TALLY ERP.

9
 Basics of Accounting
Lesson Objectives
On completion of this lesson, you will be able to understand
Principles and concepts of Accounting
Double Entry System of Accounting
Financial Statements

Introduction
Accounting is a process of identifying, recording, summarising and reporting economic informa-tion
to decision makers in the form of financial statements. Financial statements will be useful to the
following parties:
Suppliers
Customers
Employees
Banks
Suppliers of equipments, buildings and other assets
Lenders
Owners

Types of Accounts
There are basically three types of Accounts maintained for transactions :
 Real Accounts
 Personal Accounts
 Nominal Accounts

Real Accounts
Real Accounts are Accounts relating to properties and assets, which are owned by the business
concern. Real accounts include tangible and intangible accounts. For example,
 Land
 Building
 Goodwill
 Purchases
 Cash

Personal Accounts
Personal Accounts are Accounts which relate to persons. Personal Accounts include the follow-
ing.
 Suppliers
 Customers
 Lenders

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 Nominal accounts
Nominal Accounts are Accounts which relate to incomes and expenses and gains and losses of
a business concern. For example,
 Salary Account
 Dividend Account
 Sales

Accounts can be broadly classified under the following four groups.

Assets
Liabilities
Income
Expenses

The above classification is the basis for generating various financial statements viz., Balance
Sheet, Profit & Loss A/c and other MIS reports. The Assets and liabilities are taken to Balance
sheet and the Income and Expenses accounts are posted to Profit and Loss Account.

Golden Rules of Accounting

Real Accounts Personal Accounts Nominal Accounts

Debit What Comes in The Receiver Expenses and Losses
Credit What Goes out The Giver Incomes and Gains

Double Entry System of Book Keeping

As per Double Entry System of book-keeping, all the business transactions recorded in accounts
have two aspects - Debit aspect (receiving) and Credit aspect (giving). For example, when a
business acquires an asset (receiving) and pays cash (giving) for it. This accounting technique
records each transaction as debit and credit, where every debit has a corresponding credit and
vice versa.

Features of Double Entry System of Book Keeping

The Double entry system of book keeping comprises of the following features :
o Every business transaction affects two accounts
o Each transaction has two aspects, i.e., debit and credit
Maintains a complete record of all business transactions
o Helps to check the accuracy of the accounting transactions, by preparation of trial balance
o Helps ascertaining profit earned or loss occured during a period, by preparation of Profit &
Loss Account
o Helps ascertaining financial position of the concern at the end of each period, by prepara-tion
of Balance Sheet
o Helps timely decision making based on sufficient information
o Minimises the possibilities of fraud due to its systematic and scientific recording of business
transactions
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The following are the most common source documents.
Voucher
A voucher is a document in support of a business transaction, containing the details of such
trans-action.

Receipt
When a trader receives cash from a customer against goods sold by him, issues a receipt con-
taining the name of such customer, details of amount received with date.

Invoice or Bill
When a trader sells goods to a buyer, he prepares a sales invoice containing the details of name and
address of buyer, name of goods, amount and terms of payments and so on. Similarly, when the
trader purchases goods on credit receives a Invoice/bill from the supplier of such goods.

Journals and Ledgers

A journal is a record in which all business transactions are entered in a chronological order. A
record of a single business transaction is called a journal entry. Every journal entry is supported
by a voucher, evidencing the related transaction.

Account
An account is a statement of transactions affecting any particular asset, liability, expense or
income.

Ledger
A Ledger is a book which contains all the accounts whether personal, real or nominal, which are
entered in journal or subsidiary books.

Chart of Accounts
A chart of accounts is a list of all accounts used by an organisation. The chart of accounts also
displays the categorisation and grouping of its accounts.

Posting
Posting is the process of transferring the entries recorded in the journal or subsidiary books to
the respective accounts opened in the ledger i.e., grouping of all the transactions relating to a
par-ticular account to a single place.

Accounting Period
Generally, the financial statements are generated for a regular period such as a quarter or a year, for
timely and accurate ascertainment of operating and financial position of the organisation.
Trial balance is a statement which shows debit balances and credit balances of all Ledger
accounts. As per the rules of double entry system, every debit should have a corresponding
credit, the total of the debit balances and credit balances should agree. A detailed trial balance
has columns for
Account name

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 Debit balance
Credit balance

Financial Statements
Financial statements are final result of accounting work done during the accounting period.
Financial statement serves a significant purpose to users of accounting information in knowing
about the profitability and financial position of the organisation. Financial statements normally
include
Trading
Profit and Loss Account
Balance Sheet

Trading Account
Trading refers to buying and selling of goods. The trading account displays the transactions per-
taining to buying and selling of goods.

The difference between the two sides of the Trading Account indicates either Gross Profit or
Gross Loss. If the credit side total is in excess of the debit side total, the difference represents
Gross Profit. On the other hand, if the total of the debit side is in excess of the credit side total,
the difference represents Gross Loss. Such Gross Profit / Gross Loss is transferred to Profit &
Loss Account. The Gross Profit is expressed as :
Gross Profit = Net Sales – Cost of Sales

Profit and Loss Account

The profit and loss account helps to ascertain the net profit earned or net loss suffered during a
particular period. after considering all other incomes and expenses incurred over a period. This
helps the company to monitor and control the costs incurred and improve its efficiency. In other
words, the profit and loss statement shows the performance of the company in terms of profits or
losses over a specified period.

Net Profit = (Gross Profit + Other Income) – (Selling and Administrative Expenses +
Depre-ciation + Interest + Taxes + Other Expenses)

A key element of the Profit and Loss Account, and one that distinguishes it from a balance sheet,
is that the amounts shown on the statement represent transactions over a period of time, while
the items represented on the balance sheet show information as on a specific date.
All revenue and expense accounts are closed once the profit and loss account is prepared. The
Revenue and Expenses accounts will not have an opening balance for the next accounting
period.

Balance Sheet
The balance sheet is a statement that summarises the assets and liabilities of a business. The
excess of assets over liabilities is the net worth of a business. The balance sheet provides infor-
mation that helps in assessing

A company’s Long-term financial strength

A company’s Efficient day-to-day working capital
management A company’s Asset portfolio
A company’s Sustainable long-term performance

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 The balances of all the real, personal and nominal (capital in nature) accounts are transferred
from trial balance to balance sheet and grouped under the major heads of assets and liabilities.
The balance sheet is complete when the net profit/ loss is transferred from the Profit and Loss
account.
Transactions: A transaction is a financial event that takes places in the course or furtherance
of business and effects the financial position of the company. For example, when you deposit
cash in the bank, your cash balance reduces and bank balance increases or when you sell
goods for cash, your cash balance increases and your stock reduces.
Transactions can be classified as follows :
Receipts – cash or bank
Payments – cash or bank
Purchases
Sales

Recording Transactions
The important aspect of accounting is to record transactions promptly and correctly to ascertain
the financial status of a company as on a particular date.
Generally, the business transactions may be of the folowing nature :
Purchase of goods either as raw materials for processing or as finished goods for resale
Payment of expenses incurred towards business
Sale of goods or services
Receipts (in Cash or by Cheques)
Payments (in Cash or Cheques)

Getting Functional with Tally.ERP 9

Tally.ERP 9 Start-up
Tally.ERP 9 can be started in any of the following ways :
Click on Start > Programs > Tally.ERP 9 > Tally.ERP 9 or double click on the Tally.ERP 9 icon
on your desktop
The Tally.ERP 9 Start-up Screen appears as shown below:

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Tally.ERP 9 Screen Components
Title bar: Displays the Tally.ERP 9 version number.
Horizontal button bar: Selection of Language key, Keyboard Language and Tally.ERP 9 Help.
Close button: Performs the standard Windows Operating Systems function (Windows 95
onwards), allowing you to minimise Tally.ERP 9 and work on other applications. To restore
Tally.ERP 9, click the Tally.ERP 9 icon on the taskbar.
Gateway of Tally: Displays menus, screens, reports and accepts the choices and options which
you select to view data as required.
Buttons toolbar: Displays buttons which provide quick interaction with Tally.ERP 9. Only buttons
relevant to the current task are visible.
Calculator Area: Used for Calculator functions.
Info Panel: Displays Version number, License details, Configuration details.

