Advance Tally Erp With Accounts By SK Singh

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IASAM ACADEMY - 011-22043114
Quick Shiksha
A UNIT OF IASAM
Sharpen Your Skills with
us and get an ‘Edge’ in
Interview and Job
Certificate Course in
‘Financial Analysis’
1st
April 2012
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MODULE - 2
Santosh Kr.Singh
A-123, Street N0-02, (Opp. Metro Pillar No. 36), Vikas Marg, Shakarpur,
Delhi – 110092, 011 22043114, 09268972567
I&II

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Basic Accounting Concepts
Owner
Business Other Person
Capital Liabilities
Transactions/Events
(
Received
(
Payment
(
Received but due
(
Payment but not due
(
Payment but due
Received but not due
(
Expenses Assets Income Liabilities

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Debits and Credits vs. Account Types
Account Type Debit Credit
Assets Increases (Dr.) Decreases (Cr.)
Liabilities Decreases (Dr.) Increases (Cr.)
Income Decreases (Dr.) Increases (Cr.)
Expenses Increases (Dr.) Decreases (Cr.)
FUNDAMENTAL OF ACCOUNTING
(Accounting means processing)
Book - Keeping
Book Keeping
(Books of Account)
Journal
Ledger
Subsidiary book etc
System of Book – Keeping
1. Single entry system
2. Double entry system
3. Indian System
4. Cash System
1) Single Entry System :-
 Only transaction recorded at One place
 Some transaction are omitted from Book Accounts
 Renown Dispute
2) Double Entry System :-
 All transaction are recorded on two places.
 All transaction must be recorded
3) Indian System :-
 Under this system transaction are recorded on regional language

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4) Cash system :-
 Under this system transaction are recorded on cash basis system.
Double Entry System :-
 ____________ (Itli,venus city)
 1494
 Lucas Pecioli
Under this system all transaction recorded at two places which are named as debit and credit this
system sported by a set of rules which are called as Golden rules or rules of Journalizing.
Accounting Cycle:-
Transaction arises -> Not, Allusions -> Not Transaction recorded
If yes/ of Business _____________.
P 1) Memorandum/ waste book/Raugh Book.
R Journalizing
O 2) Journal/ Journal book
C Posting
E 3) Ledger/ Ledger book
S 4) T.B.
S
I
N
G
Final Accounts (Reporting)
Trail Balance Profit & loss Balance sheet
Journalizing: - It is a procedure trough which the business transaction are recorded from
memorandum book these procedure we sported by a set of rules calls rules of Journalizing.

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Rules of Double Entry Systems
 The transaction are to be recorded at two places or and cr.
 The transaction is to be recorded at each place of equal Amount.
Accounts
(Categories)
Personal Impersonal
Real Nominal
1) Personal Accounts :-
i. Natural
ii. Artificial
iii. Representative
(i) Natural : - Made by nature/God.
(ii) Artificial :- Made by Human
(iii) Representative: - represent to human/human related, example, capital Accounts, Drawing
Accounts, Outstanding, and Prepaid etc.
2) Real Account :- All Assets
(1) Tangible or Intangible
Example: - Cash, cash at Bank, Machine etc.
3) Nominal Accounts :-
 All Incomes
 All Expenses
 All gains
 All Profit
 All Losses
Note: - Expenses is losses
Income is gain

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Profit is _______ etc.
# Expenses : - Behalf of Something retimed
# Losses : - Behalf of not something return
# Income : - Income is certain/Constraint it is not trading purpose.
# Gains :- Gains is uncertain/unlimited it is not trading purpose.
# Profit :- Margainal means Sales – Marginal purpose = Profit it is trading
Purpose/business purpose.
Rules of Debit/Credit/Journalizing
1) Personal Accounts :-
Debit the receiver.
Credit the giver.
2) Real Accounts :-
Debit what comes in.
Credit what goes out.
3) Nominal Accounts :-
Debit all expenses and Losses are
Credit All Income and gains are
# Entry transaction must be two aspect
# Which that aspect here that aspect recorded.
Example : - Cash received from manoj Rs. 5000
Step 01 for Journalizing:-
(i) Ideality the Emolument of Accounts in particular transaction.
(ii) Apply the rules of relevant Accounts
i) Cash – Real A/c -> Dr. What Comes in
ii) Manoj – Personal A/c -> Cr the giver.

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According to business:-
Cash A/c – Dr. 5000
To Manoj A/c Cr. 500
(Being cash rescued from Manoj)
# According to Party/means Debtor
(Company) Party A/c – Dr. 500
To cash A/c – 500
(Being cash paid to Business)
# Postage stamps purchases worth Rs.500 and out of which only Rs.3000 has been used for the
Reporting the Private letters.
Step 01
i) Postage stamps – Naminal A/c
ii) Drawing - Repre. Personal A/c
iii) Cash - Real A/c
Step 02 (Rules)
i) All expenses & losses are Dr.
ii) Dr the receiver
iii) Cr what goes out
Postage stamps A/c - Dr. 2000
Drawing A/c - Dr. 3000
To cash A/c - 5000
(Being purchase postage stamp)
# Postage Stamp purchases for personal used and payment made by his personal A/c – 5000 Rs.
Transaction arises  No Entry
If Business if not business transaction transude
Entry
No it is not Business ____________ so not recorded is business.

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# Furniture sold to many which home have been purchases for household compartment and mode from
Business – 2000
No entry required here become it is personal/private used.
# Classification of goods.
Two types of goods.
1) Trading Goods 2) Non- Trading Goods
(Goods/Purchases) (Particulars/Used specified name)
# Classification of Goods A/c:-
1) Purchaser A/c
2) Sales A/c
3) Purchase Returns A/c
4) Sale Returns A/c
1. Business Transaction: The terms „Business Transaction‟ means a financial transaction or event entered into
by the parties and recorded in the books of accounts. It is a financial event, which can be expressed in terms of
money and brings change in the financial position of an enterprise. It is concerned with two parties (i.e.
2. (Accounts) involving the transfer of exchange of goods, receipts from debtors, payment made to creditors,
purchase or sale of fixed assets, payment of dividend, etc.
Characteristics of a business transaction:
1. It is concerned with money or money‟s worth of goods or services.
2. It arises out of the transfer of exchange of goods or services.
3. It brings about a change in the financial position (assets and liabilities) of a business concern.
4. It has an effect on the accounting equation of any business firm.

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5. It has dual aspects or sides –„receiving‟ (Debit) and „giving‟ (Credit) of the benefit.
In other words, every transaction has two sides- one side is –„receiving‟ and the other side is‟ giving‟ the benefit.
Transaction
Relationship with the accounting units Mode of settlement of value
internal transaction or accounting External Transaction Cash Transaction Credit Transaction
Transaction,e.g. Depreciation on or fixed Assets Business Transaction
A transaction may be a cash transaction or a credit transaction. When the amount is transacted immediately on
entering into a transaction it is a cash transaction and promise to pay later, it is a credit transaction. Transaction maybe
external (between a business entity and a second party, for example, goods sold on credit to Z) or internal (does not
involve second party, e.g., depreciation charged on machinery).
3. Account: Account is a summarized record of transactions relating to a particular head at one place. It records
not only the amount of transactions but also their effect and direction.

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4. Capital: Capital is the amount invested by the proprietor or partner in the business. It may be in the form of
money or assets having money value. It is a liability of the business towards the proprietor of partner. It is so
because under” Business Entity Concept”, business is considered to be a separate and distinct entity from its
owners. Capital is also known as Owner‟s Equity or Net Worth. It is always equal to assets less liabilities.
This can be expressed as:
5. Drawings: it is the amount withdrawn or goods taken by the proprietor for this personal use. Goods so taken
by the proprietor for his personal use Drawings reduce the investment (or Capital) of the owners.
6. Liabilities: Liabilities mean the amount owed (Payable) by the business to outsiders and to the proprietors.
Various kinds of liabilities are:
(i) Internal Liability: Internal Liability is the amount owned by the business to the
proprietor of the business. It is so because under the Business Entity Concept,
transactions are recorded taking business to be an entity distinct and separate from its
owners.
(ii) External Liability: External Liability is a liability that is payable to outsiders, i.e.,
other than the proprietors. External liability arises because of credit transactions or
loans raised. Examples of external liabilities are creditors, bank overdraft, bills payable,
outstanding liabilities.
Liabilities can be further classified into:
(iii) Long-Term liabilities: Long-Term Liabilities are those liabilities which are payable
after a longer period, (more than a year). Examples of Long-Term Liabilities are Long-
Term loans, debenture, etc.
(iv) Current Liabilities: These are those liabilities which are payable within a year.
Examples of Current Liabilities are creditors, bills payable, short –term loans, etc.
(v) Contingent Liabilities: Contingent Liabilities are those liabilities which may or may not
arise in future depending on the happening of an event. For example: Bills Receivable
discounted. It will become a liability if it is dishonored on the due date. These are
shown as a foot note of the Balance Sheet.
7. Assets: Assets are property or legal rights owned by an individual or business to which money value can
attached. In other words, anything which will enable the firm to get cash or a benefit in the future is an asset.
Examples of assets are land, building, machinery, furniture, stock, debtors, cash and bank balances, etc.
“Assets are property or legal right owned by an individual or company to which money cost.”
--R. Brockington
“Assets are future economic benefits, the rights, which are owned or controlled by an organization or individual.”
--Finney and Miller
Capital=Assets-Liabilities

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“Assets are valuable resources owned by a business which are acquired at a measurable money cost”
--Prof. R.N. Anthony
What emerges from the above definitions is that an asset should have the following characteristics:
1. It should be owned (i.e., property) by an individual or an organization (business or non-business).
2. It may be in the tangible (Physical) form or intangible form.
3. It should have some value attached to it.
4. It should be capable of being measured in money terms.
Assets can be classified into:
(i) Tangible Assets: - Tangible Assets are those assets which have physical existence, i.e., they can be seen
and touched. Examples of Tangible Assets are land, building, machinery, computer, furniture, good, etc.
(ii) Intangible Assets: - Intangible Assets are those assets which do not have physical existence, i.e., they can
not be seen and touched. Examples of Intangible Assets are patents, goodwill, trade-mark, etc.
(iii) Fixed Assets: - Fixed assets are those assets which are acquired not with the purpose of resell but to
facilitate business operations and increase the earning capacity of the business by employing them.
Examples of Fixed Assets are land, building, machinery, computers, vehicles, furniture, etc. Fixed Assets
are usually shown as the first item in the Balance sheet.
(iv) Current Assets: - Current assets are those assets which are retained in the business with the purpose to
convert them into cash within short periods say, one year. For example, goods are purchased with a
purpose to resell and earn profit, debtors exist to convert them into cash, i.e., receive the amount from
them, bills receivable exist again for receiving cash against it, etc.
Prepaid expenses are also classified as Current Assets although they can not be converted into cash .They
are so classified because benefit from such expenses when paid has not fully exhausted,i.e., it will be
available in the next accounting year also.
(v) Liquid Assets: - Liquid assets are those which are either in the form of cash or can be converted into cash
within a very short period. Examples of liquid assets are: cash, bills receivable and debtors, etc
.
(vi) Fictitious Assets: - Fictitious Assets are those assets which are neither tangible assets or intangible assets
but represent loss or expenses yet to be written off. Examples are: Debit balance of Profit and Loss
Account and Deferred Revenue Expenditure, etc.
8. Receipts: Receipts is the amount received or receivable for selling assets, goods or services.

