UNIT 2

What is tally?

 Tally is powerful accounting software, which is driven by a technology called concurrent

multi-lingual accelerated technology engine.
 It is easy to use software and is designed to simply complex day to day activities associated
in an enterprise.
 Tally provides comprehensive solution around accounting principles, inventory and data
integrity.
 Tally also has feature encompassing global business.
 Tally software comes with easy to use interface thus making it operationally simple.
 Tally accounting software provides a solution around inventory management, stock
management, invoicing, purchase order management, discounting, stock valuation
methodology, etc.
 Tally accounting software also comes with drill down options, which can track every detail
of transaction. It helps in maintaining simple classification of accounts, general ledger,
accounts receivable and payable, bank reconciliation, etc.
 VERSIONS OF TALLY
 Tally 4.5 was the first version of Tally. It was released in 1990. This software is
based on MS-Dos.
 Tally 5.4 was the second version of Tally. It was released in 1996. It was a graphic
interface version.
 Tally 6.3 was the third version of Tally. It was released in 2001. This version was
window based. It supports printing and implementing with VAT (Value Added Tax).
Tally 7.2 was the next version of Tally. It was released in 2005. It was added with
new features of the Statutory complimentary version and VAT rules as par state wise.
 Tally 8.1 was the next version of Tally. It was developed with a new data structure. It
was added with new features of Point of Sale (POS) and Payroll.
 The next version was Tally 9. It was released in 2006. This version was released due
to bugs and errors. This version has maximum features such as TDS, FBT, Payroll,
E-TDS filling, etc.
 The new version of Tally is ERP 9. It was released in 2009. Tally ERP 9 package is
offering maximum features for small to large business industries. It also updates with
new features of (Goods & Services Tax) GST.
 The latest version of Tally is Tally Prime. It was released in 2020 Prime package is
offering maximum features for small to large business industries. It also updates with
new features of (goods and service tax) GST.

ADVANTAGES OF TALLY

 Streamlining financial management – Tally is a software that helps to organize and

simplify financial tasks, such as invoicing and bookkeeping.
 Enhancing accuracy – Tally’s features, such as automatic calculations and error
checking, help to reduce mistakes and increase precision in financial record keeping.
 Enhancing security – Tally’s password protection and data backup options help to
secure financial information and prevent data loss.
 Facilitating collaboration – Tally’s ability to be accessed by multiple users
simultaneously allows for easier collaboration among team members in financial
management.
 Customization – Tally offers customizable options and report templates, allowing
users to tailor the software to their specific needs and preferences.
DISADVANTAGES OF TALLY

 Initial cost – Tally is a software that requires an initial purchase or subscription fee,
which may not be feasible for all users.
 Limited features – Tally may not offer all the features that some users require for
their specific financial management needs.
 Complexity – Tally may have a steep learning curve for some users, requiring time
and effort to master its various functions.
 Dependence on technology – Tally requires a computer or other device with an
internet connection to function, which may not always be available or reliable.
 Vulnerability to cyber threats – Tally, like all software, is vulnerable to cyber attacks,
which could compromise the security of financial information.

Uses of Tally?

Tally is a comprehensive accounting and business management software widely used across various
industries for its powerful financial tracking and reporting capabilities. Here are some of its key uses
in detail:

1. Accounting and Bookkeeping

 Tally helps businesses manage basic accounting operations, including recording and tracking
income, expenses, liabilities, and assets.
 Users can create ledgers for cash, bank accounts, sales, purchases, expenses, and income.
 It simplifies journal entry processes and helps ensure accuracy in day-to-day transactions.

2. Inventory Management

 Tally enables detailed tracking of inventory items, including quantity, batch, location, and
price.
 It supports stock categorization and helps manage reorder levels, providing alerts when stock
levels are low.
 Users can generate inventory reports, track movement, and control stock-in-hand efficiently,
reducing the risk of overstocking or understocking.
 3. Voucher Management

 Tally provides various types of vouchers to record different financial transactions, such as:

a) Contra Vouchers: For cash-to-bank and bank-to-cash transactions.

b) Payment Vouchers: For payments made to suppliers or vendors.
c) Receipt Vouchers: For cash inflows, such as payments from customers.
d) Sales and Purchase Vouchers: For recording sales and purchases.

 Vouchers in Tally ensure that each transaction is correctly categorized and traceable, which is
essential for accurate financial reporting.

4. Payroll Management

 Tally helps businesses manage payroll operations by tracking employee salaries, benefits,
deductions, and other details.
 Users can calculate salaries, bonuses, leave, and gratuity based on customizable rules.
 Tally can generate payslips, handle compliance with employee taxes, and ensure payroll
accuracy.