When Tally.ERP 9 first loads, the Gateway of Tally screen displays. To toggle between this
screen and the Calculator/ ODBC server area at the bottom of the screen, press Ctrl+N or Ctrl+M
as indicated on the screen. A green bar highlights the active area of the screen.

Quitting Tally.ERP 9
You can exit the program from any Tally.ERP 9 screen, but Tally.ERP 9 requires all screens to be
closed before it shuts down.
To quit working on Tally.ERP 9,
Press Esc until you see the message Quit? Yes or No ? Press Enter or Y, or click Yes to quit
Tally.ERP 9.
Alternatively, to exit without confirmation, press Ctrl+Q from Gateway of Tally.
You can also press Enter while the option Quit is selected from Gateway of Tally.

Creation of a Company
Go to Gateway of Tally > Company Info. > Create Company
Each field in the Company Creation screen is explained below. To navigate between the fields,
use the enter key or the tab key or arrow keys or the mouse.

Fields Description
Directory Tally.ERP 9 assumes that the company is to be created in the data
path given in the Tally.INI file, which is displayed by default. This
field is skipped by default. However, you can change this path, if you
want to, by using the backspace key, so that Tally.ERP 9 saves the
data to a different directory specified by you.
Name This specifies the name of the company as it appears in Tally.ERP
9. If you have several companies to create with similar names, you
will have to distinguish between them to provide a unique name for
Tally.ERP 9.

Mailing Name The company name given in the Name field automatically appears
in this field. This can be changed according to your requirements.
The correct name of the company for mailing purposes should be
entered.

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Address The address of the company (The mailing name and address details
are picked from here for any report such as balance sheet and
statement of accounts).

Statutory Compliance Select India from the list of countries.

for

State Select the appropriate State from the list of States.

Pin Code Enter the PIN code of the specified address.

Telephone No. Enter the telephone number of the company.

E- Mail E-mail address will be used to e-mail documents, reports and data
from Tally.ERP 9.

Mobile No. Enter the mobile number of the company.

Currency Symbol This refers to the currency symbol Tally.ERP 9 will use for monetary
values. By default, Tally.ERP 9 displays Rs.

Maintain Select the nature of the company i.e, Accounts only or Accounts
with Inventory.

Financial Year From Specify the Financial Year (FY) for the company. Tally.ERP 9
considers 12 months from the date you give here as the Financial
Year. For example, if you give 1st April 2009, your FY will be April to
March - in this case, ending with 31st March 2010.
Books Beginning The date given for ‘Financial Year From’ is automatically displayed.
From However, we can specify the actual date on which the books of
accounts start. In case our accounts are opened mid-way during the
financial year specified, we can enter the required date and start the
books of accounts accordingly.

TallyVault Password TallyVault is an enhanced security feature utilised to protect

company data in an encrypted form by means of a Password. The
TallyVault password entered ensures that the data is maintained
permanently in an encrypted form without retaining information of
the password used. Data is not accessible without the TallyVault
password. Remember to keep this password private and known
only to those who need to know. If the password is lost, your data
cannot be recovered.

Use Security Control Tally.ERP 9 has a range of security controls, which can define the
authority of various users to access the information and to enter/
alter/delete the vouchers.

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Base Currency Information
Tally.ERP 9 needs to know the default currency for the company and how the amounts should be
shown on the screen and in the reports.

BASE CURRENCY INFORMATION

Fields Description
Base currency symbol Pre-set as a default currency — Rs. (as
specified earlier).
Formal name Complete name for the currency symbol.
By default, this is set to Indian Rupees.
Number of decimal places By default, this is set to 2.
Is symbol suffixed to amounts? By default, this is set to No. For example,
in India, we place the Rs symbol in front
of amounts.
Symbol for Decimal Portion Enter the decimal portion for the cur-
rency mentioned. Enter Paise.
Show amounts in millions? Tally.ERP 9 caters to currencies where
the different parts of large amounts are
called by special names. By default, this
is set to No.
Put a space between amounts and symbol? By default, this is set to Yes.
Decimal Places for Printing Amounts in You can specify the number of decimal
words places to print the amount in words. This
number should be equal to or lesser than
the number specified in Number of Deci-
mal places field.

Go to the Gateway of Tally > Company Info. > Create Company Enter the following information
to create a company:

Field Data to be entered

Directory Accept what is displayed on the screen
Name National Traders
Mailing Name National Traders
Address No 24, Phase 1,
Peenya Industrial Area
Bangalore
Statutory Compliance for India
State Karnataka
Pin Code 560089
Telephone No 080 - 41237890

Mobile No. 9845293752

E-mail [email protected]
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 Currency Symbol Rs.
Maintain Accounts with Inventory
Financial year from 1 April 2009
Books beginning from 1 April 2009
TallyVault Password (if any) Skip the Field – don't enter any details.
Use security control No
Formal name Indian Rupees
Number of decimal places 2

Exercise to Create another Company

Before looking at how to view and amend company details, let us create another company to
experiment with. Name your company as Indus Enterprises, Financial Year as 1 April 2009 &
Book beginning from 1 April 2009 and you may enter the company details as you like,
To create Indus Enterprises follow this procedure:
1. From the buttons bar select Alt + F3: Create Cmp or simply press Alt + F3 to bring up the
Company Info. Menu.
2. Select Create Company from the menu to bring up the Company Creation screen.
3. Enter Indus Enterprises in the Name field and experiment with entering other data of your
choice (for example, the address details).
4. When you have finished, Press Y or Enter to accept the screen
Practice Exercise
1. Select a Company
2. Shut a Company
3. Alter a Company

To Select a Company
1. Go to the Gateway of Tally > Alt + F3 > Company Info. > Select Company OR Press F1.
Tally.ERP 9 displays the List of Companies screen. All the companies created are displayed
in an alphabetical order. Select the company name from the list given.
2. In case two or more companies are loaded (like National Traders and Indus Enterprises), click
on the company which you need to work on so that the selected company will be highlighted
and will appear on top of the list.

To Shut a Company
Go to the Gateway of Tally > Alt + F3 > Company Info. > Shut Company. Select the Company
which you need to shut from the List of Companies. You can also use Alt + F1 to shut a
Company from the Gateway of Tally screen.

To Alter Company Details

Go to the Gateway of Tally > Alt + F3 > Company Info. > Alter. Select the company which you
need to alter from the List of Companies and press Enter to view the Company Alteration
screen. Alter the company details as required and accept the screen.

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Creating Accounting Masters in Tally.ERP 9
Features
The F11: Features are Company-specific and the F12: Configurations are applicable to all the
companies in a data directory. The F11: Features is divided into the following major categories:
Accounting Features
Inventory Features
Statutory & Taxation
Tally.NET Features

You can press F11 (functional key) from any screen of Tally.ERP 9 or you may also click on the F11:
Features button available in the button bar, to enable the required features. The F11: Features are
specific only to the company currently in use (for which the said feature is enabled), thereby allowing
flexibility of independently enabling different features for each of the company.

Go to Gateway of Tally > press F11: Features

The Company Features screen is displayed as shown.

F1: Accounting Features

The Accounting Features consists of configurations/ functionalities, which generally affects

Accounting transactions and reports. The Accounting features is further sub-divided into six
sections, namely :

General
Oustandings Management
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Cost/ Profit Centres Management
Invoicing
Budgets/ Scenario Management
Other Features
F2: Inventory Features
The Inventory features comprises of configurations/ functionalities pertaining to Inventory transac-
tions and reports. The Inventory features is further sub-divided into seven sections, namely :
General
Storage & Classification
Order Processing
Invoicing
Purchase Management
Sales Management
Additional Inventory Vouchers
F3 : Statutory & Taxation
The Statutory & Taxation features comprises of configurations/ functionalities pertaining to
statutory compliances available in Tally.ERP 9. The Statutory features are country specific and
strictly depends upon the Country selected in the Company Creation screen. The following
features are available, when India is selected in the Statutory Compliance for field in the
Company Creation screen.
GST
Value Added Tax
Service Tax
Tax Deducted at Source
Tax Collected at Source
Fringe Benefits Tax

F12 : Configurations
Go to Gateway of Tally > press F12: Configure
The Configuration screen is displayed as shown.