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Capital Receipts: - It is the amount received or receivable for selling assets. Examples are: sales of machinery,
Building, furniture, etc.
Revenue Receipts:- It is the amount received or receivable against sale of goods or services. In other words, it is
a receipt on account of business transactions.
8. Expenditure:- . Expenditure is the amount spent or liability incurred for acquiring assets, goods or services.
Expenditure may be categorized into:
(i) Capital Expenditure:- It is the Expenditure incurred to acquire assets or improving the existing assets which
will increase the earning capacity of the business, i.e., will give benefit to the business in more than one
accounting year. Examples are purchase of machinery to manufacture foods, purchase of furniture or computers to
carry on business.
Capital Expenditure is shown on the assets side of the Balance Sheet.
(ii) Revenue Expenditure:- Revenue Expenditure is the amount spent to purchase goods and services
that are consumed during the accounting period. Revenue Expenditure does not increase the
earning capacity but it maintains the earning capacity in the current year.
Revenue Expenditure is shown on the debit side of the Profit and Loss Account.
(iii) Deferred Revenue Expenditure: Deferred Revenue Expenditure is revenue expenditure in nature
but is written off (Charged) to profit and loss account in more than one accounting period. For
Example, Large advertisement expenditure that will give benefit for more than one accounting
period is a Deferred Revenue Expenditure.
Revenue: Revenue means the amount , which as a result of operations, i.e., sale of goods or services, is
added to the capital. “Revenue
Is an inflow of assets, which results in an increase in the owner‟s equity. “Examples of revenue are
receipts from sale of goods, rent, commission, etc. Revenue differs from income. Sale of goods and
services is revenue and cost of sale of goods and services is expense. The difference between revenue and
expense in income.
Income = Revenue - Expense
9. Expense: Expense is a value which has expired during the accounting period. It may be
(i) Cash payment such as salaries, Wages, rent, etc.
(ii) Writing off a part of fixed assets (depreciation).
(iii) An amount written off out of current assets (say bad debts).
(iv) Decline in the value of assets (say investments).
(v) Cost of goods sold.

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An expense is charged (debited) to Profit and Loss Account.
Prepaid Expense: It is an expense that has been paid in advance and the benefit of which will be available in the
following year or years. For example, insurance premium of Rs. 10,000 has been paid for one year beginning 1st
October, 2010. The financial year ends on 31st
March, 2011. It means premium for six months, i.e., 1st
April, 2011 to
30th
September, 2011 amounting to Rs.5, 000 has been paid in advance. Thus, the amount of premium paid in advance
(Rs.5, 000) is prepaid expense. Similarly, if advance rent paid is to be adjusted over 3 years, advance rent relating to
following accounting years yet to be adjusted shall be prepaid expense. It is termed as outstanding Expense. It is
debited to the Profit and Loss Account and also shown under the head current Liabilities in the Balance Sheet.
Outstanding Expense: It is an expense that has not been paid but the benefit thereof has already been availed. For
example, an audit has been conducted by a chartered accountant firm against which audit fee of Rs.20,000 is to be
paid. It mains a liability of Rs.20, 000 has been incurred, which is yet to be paid. It is termed as Outstanding Expense.
It is debited to the Profit and Loss Account and also shown under the head Current Liabilities in the Balance
10. Income: Income is the profit earned during a period of time. In other words, the difference between
revenue and expense is termed as Income. For example, goods costing Rs.15, 000 are sold for Rs.21,
000 is revenue and the difference, i.e., Rs.6,000 and is income. It can, therefore, be expressed as:
Income= Revenue-Expense
11. Profit: It is the excess of revenue of a business over its costs. Profit is normally categorized into gross
profit and net profit.
Gross Profit: Gross Profit is the difference between sales revenue for the proceeds of goods sold and/or
services rendered over its direct cost.
Net Profit: Net Profit is the profit made after allowing for all expenses. In case expenses are more than the
revenue, it is Net Loss.
12. Gain: Gain is a profit of irregular or non-recurrent nature. For examples, profit on sale of fixed asset or
investment.
13. Loss: A loss is excess of expenses of a period over its related revenue which may arise from normal
business activities. It decreases the owner‟s equity. It also refers to money or money‟s worth lost (or
cost incurred) against which the firm receives no benefit, e.g., cash or goods lost in theft. It is also arises
from events of non-recurring nature, e.g., loss on sale of fixed assets.
14. Purchases: The term „Purchases‟ is associated with or used for purchase of goods. Goods are articles
purchased for resale or for producing the finished products which are also too sold. The term

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„purchases‟ includes both cash and credit purchases of goods. Goods purchased for cash are termed as
Cash Purchases and goods purchased on credit are termed as Credit Purchases.
Purchase Return: Goods purchased may be returned due to any reason, say, they are not as per specifications
or are defective. Goods returned are known as Purchases Return or Return Outward.
15. Sales: This term „Sales‟ is associated with or used for sale of goods that are dealt with by the firm. The
term „sale‟ includes both cash and credit sales. When goods are sold for cash, they are termed as Cash
Sales and who sold on credit, they are termed as Credit Sales.
Sales Return: Goods sold when returned by the purchaser are termed as Sales Return or Returns Inward.
16. Stock: Stock is the tangible asset held by an enterprise for the purpose of sale in ordinary course of
business or for the purpose of using it in the production of goods meant for sale. Stock may be: (1)
Opening stock or (ii) Closing Stock.
(i) Opening stock is the stock-in-hand in the beginning of the accounting year. In other words, it is
stock-in-hand at the end of the previous accounting year.
(ii) Closing stock is the stock-in-hand at the end of the accounting periods.
Stock may be of the following kinds:
(i) Stock of Goods: Stock of goods in the case of a trading concern comprises of stock of goods
remaining unsold. In the case of manufacturing concern, it comprises of processed goods
manufactured for the purpose of sale. It is valued at cost or net realizable value, whichever is lower.
(ii) Stock of Raw Material: It comprises the stock of raw material used for manufacturing of goods
lying unused. For example, stock of cloth to be used for stitching shirts. It is valued at cost or net
realizable value, whichever is lower.
(iii) Work-in-progress: It is a stock that is in the process of being finished, i.e., they are partly finished
goods. It is valued at an aggregate of cost of raw material used, cost of labor, other production cost,
i.e., power, fuel, etc.
Stock is classified in the Balance Sheet as a Current Asset. The stock is valued on the basis of “cost or
market prices whichever is lower” principle.
17. Debtor: A person who owes amount to the enterprise on account of credit sales of goods or services is
called a Debtor. For example, when goods are sold to a person on credit the person is called a Debtor
because he owes the amount to the enterprise. The amount due is known as debt.
18. Bill Receivable: Bill Receivable means a bill of exchange accepted by a debtor the amount of which
will be received on the specified date.
19. Creditor: A person to whom an enterprise owes amount on account of credit purchases of goods or
services is called a Creditor. For example, Mohan is a creditor of a firm when goods are purchased on
credit from him.

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20. Bill Payable: Bill Payable means a Bill of Exchange, the amount of which will be payable on the
specified date.
21. Goods: Goods are the physical items of trade. It is a term that applies to all the items making up the
sales or purchases of business. They are thus Stock-in-Trade of an enterprise, which are purchased or
manufactured with a purpose of selling. For an enterprise dealing in home appliances such as T.V.,
fridge, A.C., etc., are goods. Similarly, for a stationer, stationery is goods.
22. Cost: It is the amount of expenditure incurred on or attributable to a specified article, product of
activity.
23. Voucher: Voucher is an evidence of a business transaction. Example of voucher is Cash Memo, Invoice
or Bill, Receipt, Debit/Credit notes, etc.
24. Discount: When customers are allowed any type of reduction in the prices of goods by the business, it
is known as a Discount.
Trade discount: Trade Discount is the rebate allowed by the seller on the basis of sales. Sales is recorded at
net value, i.e., sales-Trade Discount. Similarrly purchases are recorded by the purchaser at net value, i.e.,
Purchases –Trade Discount.
Cash Discount: Cash Discount is the rebate allowed for timely payment of due amount. It is and expense
for the party allowing the discount and income for the party receiving cash discount.
The accounting terms discussed above, have been prescribed in the syllabus. We are discussing
below some other important terms as will.
25. Books of Accounts: Books of Accounts means Journal and Ledger in which transactions are recorded.
26. Entry: A transaction and event when recorded in the books of accounts is known as an Entry.
27. Debit: An account has two parts, i.e., debit and credit. The left side is the debit side while the right side
is the credit side. If an account is to be debited, then the entry Is posted to the debit side of the account.
In such an event, it is said that the account is debited. It has been derived from an Italian word „Debito‟.
28. Credit: Credit is the right side of an account. If an account is to be credited, then the entry is posted to
the credit side of the account. In such an event, it is said that the account is credited; it has been derived
from an Italian word „Credito‟.
29. Proprietor: The person who makes the investment and bears all the risks connected with the business is
called the Proprietor
30. Receivable: The term „Receivables‟ includes the outstanding amount due from others. Sometimes, a
debtor may accept a Bill of Exchange, which Is payable after a given period. Such a bill is known as
Bill Receivable. Sometimes, a debtor promises to pay the specific amount in writing after a specified
period. Such a promise is known as a Promissory Note and is recorded as note Receivable. The term –
accounts receivable includes trade debtors as well as bills receivable and promissory notes receivable.
The term receivable includes all the amounts due from others.

