1. Basic Concepts of Accounting

Accounting is the process of recording, summarizing, and reporting financial transactions to provide insights into a business's financial performance and position. Key concepts include:

• Assets: Resources owned by a business, e.g., cash, buildings, machinery.
• Liabilities: Obligations the business must fulfill, e.g., loans, payables.
• Equity: Owner's claim on the assets, calculated as assets - liabilities.
• Revenue: Income from sales of goods or services.
• Expenses: Costs incurred in running the business.

Example: A company sells products worth $1000 and incurs expenses of $600. The profit is calculated as:

2. Financial Statements

Financial statements summarize the financial activities of a company. The key statements include:

• Income Statement: Shows the company's profitability over a period, highlighting revenues and expenses.
• Balance Sheet: Displays the company's financial position at a point in time, showing assets, liabilities, and equity.
• Cash Flow Statement: Indicates the inflows and outflows of cash, showing how cash is being used.

Example: The income statement of a company for the year might show $50,000 in revenue and $30,000 in expenses. The net income is:

3. Financial Statement Analysis

Financial statement analysis involves evaluating the performance and financial health of a company through its financial statements. Key tools include:

• Ratios: Financial ratios such as liquidity ratios, profitability ratios, and solvency ratios are used to evaluate the company's performance.
• Trend Analysis: Analyzing financial statements over multiple periods to identify trends.
• Common-size Statements: Converting financial data into percentages for better comparison across companies.

Example: The current ratio is calculated as:

4. Cost Centre

A cost centre is a department or unit within an organization where costs are incurred, but it does not generate revenue. Its primary goal is cost control and monitoring.

• Example: A production department in a factory might be a cost centre, with costs for labor, materials, and overheads being tracked.

Example of Cost Centre: If a factory's production department spends $10,000 on labor and $5,000 on materials, the total cost for that department is:

5. Basic Concepts of Inventory

Inventory refers to the goods and materials held by a business for resale or production. Basic inventory types include:

• Raw Materials: Materials used in manufacturing products.
• Work-in-Progress: Products that are in the process of being manufactured.
• Finished Goods: Products that are completed and ready for sale.

Example: A company may hold:

Total Inventory = Raw Materials + Work-in-Progress + Finished Goods = $10,000 + $5,000 + $15,000 = $30,000

6. Tally Configuration & INI Setup

Tally is an accounting software that allows businesses to manage financial data efficiently. The configuration of Tally involves setting up various features and options such as:

• INI Setup: Configuration files that determine Tally's settings and functionalities.
• Data Directory: The folder where Tally stores data files, reports, and configurations.
• Single & Multiple Users: Configuring Tally for use by one or more users.
• Company Configuration: Creating and configuring company details such as name, address, financial year, etc.

Example: In Tally, you can set the financial year to start from April 1 and the currency symbol to ₹. You can also configure whether the company uses GST or not.

7. Tally Screen Components

The Tally screen consists of various components that facilitate the smooth operation of the software. These include:

• Gateway of Tally: The main screen that provides access to various features like accounts, inventory, and reports.
• Menus: Options available for navigating through Tally's features.
• Keyboard/Mouse Conventions: Keyboard shortcuts and mouse controls for efficient navigation.

Example: To create a new company in Tally, navigate to "Gateway of Tally" and select "Create Company."

8. Maintaining Company Data

Maintaining company data in Tally involves creating, altering, and managing company-specific details. Key aspects include:

• Create Company: Creating a new company by entering basic details such as name, address, and financial year.
• Alter Company: Modifying existing company details.
• Chart of Accounts: Defining and managing the list of accounts used for recording transactions.
• Load/Close Company: Opening and closing the company data for use in Tally.

Example: When you start Tally, you can select the "Load" option to open an existing company's data.

1. Create, Alter & Display Groups and Ledgers

In Tally, groups and ledgers are essential for classifying transactions. Groups classify similar ledgers, and each ledger represents an account.

• Create Group: A group is created by selecting a predefined category such as 'Assets,' 'Liabilities,' etc., and entering the group name.
• Create Ledger: A ledger is created within a group, representing individual accounts like 'Cash,' 'Sales,' or 'Purchases.'