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Setting up Account Heads
Tally.ERP 9 allows you to create Account heads and groups as per your requirements. The flexi-
bility and ease of creating user-defined Account Heads and groups (Chart of Accounts) as per
nature of business or business practice makes Tally.ERP 9 suitable for businesses across indus-
tries, verticals and geographies, without changing the way they do their business.

Chart of Accounts
Tally.ERP 9 follows the Double Entry system of Accounting. It records accounting information by
debiting and crediting different Ledger Accounts using different voucher types depending upon
the nature of transaction. It automatically collates the debit and credit amounts and arrives at the
closing balance of each ledger / group / report.

Pre-defined Groups of Accounts

There are 28 predefined groups in Tally.ERP 9, which are widely used in the Chart of Accounts
of many trading organizations. Out of these, 15 groups are Primary Groups and the remaining 13
are Sub-Groups.
Among the 15 predefined groups, 9 Groups are Balance Sheet items and the remaining 6
groups are Profit & Loss A/c items. However, you may also alter the nomenclature of these
predefined 28 Groups
The List of Accounts screen is displayed as shown
1. Capital Account
Reserves & Surplus [Retained Earnings]
2. Current Assets
Bank Accounts
Cash-in-hand
Deposits (Asset)
Loans & Advances (Asset)
Stock-in-hand
Sundry Debtors
3. Current Liabilities
Duties & Taxes
Provisions Sundry
Creditors
4. Fixed Assets
5. Investments
6. Loans (Liability)
Bank OD A/c [Bank OCC A/c]
Secured Loans
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 Unsecured Loans
7. Suspense A/c
8. Misc. Expenses (Asset)
9. Branch/Divisions

Out of the 15 pre- defined primary groups, the following are the six pre-defined groups that
appear in the Profit & Loss Account.
1. Sales Accounts
2. Purchase Accounts
3. Direct Incomes [Income (Direct)]
4. Indirect Incomes [Income (Indirect)]
5. Direct Expenses [Expenses (Direct)]
6. Indirect Expenses [Expenses (Indirect)]
Creating Accounting Groups in Tally.ERP

Create the following Sundry Debtors Ledger accounts :

Groups - North Delhi Debtors and Bhopal Debtors under North India Debtors.
Mysore Debtors and Secundrabad Debtors under South India Debtors.
Renison & Co and Milton & Co grouped under North Delhi Debtors.

Solution
The solution is to first create two sub-groups North India Debtors and South India Debtors
under Sundry Debtors.
Go to the Gateway of Tally > Accounts Info. > Groups > Create.
Enter Name as North India Debtors

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Against the field Under select Sundry Debtors from the List of Groups The Group Creation
screen appears as shown below
Press Y or Enter to accept the screen.
Similarly create the following Groups:
South India Debtors under Sundry Debtors.
Mysore Debtors and Secundrabad Debtors under South India Debtors.
North Delhi Debtors and Bhopal Debtors under North India Debtors.

Tally.ERP 9 allows you to create any number of groups under all the default groups. We have
now created two sub-groups under Sundry Debtors viz. North India Debtors and South India
Debtors. Additionally, we have created two sub-groups each under North India Debtors and
South India Debtors as per the requirements.

Given below is the Trial Balance of National Traders extracted from the Books of Accounts at
the close of business on March 31, 2009.
Trial Balance
Particulars Debit Credit
Bank account 35000
Deposit Account 40000
Petty Cash 500
Opening Stock 286150
Sundry Debtors (Total) 57300
Compu Care Systems 5400
Data Link Technologies 26000
Spectrum Computers 12400
Supreme Computers 13500
Buildings 75000
Buildings Accum Deprn 8000
Office Equipment 25000
Office Equip Accum Deprn 4500
Tax Deducted at Source 4780
Sales tax 13600
Sundry Creditors (Total) 156000
Challenger Systems 65650
Horizon Enterprises 44750
Silverplus Computers 45600
Mutual Trust Loan 50000
Equity Capital 250000
Profit & Loss A/c 32070
Total 518950 518950

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 The Chart of Accounts to be prepared is based on the above Trial Balance of National Traders.
This is to assist you in understanding the classification of ledgers. To help you, each account
has been marked as :
P - Pre-defined Tally.ERP 9 Group (no
action) L - Ledger account required
NG - New Group required
NPG - New Primary Group required
Let us now view the List of Groups in the Multiple Display Mode.
Go to the Gateway of Tally > Accounts Info. > Groups > Display (Multiple Groups) > Select
All Items

Altering and Displaying Ledgers

The procedures for altering and displaying ledgers are similar to those of groups. Now try this out
on National Traders by altering the Tally.ERP 9 pre-defined ledger for Cash to Petty Cash and
entering the opening balance:
Select Alter from the Single Ledger option.
Select Cash from the List of Ledgers.
Change the Name from Cash to Petty Cash.
Enter the Opening Balance of 500 Dr.
Press Y or Enter to accept the screen.
If you use Display in Single Ledger now, you will see that the List of Ledgers shows Petty
Cash instead of Cash.

Deleting Ledgers
You can delete a ledger, by pressing Alt+D in the Ledger Alteration screen.
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You will not be able to delete a ledger, once the financial transactions (vouchers) have been
entered (excluding the Opening Balance). If there is a need to delete a ledger with any financial
transactions the lowest level must be deleted first by pressing Alt+D.

Creating Inventory Masters in Tally.ERP 9

Inventory accounting includes recording of stock details like the purchase of stock, the sale of stock,
stock movement between storage locations or godowns and providing information on stock
availability. Tally.ERP 9 makes it possible to integrate the inventory and accounting systems so that
the financial statements reflect the closing stock value from the Inventory system.

The inventory system operates in much the same way as the accounting system.
First you set up the inventory details, which is a similar operation to creating the chart of
accounts although, in this case, there are no pre-defined set of stock groups.
Second, you create the individual stock items, which is similar to setting up the ledgers.
Go to the Gateway of Tally > Inventory Info.
The Inventory info. menu is displayed as shown:

Let us take the example of Indus Enterprises that sells Televisions and Music Systems.
Given below is the structure of items being sold.
Group A – Televisions
A1 – Sony A1a – Sony 29 inches TV
A1b – Sony 25 inches TV
A2 – Philips A2a – Philips 29 inches TV
A2b – Philips 25 inches TV
A3 – Videocon A3a – Videocon 29 inches TV
A3b – Videocon 25 inches TV

Group B – Music Systems

B1 – Sony B1a – Sony Tape-Recorder
B1b – Sony CD Player
B2 – Videocon B2a – Videocon Tape-Recorder
B2b – Videocon CD Player

The televisions are sold in numbers. Hence, the Unit of Measure will be Nos.
Indus Enterprises has two Godowns, the Bangalore Godown and the Mumbai Godown.
The grouping structure in Tally.ERP 9 is as follows:
Stock Group
1. Televisions (main stock group)
Sony TV – stock group under Televisons
Philips TV – stock group under Televisons
Videocon TV – stock group under Televisons
2. Music Systems (main stock group)

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 Sony Music Systems – Stock Group under Music Systems
Videocon Music Systems – Stock Group under Music Systems

Under the stock group Televisions, let us create stock groups based on the different brands
being sold viz. Sony, Philips and Videocon. This helps to find the total sales of a particular brand
of tele-visions at any given point of time. In order to compare the total sales of the 29 and 25
inches tele-visions respectively, Tally.ERP 9's feature of Stock Categories for parallel
classification can be used.
Experiment Creation of Inventory Masters in Indus Enterprises.

Stock Groups
Stock Groups are provided to help in the classification of stock items. Classification is done based
on some common behaviour. Grouping stock items makes it easy to identify and report them in the
statements. For example, items of a particular brand can be grouped together so that you can get
the inventory details of all the items of that brand.

Creating Stock Group

i. Create the Stock Group – Television under Primary.
Go to the Gateway of Tally > Inventory Info. > Stock Groups > Create (under the Single
Stock Group).
Ensure that the screen appears as shown below:

Press Y or Enter to accept the screen.

Similarly, create Music Systems under Primary.

ii. Create Sony TV under Televisions.