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31. Payables: The term „Payables‟ include the amounts due to others. Accounts payable included trade
creditors as well as bills payable and promissory notes payable. The term payable includes all the
amounts due to others.
32. Depreciation: Depreciation is a fall in the value of an assets because of usage or with passage of time
or obsolescence or accident.
33. Cost of Goods Sold: Cost of Goods Sold is the direct costs of the goods or services sold.
34. Bad Debts: Bad Debts are the amount that has become irrecoverable. It is a business loss and is debited
to Profit and Loss Account.
35. Insolvent: Insolvent is a person or enterprise which is not in a position to pay its debts.
36. Solvent: Solvent is a person or enterprise which is in a position to pay its debts.
37. Book Value: This is the amount at which an item appears in the books of accounts or financial
statements.
38. Balance Sheet: It is a statement of the financial position of an individual or enterprise as at a given
date, which exhibits its assets, liabilities, Capital, reserves and other account balances at their respective
book values.
39. Entity: An Entity means an economic unit which performs economic activities (e.g., Reliance
Industries, Bajaj Auto, Maruti, TISCO). Business entity means a specifically identifiable business
enterprise like ITC Ltd., Hira Jewelers, etc. An accounting system is always devised for a specific
business entity (also called Accounting Entity).
HEAD OF ACCOUNTS
(1) Salary: - Amount paid to permanent employee is called salary.
(2) Staff welfare: - Expenses incurred on the welfare of the staff is called staff welfare
Example –tea bill, etc.
(3) Medical expenses:-the expenses incurred for the treatment of the employee of called the medical expenses i.e.
medicines, doctor fee, regular checkup etc.
(4) Printing & stationary: - All type of stationary and printing. I.e. pen, file cover, cash book, etc.
(5)Telephone expenses: - telephone bill, fax, STD and any other expenses related to telephone is called telephone
expenses.
(6) Postage and stamp/Telegram Expenses: - The expenses the expenses incurred on stamps, Airmail, Postcard,
courier goes to postage and telegram expense.
(7)Tour and travelling expenses:-The expenses incurred for tour for official purpose i.e. for collecting payment
outstation or for attending some meeting or conference the road faire, train fare, air fare, and boarding and lording
expenses go to tour and traveling expenses.

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(8)Insurance:- the expenses incurred for the insurance of vehicle, building, machinery and other assets goes to
insurance expenses.
(9) Advertisement & publicity expenses: - any type of expenses incurred for broadcasting, advertising, either on sign
board or news pappeer, ads or hording board, radio, TV, is called Advertisement &publicity expenses.
(10) Sales promotion: - any expenses incurred for the promotion of sales goes to sales foes to sales promotion
expenses according to. I.e. hold or restaurant bill or conference whit supplier and dealers and delegates goes to sates
promotion according to.
(11) Conveyance A/C:- Any expenses incurred or travelling on place to another locally i.e. auto fare, D T C pass for
employees go to conveyance accordingly.
(12) Freight & cartage accounts: - the amount which is spent on the transportation of goods Goes to freight and
cartage accounts.
(13) Consumable goods /Items Accounts: - any expenses incurred for office use are called consumable items for
example soap payment duster and towel. Flower etc.
(14) Entertainment expenses accounts: - any expenses incurred for the entertainment of staff goes to entertainment
expenses accounts. For the example – any picnic or party or gathering or trade fare or seminar etc.
(15) Fire extinguishing expenses accounts: - expenses incurred for the prevention of fire goes to fire extinguishing
expenses.
(16)Vehicle maintenance: - amount spends for the maintenance of vehicle such as car, bus , tempo and trunk
which is used for official purpose. For example- petrol, type, repairs.
(17) Audit fee: - the amount given for the services rendered by C.A. for the auditing of accounts books goes to audit
fee accounts.
(18) Donation a subscription accounts:- any amounts paid to society s charitable trust primeminister
(19) News paper & periodical: - accounts: - any amount spends on news paper, book and magazines. Goes to
News paper & periodical accounts.
(20) Rent account: - The amount that is given as rent office, building, godown and staff, residence goes to
rent accounts.
(21) Mislenious expenses: - all types of uncountable expenses or minor expenses goes to mislenious expenses
such as amount paid to sweeper, lock etc.
(22) Bank charges &interest accounts :-The interest another charges lived by the bank charges &interest
accounts for example- cheques charges, cheques returned charges, discounted charges, over draft interest etc.
(23) Bonus accounts: - any amount given to staff except salary goes to bonus accounts.
(24)Discount accounts :-any discount gives or received against bill is goes to discounts.
(25) Repair &maintenance: - amount spend on the repairing and maintenance office, building, godown goes
to repair &maintenance account for example wllpaper, flooring,, addition,alteration or renovation.
(26) Accuntancy charges:-the amounts paid to casual other than a regular or permanent accountant goes to
accountancy charges account.

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(27) Parking expenses: - the expenses done for parking of goods are recorded ib parking expenses i.e.
cartoons, boxes etc.
(28)Manufacturing expenses:-all manufacturing expenses such as factory i.e. fuel, oil, power, coal gas
&lighter is kept on manufacturing expenses.
(29) Wages: - the amount paid to casual labour or temporary or daily wages go to wages expenses accounts.
(30) Loss &damage account: - all types of loss such as good destroted by the fire, accident and good stolen
etc. go to loss damage accounts.
(31) Production incentives: - the profile distribution among works in the business against production is kept
on production incentive accounts.
1.1 INTRODUCTION TO ACCOUNTING
1.1.1 What is Accounting?
Accounting, in simplest, is keeping track of our Income, Expenses, Assets and Liabilities.
This is true for business, for a household or for an individual.
In the case of a business Accounting can be defined as:
“… the art of systematic recording, classifying, summarizing in a significant manner and
in terms of money, transactions and events which are, in part at least, of financial
character, and interpreting the results thereof.”
From the above definition, we note the following features of accounting:
Only financial aspects are considered in Accounting. A financial transaction is one which
brings some change in the financial position of business. For example, we buy raw
material or sell our goods. Thereby, we spend money and earn money. These are financial
transactions.
But when we place an order to a supplier for a particular machinery, it does not alter the
financial position of the business. Thus, it is not a financial transaction and cannot be
included in Accounts Books.
The transactions are to be recorded primarily in some documents. Later they are to be
grouped and summarized. This leads to different steps in Accounts Compilation.
The process at different steps in the Compilation of Accounts should be performed on
some basic rules, which are common for all business organizations, be it Manufacturing,
Trading or the Service industry.
The entire organized, grouped and summarized data should reveal some information for
executives at different levels in the organization. We prepare reports of standard formats
for interpretation purposes.
1.1.2 Process of Financial Accounting System
The basic document used in the Financial Accounting System are:
Voucher Where transactions are entered first
Journal Where transactions are entered chronologically and denote which
accounts will be affected.
Ledger Where the transactions of particular accounts are segregated and balance
for each account

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Using the above documents, the main reports prepared in the Financial Accounting System
are stated below:
Trial balance:- It gives the consolidated list of various Accounts and their balances.
Brings out any error, procedural or airthmetical, in Journalising or posting ogf
transactions. This is the source point for preparing other reports.
Profit & loss report:- This statement is prepared to find the operating profit in the
business for a given period. The net profit is the basis of calculating the tax. The final net
profit will be transferred to the Balance Sheet. The P&L statement shows the efficiency of
performing operations in the business for given period.
Balance sheet:- The Balance sheet shows the financial status of the business as at a
particular date. The effectiveness of managing the business is depicted here.
The P&L Account and the Balance Sheet together form the basis for different analysis.
The results of such analysis will be used by different groups of people such as the Income
Tax Department, Banks for providing Working Capital Loans, existing and potential
investors for investing in the business, and so on.
1.2 DOUBLE ENTRY SYSTEM OF ACCOUNTING
1.2.1 What is Double Entry System of Book-Keeping?
Every financial transaction in an organization has two aspects. There will always be inflow
of cash or kind on one side and outflow on the other. For example, purchase material from
the supplier on credit. Our stocks of material increases. At the same time our liability
towards the supplier (which is outflow of cash) also increases.
The double entry system of Book-keeping allows us to keep track of both these aspects.
Thus, as per this system at least two accounts are affected when a transaction is recorded.
In the example above, the accounts affected are the Material Purchase account and the
supplier account.
Debit and Credit Entries in the Double Entry System
How do we account for the two sides of a transaction?
The respective accounts, which get changed by a transactions, get any of the two entries –
Debit or Credit. In other words, one account will be debited and the other account will be
credited.
Passing of the Debit and Credit entries is the basic, but crucial process in Accounting. Any
error in this process will have a ripple effect and will affect the final reports.
1.3 ACCOUNTS AND RULES FOR ACCOUNTING
1.3.1 Accounts Type:- Accounts can be any of four types:
Assets What the business owns and what is due to be business.
Liability What the business owes to other
Expense A source of expenditure for running the business pertaining to a
Period.
Income A source of earning money in the business pertaining to a
period.
Exercise : Identify the following types of Accounts :
Debentures Bank of India

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Factory Shed Furniture and Fittings
Taxes Payable Interest received
Sales Electricity charges
1.3.2 Rules for recording Transactions
Classification of Accounts by the Nature of Account and the Golden rules of
Accounting:
1. Personal Account
All accounts which are in the name of any Individual, Firm or Company such as Ram
&Co., Shyam Gupta, Metro Transport, and so on.
Rule: Debit the receiver and
Credit the giver
2. Real Accounts
Accounts which relate to the Assets or liabilities of the business, such as Cash A/C,
Goods A/C, Furniture A/C, and so on.
Rule: Debit what comes in and
Credit what goes out
3. Revenue or Nominal Accounts
Accounts which relate to income or expense, such as Purchase, Sales, Interest received,
Salary & Wages, and so on.
Rule: Debit all expenses and
Credit all income
Let us suppose we have a transaction
“purchase of goods worth Rs. 7000/- on credit from Mahesh Traders”
What accounts will be affected by this transaction?
What accounts will be Debited and which will be credited?
To find answers for the above questions, take the help of some basic rules of recording
transactions. The rules are given below.
Account Type Debit Credit
Personal receiver Giver
Assets/liability/capital what comes in What goes out
(real) (in cash or kind) (in cash or kind)
Revenue (income and Expenses and losses Income or gains
Expenses)
Also Known as Nominal
Let us understand the rules with some examples. Consider the same transaction :
(i) Purchase of goods worth Rs. 7000/- on credit from Mahesh Traders
Accounts affected Purchase Mahesh Traders
Type Expenses Personal
Status Money paid/to be paid Giver

