Introduction and History of tally

Tally Solutions Pvt. Ltd. is an Indian Multinational Company that provides Enterprise Resource Planning (ERP) software. It is headquartered in Bengaluru, Karnataka, India. The company reports that its software is used by more than 1.8 Million customers and is currently sells into more than 100 countries beyond its native India, including the United Kingdom, Bangladesh and the Middle East.

Founder: Shyam Sunder Goenka & Bharat Goenka

Products: Tally.ERP9, Tally.Server9, Tally. Dev

Founded: 1986

Headquarters: Bengaluru, Karnataka, India

What is tally?

Tally. ERP 9 is one of the most popular accounting software used in India. It is complete enterprise software for small & medium enterprises. Tally. ERP 9 is a perfect business management solution and GST software with an ideal combination of function, control and in-built customizability.

Enterprise useful Resource Planning also known as ERP is technique to design to combine a no of different information sources and/or process into one single unified system.

What is full form of tally?

TALLY-Total Accounting Leading List Year

What is ERP?

Enterprise Resource Planning

Uses of tally: –

In the present world, organizations have been moving toward easier and simpler ways. When Tally has been providing effective solutions for their accounting queries, organizations feel it more comfortable and efficient technique. Many inculcated reasons and uses of Tally provided path to clear up accounting and management rush ups.

Tally ERP 9 is accounting software that has been used to record several financial transactions and events.  As it is a multi-functional software, it is used for

1. Inventory Management
2. Accounting
3. Payroll Preparation
4. Multiple Go-Downs Management
5. Cost Center Management
6. Banking
7. Ratio Analysis
8. Taxation and Billing

Tally software, accounting user-friendly software configures the status according to the business requirements.

Different Version of tally: –

Basic Concept of Accounting: –

Accounting: –

Accounting is the process of recording daily financial transaction in a systematic way.

Need for Accounting

1. Records transactions.
2. Classifies transactions and event.
3. Express transactions in monetary terms.
4. Helps to monitor the financial performance and condition of the business.
5. Helps to evaluate the business.

All the transactions which take place in the day-to-day business. This is done for a particular period of 12 months called a ‘Financial Year’. It generally starts on 1st April and ends on 31st March. All the information of this period taken for Interpreting Financial events is helpful for decision making.

A person running a business needs to know his: –

1. Assets [What he owns].
2. Liabilities [What he owes].
3. Profit or Loss.
4. Accordingly, the future planning.

In short accounting means recording the transactions. So, what is transaction?

Transaction: – Mutual dealing of goods, money or services in business is called transaction.

Transactions are of two types

1. Cash (Immediate Payment)
2. Credit (The payment is done after some period)

Cash transaction: – When money or cash is paid at the time of dealing, it is called cash transaction.

Credit transaction: – If the payment of cash is deferred on any particular date in future

Some important Term and Definitions: –

Assets: –

The properties which are necessary for running the business are called assets.

These are of three types,

1. Fixed Assets 

 Assets acquired relatively for a long period to carry the business e.g. land and building, furniture, plant and machinery etc.

• Current Assets  

Assets which are held essentially for a short period and are meant for converting into cash. e.g. cash, inventories, bills receivable etc.

• Liquid Assets  

Assets which are immediately convertible into cash without much loss. e.g. marketable securities, stamps etc.

Liabilities: –

           It is the amount which a business owes or has to return. E.g. loans taken from banks etc. The advance and obligation which are to be paid to the creditors, other person and institutions are called liabilities. For example, capital account, creditors, outstanding expenses, bills payable etc. are liabilities for business.

Capital: – It refers to the amount invested in a business enterprise.

Revenue: – It refers to the income of a recurring nature from any source related to business.

Expenses: – It denotes the cost of services and things used for generating revenue.

Capital Expenses: – An expenditure incurred for purchase of Fixed Assets.

Revenue Expenses: – Expenses incurred merely to maintain the business or to keep the Assets in good working condition.

Goods: –

The term “goods” is used only to indicate the trading products and other products which we purchase for sale or trading and not for consumption. E.g., computer purchased for office use is an ‘Asset’ but the computer purchased for selling is ‘Goods’. Goods purchased are known as ‘Purchases’ and Goods sold is known as ‘Sales’.

Stock: – Some of the goods purchased sometimes remain unsold, it is known as stock or stock in Trade.

Debtors: – A person to whom goods are sold on credit, means who owes money to the business is called a debtor.

Creditors: – A person from whom goods are purchased on credit and amount is payable is called a creditor.

Direct Expenses: – These are the expenses which are directly related to manufacturing of goods. Ex. Wages, Factory Rent, lighting etc.

Indirect Expenses: – These are the expenses which are indirectly related to manufacturing of goods. Ex. Salary, Rent, Stationery, Advertisement, Printing.

Depreciation: – Decrease the value of the assets

Sundry debtors: – The person who is the receiver or customer

Sundry creditors: – The person who gives or supplier.