The screen is displayed as shown below:

Figure 4.3 Stock Group Creation — Sony TV

Press Y or Enter to accept the screen.
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Practice Exercise
Create the following Stock Groups in the similar manner
Name Under Can Quantities
of items be
ADDED
Philips TV Televisions Yes
Videocon TV Televisions Yes
Sony Music Systems Music Systems Yes
Videocon Music Systems Music Systems Yes

Stock Categories
This is a feature, which offers a parallel classification of stock items. Like Stock Groups, Stock
cat-egories are also classified based on some similar behaviour. The advantage of using
Tally.ERP 9 lies in categorising Stock items together, (based on functionality) across different
stock groups. This enables you to obtain reports for alternatives or substitutes of a stock item.

Set Yes to Maintain Stock Categories in F11: Features (F2: Inventory Features) to get an
additional option Stock Categories under Inventory Info.
1 Creating Stock Category
Go to the Gateway of Tally > Inventory Info. > Stock Categories > Create.
i. Create Stock Category 29 inches TV Under Primary

Figure 4.4 Stock Category Creation — 29 inches TV

Press Y or Enter to accept the screen.

Similarly , create Stock Category 25 inches TV under Primary.

Godowns / Locations
A place where stock items are stored is referred to as Godowns. You can specify where the
stock items are kept. For example: A warehouse, shelf or rack etc, and obtain stock reports for
each Godown and account for the movement of stock between locations/Godowns.

Set Yes to Maintain Multiple Godowns in F11: Features (F2: Inventory Features) to
get additional option like Stock Categories under Inventory Info.

Creating a Godown
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Go to the Gateway of Tally > Inventory Info. > Godowns > Create.
i. Create a Godown – Bangalore under Primary.
Ensure that the screen is displayed as shown below:

Units of Measure
Stock Items are mainly purchased and sold on the basis of quantity. The quantity inturn is
measured by units. In such cases, it is necessary to create the Unit of Measure. The Units of
Measure can either be simple or compound. Examples of simple units are: nos., metres, kilo-
grams, pieces etc. Examples for compound units are: a box of 10 pieces etc. Create the Units of
Measure before creating the Stock Items.

4.4.1 Creating Units of Measure

Go to the Gateway of Tally > Inventory Info. > Units of Measure > Create.
The Unit Creation Screen appears as shown below:

Figure 4.6 Units of Measure Creation screen

Type
Tally.ERP 9 has the option to create simple units as well as compound units. Examples: box,
nos, pcs, etc. A Compound Unit is a combination of two simple units of measure. Example: A
box of 10 pcs is a compound unit of measure.
Symbol
It is the abbreviated form by which a stock item is identified. For example, the abbreviation pcs
indicates – pieces.
Formal Name
This represents the complete or formal name of a symbol used while creating a unit. Different
companies use different symbols to represent the same units. Formal names help you to match
the symbols with their respective units. For example, the symbol for numbers (formal name) can
be nos or num.
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 Number of Decimal Places
A unit can be expressed as fractions. For example, a 3.15 Kg refers to 3Kg and 150 grams. The
number of digits expressed in grams after the decimal places are three. Likewise, fractions up to
four decimal places can be expressed in the same manner. For expressing numbers, without a
decimal place, specify 0 in this option.

Let us create the unit Nos.

1. Type: Simple
2. Symbol: Nos
3. Formal Name: Numbers
4. Number of Decimal Places: 0

The Unit Creation screen is displayed as shown below:

Figure 4.7 Units of Measure Creation — Nos

5. Press Y or Enter to accept the screen.

Stock Items
Stock items are goods that you manufacture or trade (sell and purchase). It is the primary
inventory entity. Stock Items in the Inventory transactions are similar to ledgers being used in
accounting transactions. Therefore, Stock Items are important in an inventory just as ledgers are
important in accounting.

Creating a Stock Item

Go to Gateway of Tally > Inventory Info. > Stock Items > Create.
The Stock Item Creation Screen appears as shown below:

20
 Figure 4.8 Stock Item Creation screen

Enter the following details:

Name: The name of the stock item.
Under: The stock group under which you want to classify the stock item.
Category: The stock category you want to classify the stock item for parallel classification.
Units: The unit of measure for the stock item being created.
Rate of Duty: Enter the rate of duty charged on the item.
Opening Balance: The opening balance of a stock item, refers to the stock available with us.
Godowns that have already been created, must have the opening balance quantity and the
location specified.
Create a Stock Item Sony 29 inches TV, under the Group Sony TV.
Ensure that the details appear as shown below:

21
 Figure 4.9 Stock Item Creation — Sony 29 inches TV

Press Y or Enter to accept the screen.

Practice Exercise
Similarly, create the following Stock Items under Televisions

Name Under Category Units

Sony 25 inches TV Sony TV 25 inches TV Nos
Philips 29 inches TV Philips TV 29 inches TV Nos
Philips 25 inches TV Philips TV 25 inches TV Nos
Videocon 29 inches TV Videocon TV 29 inches TV Nos
Videocon 25 inches TV Videocon TV 25 inches TV Nos
Similarly, create the following Stock Items under Music Systems.

Name Under Category Units

Sony Tape - Recorder Sony Music Systems Not Applicable Nos
Sony CD - Player Sony Music Systems Not Applicable Nos
Videocon Tape - Recorder Videocon Music Systems Not Applicable Nos
Videocon CD - Player Videocon Music Systems Not Applicable Nos
Create the stock items as on 1-4-2009, with the information provided below:
Stock Cost Ware- On - Total Total Retail
house Site Qty Value Price
COMPUTERS
HCL PIV 17,500 1 4 5 Nos 87,500 21,500
IBM PIV 17,100 0 4 4 Nos 68,400 24,785
PERIPHERALS
Accessories
CD ROM Disks 100s 450 0 5 5 Box 2,250 500
Dust Covers 35 2 8 10 Nos 350 40
USB Pen Drives 64MB 1,250 0 10 10 Nos 12,500 1,600
Wireless Keyboard 490 10 15 25 Nos 12,250 700
Wireless Mouse 250 10 10 20 Nos 5,000 430
Printers
HP Laserjet 1010 Series 8,200 0 7 7 Nos 57,400 9,500
Samsung Laserjet 1500 8,100 0 5 5 Nos 40,500 9,850
Total 2,86,150

Voucher Entry in Tally.ERP 9

22
Accounting Vouchers
Tally.ERP 9 is pre-programmed with a variety of accounting vouchers, each designed to perform
a different job. The standard Accounting Vouchers are:
Contra Voucher (F4)
Payment Voucher (F5)
Receipt Voucher (F6)
Journal Voucher (F7)
Sales Voucher /Invoice (F8)
Credit Note Voucher (CTRL+ F8)
Purchase Voucher (F9)
Debit Note Voucher (CTRL+ F9)
Reversing Journals (F10)
Memo voucher (CTRL+ F10)

Contra Voucher (F4)

For example: withdrawing money from the bank for petty cash.
Contra Voucher
Description Records funds transfer between cash and
bank accounts
Voucher Entry Account Amount Amount
State Bank of India Credit
(Bank Accounts)
Petty Cash Debit
(Cash-in-hand)
Use a Contra Voucher to record the entry.
Setup :
In Voucher entry mode, press F12: Contra Configuration and set the following to Yes:
Skip the Date field in Create Mode (faster entry!)
Use Cr/Dr instead of To/By during entry
Warn on Negative Cash Balance
Show Ledger Current Balances
Show Balances as on Voucher Date
Go to the Gateway of Tally > Accounting Vouchers > F4: Contra.

23
 Figure 5.1 Contra Voucher

Press Y or Enter to accept the screen.

Payment Voucher (F5)

For example, a company settles a creditor's bill by cheque.

Payment Voucher
Description Records all bank and cash payments
Voucher Entry Account Amount Amount
Ledger account paid Debit
Kaltronic Ltd.
(Sundry Creditors)
Bank or cash account Credit
State Bank of India
(Bank Account)

Use a Payment Voucher to record the entry.

Go to the Gateway of Tally > Accounting Vouchers > F5: Payment.

24
 Figure 5.2 Payment Voucher

Press Y or Enter to accept the screen.