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Rule Debit Expenses Credit the giver
Entry Debit purchase A/C Credit Mahesh Traders A/C
Amount 7000/- 7000/-
 Purchase A/c Dr. 7000/- (Debit all expenses)
To Mahesh Traders A/c Cr. 7000/- (Credit the giver)
(ii) Cash drawn from United Bank Rs. 5500/-
Accounts affected cash United bank
Type Assets Asset
Status Money comes in Money goes out
Rule Debit what comes in What goes out
Entry Debit Cash A/c Credit United Bank A/c
Amount 5500/- 5500/-
 Cash A/c Dr. 5500/- (Debit what comes in)
To United Bank A/c Cr. 5500/- (Credit what goes out)
1.4 ACCOUNTING COMPILATION & REPORTS
1.4.1 Basic steps in Account Compilations, documents used and reports
In this section, let us learn how to go through the different steps of Accounts compilation
and see what document is used and created/ updated at each stage.
The steps are as indicates below:
Step 1 Recording
Step 2 Classifying
Step 3 Summarizing
Step 4 Interpreting (by preparing reports)
The sequence is best represented in the flow diagram below:

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FIGURE-1
-Let us start with a payment transaction for example:
Paid cash Rs. 700 for local Conveyance
(i) Voucher or entry Document: The first document where the transaction is entered is called a
Voucher. A voucher can exist in the form of an Expenses Bill, Sales Bill, Receipt, Payment,
and so on.
(ii) Journal entry: The second step is the stage where we classify the transaction that is, to find
out which are the accountints to be debited or credited. The transaction is now entered in the
form of a journal entry in a book called a journal Proper. A paper journal entry has a typical
format. Given below is the journal entry for the cash payment transaction above:
25.04.2012 Electricity Charges Dr. 1000
To cash A/c 1000
The process of passing a journal entry such as the one above is based on the rules for
recording transactions, discussed in the earlier section.
(iii) Ledger Posting and Balancing: Ledger posting and balancing is done to findout the
payment receipt, income or expenses through any Account.
For example, in the Cash A/c the Electricity Charges are posted to the Debit side of
Electricity
Charges Ledger and the Cash A/c Credited.
Thus the process of posting is transfer of individual transaction amounts from the journal to
the debit or credit side in a given Account.
A simple Cash Account is shown in next page with posting entries.
CASH ACCOUNT
TRANSACTON
VOUCHER
TRIAL
BALANCE
LEDGER
ACCOUNTS
JOURNAL
ENTRY
P&L
ACCOUNTS
BALANCE
SHEET

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RECEIPTS PAYMENTS
DATE PARTICULARS AMT DATE PARTICULARS AMT
01.03.02
05.03.02
26.03.02
31.03.02
To Bal B/d
To Bank A/c
To Tour Advance A/c
(Amount Refunded)
Total
2500
500
1500
5000
02.03.02
04.03.02
06.03.02
07.03.02
05.03.02
31.03.02
31.03.02
By Electricity charges
By Printing A/c
By stationery A/c
By Tour Advance A/c
By other Expenses A/c
By Bal C/f
Total
50
35
55
460
100
4400
5000
From the above we see that the total of payment (credit total, omitting the last entry) is different from
the total of receipts on the left side. But in the manual system the total of both sides are matched. To
get them matched, a new entry is passed on the right side (if the debit Total is more than the credit
total) or on the debit side (if the debit total is less than the credit side). This new entry is known as
balancing entry and it will have the difference between the totals in the amount column. In the above
cash account, the balancing entry is “By Balance Carried Forward” and the balance amount is 4400.
This is the actual cash availability as at the end of March 2002. In other words, it is the closing
balance as on March 31,2002. The ledger accounts are usually posted every month.
(iv) Consolidating in Trial Balance : Once we get the closing balance of all accounts for the last
month of the fiscal year (March), we are ready to prepare the reports. But first we get the
consolidated list of such balances. The list is called the Trial Balance. The Trial Balance has
three columns, namely Account Name, Debit Column and Credit Column. When an account
appears in the debit column, otherwise in the credit column. A sample Trial Balance is
shown below:

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ACCOUNT NAME
Capital
General reserve
Surplus in P&L Account
Tax deducted at source
Expenses payable
Sales tax payable
Furniture
Land & building
Plant & machinery
State bank of india
Cash in hand
Fixed deposits
Opening stock
Material purchased
Stores consumed
Labour charges
Factory electricity
Salary & Wages
Travelling expenses
Other expenses
Sales
Interest received
Other income
Accounts payable
Accounts receivable
Total
DR
227500
242500
355000
413000
3500
250000
140000
382500
55500
6300
11750
55000
131500
211500
285500
2771050
CR
500000
150000
132500
21000
49000
10000
1417500
43000
126000
322050
2771050
TYPEOF
ACCOUNT
Liability
Liability
Liability
Liability
Liability
Liability
Assets
Assets
Assets
Assets
Assets
Assets
Expense
Expense
Expense
Expense
Expense
Expense
Expense
Expense
Assets
The Trial Balance is a source for preparing the reports. As per double entry system, every transaction
has debit and credit entries of equal sum in different accounts. Hence, the total of debit balances and
credit balances should be equal in the trial balance. Preparation of these consolidated reports reveals
any manual or procedural errors in the earlier steps of accounts compilation.
There is one more input require before we go for preparing the P&L report and the balance sheet.
That is the closing entry. Closing entry is given for stock value at the end of the year.
Closing stock is the value of stock available at the end of the year. The closing stock can be valued
by any method such as LIFO, FIFO, Weighted Average and Moving Average.
The value of stock is shown as a current assets in the Balance sheet.
The closing stock of finished goods is treated as an income in the Profit & Loss (P&L) statement.
1.5 PREPARING FINAL REPORTS
1.5.1 Profit & Loss Statement: This report depicts the operating profit/ loss for given period. In
many organizations, this report is prepared in two steps – trading Account and P&L Account.
The trading account is a list of all direct production – related expenses on one side and the
direct source of income (usually income through sales and services) on the other side . The
difference between their total is the Gross Profit or Gross Loss. Given below is a sample
Trading Account showing the balances in the Trial balance above.
The closing stock of Finished goods is assumed as Rs. 25000 and the depreciation for the year
is assumed as Rs. 37000.

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Trading Account of ABC Company for the year ending 31 March, 2001
Expense Amount Income Amount
Opening stock
Add: Material purchased
Labour charges
Factory Power
Gross profit transferred to
P&L
Account
Total
140000
382500
1045000
6300
11750
901950
1442500
Sales Turnover
Closing stock
Total
1417500
25000
1442500
The P&L Account is prepared by listing all other expenses, which were not included in the
Trading Account , on one side and all other incomes on the other. Additionally , the
Depriciation is included in the expenses list. The first entry on the income side is the Gross
Profit taken from the Trading Account.
The Profit & Loss Account using the balances from the Trial Balance and Closing Entries
above is given below.
Profit & Loss Statement for ABC Co. For the year ending 31 March, 2001
Expenses Amount Income Amount
Stores Consumed
Salary & Wages
Travelling Expenses
Other Expenses
Depreciation for the year
Net operating profit
Total
55500
55000
131500
211500
37000
580450
1070950
Gross profit from trading
A/c
Interest earned of fixed
deposits
Other income
Total
901950
43000
126000
1070950
1.5.2 Balance Sheet
The P&L statement depicts the operating profit earned or loss suffered by doing the business
for the one year. But the Balance sheet provides information about the financial status of the
company as on a particular date. The balance sheet is prepared taking the assets and liability
type accounts from the Trial balance.
The balance sheet of ABC Co. as at March 31,2002 is given in next page. The values are taken
from the trial Balance and the Closing entries for Depreciation and Closing Stock.

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Liabilities Amount Assets Amount
Share capital
General reserve
Surplus in P&L account
Tax deducted at source
Expenses payable
Sales tax payable
Accounts payable
Net profit from P&L A/c
Total Liabilities
500000
150000
132500
21000
49000
10000
322050
580450
1765000
Furniture
Land & Building
Plant & Machinery
Less Depreciation
Net Fixed Assets
Bank balance
Cash in hand
Fixed Deposits
Accounting receivable
Closing stock
Total Assets
227500
242500
355000
37000
788000
413000
3500
250000
285500
25000
1765000
1.6 USE OF DAY BOOKS IN ACCOUNTING
We learnt that all the transactions are entered from vouchers to the journal in a chronological
order. Using this method, the journal becomes a voluminous book and extracting entries for
posting in Ledger becomes a time-consuming job. Moreover, the debit and credit entries are
written in the journal and ledger. This is a duplication of effort.
To avoid these disadvantages, the day books are used. Day books are specialized books,
where transactions relating to a particular type, say Sales or Purchase, are entered directly
from the voucher. They are not written into the journal. At intervals, say every month, the
totals from these books are carried forward and used for posting in the Ledger. When the
ledger is posted from the day books, there is only one entry written.
Thereby, we can get the details such as total sales or total purchase at a glance from the
ledger. If we want to know the details, we have to refer to the Day books using a reference
number usually the folio number of the respective Day book. These books are also called
Books of Original Entry.
1.7 ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE
Accounts receivable, also known as Bills Receivable, gives he details of the dues from the
Customers. The details are maintained in a sub-ledger (called Debtors Ledger or Sundry
Debtors). As the sum due from customers is our money blocked, we have to monitor the
receivable closely. This also helps us keep a watch on our customers‟ credit worthiness and
reliability. Many statements are prepared to monitor the Accounts receivable. Some of them
are Analysis Statement, Ageing analysis Statement, Business summary (month-wise or item-
wise) and so on.
Account payable, also known as Bills Payable, gives details of yours dues to suppliers. The
details are maintained in a sub ledger (called Creditors Ledger of Sundry Creditors). A close
monitoring of Accounts payable is also essential, because it helps us in our cash flow

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planning and knowing the cash requirement at any time. Further, our credit worthiness
towards our suppliers is also enhanced, which is again important.
1.8 BANK RECONCILIATION STATEMENT
When we maintain a bank account, we prepare a bank book. The bank gives us one book,
which is called the pass book. The entries in the bank book are made by us. The Pass book
entries are made by the bank authorities.
At any point of time, the final balance shown as per the Bank and the Pass book should be the
same. But most of the times it will not be so. This happen because of the following reasons :
When we make a cheque payment, we make the Bank book posting immediately, whereas
our account will be adjusted only when the cheque is presented and honoured.
When we deposit a cheque from the cutomer, we post the same in our bank book. But our
account with the bank is actually adjusted only when the amount is realized.
For any outstation cheque receipts or for overdrafts, the bank will deduct the service charges.
This will be automatically debited to our account. But we will get the statement only after
some time.
But to be sure that everything goes fine and no errors are committed, a statement is regularly
prepared. This statement is called the Bank Reconciliation Statement.
Suppose we have the following entries in our Bank Book and Pass Book for one month
ending 30.9.02
Bank Book Dr. Cr. Pass Book Dr. Cr.
Opening balance
Payment by cheque
No. 489882
Cheque deposited
No. 2345
Arvind by cheque
No. 22328
Cheque deposited
No. 2434
Total
Balance as on 30.9.02
20000
3500
3000
26500
21800
1500
3200
4700
Opening balance
Withdrawal as per
Cheque No.2482
Cheque presented
and realized
Cheque No. 48945
Purchase of demand
Draft by
cheque No. 22343
service charges
Total
Balance as on
30.9.02
20000
3500
23500
18700
1500
3200
100
4800
Now comparing the entries in both of the books, we prepare a Bank Reconciliation
Statement which looks like the one below:

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Bank Reconciliation Statement as on 30.9.02
Dr. Cr.
Balance as per Bank Book
Add: Cheques issued but not presented
Less: Cheques deposited but not
presented
Chque No. 2434. Amount –
Rs.3000
21800
0
3000
Service charges 100
Total
Balance as per pass Book (Bank
Statement)
21800 3100
18700 Dr.
Groups

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Name Of The Accounts Groups
1. Stock A/c Stock in hand
2. Purchase A/c Purchase
3. Sales A/c Sales
4. Carriage A/c
5. Wages A/c
6. Octorio A/c
7. Import duties A/c Direct expenses
8. Duck charges A/c
9. Royalty A/c
10. Boxel & label A/c
11. Factory expenses A/c
12. Salary A/c
13. Rent A/c
14. Printing & stationery A/c
15. Audit free A/c
16. Repair & maintenance
17. Rent A/c
18. Printing & stationery A/c
19. Audit fee A/c
20. Repair & maintenance A/c
21. Interest A/c
22. Miscellaneous expense A/c
23. Donation A/c
24. Conveyance A/c
25. Vehicle maintenance A/c
26. Depreciation A/c
27. Medical expense A/c
28. Fire extension A/c
29. Accountancy charges Indirect expenses
30. Staff welfare A/c
31. Establishment A/c
32. license fee A/c
33. Brokage A/c
34. Electronic charges
35. Commission A/c
36. Advertisement A/c
37. Packing charges
38. Tours & Travelling A/c
39. Bad debts A/c
40. Telephone Charges A/c
41. Postage & telephone A/c
42. Entertainment expenses A/c
43. Legal charges
44. Incidental expenses A/c
45. Freight & carriage (outward) A/c

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46. Business promotion
47. News & paper A/c
48. periodical A/c Indirect expenses
49. Loss & Damages A/c
50. Insurance A/c
51. Discount A/c
52. Commission received A/c
53. Interest received A/c
54. Discount received A/c
55. Rent received A/c Indirect incomes
56. Bad-debts A/c
57. Mis. Receipts A/c
58. Dividend A/c
59. Furniture A/c
60. Loan & Building A/c
61. Loose and tools A/c
62. Plant & machinery A/c Fixed assets
63. Vehicle A/c
64. Freehold land A/c
65. Patents & trade mark
66. Goodwill A/c
67. B/R A/c
68. Accrued income A/c Current Assets
69. Cash A/c Cash in hand
70. Bank A/c (SBI) Bank
71. Party dob. (sales) A/c Sundary depts
72. Investment A/c
73. F&R A/c
74. Advance A/c
75. Loan A/c
76. Drawing A/c Capital A/c
77. Reserve & fund A/c Resreve & surplus
78. Outstanding expenses Current liabilities
79. Bills payable A/c Current liabilities
80. Sales tax/ VAT A/c Duties & Taxes
81. Loan A/c Loan Liability
Party Cr. Purchase from party A/c Sundry Creditors
Double Entry Book Keeping
I. Simple Entry
II. Compound Entry
The transaction affects three accounts as follows:
Cash A/c Real A/c: Cash A/c (Rs4, 850) to be debited because cash is coming into business.
Discount allowed A/c Nominal A/c: Discount Allowed A/c (Rs150) to be debited because it is an

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Expense or loss for business.
Satish Personal A/c: Satish‟s A/c (Rs5,000) to be credited because he is the giver of the
amount
The entry for the transaction is a Compound Entry as follows:-
cash A/c ……..Dr. 4,850
To Satish ……...Dr. 150
(Being the amount received from satish and allowed him discount)
Let us take another example of a Compound Entry. Salaries of Rs.5,000 and trade expenses of Rs.3,000 are
payable for the year ended 31st March, 2010. These expenses can be recorded in the books of accounts with the
following compound entry.
Salary A/c …………Dr. 5,000
Trade expenses A/c ………….Dr. 3,000
To expenses payable A/c
(Being the salary and trade expenses payable provided)
Entries of some specific Transactions
1. Bad Debts:-
(i) when the amount is irrecoverable:
Bad Debts A/c ………Dr.
To Debtor‟s personal A/c
(Being the amount not recoverable written off as bad Debt)
(ii) when a part of the debt is recoverable:-
cash or Bank A/c ……….Dr.
Bad Debts A/c ………Dr.
To Debtor‟s personal A/c
(Being the amount received and balance written off as bad debt being not recoverable)
2. Bad Debt Recovered:-
To Bad Debt Recovered A/c
(Being the amount earlier written off as bad debt, now recovered)
3. Cash withdrawn for personal use:-
Drawing A/c ……….Dr.
To cash A/c

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(Being the cash withdrawn for personal use)
4. Banking Transactions:
5. Discount
(i) Trade Discount
(ii) Cash Discount
6. Goods taken for personal use:
Drawing A/c ……….Dr.
To purchase A/c
(Being the goods taken for personal use)
Note: The cost of goods withdrawn is debited to the Drawings Account and credited to purchases Account. It is
not considered as a sale but as a sale but as a decrease in purchases as no profit is earned on such goods.
7. Goods given as charity:-
Charity A/c ……….Dr.
To purchase A/c
(Being the goods given as charity, hence credited to purchases account)
8. Distributed of goods as free samples:-
Advertisement A/c/Sample A/c …….Dr.
To purchase A/c
(Being the goods distributed as free samples)
9. Loss by Theft or Fire:-
Loss by Theft or Fire A/c ……Dr.
To purchase A/c
(Being the loss of goods by theft or fire)
Note: Loss by Theft or Fire Account is debited because the loss is a nominal account and the purchase Account is
credited because the purchase decrease. The loss will be treated in accounts as follows:
(i) When goods (Stock) are fully insured, loss is to be borne by the insurance company. The entry passed is:
Insurance Co. or Insurance claim A/c. …………Dr.
To loss by theft or fire A/c
(Being the Loss of goods recoverable from the insurance company)
Insurance claim is an asset and will be shown as an asset in the Balance sheet until actually received in cash.
(ii) When the goods are partly insured:-
Insurance Co. A/c ………….Dr.

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Profit and Loss A/c ………….Dr.
To Loss by Theft Or Fire A/c
(Being the insurance claim partially admitted. Balance amount transferred to Profit and Loss A/c)
(iii) When the claim is received from the insurance company:
Bank A/c …………Dr.
To Insurance Co.
(Being the insurance claim received)
(iv) When the stock is not insured, whole of the loss will be borne by the firm. At the end of the year balance
in loss by Theft or Fire Account is transferred to Profit and Loss Account
Profit and Loss A/c …………..Dr.
To Loss by Theft Or Fire A/c
(Being the loss transferred to profit and Loss Account)
10. Goods used to make an asset:-
Asset A/c ……….Dr.
To purchase A/c
(Being the loss transferred to profit and Loss Account)
11. Purchase and sale of fixed assets:-
(i) On purchase of asset for Cash:
Asset A/c …………Dr.
To cash or Bank A/c
(Being the asset purchased against cash)
(ii) On sale of asset for cash:
To Asset A/c
(Being the asset sold against cash)
(iii) On purchase of asset on Credit:-
asset A/c …….Dr.
To supplier A/c
(Being the asset purchased on credit)
(iv) On Saele of Aset on Credit:
Purchaser‟s A/c ………Dr.

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To assets A/c
(Being the asset sold on credit)
12. Expenditure on the instillation of Machinery and on the Construction of Building:
13. Central Sales Tax:
(i) cash or Debtors A/c ……….Dr.
To sales A/c
To central sales Tax A/c
(Being the sales made and central sales Tax Collectd)
(ii) At the time of depositing sales Tax in the Government Account, the entry passed is:
central sales Tax A/c …………..Dr.
To cash or Bank A/c
(Being the central sales tax collected and deposited in Government Account)
14. Value Added Tax (VAT):
(i) When VAT is paid at the time of purchases:
Purchases A/c ……………Dr.
VAT paid A/c …………….Dr.
To cash sales Tax A/c
(Being the purchase made and VAT paid recorded)
(ii) When VAT is collected at the time of sales:-
Cash or Bank or Debtor‟s A/c ………..Dr.
To sales A/c
To VAT collected A/c
(Being the sales madder and VAT collected rerecorded as liability)
(iii)When VAT is paid to the Government:
(a) VAT collected A/c ……….Dr.
To VAT paid A/c
(Being the balance in VAT paid A/c transferred to VAT collected A/c)
(b) VAT collected A/c ………..Dr.
To cash or Bank A/c.