5. Taxation Management

 Tally simplifies tax calculations, including GST, TDS, VAT, and Service Tax.
 It helps businesses calculate, apply, and generate tax returns as per local laws, reducing manual
efforts.
 Tally also provides tax-related reports that assist in compliance and filing returns, minimizing
errors in tax submissions.

6. Budgeting and Forecasting

 Tally allows businesses to set budgets for different accounts, helping monitor and control
expenses effectively.
 It tracks variances between actual and budgeted figures, providing insights into financial
performance.
 Budgeting in Tally supports informed decision-making and financial planning, essential for
long-term business growth.

7. Bank Reconciliation

 Tally simplifies the process of bank reconciliation by matching a company’s bank records with
its ledger entries.
 Users can quickly identify any discrepancies between the bank statement and company
records, ensuring accuracy.
 It saves time in reconciling monthly bank statements, improving cash flow visibility and
reducing errors.

8. Financial Reporting

 Tally generates detailed reports, including Profit & Loss statements, Balance Sheets, Cash
Flow statements, and Ratio Analysis.
 These reports provide real-time insights into the financial health of the business.
 Customizable reports allow businesses to analyze trends, identify areas of improvement, and
make data-driven decisions.

9. Multi-Currency and Multi-Language Support

 Tally’s multi-currency support is particularly useful for businesses operating internationally,

allowing them to handle transactions in various currencies.
 It also supports multiple languages, making it accessible to users from different regions.

10. Compliance and Audit Support

 Tally helps maintain audit trails by recording all transactions, with options to check the history
and modifications made to each entry.
 Tally's Audit and Compliance tools assist in meeting statutory requirements, ensuring that
businesses can produce accurate, traceable, and compliant records when needed.
 11. Data Security and User Access Controls

 Tally provides high levels of data security, allowing businesses to set up role-based access for
different users.
 It enables businesses to restrict access to sensitive data and provides secure backup options to
prevent data loss.

12. Remote Access and Multi-User Support

 Tally enables remote access, allowing authorized users to work from different locations.
 It supports multi-user access, making it suitable for businesses with large accounting teams
who need concurrent access to the system.

13. MIS Reporting

 Tally offers Management Information System (MIS) reporting, which helps managers access
critical data in real time.
 Reports can be customized based on management needs, assisting in decision-making and
performance analysis across various departments.
 These features make Tally an essential tool for businesses looking to streamline their
accounting, compliance, and operational efficiency. Its versatility and ease of use are among
the reasons why it’s widely adopted by both small businesses and large corporations.

Importance of Tally

The importance of Tally, as an accounting and business management software, can be highlighted
through several key aspects that demonstrate its value to businesses of all sizes. Here are some of
the main points regarding the importance of Tally:

1. Streamlined Accounting Processes

Tally automates various accounting tasks, reducing manual effort and minimizing errors. This
automation allows businesses to manage their financial transactions efficiently, leading to
more accurate financial records.
2. Comprehensive Financial Management
 Tally provides a complete suite of features that cover all aspects of financial management,
including:

a) Accounting: General ledger management, journal entries, and financial statement

generation.
b) Inventory Management: Tracking stock levels, managing stock valuation, and generating
inventory reports.
c) Payroll Management: Processing employee salaries, managing attendance, and generating
payroll reports.

3. GST Compliance

With the introduction of the Goods and Services Tax (GST) in India, Tally has integrated GST
compliance features that simplify tax calculations and filing. Businesses can generate GST-
compliant invoices and file returns directly from the software, ensuring adherence to regulatory
requirements.

4. User -Friendly Interface

Tally's interface is designed to be intuitive and user-friendly, making it accessible even to users with
limited accounting knowledge. This ease of use reduces the learning curve and allows employees to
quickly adapt to the software.

5. Real-Time Data Access

Tally provides real-time access to financial data, enabling businesses to make informed decisions
based on the latest information. This feature is crucial for effective financial planning and
management.

6. Robust Reporting Capabilities

Tally offers a wide range of customizable reports, including profit and loss statements, balance
sheets, cash flow statements, and inventory reports. These reports help businesses analyze their
financial performance and make strategic decisions.

7. Multi-Currency and Multi-Language Support

Tally supports transactions in multiple currencies and languages, making it suitable for businesses
that operate internationally. This feature enhances its usability for global enterprises.