Payment in Single Entry Mode

In Voucher entry mode, use F12: Payment Configuration and set Use Single Entry mode
for Pymt/Rcpt/Contra to Yes.

Payment Voucher
Description Records all bank and cash payments
Voucher Entry Account Amount Amount
Ledger account paid Debit
Conveyance
Postage
(Indirect Expenses)
Bank or cash account Credit
Petty Cash
(Bank Account)
The entry made in the single entry mode appears as shown below:

25
 Figure 5.3 Payment Voucher with Single Entry Mode

Press Y or Enter to accept the screen.

The advantage of a single entry mode is that you can select multiple debits or credits depending
on the type of entry. Similarly the transactions can be recorded in single entry mode even in
Receipt and Contra vouchers.

Warn on Negative Cash Balance

Tally.ERP 9 displays a warning if the cash balance is NIL when Warn on Negative Cash Balance is
set to Yes in the F12: Payment Configuration. For example, a cash ledger account has no balance.
A payment of Rs. 4,500 towards Telephone expenses is to be made. In the process of making the
payment, Tally.ERP 9 displays a warning at the time of accepting the entry.

The entry made appears as shown below:

In addition to the warning, Tally.ERP 9 also displays the negative balance amount in Red.

Receipt Voucher (F6)

For example, the company receives a bank advice that the interest has been credited to its
deposit account.

26
 Receipt Voucher
Description Records all receipts into bank or cash accounts
Voucher Entry Account Amount Amount
Ledger account receiving Bank Credit
Interest
(Indirect Incomes)
Bank or cash account Debit
Deposit Account
Use a Receipt Voucher to record the entry.
Ensure in F12: Payment Configuration, Use Single Entry mode for Pymt/Rcpt/Contra is set
to No.
Go to the Gateway of Tally > Accounting Vouchers > F6: Receipt.
The entry made appears as shown below:

Figure 5.5 Receipt Voucher

Press Y or Enter to accept the screen.

Journal Voucher (F7)

For example, the company has entered some expenditure on advertising as general office costs,
rather than recording the transaction in the separate ledger for advertising.
Journal Voucher

27
 Description Records adjustments between ledger accounts
Voucher Entry Account Amount Amount
Advertising Debit
(Indirect Expenses)
Office Costs Credit
(Indirect Expenses)
Use the Journal Voucher to adjust the two accounts.
Go to the Gateway of Tally > Accounting Vouchers > F7: Journal.
The entry made appears as shown below:

Press Y or Enter to accept the screen.

Sales Voucher (F8)

For example, a company sells software on credit.
Sales Voucher
Description Records all sales
Voucher Entry Account Amount Amount
Buyer’s ledger account
Milton & Co. Debit
(Sundry Debtors)
Sales Accounts
(Local Sales) Credit
Use a Sales Voucher for making this entry.
Go to the Gateway of Tally > Accounting Vouchers > F8: Sales.
The entry made appears as shown below:

28
 Figure 5.7 Sales Voucher

Press Y or Enter to accept the screen.

Credit Note Voucher (Ctrl + F8)
This voucher type is made available when the option Use Debit/Credit Note to is set to Yes in
the F11: Features (F1: Accounting features).
For example: A customer returns stock that was incorrectly supplied.
Credit Note Voucher
Description Records credit note entry for sales returns or Customer over-
charging
Voucher entry Account Amount Amount
Buyer’s ledger account
Milton & Co Credit
(Sundry Debtors)
Sales Accounts
Local Sales Debit
Use a Credit note to record this entry.
Go to the Gateway of Tally > Accounting Vouchers > F8: Credit Note.
The entry made appears as shown below:

29
 Figure 5.8 Credit Note Voucher

Press Y or Enter to accept the screen.

Purchase Voucher (F9)

A company buys computer parts on credit.
Purchase Voucher
Description Records all purchases
Voucher Entry Account Amount Amount
Supplier’s ledger account
Beltron Ltd Credit
(Sundry Creditor)
Purchase Accounts
(Local Purchases) Debit
Use a Purchase Voucher to record this entry.
Go to the Gateway of Tally > Accounting Vouchers > F9: Purchase.
The entry made appears as shown below:

Figure 5.9 Purchase Voucher

30
 Press Y or Enter to accept the screen.

Debit Note Voucher (Ctrl + F9)

This voucher type is made available when the option Use Debit/Credit Notes is set to Yes in the
F11: Features (F1: Accounting Features).

For example, a company returns damaged goods to a supplier.

Debit Note Voucher

Description Records debit note entry for purchase returns or over-charging
by a supplier
Voucher Entry Account Amount Amount
Supplier’s ledger account
Beltron Ltd (Sundry Creditor)
Debit
Purchase Accounts
(Local Purchases) Credit

Use a Debit Note to record this entry.

Go to the Gateway of Tally > Accounting Vouchers > F9: Debit Note.
The entry made appears as shown below:

Figure 5.10 Debit Note Voucher

Press Y or Enter to accept the screen.

31
Creating a New Voucher Type
National Traders wants to record bank and petty cash payments differently and needs two new
voucher types to replace the pre-defined Payment voucher. Inorder to do this:
Create a Bank Payment voucher
Go to the Gateway of Tally > Accounts Info. > Voucher Types > Create.
1. Name: Bank Payment
2. Type of Voucher: Payment (Specify the default Tally.ERP 9 voucher, whose functions the
new voucher should copy).
3. Abbr.: Bank Pymt (Specify the abbreviation to denote this new voucher in reports)
4. Method of Voucher Numbering: Automatic
You can choose one of the following methods for numbering from the pop-up:

Method of Numbering Purpose

Automatic For Tally.ERP 9 to do it for you.
Manual You do it. You can also specify if you wish to prevent
duplicates.
None To disable numbering for this voucher type.

5. Use Advance Configuration: No

6. Use EFFECTIVE Dates for Vouchers: No
7. Make ‘Optional’ as default: No (This is to set the voucher type as an Optional voucher, by
default)
8. Use Common Narration: Yes
9. Narrations for each entry: No
10. Print after saving Voucher: No
11. Name of Class: Skip.

The voucher date is taken from the current date mentioned at the Gateway of Tally.ERP 9.
However, the effective date for the voucher may be different. For example, entering a post-
dated cheque.
Tally.ERP 9 displays the narration field which applies to the whole voucher. By setting Use
Common Narration option to No, we can have separate narration fields for each line on the
voucher. Reversing Journals are used for Scenario Management.
The Name of Class field enables creation of Voucher Classes for the respective voucher
types. (The Voucher class is a template to custom-ise voucher data entry).

A Bank Payment Voucher Type Creation screen appears as shown below:

32
Recording Accounting Transactions
Let us record the following business transactions of National Traders for the month of April 2009 :

National Traders Business Transactions

Date Transaction Details
1-4-09 Paid Rs 500 to Challenger Systems by cheque
1-4-09 Bought office supplies for Rs 150 with Petty Cash
2-4-09 Wages of Rs 600 paid to employees by cheque
5-4-09 Banked a cheque for Rs 5000 received from Data Link Technologies
6-4-09 Sold 1 IBM Pentium IV to Spectrum Computers for Rs 24,785.
6-4-09 Withdrew Rs 200 from Bank Account for Petty Cash
7-4-09 Bought 1 Laserjet 1500 from Silver Plus computers on credit for Rs 8,100

Create the following Accounting Vouchers in the books of National Traders :

Date Voucher Type Ledgers to be Selected Debit Credit

1-4-09 F5:Payment Dr - Challenger Systems 500.00
Bank Payment Cr - Bank Account 500.00
1-4-09 F5: Payment Dr - Office Costs 150.00
Cr - Petty Cash
Petty Cash 150.00
2-4-09 F5: Payment Dr - Wages 600.00
Cr - Bank Account
Bank Payment 600.00
5-4-09 F6: Receipt Cr - Data Link Technologies 5000.00
Dr - Bank Account 5000.00
6-4-09 F8: Sales Dr - Spectrum Computers 24,785.00
Cr - Computer Sales
24,785.00
6-4-09 F4: Contra Cr - Bank Account 200.00
Dr - Petty Cash
200.00
7-4-09 F9:Purchase Cr - Silverplus Computers 8,100.00
Dr - Printer Purchases 8,100.00
Enter further transactions for National Traders.
33
Business Transactions for the months of May and June 2009 are as follows:

National Traders Business Transactions

Date Transaction Details
10-5-09 Bank Advice received for bank interest of Rs.500 credited to the deposit account.
11-5-09 Electricity bill (Office costs) for Rs.400 received from Horizon Enterprises.
(Note: Use a Journal Voucher)
13-5-09 Sold 1 HP Laserjet 1010 Series for Rs 9,500 to a cash customer, retaining the
money as Petty Cash.
19-5-09 Salaries of Rs 2,500. Amount paid through Bank Account.
24-5-09 Sold 1 HCL Pentium IV for Rs. 21,500 to Supreme Computers.
30-5-09 Purchased 5 USB Pen Drives 64MB @ Rs. 1,250 each from Challenger Systems
on credit.
01-6-09 Paid freight charges of Rs 200 from petty Cash
01-6-09 Paid Challenger Systems Rs. 11,500 by cheque
09-6-09 Transferred Rs 6,000 from Bank Account to Deposit Account.
15-6-09 Cheque for Rs 15,000 received from Spectrum Computers
22-6-09 Purchased 4 IBM Pentium IVs for Rs. 17,100 each from a new supplier and paid
by cheque
22-6-09 Sold 2 IBM Pentium IVs for Rs. 24,785 to a customer who paid by cheque

In the Purchase/Sales Ledger Masters, set Inventory Values are affected to No and proceed
with the above transactions. Enable the option to Yes in the Inventory Transactions section.

Inventory Vouchers
Tally.ERP 9 inventory vouchers perform the same function in the inventory system as accounting
vouchers do. They are the means by which you enter transactions relating to the Inventory. The
vouchers record transactions relating to the issue and receipt of stock, the transfer of stock
between godowns, and physical stock adjustments. The following inventory vouchers are
available in Tally.ERP 9 :
Purchase Order (Alt+F4)
Sales Order (Alt+F5)
Rejections Out (Alt+F6)
Rejections In (Ctrl+ F6)
Stock Journal (Alt+F7)
Delivery Note (Alt+F8)
Receipt Note (Alt+F9)
Physical Stock (Alt+F10)

Purchase Order
A Purchase order entry has to be made in the books of the company to assist them in checking
whether the goods have been received or not. The Purchase Order number can be used as a ref-
erence. For example, the company wishes to place an order with the supplier for some goods.
Purchase Order
34
 Description Records placing an order for stock items to suppliers.
Details recorded Supplier's Ledger account, Name and address, Order details, name of
stock item, Due on, Godown, Quantity, Rate, Amount, Narration.

5.2.2 Sales Order

A Sales Order entry has to be made to record this. The Sales Order number can be used as a ref-
erence. For example, a customer places an order with the company for purchasing some goods.
Sales Order
Description Records order details for stock items received from customers.
Details recorded Customer's Ledger account, Name and address, Order details, name of
stock item, Due on, Godown, Quantity, Rate, Amount, Narration.

5.2.3 Rejections Out

A Rejections Out entry is passed to record the rejected goods. This is a pure inventory voucher.
For example: We have purchased some goods and have rejected a part of it.
Rejections Out (Purchase Returns)
Description Records rejected stock details returned to suppliers.
Details recorded Ledger Account, Suppliers name and address, stock item, Tracking
details, Order details, Godown, Quantity, Rate, Amount, Narration.

Rejections In
A Rejections In entry is passed to record the rejected goods. The Rejections In entry is a pure
inventory voucher. For example a customer has rejected goods that was sold earlier.

Rejections In (Sales Returns)

Description Records rejected stock details received from customers
Details recorded Ledger account, Customer's name and address, stock item, tracking
details, order details, Godown, Quantity, Rate, Amount, Narration.

Stock Journal
To record the consumption of goods there is no need for entries on both sides of the voucher.
Such entries can be entered in a stock journal voucher. For example: the company transfers
items of stock from the warehouse to the shop.

Stock Journal
Description Essentially records the transfer of stock from one Godown to another.
Details recorded Names of from and to godowns, name of stock item, quantity,
rate, amount, narration.

Delivery Note
Goods that are being delivered to a customer are recorded in a Delivery Note voucher.
Delivery Note
35
 Description Records delivery of new stock to customers
Details recorded Reference, ledger account, supplier’s (if supplementary details are set to
yes in F12: Delivery Note Configuration) then, name and address, Order
& dispatch details, name of stock item, Tracking details, Order details,
Godown, Quantity, Rate(optional), Amount(optional), narration.

Receipt Note
Goods that are received from the supplier are recorded in a Receipt Note (Goods Receipt Note –
GRN) voucher.
Receipt Note
Description Records receipt of new stock from suppliers
Details recorded Reference, ledger account, (If supplementary details are set to yes in
F12: Receipt Note Configuration) then, Order details, Supplier’s name
and address, name of stock item, Tracking details, Order details,
Godown, Quantity, Rate (optional), Amount (optional), narration.

Pure Inventory Transactions

Pure inventory Transactions (vouchers) are those that do not affect financial records. They affect
only the stocks. There will be a rise or fall in the stock when such vouchers are entered.
The different pure inventory vouchers are:
Rejections Out (Alt+F6)
Rejections In (Ctrl+F6)
Stock Journal (Alt+F7)
Delivery Note (Alt+F8)
Receipt Note (Alt+F9)
Physical Stock (Alt+F10)

Setup :
To enable Delivery Note and Receipt Note, set Yes to Use Tracking Numbers and Use
Rejection Notes in F11: Features (F2: Inventory Features).
Go to the Gateway of Tally > F12: Configuration > Invoice/Orders Entry – Set Com-
plete Accounting Allocations in Order/Delivery Note to Yes.
Make sure that Inventory Values are affected? is set to Yes in all ledger accounts under
the groups Sales Accounts and Purchase Accounts.

An entry made in a purchase voucher can update the stocks. It is not necessary to make a
separate entry in a Goods Receipt Note. This holds true for the goods delivered and recorded in
the Sales Voucher itself.
We shall now learn how to enter pure inventory vouchers.

Recording Inventory Transactions

The inventory transactions of National Traders for April 2009 are:

National Traders Inventory Transactions

36
 Date Transaction Details
6-4-09 Delivered 1 HCL PIV from On-Site to Spectrum Computers.
7-4-09 Received delivery of 2 HP Laserjet 1010 Series from Silver Plus Computers and
stored in On-Site Godown.
9-4-09 Transferred 2 HCL PIV from On Site to Warehouse.
13-4-09 Returned 1 HP Laserjet 1010 Series (Faulty) to Silver Plus Computers.
15-4-09 Supreme Computers returned 1 HCL Pentium IV which was ordered incorrectly
16-4-09 Stock check reveals physical stock of 3 Boxes of CD ROM Disks 100s in On-Site
Godown.

In the Purchase/Sales Ledger Masters, set Inventory Values are

affected to Yes and proceed with the above transactions.
Tracking numbers must be activated and disabled after the exercise
is completed. (Tracking numbers will be discussed later.)

Go to the Gateway of Tally > Inventory Vouchers.

The basic steps to enter the vouchers are:
Change the date if necessary.
Select the voucher type from the button bar menu.
Type the details and check whether they are correct before accepting.
Accept the default rates of items that appear according to the standard cost and standard
selling price given in the workbook.

Practice Exercise
Create the following transactions in the books of National Traders.

