Fundamentals of Accounting Computers in Accounting and Management 18. Introduction to Tally and its Basic Features Accounting is a process of identifying, recording, classifying and summarizing financial transaction to produce financial statements. The term accounting process means entering into transactions, preparation of vouchers, writing of books of accounts including posting into ledger accounts, preparation of trial balance and final account. This lesson introduces a software that has revolutionized the way how books of accounts are maintained by small enterprises and how all the above accounts related actions are automated through this software.
18.0 Objectives After going through this lesson , you will be able to • •
Understand the basic concept of Tally Understand the standard features in this software
18.1 Introduction A very basic accounting process flow is shown in the chart below .This chart tries to capture various actions , records , books and other relevant accounts related information that area created everyday in an organisation. Traditionally these activities were carried out by ‘Munims’ by maintaining physical books called ‘Bahi – Khata’ etc . All entries were made by hand and it was a time consuming process to get any outputs and reports .
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ACCOUNTING PROCESS
TRANSACTION JOURNAL LEDGER SUBSIDARY BOOKS (Cash Book, Purchase Book, Sales Book. Bills Payable and Receivable Book etc.)
TRIAL BALANCE FINAL ACCOUNTS
TRADING
PROFIT AND LOSS
BALANCE SHEET
ANALYSING INTERPRETATION
The accounting process may be carried out manually or by the use of computers. The use of computers means automation of accounting process. The accounting process, whether carried out manually or by the use of computers generates accounting records which are cash book, sales book, ledgers etc. The accounting software available off-the-shelf are known as readymade softwares. These software are for the users at large and are not user specific. Some of the readymade softwares available in the market for accounting are Tally, E.X., Busy etc. The software titled TALLY is the most widely used software in the Indian market.
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18.2 Opening Screen of Tally Tally maintains all books of accounts starting from recording of vouchers to analyzing of financial statement. Tally follows the double entry system of accounting for eliminate any possible errors. The opening screen of Tally shows two Bar: Top Bar: the top bar of the screen contain the product message and version , system date and time. Top Bar
LH RH
Middle Bar
Middle Bar: The middle bar of the screen is divided into two sides:a. Left Hand Side: this portion contain the following information: o Current Company: It gives the information of the companies that are already loaded or selected o Current Period: Financial year of the currently loaded company o Current Date: Date for which vouchers are being entered o List of Selected Companies: It shows the list of all active companies. The currently selected companies will be in bold letters
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Direct Command
Button Panel
b. Right Hand Side: - It shows the menu pop up from where the instruction to tally are given. o Button Panel: - The button on the button panel helps you to perform various functions. These buttons can be selected simply by clicking on them o Direct command: - Press ctrl + N key simultaneously or click on this area to activate it. If mouse does not work, you can type command in English in this area and execute them
18.3 Features of Tally Some important features of tally are listed below: •
Budgeting Budget is the predetermined Expenditure and Revenue of the company. It is an important feature of Tally and is very useful for the company. Budgets can be created , altered and reports taken out of ‘Plan Vs Actuals’ at any point of time . This feature helps in the controlling of expenses in an organisation From the main screen , the command for ‘Maintain Budgets and Controls’ has to be selected as below:
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This then opens the Budget gateway
Budget menu has the following three options:
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a. Create b. Alter c. Quit •
Security Control This is another very attractive feature of tally. This helps set up authority levels to decide the right of the users for data manipulation. With this feature , you can restrict the access of people using Tally to only the areas where they are supposed to .By default two security levels exist i.e. a. Owner : Here you can have access to all areas under Tally b. Data Entry : Here you can only have access to limited functions and areas Additional security types can be created with more or less rights.
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Groups This is the first option in the accounts info menu. In the modern way of accounting, all financial entries are performed using ledgers or accounts heads. Tally follows the ‘single ledger’ concept of accounting. It is advisable to groups/classify ledger information based on this function. Groups are helpful in classifying and identifying accounts heads based on their nature. Groups help in presenting summarized information.
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Pre-defined Groups Tally provides a number of pre-defined groups to save you from unnecessary burden of creating frequently used groups. These are defined as follows : Pre-defined Groups
Capital in Nature 1. Capital Accounts
Revenue in Nature 1. Sales accounts
Reserve & Surplus 2. Current Assets
2. Purchase Accounts
Cash in Hand/Bank Deposits Stock in Hand Sundry Debtors etc. 3. Current Liabilities Duties & Taxes Provisions
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3. Wages & Salaries
Sundry Creditors Bills Paybles etc. 4. Fixed Assets
4. Direct / Indirect Expenses
5. Investment
5. Incomes like:- Rent, commission, interest received etc.
6. Loan & Advances Unsecured loan Secured loan 7. Suspense Accounts
Self-Check Questions Answer True or False 1. Tally is maintained by ‘Munims’? 2. Budgets cannot be reviewed on Tally ? 3. Security Control feature is very important? Fill in the Blanks 4. Groups help in presenting ________________ information 5. ‘Owner’ can have access to _________________ areas under Tally
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Ledger Ledger is the actual accounts heads to which a transaction is classified and identified. As you create a company, two ledgers are created by default i.e. cash and Profit & Loss account. So another profit & loss accounts cannot be created, but any number of cash accounts may be created.