8. Scalability

Tally is scalable, meaning it can accommodate the needs of small businesses as well as large
enterprises. As a business grows, Tally can easily adapt to increased transaction volumes and more
complex accounting requirements.

9. Enhanced Security Features

Tally provides various security measures to protect sensitive financial data, including user access
controls, data encryption, and backup options. This ensures that financial information remains
secure and confidential.

10. Remote Access and Collaboration

With Tally.NET, users can access their accounts remotely, allowing for greater flexibility and
collaboration among team members. This feature is particularly valuable for businesses with
multiple locations or remote employees.

11. Cost-Effective Solution

Tally is a cost-effective solution for businesses, providing a comprehensive range of features at a

competitive price. This affordability makes it accessible for small and medium-sized enterprises.

Creating of a company, alter and deletion.

COMPANY CREATION
1. Go to Gateway of Tally > Alt+F3 > Create Company.
2. Directory: modify the data path, if required.
3. Enter the following details pertaining to your company:
 Primary Mailing and Contact Details: The correspondence details of your company such
as mailing name, address, state, and Pincode, telephone number, email ID, and so on can
be entered here.
  Select the country for which you require the statutory features in the field Country.
 Base currency symbol is enabled in accordance with the country selected.
 Books and Financial Year Details
 Financial year begins from: Tally.ERP 9 considers a financial year to be of twelve
months. Any date can be entered here.
 Books beginning from: By default, the date provided in the Financial year begins
from field is captured here. However, this can be changed if your book beginning date
is different.
 Security Control : Tally.ERP 9 provides various security options which can be enabled in
this section:
 Tally Vault password : An enhanced security system that allows encryption of your
company data. Encryption involves converting normally accessible Tally information
into unrecognizable information, which can only be reconverted by authorised
persons.
 Use security control : Security control enables you to initiate a password-protected
system to control access to your company data.
Note: The administrator password is case-sensitive, and if forgotten, it cannot be
retrieved. Once Security Control is enabled in the Company Alteration screen, the
fields against Password and Repeat password will display a single star.
  Use Tally Audit features : Tally Audit allows the administrator or an auditor profile user to
track changes in accounting information.
 Disallow opening in educational mode : Set this option to Yes , if you do not want
the company to be opened in the educational mode. In the educational mode, you can
record transactions only on the first and last day of a month. On accepting the
company creation screen, if you have specified Tally Vault password, Tally.ERP 9
prompts you to enter the user name and password.
 Base Currency Information : Base Currency Information varies based on the country
selected. The various fields under this section include:
 Base currency symbol: The currency symbol of the respective country selected
appears in this field.
 Formal name: The name of the currency specified.
 Suffix symbol to amount? : For countries which specify the symbol after the
amount (value) – this option can be enabled. For example, Yen is specified after the
amount (5000 Yen).
 Add space between amount and symbol? : Enable this option if you require space
between amount and symbol.
 Show amount in millions? : This is useful for companies, which require reporting
the financial statements in millions.
 Number of decimal places: This is set to 2, by default. However, it can be specified
up to 4 places.
 Word representing amount after decimal: The name of the decimal portion of
amount appears based on the country selected. For example , if India is selected as
the country and Number of decimal places is entered, then paise appears by default.
 No. of decimal places for amount in words: You can specify the number of decimal places
for printing the amount in words. This number should be equal to or lesser than the number
specified in field No. of decimal places for amount in words.

The Company Creation screen appears as shown:

 COMPANY ALTERATION
1. Go to Gateway of Tally > click F3 : Cmp Info . > Alter .
2. Press Enter .
3. Select the company from the List of Companies .
4. Press Enter to view the Company Alteration screen.
5. Make necessary changes in the required fields.
6. Press Enter to save.
 COMPANY DELETION

1. Select the company to be deleted.

2. Go to Gateway of Tally > F3 : Cmp Info .
3. Select Alter .
4. Press Enter .
5. Select the company to be deleted.
6. Press Alt+D to delete.
 7. Click Yes.

8. Press Enter to delete the company

Creation of a Ledger
After the creation of company, the next step will be the creation of ledger

 To create ledger- Gateway of Tally > Accounts Info. > Ledgers > Create (single or multiple)
> Choosing specifics of Accounts > Accept.

Note – The cash and profits & loss accounts are present by default. No need of creation Creating all
the ledgers needed according to the transactions of the company

Step 1: Use the following path to create ledger accounts in Tally

Gateway of Tally → Accounts Info → Ledgers → Single Ledger → Choose Create

Step 2: Click on Accounts Info under Gateway of Tally screen.