Field Details to be entered

Voucher 1
Voucher type Alt +F8: Delivery Note
Current date 6-4-2009
Ref: ABC/DN/00654
Ledger account Spectrum Computers
Order details Accept the default
Name of item HCL PIV
Tracking Number Not Applicable
Godown On-Site
Quantity 1
Rate 21,500 / Nos
Amount 21,500

37
 In Accounting Details Screen Computer Sales

Narration Computer delivery

Yes
Accept? Yes or No
Voucher 2
Voucher type Alt +F9: Receipt Note
Current date 7-4-2009
Ref: USC/12089/Del
Ledger Account Silver Plus Computers
Order Details Accept the default
Name of item HP Laserjet 1010 Series
Tracking Number Not Applicable
Godown On-site
Quantity 2
Rate 8,200 / Nos
Amount 16,400
In Accounting Details Screen Printer Purchase
Narration Printer received
Accept? Yes or No Yes
Voucher 3
Voucher type Alt +F7: Stock Journal
Current date 9-4-2009
Source (Consumption)
Name of item HCL PIV
Godown On-site
Quantity 2
Rate 17,500 / Nos
Amount 35,000
Destination (Production)
Name of item HCL PIV
Godown Warehouse
Quantity 2
Rate 17,500 / Nos
Amount 35,000
Narration Transfer of stock
Accept? Yes or No Yes
Voucher 4
Voucher type Alt +F6: Rejection Out
Current date 13-4-2009

38
 Supplier’s Name and Address Silver Plus Computers
Name of item HP Laserjet 1010 Series
Tracking Number Not Applicable
Godown On-site
Quantity 1
Rate 8,200 / Nos
Amount 8,200
Narration Rejected goods out
Accept? Yes or No Yes
Voucher 5
Voucher type Ctrl+F6: Rejection In
Current date 15-4-2009
Ledger account Supreme Computers
Customer’s Name and Address Supreme Computers
Name of item HCL PIV
Tracking Number Not Applicable
Godown On-site
Quantity 1 Nos
Rate 21,500 / Nos
Amount 21,500
Narration Rejected goods in
Accept? Yes or No Yes
Voucher 6
Current date 16-4-2009
Voucher type Alt +F10: Physical stock
Name of item CD ROM Disks 100s
Godown On-site
Quantity 3 Box
Narration Stock check adjustment
Accept? Yes or No Yes

Stock Summary for April 2009

Go to the Gateway of Tally > Stock Summary

Enter further inventory transactions for National Traders.

The sample inventory transactions of the company for the months of May and June 2009 are as
follows:

National Traders Inventory Transactions

Date No Transaction Details
9-5-09 1 Delivered 2 Nos of HCL PIV from warehouse to Spectrum Computers
39
 (Ref: ABC/DN/00654
Hint: Select Computer Sales.
17-5-09 2 Received 5 Boxes of CDROM Disks 100s from Silver Plus Computers
(Ref: USC/13049/Del).
18-5-09 3 Returned 1 Box of CDROM Disks 100s (damaged) to Silver Plus
Computers.
1-6-09 4 Received 5 Nos of Wireless Keyboards from Silver Plus Comptuers
(Ref:USC/13420/Del).

15-6-09 5 Delivered 2 Nos IBM pentium IV from On-site to Supreme Computers (Ref:
ABC/DN/00721)
Hint: Select Computer Sales

24-6-09 6 Stock check reveals physical stock HP Laserjet 1010 Series as 5 Nos.

29-6-09 7 Spectrum Computers returned 1 Nos HCL PIV.

30-6-09 8 Transferred 2 Nos of IBM PIV from warehouse to onsite.

Purchase voucher
For example: the company receives new stock from a supplier.

Purchase Voucher
Description Records receipt of new stock with invoice from suppliers.
Details recorded Reference, ledger account, supplier’s name and address, name of
stock item, godown, quantity, rate, amount, purchase ledger, other
ledgers (if required), narration.

Sales voucher
For example: the company delivers goods from its stock to a customer.

Sales Voucher
Description Records the delivery of goods and invoice to customers.
Details recorded Reference, ledger account, customer’s name and address, name of
stock item, godown, quantity, rate, amount, sales ledger, sales tax
ledger (if required), narration.

Debit Note
For example: the company rejects and returns goods to the supplier.

Debit Note
Description Records the delivery of goods and debit note to supplier.
Details recorded Reference, ledger account, supplier’s name and address, name of
stock item, godown, quantity, rate, amount, purchase ledger, other
ledgers (if required), narration.

40
 Credit Note
For example: the company receives rejected goods from a customer.

Credit Note
Description Records receipt of rejected goods with advice from customer.
Company issues credit note.
Details recorded Reference, ledger account, customer’s name and address, name of
stock item, godown, quantity, rate, amount, sales ledger, sales tax
ledger (if required), narration.

Tally.ERP 9 permits the entries of these vouchers in Voucher Mode as well as in invoice mode.
In this section, you will learn how to enter them in Voucher Mode.

Set up :
Set Yes to Use Debit/Credit Notes in F11: Features (F1: Accounting Features). Do not
activate the invoice mode.
Make sure that Inventory Values are affected? is set to Yes in all ledger accounts under
the groups Sales Accounts and Purchase Accounts.
Set Use Tracking Numbers to No in F11: Features (F2: Inventory Features).

Go to the Gateway of Tally > Accounting Vouchers.

Ensure that in F11: Features (F1: Accounting Features) Allow Invoicing is set to No.

Create the following Accounting Vouchers with Inventory details.

41
Sales voucher
Select F8: Sales from the button bar and enter.

Field Details
Date 1-7-2009
Ref: Blank
Dr Supreme Computers
Debit Amount 21,500
Cr Computer Sales
Inventory Allocation Name of Item - HCL PIV
Godown - On-site
Quantity - 1
Rate -21,500
Credit Amount 21500
Narration Sales made
Accept? Yes or No Yes

ii. Purchase voucher

Select F9: Purchase from the button bar and enter:

Fields Details
Date 1-7-2009
Ref: Blank
Cr Silver Plus Computers
Credit Amount 1,500
Dr Purchases
Inventory Allocation Name of Item - Wireless Mouse
Godown - On-site
Quantity - 6
Rate -250
Debit Amount 1,500
Narration Purchases made
Accept? Yes or No Yes

Payment voucher
Select F5: Payment from the button bar, Petty Cash, and enter:

Fields Details
Date 1-7-2009
Dr Office Costs
Debit Amount 85
Cr Petty Cash
Credit Amount 85

42
 Narration Office cost paid
Accept? Yes or No Yes

Ensure that in the F12: Payment Configuration, Use Single

Entry mode for Pymt/Rcpt/Contra is set to No.

Invoicing
Tally.ERP 9 has an in-built system to create and print sales invoices. You will now record
sales and purchase invoice details, adjust accounting and inventory balances.

To enable the option of invoicing, set Yes to Allow Invoicing, Enter Purchases in
Invoice Format and Separate Discount Column in invoices in F11: Features
(Accounting Features/ Inventory Features).
Ensure that the Inventory values are affected? is set to Yes in Purchases Ledger.
Ensure that the Inventory values are affected? is set to Yes in Parts Sales,
Software Sales and Computer Sales.

Make the following entry of Sales in Voucher Mode.

Go to the Gateway of Tally > Accounting Vouchers > F8: Sales.
Ensure the button above the Post-Dated option reads As Invoice. This button
enables you to toggle between the voucher and invoice format for data entry. The
button visible is the format NOT in use.
Enter the following data as on 1 -7-2009 to record the sale of 2 Nos of USB Pen
Drives 64 MB to Supreme Computers. (at the standard price) and update the
accounting and stock records:

Field Details
Ref:
Dr Supreme Computers.
Debit Amount 3,200
Cr Component Sales
Name of item USB Pen Drives 64 MB
Godown On-site
Quantity 2 Nos
Rate 1,600 (accept)
Per Nos (accept)
Amount 3,200.00
Narration —
Accept? Yes or No Yes

43
 Make the following entry of Sales in Invoice Mode:
1. Date: 2-7-2009.
2. Voucher Type: Sales
3. Click on the Toggle Button As Invoice (so it reads As Voucher)
4. Click on the Toggle Button Item invoice (so it reads Acct Invoice)
5. Enter the following to record the sale of two nos of USB Pen Drives 64 MB to Supreme
Comput-ers. (at the standard price) and update the accounting and stock records:

Fields Details
Ref:
Party’s A/c Name Supreme Computers.
Despatch Details Accept the default
Address Ctrl+A to accept all
Name of item USB Pen Drives 64 MB
In Item Allocation for: USB Pen Drives 64 MB Screen
Godown On-site
Quantity 2 Nos
Rate 1,600 (accept)
Per Nos (accept)
Discount 10%
Amount 2,880.00 (accept – then keep pressing
Enter until the accounting details screen
appears)
Particulars (Accounting allocation sub- Component Sales
form)
Amount 2,880.00 (accept)
Narration —
Accept? Yes or No Yes

Item Invoice and Account Invoice

Tally.ERP 9 gives you an option called Account Invoice where you can select the
ledgers instead of the stock items. An Item Invoice on the other hand, allows you to
select stock items instead of ledgers.
Businesses that require an invoice raised with the item details, can select the Item
Invoice option. Businesses that want to raise invoices for services rendered, can do so by
selecting the Account Invoice.
At this point, it is understood that you already know how to enter an Item Invoice, by
selecting items and entering their quantity, rate, discount, etc.