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Ledgers are two types and created in two modes: o Normal Mode: - single ledger o Advanced Mode: - multiple ledger •
Vouchers A Voucher is the basic recording document. Vouchers are used for recording day-to-day transactions. Tally has several pre-defined vouchers with different formats, for different types of transaction. You have to modify the existing formats of voucher as per your need.
There are a number of pre-defined vouchers: o Contra Voucher: This voucher is used for fund transfer between bank and cash account for e.g. fund transfer from one bank account to another bank or cash account. Another e.g. is cash deposits/withdrawals into/from bank. o Payment Voucher: This voucher is used to records all the payment made through bank and cash accounts. o Receipts Vouchers: This voucher is used to record all the receipts into bank and cash account. o Journal Voucher: This voucher is used for rectification/adjustment entries. Journal voucher are three types: i. Journal
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ii. Credit Notes iii. Debit Notes o Sales Voucher: This voucher is record all entries related to sales o Purchase Voucher: This voucher records all entries related to purchase of goods and services. o Memo Voucher: It is a non-accounting voucher entries of which do not affect your accounts at all. The entries in this voucher are not posted into ledger. They are record in a separate Memo •
Day Book & Daily Balances Day book is the right place to have a look at all the vouchers entered till date (Daily Balance) and also the most appropriate place to alter and modify the vouchers.
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Audit Functionalities Tally has very powerful functionalities built in for system auditing and Budget auditing. This helps you to keep a cross check on expenses and the variances on Budget Vs Actuals. This brings transparency in the accounts of the organisation .
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Balance Sheet, P&L Balance sheets and Profit and Loss statements are key to evaluating a company’s performance and for future planning. Tally helps you automate the process of creating a customized balance sheet for your organisation in line with the statutory governmental standards. Profit & Loss statements can also be generated periodically without too much effort.
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18.4 Supported Data Formats It is essential for tally to support data files imported or exported in any version or format. Moreover, Tally is designed to import any kind of data. You can use a part of data from or to any other external system. •
Data Import: This Program feature allows a user to import data files into Tally (commonly used extensions are Excel, Access, ASCII, HTML, SDF, XMIL etc.)
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Data Export: Data may be conveniently exported by clicking on the Export button on the Button Panel. Any statement and reports may be exported directly in any of these four formats (ASCII, HTML, SDF, and XMIL)
Self-Check Questions Fill in the Blanks 6. Audit features help in keeping a ______________________ on the accounts of the organisation 7. A __________________ is a basic recording document 8. Tally can import _________________ of data Answer Briefly 9. List the basic features of Tally 10. List the different types of vouchers
18.5 Other Features of Tally • • • • • • • •
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Tally is very user friendly business accounting software It has the complete range of book keeping required for accounting in any organisation It is flexible and can be customized to suit your daily work It is highly secured against data tampering It has very powerful audit facilities It permits you to publish reports and documents on Web or Intranet You directly mail all reports and documents without closing tally It is VAT compliant
18.6 Summing Up In this lesson you have learnt about how tally is able to automate the various activities carried out by accounts in an organisation. You also learnt about the basic features of Tally and how it helps in bringing responsiveness , control and transparency in an organisation on accounts related matters .
18.7 Answers to Self-Check Questions 1. 2. 3. 4. 5. 6. 7. 8. 9.
False False True summarized all cross – check voucher all types Budgeting, security control, creation of groups, vouchers, ledgers, Day book, Daily balances, Audit, Balance sheets, P&L statements 10. Contra, Payment, Receipt, Journal, Sales, Purchase and memo
18.8 Terminal Questions 1. How is Tally useful in today’s modern office ? 2. List down the types of voucher entries that can be made in Tally with a brief description of the voucher types. 3. Give examples of how the ‘Audit’ functionality can be used to have effective cross checks in any organisation.
18.9 Glossary •
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Budget: Budget is the predetermined Expenditure and Revenue of the company. It is a plan of from where the money is going to flow in (sales etc) and how will it be used. It helps in building an idea of the profitability of the company. Ledger: Ledger is the actual accounts head to which a transaction is classified and identified. These are like physical books / registers where all transactions are recorded Voucher: A Voucher is the basic recording document. Vouchers are used for recording day-to-day transactions. For e.g. a cash voucher records on a paper any cash transaction etc. Audit: This is a process of cross checking all information in an organisation. It is a process of physical verification of documents and entries and is normally carried out by a separate department called ‘Internal Audit’ VAT or Value Added Tax, is the new version of the ‘Sales Tax’ levied by the governments
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