Ledger:- A ledger is the book in which all the accounts are maintained.

Journal entries: – A daily record of transaction.

Trail balance: – A trial balance is a list of the balances of all ledger accounts. It is prepared after all the transactions are entered in the journal, journal entries posted to the ledger and the ledger accounts balanced. It is the sum of balances of the all real, personal, and nominal accounts of the organization.

Profit: – Excess of credit over debit

Voucher: – A voucher is a document containing the details of a financial transaction. For example, sales invoice, purchase invoice, pays lip, and rent receipt and so on.

Invoice or Bill: – When goods or services or sold, a voucher needs to be created, which the customer (debtors) as a proof of purchase made. This document is called “invoice”.

Balance sheet: – The balance sheet is a statement that summaries the assets and liabilities of a business. The access of assets over liability is the net worth of business.

Journal: – A journal is a book in which business transactions are entered in chronological order. A record of a single business transaction is called a journal entry.

Petty Cash: – It is generally observed that in every business irrespective of size and volume of trade, there are many payments which are of small amount and high frequency for example, postage, printing, stationary etc. If all these payments are recorded in cash books it will be unnecessary overburdened. For head cashier. Therefore, a separate cash book is kept in charge of a petty cashier to record all such all small cash transaction. This is known as petty cash book. It is the book which is used for recording small and frequent cash transaction every day.

Drawing: – when the proprietor of a business withdraws cash or goods from business for his private use is called drawing. It is entered in a separate account ‘Drawing Account’ while passing a journal entry drawing account is always debited and cash account & purchase account are credited

Turnover: – The total amount of sale (cash & credit) during a particular period is called turnover Debtors: – The person institution to whom you have sold goodsmoney on credit is called debtors till the full amount is not paid.

Capital: – Capital is that amount of cash, goods or assets which is initially invested by the proprietor which starting his business, if additional amount is invested after the starting of the business it is also called the capital. Profit in the business adds to the capital which loss in business reduces the capital

Debit note: – When goods are returned by the customer to the supplier due to wrong quantity or quality of product, rate difference, discount, commission, etc. is known as debit note. It is also known as purchased return.

Credit note: – It is an official or commercial document which is provided by supplier to the customer. It is also known as sales return.

Rules of Accountants: –

Account and its Types: –

Accounts are classified into two categories:

1. Personal
2. Impersonal

Personal Account:-

Accounts that record transactions related to individuals, companies, banks, and organizations are known as personal accounts.

Examples of personal accounts are Ramesh A/c, and Mohan & Co. A/c flowing are the three types of personal accounts.

Rules of Personal Account

Dr. The Receiver

Cr. The Givers

Examples of Personal Accounts

Paid Rs.10000/- to Mr. Krishna by Cash/Cheque.

DR- Mr. Krishna A/c

CR- Cash / Bank a/c

Natural Accounts: Refers to accounts that record transactions related to person or individual. Example Rahul’s accounts and Savita’s account.

Artificial Accounts: Refers to accounts that record transactions related to entities, such as a company, institution, bank and firm.

Representative Account: Refers to accounts that represent a certain person or a group of persons.

Example:  if the salary is due to an employee of an organization, an Outstanding Salary account will be opened. In this case, the Outstanding salary account represents the account of the employee to whom the salary is to be paid.

The Impersonal Account

All accounts other than the personal accounts are called impersonal accounts.

Examples of impersonal accounts are cash accounts and rent accounts. Following are the two types of impersonal accounts:

1. Real Account
2. Nominal Account

Refers to accounts that record transactions related to property or an asset, such as furniture, land, or house. Real account is also classified into two accounts.

Tangible Account: Refers to accounts related to an asset having a physical existence that can be touched, seen, measured, purchased, and sold.

Example: Land, building a/c cash a/c, and stock a/c

Intangible account: Refers to accounts related to assets that cannot be perceived by the senses, but measured in terms of value, such as goodwill, patents, trademarks, and copyright.

Rules of Real Account

Dr- What comes in

Cr- What goes out

Examples of Real Accounts

Purchase machinery worth Rs.75000/- on cash basis from Mr. Krishna

DR- Machinery A/c

CR- Cash A/c

• Nominal Account: –

Refers to accounts that record transactions related to expenses, losses, profits, and revenues. These accounts are closed at the end of an accounting period.

Example: purchase a/c, sales a/c, salary a/c, rent a/c, commission a/c, discount a/c

Rules of Nominal account

Dr. All expenses & Losses

Cr. All incomes & Gains 

Examples of Nominal Accounts

Paid Rs.5000/- for computer repairing by cash/ Cheque.

DR- Computer Repairing A/c

CR- Cash / Bank A/c

Accounts can be broadly classified under the following five groups.

1. Assets
2. Liabilities
3. Capital
4. Revenue
5. Expenses

Assets, Liabilities and capital are taken to the balance sheet. Revenue and expenditure accounts are shown in the profit and loss statement.