5

Payment voucher is used to enter all type of payments

By cash or bank. Payment of salary, wages,
commission, rent, all indirect expenses, payment to
sundry creditor and interest on loan except depreciation
 Receipt voucher F6
Receipt voucher is used to enter all receipts of
cash or bank. Amount received from customers,
capital introduced into the business, loan take,
commission, rent, interest, income received.
Amount received from sale of fixed asset etc.
 Journal voucher F7

A Journal voucher is an adjustment voucher.

Depreciation on fixed asset, sale of fixed asset on
credit
 Sales Voucher F8

Sales voucher is meant for sales entries. Sales

made in the regular course of business (not sale of
fixed asset of the office). Generally, business are
made on credit.
 Credit note ctrl+F8

Credit note is used to enter the transaction related

to sales Return
 Purchases voucher F9

Purchase voucher is meant for Purchases

entries. Purchases made in the regular course of
business (not Purchases of fixed asset of the
office). Generally, business are made on credit.
 Debit note ctrl+F9

Debit note is used to enter the transaction

related to Purchase return
 Inventory vouchers
• Purchase order Alt+F4
• Purchases Quote Ctrl+F4
• Sales order Atl+F5
• Sales Quote ctrl+F5
• Rejection out Alt+F6
• Rejection in Ctrl+F6
• Stock journal Alt+F7
• Delivery note Ctrl+F8
• Receipt note Alt+F9
• Physical stock voucher Alt+F10