Example: To create a new ledger in the 'Assets' group for 'Bank Account', follow these steps:

2. All Accounting Voucher Types and Transactions

Tally provides various types of accounting vouchers for different types of transactions. Some common voucher types include:

• Receipt Voucher: Used for recording cash or bank receipts.
• Payment Voucher: Used for recording cash or bank payments.
• Sales Voucher: Used for recording sales transactions.
• Purchase Voucher: Used for recording purchase transactions.
• Journal Voucher: Used for non-cash transactions like adjusting accounts.

Example: To record a receipt transaction for Rs. 5000, use the following steps:

3. Create and Alter New Voucher Type

You can create or alter new voucher types in Tally to match specific business needs. Tally allows customization of voucher types, such as adding new fields or changing existing ones.

Example: To create a new voucher type for 'Loan Receipt':

4. Item and Account Invoice Transactions

Tally allows the entry of both item invoices (inventory-related) and account invoices (non-inventory transactions). The difference is that item invoices track stock, while account invoices do not.

Example: For an item invoice:

Example: For an account invoice:

5. Excise Invoice

Excise invoices are used in businesses that deal with excise duty. Tally helps to generate excise invoices for sales of exciseable goods.

Example: To create an Excise Invoice:

6. Export Invoice

Export invoices are used when goods are sold internationally. Tally can be configured to handle export-related details, including export duty and tax exemptions.

Example: To create an Export Invoice:

7. Transactions Using Bill-wise Details

Bill-wise details are used to manage outstanding bills and their payments. This feature allows tracking of due amounts and payments for a particular bill.

Example: To record a bill payment using bill-wise details:

8. Create, Alter & Display Cost Centre and Cost Categories

Cost Centres and Cost Categories help in tracking and allocating expenses to specific departments or projects. Cost centres represent individual units, while cost categories represent different types of costs.

Example: To create a cost centre for "Production Department":

9. Cost Centre & Cost Category Allocation in Voucher Entry

Once cost centres and cost categories are created, they can be assigned to relevant voucher entries to track specific expenses.

Example: During a payment voucher entry, you can allocate the cost to the "Production Department" cost centre.

10. Creating Cost Centre Class and Invoice Entry in a Class Situation

A Cost Centre Class is used when you want to group similar cost centres under a common class. This can simplify cost reporting.

Example: To create a Cost Centre Class:

11. Create, Alter & Delete Foreign Currencies

Tally supports transactions in foreign currencies. You can create, alter, or delete foreign currencies used in your transactions.

Example: To create a new foreign currency:

12. Voucher Entry Using Foreign Currency

When recording transactions in foreign currencies, Tally automatically converts them into the base currency based on the exchange rate.

Example: To enter a sales voucher using USD as the foreign currency:

13. Bank Reconciliation

Bank reconciliation is the process of comparing the bank's records with the company's ledger. Tally allows automatic reconciliation of bank accounts.

Example: To reconcile a bank account:

14. Interest Calculations Using Simple & Advance Parameters

Interest can be calculated in Tally using both simple and advanced methods, with options to adjust the calculation method.

Example: To calculate interest on outstanding balances using advanced parameters:

15. Use of Voucher Class and Adjustment of Interest

A voucher class is used to automate recurring transactions. Adjustments can be made to the interest in the voucher class.

Example: To adjust interest in a voucher class:

16. Creation of Voucher Class and Invoice Entry in a Class Situation

The voucher class helps in setting predefined rules for voucher entries, like default ledgers and taxes.

Example: To create a voucher class for a special discount:

1. Create, Alter & Delete Budgets for Groups, Ledgers & Cost Centres

Budgets are used to set financial targets for groups, ledgers, or cost centres. They help track expenses and incomes against predefined targets.

Example: To create a budget for a ledger (e.g., "Sales"):

Similarly, you can alter or delete budgets by selecting the relevant group, ledger, or cost centre and making the necessary adjustments.

2. Defining Credit Limit & Credit Period

Credit limits and credit periods are set to control the amount and time for which a customer or supplier can avail credit.