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(Being the balance in VAT collected A/c after transfer of balance in VAT paid A/c deposited)
15. Sundry or Miscellaneous Expenses:-
Sundry Expenses A/c ……….Dr.
To Cash A/c
(Being the miscellaneous expenses incurred)
16. Income Tax:-
(i) When Income tax is paid:-
income Tax A/c ……..Dr.
To cash or Bank A/c.
(Being the income tax paid)
(iii) For treating it as drawings of the proprietor:
Drawing A/c …….Dr.
To income Tax A/c
(Being the income tax paid transferred to drawings)
17. closing Stock:
Closing stock A/c …………Dr.
To Trading A/c.
(Being the closing stock recorded)
Remember: Closing stock is to be valued at cost or net realizable value (market price) whichever is lower.
18. Outstanding Expenses:-
Wages A/c …………….Dr. 500
To Outstanding Wages A/c 500
(Being the outstanding wages accounted)
19. Prepaid Expenses:
Prepaid Expenses A/c
(Prepaid insurance premium A/c in the above example)
To insurance premium A/c
(Being the amount transferred to prepaid expenses A/c of insurance for the period)

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1st April, 2011 to 30th June, 2011
Note: prepaid Insurance premium A/c is an asset.
20. Depreciation:-
Depreciation A/c
To asset A/c
(Being the depreciation on asset provided)
21. Interest on capital:
Interest on capital A/c ……………Dr.
To capital A/c
(Being the interest on capital allowed @....%)
22. Interest on Drawings:
Drawing A/c ………….Dr.
To Interest on Drawings
(Being the interest on drawings charged @.......%)
(ii) Posting an Account Credited in a Journal entry:
Furniture A/c …………Dr.
To modern Furniture A/c
(Being the furniture purchased)
Tally ERP.
Tally is the no. 1 financial accounting package which allows used to create a company a company , create an
accounts, create a voucher and print report or more…..(used in India and abroad also)
 Creating a company:-
For first time to start working which tally a company is to be created a company, first time typing the
company name & addresses etc.
 Method of manufacturing account in tally
1) Accounts only
2) Account with inventory
 Starting date of company/transaction
1) Financial year
2) Books being from

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 When the company created in tally automatically to create two accounts.
1) Cash
2) Profit& Loss A/
 To Create a company :-
Got Alt+ F3 Create company  As your requirement  OK
 To edit the company :-
GOT  Alt + F3  Alter  edit  OK
 To delete the company
GOT Alt  F3 Alter Alt + D  Yes yesOK
 To select the company:-
GOT  Alt + F3  Select the requirement company OK
 To change the financial period:-
GOT Alt + F2  Change financial period  OK
 To change the voucher date:-
GOT  Accounting voucher  F2 Give the voucher date  Ok
 To save the voucher/Ledger etc.
Ctrl + A
 To create online ledger:-
Alt  (when your cursor/ selection on ledger place)
 To create online calculator:-
Alt + C (when your cursor/ selection on value/ number column)
 To display any ledger/Day book/ Inventory/ etc.
GOT  Display  Check & See the effect  OK.
 To create a ledger/Opening Balance:-
GOT  Account info  Ledger  Create  as your requirement ledger  OK (Ctrl + A)
 To open the voucher entry:-
GOT  Accounting voucher  as your requirement  OK (Ctrl+A).
Some Voucher name
1) Contra ------------------------------------F4
Only for this situation:-
Bank to Bank -----For example-------------------SBIUTI
Bank to Cash------For example-------------------SBICASH
Cash to Cash------For example------------------ CASHPETTY CASH
Suppose cash deposit to SBI Rs 100,000 by P.V. Ltd.
SBI A/C-------------------------Dr.
To Cash A/C

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(Under contra entry after pressing F4)
2) Payment ............................................................................... F5
Expenses/Purchase /Assets etc.
For example:-
Salary paid to Ram RS 20,000
Salary A/C -----------------------Dr. 20,000
To Cash A/C 20,000
(under payment entry after pressing F5)
3) Receipt/ Received (Received any amount)------------F6
For example:-
RS 20,000 Received from Ram & Sons
Cash A/C -----------------------Dr. 20,000
To Ram & Sons. A/C 20,000
(under receipt after pressing F6)
4) Journal---------------------------------------------------------F7
5) Purchase ------------------------------------------------------F9
(purchase any trading goods normally)
For example:-
Purchase goods RS 10,000 from ABC Ltd. In cash
V.V.I. Shortcut key for Tally
Function key Description
 F1 _______________________________________________ Select the company
 F2 __________________________________________ Change the voucher date
 F3 _______________________________________________Create the company
 F4 _____________________________________________________Contra entry
 F5 ___________________________________________________ Payment entry
 F6 ____________________________________________________ Receipt entry
 F7 ____________________________________________________ Journal entry

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 F8 ______________________________________________________ Sales entry
 F9 __________________________________________________ Purchases entry
 F10 _______________________________________________ Reversing journal
 F11 ________________________________________________________ Feature
 F12 ___________________________________________________Configuration
 Alt+F1 ____________________________________________ Shut the company
 Alt+F2 ____________________________________________ Change the Period
 Alt+F3 ____________________________ Select the company, Create comp.etc.
 Alt+F4 _______________________________________________Purchase order
 Alt+F5 __________________________________________________ Sales order
 Alt+F6 ________________________________________________ Rejection out
 Alt+F7 _______________________________________________ Stock Journal
 Alt+F8 ________________________________________________ Delivery note
 Alt+F9 ________________________________________________Receipt Notes.
 Alt+F10 ______________________________________________ Physical Stock
 Ctrl+F6_________________________________________________ Rejection in
 Ctrl+F8__________________________________________________ Debit notes
 Ctrl+F9_________________________________________________ Credit notes
 Ctrl+F10______________________________________________ Memorandum
 Ctrl+V _________________________________ Voucher mode/Inventory mode
 Ctrl+L _________________________________________________Option mode

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New Features - Tally.ERP 9
Some of the new features in Tally.ERP 9 include,
 Remote Access
 Tally.NET (to be read as Tally.NET)
 Simplified Installation process
 New Licensing Mechanism
 Control Centre
 Support Centre
 Enhanced Look & Feel
 Enhanced Payroll Compliance
 Excise for Manufacturers
 Auditors� Edition of Tally.ERP 9 (Auditing Capabilities for Auditors�)
 Enhanced Tax Deducted at Source
Remote Access
Tally.ERP 9 provides remote capabilities to its users to access data from anywhere. Using Tally.NET
features, the user can create remote users (ids), authorize & authenticate them to access company remotely.
Currently, the remote connectivity allows the user to view/display the required information on his system
instantly.
The process for remote access is as follows:
 Start Tally.ERP 9, load the required company and connect to Tally.NET
 Enter the remote user ID at the remote login location to access company data from Tally.ERP 9
Licensed / Educational.

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Requirements for Remote Connectivity:
At the Customer�s Location:
 A valid Internet connection
 A valid Tally.ERP 9 License with a Tally.NET subscription
 Create and authorise remote users for a Company that has to be accessed remotely
 Load & Connect the Company to Tally.NET for remote access
Note: For the company to be accessed by the Remote User the computer has to be kept on and Tally.ERP 9
with company loaded.
At the Remote Location:
 A valid Internet connection
 Tally.ERP 9 (Licensed/Education)
 A valid remote User ID and Password
Benefits of Remote Access:
 Provides anytime, anywhere access to required information
 Allows you to access Reports & Statements on the move to keep yourself updated with the latest
Business happenings.
 Enhances response time to customers (For e.g., Sales staff can access Customer�s Outstanding
Statement for immediate reference / discussion)
 Easy access to financial information for faster & timely decision making.
Data Security:
 The Remote connectivity is initiated with a secured Handshake between two computers using
Tally.NET environment.
 Customer can allow / disallow access to the Company Data for remote users at any point of time.
 Data resides on the Customer�s Computer only.
 Encrypted Data is transferred between two computers on request.
 The customer can assign Security controls to remote users depending upon what access to be given.
 For the Remote user(s) Back up / Restore options will not be available in the remote location.

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Remote TDL�s
During Remote Access, the additional TDL�s running at the customer�s place will also be available to the
Remote User at the remote Location.
The user experience remains the same either working locally on Customer�s Computer or from a Remote
Location. It is recommended to use Broadband connections to enjoy the best Remote experience.
Tally.NET
Tally.NET is an enabling environment which works behind the scenes to facilitate various Internet based
services in Tally.ERP 9. Each Tally.ERP 9 is enabled for Tally.NET Services by default. Tally.NET
provides the following services/capabilities in this release of Tally.ERP 9:
Tally.NET Features
 Create and maintain Remote Users
 Remote Access
 Control Centre
 Support Centre
 Synchronization of data (via Tally.NET)
 Product updates & upgrades
The following services will be available in the forthcoming releases:
 Online help capability in the form of reference Manuals, Articles and FAQ�s
 Access information from Tally.ERP 9 via SMS from mobile
 Employer Recruitment Test
Simplified Installation Process
Tally.ERP 9 comes with a new enhanced installer, which allows the user to configure different settings from
a single screen, as per requirements.
New Tally.ERP 9 Installer
The new installer allows the user to install Tally.ERP 9 application as well as License Server, however you
may choose to install either of them one after the other.
Using the new Installer, the user can install Tally.ERP 9 and License Server separately on different
Computers/folders or same folder.

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 While installing Tally.ERP 9, the user can specify the path for Application, Data, Configuration
and Language files to be stored.
 While Installing Tally.ERP 9 on the Client machine in a multiuser environment, the user is required
to provide the Computer Name / IP Address and Port Number of the computer, where the License
Server is installed & running.
Uninstaller:
The Uninstaller wizard similar to the Installer, also provides flexibility to uninstall either Tally.ERP 9
application or License Server separately or both together. If only License Server is uninstalled, then
Tally.ERP 9 will switch to Education mode on the Client Computer.
Tally Admin Tool
The TallyAdmin tool is a new component that has been introduced with Tally.ERP 9 which enables the
user to perform the following activities without starting Tally.ERP 9
 Initiate License Service operations.
 Display the active Tally.ERP 9 License Servers in a LAN.
 Administer Site License for different products from Tally.ERP 9.
 Check network connections between the computers designated as Client and Server.
 Convert TCP and TSF files of Tally 9 to the format compatible with Tally.ERP 9.
The Tally Admin Tool is available in the Tally.ERP 9 application folder, on installation.
Introduction to TDL Server DLL Component
Tally.ERP 9 onwards, a new component TDLServer.DLL has been introduced, which gets copied to the
folder in which Tally.ERP 9 has been installed. All the default TDL files of Tally have been integrated in
this component. On invoking Tally.ERP 9, these TDL�s will be loaded. The user TDL�s will be
subsequently loaded as usual from Tally.ini.
The componentization will result in a more robust application. The benefits of this componentization are as
follows-
 In case of any updates/ changes in TDL, only TDLServer.dll file needs to be downloaded and not the
entire Tally application which enables faster downloads.

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 This will help in dynamic loading and unloading of TDL Files while Tally application is running
 Forthcoming Tally Developer will be directly using this component, thus eliminating the need for a
separate DefTDL.dat file.
Unified File Format for Tally.ERP 9
The Tally.ERP 9 application folder contains files other than the data files. These are referred to as secondary
files. From this release onwards the file format of all the secondary files have been standardized.
TCP Files
All the TDL files which were compiled for previous versions of Tally as .tcp have to be converted to a new
format. Mentioned below are the ways in which this can be done.
Note: The TDL files in txt format does not require this conversion.
Conversion of Tally 7.2 tcp files to Tally.ERP 9 Format
Tally7.2 tcp files can be migrated to Tally.ERP 9 format using the Tally72Migration tool available in the
Tally.ERP 9 folder. Migration process is the same as earlier.
Conversion of Tally 9 tcp files to Tally.ERP 9 Format
 Automatic Conversion Process: When Tally.ERP 9 is installed in the existing Tally 9 folder then
all the files with .tcp extension included in the �tally.ini� file are automatically converted to the
Tally.ERP 9 compatible format. The original �.tcp� file is renamed as �<filename>.tcp.BAK�.
The name of the file which is converted to new format is same as the original filename. The original
TCP file is retained as a backup file.
 Manual Conversion Process: To manually convert the files in the new format use the Conversion
tab of Tally Admin Tool.
It is mandatory to specify the File Type. The file Type can be TSF or TCP.
 TSF: Converts tally configuration file from old format to new format e.g. tallysav.tsf to tallycfg.tsf
 TCP: Converts TCP file from old format to new format.
In the Source File box specify the name of file to be converted.
In Destination File box provide the name for the converted file.
Note: Start Tally.ERP 9 and check the status of your TDL file. [Go to Gateway of Tally, click
F12:Configuration > Functions and Features] If the status is Active, then the tdl is compatible to
Tally.ERP 9 format. If the status is Error, then scroll down to the line and press enter to know the details.
Then make the TDL syntactically compatible as per the Tally.ERP 9 standards.
Configuration File
Manually the file �Tallysav.tsf� can be converted to the new standardized format by selecting �TSF�
as the file type in the Conversion tab of Tally Admin Tool. Ensure that the destination file name is
�Tallycfg.tsf�
Licensing in Tally.ERP 9
Tally.ERP 9 launches a new Licensing mechanism which is simple, user-friendly and addresses all the
licensing activities from a single screen for users across segments of business. Besides, allowing activation
of Single User (Silver) and Multi User (Gold) license, it also extends the feature to Multi-Site Licensing.
The salient features of Licensing are:
 License Activation is simple and easy two step process.
 Introducing the concept of an Account for better management & administration of Licenses through
the Control Centre.
 Provide your Account ID and Password to reactivate license
 The flexibility and compatibility to centrally manage multiple licenses across locations in a secured
environment
 Removes all licensing data from your computer for a particular instance of license.
Site Licensing
A new concept of Site Licensing is introduced from Tally.ERP 9. A site refers to activation of Tally.ERP 9
Single or Multi User license. The site licensing is broadly classified into two categories namely Single Site
and Multi-Site.

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 Single Site: A single instance of Tally.ERP 9 Silver or Gold license is active at a time under an
Account.
 Multi Site: Is more than one active Tally.ERP 9 Silver or Gold licenses on different machines
under a single account comprising of same or different Serial numbers.
Advantages:
 Centrally configure Sites / License across locations.
 An Account is created using your E-Mail ID provided in the activation form.
 All the serial numbers are assigned to the Account.
 User can split an Account or merge two or more Accounts.
 The Account information is accessible using the Account ID and Password.
Licensing Mechanism
 Provide the required details and your E-Mail ID in the activation form.
 On processing the request an encrypted (not in readable format) license file is generated and needs to
be decrypted using a set of character and numbers called key.
Control Centre
Control Centre is a new feature being introduced with Tally.ERP 9. This utilises Tally.NET as an interface
between the end user and Tally.ERP 9 installed at different locations. With the help of Control Centre, you
will able to:
 Create users with predefined Security levels
 Centrally Configure & manage your Tally.ERP 9
 Surrender, Confirm or Reject activation of a Site
 Maintain Account related information
Following are brief descriptions of the features of the Control Center:
Create users with predefined Security levels
Using the Control Centre feature, the Account Administrator can create users and map them to a predefined
security level and authorise them to access a Site/Location linked to that Account. Further, the system
administrator can also create Remote users (Tally.NET Users & Tally.NET Auditors) and allow / disallow
them to remotely access the data.
The predefined security levels in Tally.ERP 9 are:
 Owner - This security level refers to the ownership for the complete Account. The Owner can create
Standard Users or Owners with required permissions.
 Standard User - Created by the Owner with required permissions.
Centrally Configure and manage your Tally.ERP 9
The Control Centre provides the flexibility to create (or change) the master configurations set for an
Account and apply them to one or more sites (all sites) belonging to that Account.
The following master configurations set can be made from the Control Centre:
 Add/Modify the Tally.ini parameters
 Assign TDL�s to a site or all the sites under an Account
 Permit or Deny changes to the local configurations
The master configurations set created, is applied initially to the Account centrally, which is then inherited by
the site(s) on updation of license, based on the site level permissions defined by the Account Administrator.
Surrender, Confirm or Reject activation of a Site
The Account Administrator is authorised to surrender, confirm a site license or Reject the request received
on activation from another site.
Maintain Account related information
Allows you to maintain information about the organisation. Based on the requirements, the Account
Administrator can merge multiple accounts into one or split an account into multiple accounts for easy and
better management.
Support Centre
Tally.ERP 9 provides a new capability known as Support Centre, wherein a user can directly post his
support queries on the functional and technical aspects of the Product. Using Support Centre feature, the

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user can view all the support queries reported via Support Centre and also through other modes viz., Email,
Calls, etc.
The Support Centre feature facilitates viewing queries for an activated license along with the Status i.e.,
Closed / Pending and Ticket Summary. The report is viewed based on Date, Status and Location.
Faster reach for help and support
The Support Centre makes it easy and convenient to reach out Tally Support, including the Tally Service
Partner, for any product help and support, by a click of a button from within the product.
Access solutions to your problems any time
This feature facilitates instant reference to the solutions provided for your queries at any point of time.
Avoid repeated explanations
Availability of information on the issues, interactions and resolutions, to the entire Tally Support Team,
including the Tally Service Partners largely reduces the possibilities of repeated explanations on the
issues/support queries and thereby ensures quality help and support.
Track your issues on real-time basis
Support Centre enables you to track the status of your queries including the full chain of interactions
irrespective of the mode of communication. If you have posted a query from the Support Centre within
Tally.ERP 9 and then interacted over the phone, you will be able to see both the interactions.
Access issues of any Location/Site
In case of Multi-site License, you can view the details of issues of any location /site from any of your
Location(s).
Reach out to your nearest Partner instantly
You can search for a service partner and post your queries instantly.
Access your Support Centre remotely from any Tally.ERP 9
As an authorized Tally.NET user, Support Centre feature can be accessed remotely from any Tally.ERP 9
(active or in Educational mode) from anywhere. Support Centre also allows you to Select the required
account from the list of User Accounts in case your ID (user name) is linked to multiple accounts.
Configure Tally.ERP 9 from Tally.ERP 9
The user can make all the necessary changes to the product configuration from Tally.ERP 9 itself by going
to Data Configuration, TDL Configuration, Advanced Configuration and Licensing options available
under F12:Configurations from Gateway of Tally. This provides a flexible option for the user to make
changes in the Tally.ini file (Configuration file) and apply them from the application itself.
 Data Configuration - To specify the default Companies that should load during start up and path for
the data files, language files, Confide files.

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 TDL Configuration - Displays the additional TDL�s (Local TDL�s, Account TDL�s, and
Remote TDL�s) and the user can specify the Local TDL�s that need to be loaded. The TDL�s
specified will be loaded dynamically (without restarting Tally.ERP 9).
 Advanced Configuration - To configure Tally.ERP 9 as Server/Client/none, as ODBC Server and
the port configured for ODBC or Data Sync.
 Licensing - To configure the License path in a Multiuser environment.
New Look & Feel
Resizing Screens
The user can resize the Tally.ERP 9 screen/window. The resize parameters such as height and width are
defined in the Tally.ini file. The user can compare identical reports of different companies by changing the
screen size for the two instances of Tally.ERP 9.
Multiple Selection capabilities
The user can now select multiple lines in a Report at single instance. On selecting multiple lines, the user
can delete or hide line(s) based on the requirement of the report.
Bottom Button Toolbar
Another new component that has been introduced in a set of buttons located at the bottom part of every
report and Data Entry screen. Click on the button or press the relevant keys to perform the required task.
Information panel
A new component titled Information Panel or Info Panel has been introduced which is located in the bottom
part of the Tally.ERP 9 screen. The Info Panel has five blocks namely Product, Version, Edition,
Configuration and Calculator. The user can click on any one of these blocks to view the detailed
information.
Product
Displays the logo and product name. The user can click on this section to go to Tally Solutions website to
view the latest happenings.
Version
This part of the Info Panel displays the Release, Build, Date on which the recent License Update is done. In
case Tally.ERP 9 is not updated with the recent Release/Build, the info panel will take you to the Download
Center get the latest update. The user can also click on as on Date to update the License. It also displays the
information on the Type of License (Silver/Gold/Auditors� Edition).
License

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Displays the Serial Number, Site ID, Account ID and Tally.NET subscription details.
Configuration
Displays the Stat and Client Server Information. Stat Information will take the user to the Download center
to download the Latest Stat file. The Client Server Information will allow the user to re-configure the
settings. The Additional TDL�s loaded will also be shown in this section.
During Voucher Entry or while viewing reports the information panel is hidden to provide additional
working space. However, you can click on the directional arrows to restore the information panel as and
when required.
Calculator
Displays the Connection status while connecting to Tally.NET, during Data Sync, and Remote connectivity.
This can also be used as Calculator.
Enhanced Payroll Compliance
Payroll in Tally.ERP 9 is now simplified & enhanced to handle all the functional, accounting and statutory
requirements of your business. The following Statutory features and processes have been incorporated for
faster, better and accurate payroll processing.
Payroll Statutory Features
The following statutory features have been incorporated in Tally.ERP 9:
Employees Provident Fund (EPF)
 Provides automated computation and deduction/contribution of Employees & Employer�s
Contribution towards Provident Fund.
 Provides a predefined PF process to expedite voucher entry and accurate processing of contributions.
 Generates the following Monthly / Annual statutory Challans & Reports:
 Form 12A: Statement of PF Contribution during a particular month
 Form 5: Details of the Employees joining during a particular month
 Form 10: Details of the Employees leaving during a particular month
 PF Combined Challan: Monthly Challan form to be submitted to the bank while paying the PF
amount
 PF Monthly Statement
 Form 3A: Employee wise Annual Payment details
 Form 6A: Annual Statement of PF contribution
 Facilitates automated computation and payment of following administrative charges with the help of
predefined processes.
 PF Administration Charges @ 1.10%
 Employees� Deposit-Linked Insurance Scheme (EDLI) @ 0.5%
 EDLI Administration Charges @ 0.01%
 Other Admin Charges (inspection charges, interest paid etc.)
Employees State Insurance (ESI)
 Provides automated computation and deduction/contribution of Employees & Employer�s
Contribution towards Employees State Insurance
 Provides predefined ESI process to expedite voucher entry and accurate processing of contributions
 Generates the following Monthly / Half Yearly statutory Challans & Reports:
 ESI Monthly Statement
 ESI Monthly Payment Challan: Challan form to be submitted to the bank while paying the paying
the ESI amount.
 Form 3: Monthly Declaration form
 Form 5: Half Yearly Return of ESI Contributions
 Form 6: Half Yearly Employee Register
Professional Tax (PT)
 Provides automated computation and deduction of Professional Tax based on user-defined Slab rates
 Provides predefined PT payment process to expedite voucher entry and accurate payment of
Professional Tax