Step 3: Choose Ledger option under Account Info.

Step 4: Under Single Ledger, choose the option Create

Step 5: Update the following details on Ledger creation screen.

1. Enter the Name of the ledger account. Duplicate names are not allowed.

2. Enter the alias of the ledger account, if required. You can access the ledgers using
the original name or the alias name.

3. Select a group category from the List of Groups.

Note: To create a new group from this field, press Alt+C.

4. Enter the Opening Balance. The opening balance is applicable when the ledger is
an asset or a liability, and also if it has a balance in the account as on the date of
beginning of books.

SINGLE LEDGER ALTERATION

Step 1: Use the following path to alter the single ledger in Tally

Gateway of Tally → Accounts Info → Ledgers → Single Ledger → Choose Alter

Step 2: Under the List of Ledgers, choose the ledger account option.

Step 3: Now modify/ alter the required details for ledger account. To save the
changed details, click on A: Accept.
SINGLE LEDGER DISPLAY
In Tally, after the creation of a single ledger account, we can view the details of the
ledger by choosing the display option.

Refer the following steps to show how to display single ledger:

Step 1: Use the following path to display the single ledger in Tally

Gateway of Tally → Accounts Info → Ledgers → Single Ledger → Choose

Display
MULTIPLE LEDGER CREATION

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

Step 2: Under account info, choose the option Ledgers

Step 3: Click on create under multiple ledgers option to create multi
ledgers in Tally

Step 4: On multi ledger creation screen, enter the following details

Under Group: Choose the Fixed Assets under the list of groups, however
you can search group by entering the group name in the given under group
text field.
1. Name of Ledgers: Enter the name of ledger that you like to create in
Tally
2. Under: The under group field will be automatically filled by Tally as
Bangalore Debtors ( As we are creating ledgers under Bangalore Debtors).
3. After entering the details, press enter to continue. You will get messages
as Accept: Yes or No, choose Yes to accept the updated details in
Tally.ERP 9.

MULTIPLE LEDGER DISPLAY

 Path : Gateway of Tally –> Accounts Info –> Ledgers –> Multiple
Ledgers (Display).
  On select group of lists screen, choose the group name “Fixed Assets”
from the list of groups.
 Now the multi ledger screen displays as shown below.

MULTIPLE LEDGER ALTERATION

The path for alter multiple ledger is same as create and display. Through
this alter mode, you can change the details as per the requirements.

Path: Gateway of Tally –> Accounts Info –> Ledgers –> Multiple Ledgers –
> Choose Alter
  From the list of the groups, choose the required group name for
alteration.
 On multi ledger alteration screen, you can update the following details

 Press enter and Accept the details to save in Tally.

What are Accounting Voucher and its type?

A voucher is a document that contains details of a financial transaction and is required for recording
the same into the books of accounts. For every transaction, you can use the appropriate Tally
voucher to enter the details into the ledgers and update the financial position of the company.

In Tally, Accounting Vouchers are documents that record financial transactions and maintain the
company's accounting records. Each voucher represents a specific type of transaction, like sales,
purchases, payments, and receipts, and includes information about the accounts involved, amounts,
dates, and any supporting details. Tally uses these vouchers to update the ledgers and generate
financial reports.
The main types of Accounting Vouchers in Tally and other accounting systems are designed to
record specific financial transactions. Here are the primary types:

1. Contra Voucher:

Used for cash and bank transactions, especially for fund transfers between bank accounts or
between cash and bank.

Example: Withdrawing cash from the bank or depositing cash into the bank
2. Payment Voucher:
o Records all payments made, whether by cash, bank, or other methods.
o Example: Paying rent, utility bills, or vendor payments.

3. Receipt Voucher:
o Records all receipts, such as cash or bank receipts from customers or other sources.
o Example: Receiving payment from customers or other parties.
4. Journal Voucher:
o Used for non-cash transactions, adjustments, or other general entries that do not
involve immediate cash or bank transfers.
o Example: Depreciation, adjustments, or corrections.

5. Sales Voucher:
o Records sales transactions, both cash and credit.
o Example: Selling goods to customers.
6. Purchase Voucher:
o Used to record purchases, either cash or credit.
o Example: Buying raw materials or inventory from suppliers.

7. Credit Note Voucher:

o Issued for sales returns or to reduce the amount payable by the customer.
o Example: When a customer returns goods, a credit note is recorded.
8. Debit Note Voucher:
o Issued for purchase returns or to increase the amount receivable from a supplier.
o Example: When goods are returned to a supplier, a debit note is recorded.