Example: To set a credit limit and period for a customer:

3. Display Budgets & Variances

After setting up budgets, you can display them alongside actual figures to analyze any variances (differences) between the budgeted and actual amounts.

Example: To display budget and variances:

4. Create, Alter & Delete a Scenario

Scenarios in Tally allow you to manage different situations or versions of budgets, such as best-case, worst-case, and most likely scenarios.

Example: To create a new scenario:

Similarly, you can alter or delete existing scenarios by selecting the relevant scenario.

5. Enabling Job Costing in Tally

Job costing allows you to track the costs associated with specific jobs, such as a manufacturing project or a service contract. It helps in calculating the profitability of individual jobs.

Example: To enable Job Costing:

6. Master Creation & Configuration for Job Costing

For job costing to work effectively, you must create job cost masters that define the job parameters.

Example: To create a Job Cost Master:

7. Creation of Voucher Type & Voucher Class for Stock Transactions

Voucher types and classes help streamline stock transactions such as purchases, sales, and stock adjustments. A voucher class can automate certain details, like tax calculations and account allocations.

Example: To create a new voucher type for stock transactions:

8. Creation of Transfer Journal for Transfer of Stock Between Godowns

The transfer journal helps in transferring stock from one godown (warehouse) to another.

Example: To create a transfer journal:

9. Consumption Journal Transactions

The consumption journal helps in tracking the use of stock or materials, often for production processes.

Example: To record a consumption journal:

10. Payment Voucher

The payment voucher is used to record payments made by the company, whether in cash or through bank transfer.

Example: To record a payment voucher:

11. Godown Summary Report

The Godown Summary Report provides a summary of stock movement across various godowns.

Example: To view the Godown Summary:

12. Job Work Analysis

The Job Work Analysis helps to track the cost incurred on job work and assess its profitability.

Example: To view Job Work Analysis:

13. Material Consumption Summary

The Material Consumption Summary report provides details on the materials consumed in production.

Example: To view Material Consumption Summary:

14. Reports

Various reports in Tally help in financial analysis and monitoring business health. Some commonly used reports include:

• Balance Sheet: Provides an overview of assets and liabilities.
• Profit & Loss Account: Displays the company's income and expenses.
• Ratio Analysis: Helps analyze the financial ratios such as liquidity, profitability, etc.
• Trial Balance: Lists all accounts with their balances, ensuring the books are in balance.

15. Accounts Books and Registers

Tally offers several useful books and registers, such as:

• Cash/Bank Book: Tracks all cash and bank transactions.
• Sales Register: Lists all sales transactions.
• Purchase Register: Lists all purchase transactions.
• Journal Register: Includes all journal entries.
• Cost Centre & Category Summary: Tracks costs associated with cost centres and categories.

1. Create, Alter & Display Stock Groups and Stock Items

Stock Groups are used to classify stock items into different categories, whereas Stock Items represent the individual products being managed in the inventory.

Example: To create a Stock Group for "Electronics":

Example: To create a Stock Item like "Mobile Phone":

2. Stock Item Behaviour Using Costing and Market Valuation Methods

Stock item behavior defines how the cost and valuation are managed. Costing methods include FIFO, LIFO, and Weighted Average, and Market Valuation methods control the valuation based on the market price.

Example: Setting up costing for a stock item:

3. Stock Item Behaviour: Additional Features

Additional behaviors allow you to manage stock in more detailed ways:

• Treat all sales as new manufacture: This ensures that each sale is treated as a fresh manufactured item.
• Treat all purchases as consumed: This feature adjusts inventory immediately when a purchase is made, as if the stock is already consumed.
• Treat rejections inward as scrap: Items returned due to rejections are treated as scrap material.
• Ignore negative balances: This ensures no warning is displayed when stock goes negative, which can be useful for certain industries.
• Handling differences due to physical counting: This manages discrepancies found during stock audits or physical stock-taking.

4. Create, Alter & Display Stock Categories

Stock categories allow grouping of stock items based on various criteria, such as type, usage, or other attributes.

Example: To create a new Stock Category like "Smartphones":

5. Create, Alter & Display Units of Measure

Units of measure define how stock items are quantified, such as pieces, kilograms, liters, etc. You can also create compound units for combinations of base units.