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 Generate following PT Reports:
 PT Computation Report: Print reports with Slab-wise details of Professional Tax by the Employer
 PT Statement: Print monthly reports with Employee wise details of Professional Tax
Payroll Processes
The following pre-defined payroll processes have been provided to automate different functions in Payroll:
 Salary Process � Automates the Computation of Salary
 PF Process � Automates the Computation of Employer PF Contribution
 ESI Process � Automates the Computation of Employer ESI Contribution
 Salary Payment � Automates the Payment of Salary
 PF Challan � Automates the Payment of PF
 ESI Challan � Automates the Payment of ESI
 Professional Tax Payment � Automates the Payment of PT
Excise for Manufacturers
Tally.ERP 9 provides a complete solution for Excise related Business requirements for versatile industries.
Salient features of Excise in Tally.ERP 9 are:
 The new Excise module allows you to maintain the required Central Excise records for multiple
excise units of Traders /Manufactures in a single company.
 Excise module handles Ad valorem, Ad Quantum, MRP based Valuation Method for Excise
Duty calculation, and also Expenses / Income can be apportioned for calculation of assessable value
either by Value or by Quantity. Additional Expenses / Income can be apportioned for calculation of
assessable value, both by Value or by Quantity.
 The user can maintain a Single Excise invoice book for all purposes of removals as per the
requirement of Rule 11 and an option is provided to maintain the multiple Excise invoice book for a
given Excise unit, the Serial number of Excise book will be generated as running series & with a
check for duplicate numbers.
 The Excise Duty types & it�s Calculation Method are Pre-defined for error free calculation.
 Items can be classified as per tariff (CETSH/HSN) number, and to support error free calculation duty
types and calculation methods can be pre-defined with options provided to manage excise duty for
Exempt and Special Rates.
 An option is provided to avail CEVAT Credit during purchase entry or avail partial/full credit in a
separate entry. Input Service Tax can also be taken as input credit towards Excise duty payable.
Excise Manufacturing Reports in Tally.ERP 9
 Personal Ledger Account (P.L.A.): This is to be submitted on a monthly basis with the details of
Excise duty payments and payable.
 ER1: Monthly return for production and removal of Goods and other relevant particulars
 G.A.R.-7: Proforma for Central Excise duty payments
 CENVAT Credit on / Capital Goods Availed / Utilized Account: Details of CENVAT Credit
availed and utilized for capital goods.
 CENVAT Credit on Inputs availed / Utilised Account
 Rule 11 Invoice: The Excise invoice can be generated as per Rule 11 requirements.
 Daily Stock Account (RG 1 Register): Provides RG1 Register as prescribed the excise dept. for
daily entry of production and removals.
 Statutory Sales Register: provides complete details of Excise sales of finished goods.
Auditors� Edition of Tally.ERP 9
Tally.ERP 9 offers a special Gold Auditors� Edition, which provides Audit and Compliance capabilities
exclusively for Chartered Accountants. The current release provides the following tools:

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 Tax Audit
 Statutory Compliance
Using Tally.ERP 9, Chartered Accountants can provide Audit and Compliance services to their clients in the
following scenarios:
Audit at CA�s office by accessing local data
The Auditors� Edition includes the Audit/Compliance capabilities as a default feature without any
dependency on Tally.NET for Authentication. When the Client�s data is locally available at CA�s office,
the Auditor can perform the Audit or Verification as the Tax Audit and Statutory Compliance features are
available by default.
Audit at Client�s place by accessing local data
When the Auditor wants to use the Auditors� License from Clients Office to provide the Audit or
Compliance Service, the Internet Connection and Tally.NET subscription is required. The Client should
have authorized the Chartered Accountant as Tally.NET Auditor for the Company. In this scenario,
Tally.NET is used to Authenticate the Auditor and fetch the Auditors� License on the Client�s Tally.ERP
9. The Auditor can then open the Company and perform Audit or Verification in the same way as it is done
in the Auditor�s office with Local data using the Auditor�s License.
In this scenario, the Auditor should have a valid Tally.NET subscription to perform Audit.
Audit Remotely by accessing Client�s data from anywhere
When the Auditor wants to access the Client�s Data Remotely and provide Audit and Compliance services
from his office (or from any other remote location), the internet connection and valid Tally.NET
subscription is a must for both Auditor and Client. The Client should have authorized the Chartered
Accountant as Tally.NET Auditor and Connect the Company to Tally.NET at the time of Audit/Verification
process. The Auditor will Login as Remote User and provide the Auditor�s Username and Password to
view the Companies that are available for Audit (Connected) belonging to various Client�s based on the
Access provided. The Auditor can open the required Company to perform the Audit/Verification and save
the Audit/Verification Notes.
The user experience essentially remains the same in all the three scenarios.
Tax Audit
The Tax Audit feature in Tally.ERP 9 enables the auditor to compile information in comparatively less time
with required accuracy to form his opinion and print Annexure as required for Tax Audit under Section
44AB. The following Clauses are available with respect to Form 3CD:
 Bonus PF, ESI Recoveries (Clause 16)

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 Amounts inadmissible u/s 40A(3)(Clause 17(h))
 Payments u/s 43B (Clause 21)
 Employer�s Contribution
 Tax Collected at Source
 Service Tax
 Value Added Tax
 Loans / Deposits Accepted (Clause 24(a))
 Loans / Deposits Repaid (Clause 24(b))
 Fringe Benefits Tax (Annexure II)
Statutory Compliance
Statutory Compliance is a comprehensive tool available with Auditors� Edition to provide Compliance
services for the following Direct and Indirect Tax modules available in Tally.ERP 9.
 Value Added Tax (VAT)
 Service Tax
 Fringe Benefit Tax (FBT)
 Tax Collected at Source (TCS)
The salient features for Statutory and Compliances are:
 Taxation based in-built rules to classify the Masters and Vouchers as Possibly Incorrect (not created
as per the recommended setup for each Taxation)
 Reasons for Possibly Incorrect Masters and Vouchers
 Auditor can concentrate only on Possibly Incorrect and save time
 No need for 100% verification of Masters and Vouchers (for other than Possibly Incorrect)
 Taxation based Payable & Paid information
 Taxation based Due Dates
 Random verification of In Accordance Masters and Vouchers
 Provision to raise Clarification on Master and Vouchers from Clients
 Provides facility to record Verification Remarks using Verification Note
Major Enhancements
Some of the major functionality changes in Tally.ERP 9 include,
 TDS Compliance
 Data Synchronization
 Size and Performance
 FBT
Tax Deducted at Source (TDS)
The TDS feature in Tally.ERP 9 has been revamped to handle all the functional, accounting and statutory
requirements of your business in an accurate and simplified manner. The new/enhanced TDS features are:
 Option provided to the user to deduct the TDS at the time booking the Expense itself.
 The user can deduct the TDS in a single Voucher at the end of the month for all TDS related
Expenses/ Advance Payments booked during a particular month.
 Provides an option to have a single Expense Ledger for multiple Nature of Payments. This will
reduce the need to create Nature of Payments wise separate Ledgers.
 The user can have a single TDS Duty Ledger for multiple Nature of Payments. This will reduce the
need to create multiple Duty Ledgers.
 Both TDS related and non-TDS related Expenses can be booked in a single Voucher. You can also
deduct the TDS at the time of Voucher entry or later.
 Handling TDS for Non-Residents (Sec.195) Payments

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 Tally.ERP 9 handles TDS deductions where payment to the contractor or the sub-contractor exceeds
Rs.20, 000 in a single payment or Rs. 50,000 in aggregate during a financial year as prescribed under
section 194C
 Surcharge Retrospective Calculation � Once the Surcharge Exemption Limit exceeds for a
particular Nature of Payment for a Particular Vendor, the Surcharge will be calculated for the
previous payments also.
 Facility to Print (Hard Copy) and Export Form 26, 26Q & related Annexure, Form 27, 27Q &
related Annexure and Form 16A
 Provides the option to configure the Lower / Zero rate, Ignore IT / Surcharge Exemption Limit
in the Party Creation screen. This will facilitate faster data entry as the user need not remember the
party TDS details at the time of Voucher entry.
TDS related Reports in Tally.ERP 9:
 TDS Computation Report - This report will help the user to manage the TDS deductions.
 TDS Challan (ITNS 281) printing � Monthly challan based on the TDS sections.
 TDS Outstanding Reports � Displays the details of the TDS Outstanding for the selected period.
This can be filtered based on:
 TDS Payable
 Nature of Payment wise
 Party wise
 TDS Exception Reports � This report will display the details of the vendor which are not having
the required details for E-TDS filing (There are certain pre-defined fields to captured and validated
before E-TDS filing). e.g. TDS parties not having PAN details.
 Form 16A � TDS Certificate to be provided to the vendors either at the time of Payment or at the
end the year (Annually).
 Form 26 & Annexure � Annual returns of TDS deducted and paid.
 Form 26Q & Annexure � Quarterly returns of TDS deducted and paid.
 Form 27 & Annexure - Annual returns for Non-Residents for TDS deducted and paid.
 Form 27Q & Annexure - Quarterly returns for Non-Residents for TDS deducted and paid.
 E-TDS � Generates the required file for filing the TDS returns electronically.
 Form 27A � Covering Letter for E-TDS returns.
Data Synchronization Changes
Using Direct � Client and Server Capability
Direct- Client and Server capability for Synchronization through a private network will be incorporated as a
default feature of Tally.ERP 9 Series A release 1.0 onwards.
Using Tally.NET Server
The process of Data Synchronization using TallyLink Server has been changed in Tally.ERP 9. Going
forward Synchronization will be available as a service through the Tally.NET Framework. The user will be
able to use Tally.ERP 9 Silver (SU) at both the ends to Synchronize data.
To use this service the Tally Server Company has to be Connected to Tally.NET server at the time of
Synchronization.
Note:Tally.NET Server (TNS) will be used for Synchronization instead of TRB Server.
In Sync Configuration, under TallyLink Configuration, the options "Use Tally Link� & "Connect to
Tally Link Server" have been removed.
Size and Performance changes
Automatic caching based on system memory

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