Walk-through to create an Item Invoice

1. Ensure that you are at the Gateway of Tally of Indus Enterprises.

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2. Ensure Allow Invoicing option in F11: Features (F1: Acounting Features) is set to
Yes.
3. Go to the Gateway of Tally > Accounting Vouchers > F8: Sales.
4. The invoice screen must display the columns - Name of Item, Quantity, Rate, per,
Amount, etc.
5. Party's A/c Name: Customer One (create one, if it is not displayed in the list of
ledgers).
6. Press Enter till you reach the ‘Name of Item’ field and press the spacebar to view the
List of Stock Items.
7. The different stock items with their balances are displayed as follows:.

Figure 5.17 Sales Voucher In Item Invoice Mode

You already know how to enter an item invoice. Now, let us go to the Gateway of Tally to
learn how Account Invoices are entered.

5.3.3 Walk-through to create an Account Invoice

Go to the Gateway of Tally > Accounting Vouchers > F8: Sales.
1. The invoice screen must display the following columns: Name of Item, Quantity,
Rate, per and Amount.
2. Click on the Acct Invoice button. You will notice that Tally.ERP 9 now displays the
columns as Particulars, Rate, per and Amount.
3. Select the Party's A/c Name as Customer One.
4. Press Enter till you reach the Particulars field. Press the Space Bar and Tally.ERP 9
displays the List of Ledgers.

Figure 5.18 Sales Voucher In Accounting Invoice Mode

5. Select the Consulting Fees (create one if it is not displayed under Direct Income).
6. Specify the amount as Rs. 45000 and press Enter

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Points to Remember

 A voucher is a document containing the details of a financial transac-tion.
 As per accounting rules, any transaction indicating the transfer of funds from cash
account to bank account; bank account to cash account and bank account to bank
 account is referred to as a Contra Entry.
 Inventory vouchers perform the same function in the inventory system as
 accounting vouchers in Tally.ERP 9.
 Tally.ERP 9 allows to create and print sales invoices

Shortcut Keys
List of Function Keys
Function Key
Sl. No Key Functionality Availability
1. F2 To change the menu period. At almost all screens in Tally.ERP 9.
2. F4 To select the contra voucher At accounting voucher creation and
alteration screens.
To view the list of groups. At the trial balance, cash/bank sum-
mary, group summary and group
vouchers screens.
To view the list of ledgers. At the ledger vouchers screen.
To change voucher type. At the sales, purchase and journal
register and day book screens.
To switch between bills receiv- At the bill receivable and payable
able and payable report. report screens.
To view other stock item's sum- At the item monthly screen.
mary.
To show/ hide gross profit earned At the item monthly screen.
on sales made.
3. F5 To select the payment At accounting voucher creation and
voucher. alteration screens.
To switch between grouped and At the trial balance, cash/bank sum-
ledger wise display. mary and group summary screens.
To reconcile bank At the ledger vouchers screen, where
accounts. the ledger is the bank ledger.
4. F6 To select the receipt At accounting voucher creation and
voucher. alteration screens.
To view the age wise analysis of At the bill receivable and payable
bills payables report screens.
5. F7 To select the journal voucher. At accounting creation and altera-
tion screens.
To view the monthly summary. At the ledger vouchers screen.

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 To switch between group summary At the group summary and group
and group vouchers. voucher screens.
6. F8 To select a sales voucher. At accounting voucher creation and
alteration screens.
7. F9 To select a purchase voucher. At accounting voucher creation and
alteration screens.
8. F10 Navigate between accounting At the reports screens, trial balance,
reports. account books and day book
screens.
9. F11 To select the features screen. At almost all screens in Tally.ERP 9.
10. F12 To select the configure screen. At almost all screens in Tally.ERP 9.

Special Function Key Combination

Sl. No Key Functionality Availability
1. Alt + F11 To close a company. At all the menu screens.
To view detailed report. At almost all report screens.
To explode a line into its details. At almost all screens in
Tally.ERP 9.
2. Alt+ F2 To change the system period. At almost all screens in
Tally.ERP 9.
3. Alt + F3 To select the company info At Gateway of Tally.ERP 9 screen.
menu.
To create/ alter/ shut a company.
4. Alt + F5 To view sales and purchase reg- At the sales and purchase register
ister summary on a quarterly screens.
basis.
5. Alt + F12 To view the filters screen where At all the report screens.
the range of information can be
specified.
6. Alt + C To create a ledger at a voucher At accounting voucher and altera-
screen. tion screens, at a field where you
have to select a ledger from a list. If
the necessary account has not been
created earlier, use this key combi-
nation to create the ledger without
quitting from the accounting
voucher screen.
To add a new column to reports. At all the reports, trial balance,
cash/bank book(s), group summary
and journal register screens.
7. Alt + N To add multiple columns to a At all the reports, trial balance,
report (Auto column). cash/bank book(s), group summary
and journal register screens.
8. Alt + P To print reports. At all reports screens in Tally.ERP 9.
9. Alt + Z To zoom. At all the print preview screens.
10. Ctrl + F8 To select a Credit note. At accounting voucher creation and
alteration screens.

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11. Ctrl+ F9 To select a Debit note. At accounting voucher creation and
alteration screens.
12. Ctrl + Q To quit a screen - wherever you At almost all screens in Tally.ERP 9.
use this key combination, it quits
that screen without making any
changes to it. It also does not
ask for confirmation from user
before quitting.
13. Ctrl + L To mark a voucher as optional or At accounting voucher creation and
regular. alteration screens.
14. Alt + R Recalls the Last narration saved At creation/alteration of
for the first ledger in the voucher, screen
irrespective of the voucher type.
15. Ctrl + R Recalls the Last narration saved At creation/alteration of
for a specific voucher type, irre- screen
spective of the ledger.
16. Alt + D To delete a voucher or To delete At Voucher and Master (Single)
a master or To delete a column in alteration screens.
any columnar report
17. Alt + X To cancel a voucher in Day At all voucher screens in Tally.ERP
Book/List of Vouchers. 9
18. Alt - 2 To Duplicate a voucher. At List of Vouchers – creates a
voucher similar to the one where
you positioned the cursor and used
this key combination

19. Alt - A To Add a voucher or To Alter the At List of Vouchers – adds a

column in columnar report. voucher after the one where you
positioned the cursor and used this
key combination.
20. Alt + 1 To insert a voucher or To toggle At List of Vouchers – inserts a
between Item and Accounting voucher before the one where you
invoice. positioned the cursor and used this
key combination.
21. Alt + R To remove a line in a report. At almost all screens in Tally.ERP 9.
22. Alt + U To retrieve the last line which is At all reports screens in Tally.ERP 9
removed using Alt + R.
23. Ctrl + U To retrieve all lines which are At all reports screens in Tally.ERP 9
removed using Alt + R.

Key Combination Used For Navigation

Sl. No Key Functionality Availability
1. Enter To accept anything you type You have to use this key at most
into a field. areas in Tally.ERP 9.
To accept a voucher or master.
To get a report with further details
of an item in a report.
2. Esc To remove what you type into a At almost all screens in
field. Tally.ERP 9.

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 To exit a screen.
To indicate that you do not want to
accept a voucher or ledger.
3. Shift + To view next level details and At the balance sheet, profit and
Enter condense the next level details. loss account, trial balance, cash/
bank book(s), group summary,
group vouchers, voucher register,
day book and list of accounts
screens.
4. Space Select the current line. At all reports screens in Tally.ERP
9
5. Ctrl + Select all lines. At all reports screens in Tally.ERP
Space 9

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