Example: To create a new unit "Box" as a compound unit:

6. Define Standard Cost & Selling Price

Setting up standard cost helps you track the expected cost of items. Selling price is defined to set up the price at which goods are sold to customers.

Example: To define a standard cost and selling price for a stock item:

7. Define Rate of Duty & MRP

Define the rate of duty (like GST or other applicable taxes) and the maximum retail price (MRP) of items to ensure compliance with regulations and accurate pricing.

Example: To define the rate of duty and MRP for an item:

8. Create, Alter & Display Godowns

Godowns are physical locations where stock items are stored. You can manage multiple godowns in Tally.

Example: To create a new godown:

9. Allocation of Items to Godowns

Allocating items to godowns helps track inventory across various locations.

Example: To allocate a stock item to a godown:

10. Inventory Voucher Types and Transactions

Inventory vouchers are used for recording various stock transactions like purchases, sales, stock transfers, and adjustments.

Example: To record a stock purchase:

11. Create & Use Bill of Material (BoM)

A Bill of Material is used in manufacturing businesses to define the raw materials needed to produce a finished product.

Example: To create a BoM for assembling a mobile phone:

12. Reports

Several inventory-related reports in Tally help track stock movements and manage inventory effectively. These reports include:

• Stock Summary: Displays the stock level for each item.
• Physical Stock Register: Tracks physical stock as per the last audit.
• Stock Group & Item Analysis: Shows stock status by group or individual items.
• Sales & Purchase Order Summary: Helps manage orders efficiently.

1. Cheque Printing

Cheque printing in Tally allows you to print payment cheques directly from the software, which streamlines the payment process for businesses.

Example: To print a cheque in Tally:

2. Common Printing Options

Printing options in Tally allow you to customize various document prints, like invoices, ledgers, and reports, based on your preferences.

• Preview: View the print format before actually printing.
• Printer Settings: Choose printer type and paper size.
• Page Layout: Adjust the page layout for clarity.

3. Different Printing Formats

Tally supports various printing formats for different business documents, such as invoices, reports, and cheques.

Example: To change the printing format for invoices:

4. Multi-Account Printing

Multi-account printing allows you to print multiple account statements or vouchers at once, saving time when handling bulk printing tasks.

Example: To print multiple ledgers at once:

5. Dynamic Report-Specific Options

Dynamic report-specific options in Tally allow users to customize and filter reports based on specific criteria such as date range, group, and category.

Example: To view a dynamic Profit and Loss statement:

6. Creating Group Company

A Group Company in Tally is useful when managing multiple companies under a single umbrella for reporting purposes.

Example: To create a group company:

7. Use of Tally Vault

Tally Vault is a feature that provides enhanced security for company data, allowing password protection and encryption for sensitive data.

Example: To activate Tally Vault:

8. Using Security Control & Defining Different Security Levels

Security control in Tally allows the admin to set different levels of access for users, ensuring data security and control over actions.

Example: To define user roles and security levels:

9. Use of Tally Audit

Tally Audit is used to monitor and track changes in financial data, ensuring transparency and accuracy in accounts.

Example: To enable Tally Audit:

10. Backup & Restore

Backup and Restore features in Tally help safeguard company data by creating copies and restoring them if necessary.

Example: To create a backup of company data:

11. Splitting Company Data

Data splitting in Tally allows you to divide company data into multiple periods (e.g., financial years) for easier management and archiving.

Example: To split company data:

12. Export & Import of Data

Data export and import features allow Tally users to move data between different systems or software.

Example: To export data from Tally:

13. ODBC Compliance

ODBC (Open Database Connectivity) compliance in Tally allows the integration of Tally data with other software applications that support ODBC.

Example: To use ODBC in Tally:

14. Use of E-mail & Internet Publishing

Tally allows users to send reports and data via email and publish them on the internet directly from the software.

Example: To send an invoice via email:

15. Rewriting Data

Rewriting data in Tally ensures that the data is cleaned, reorganized, and optimized for better performance.

Example: To rewrite data: