How To Use Tally Erp Accounting Software

Those who are willing to learn Tally ERP Accounting Software at Tally ERP Academy shall keep few things in mind before enrolling them with Tally ERP training center, Tally ERP accounting software will help you to maintain books of accounts of various companies whether it is trading, service or manufacturing, today will will discuss few important topics to learn Tally ERP Accounting Software , these topics are given below:-

Chart of accounts

The know the state of affairs showing the profit/loss and the status and nature of liabilities & assets of the organization the Accounting Community follows some conventions for presentation of the Financial Reports. Transactions of similar nature are collated and balanced into entities called Ledger Account in Tally ERP. These Ledger Accounts are further organized into hierarchical levels called Account Groups. Account Groups are used to get a bird’s eye view of transactions while Ledger accounts give the details of individual transactions.

Account Groups & Ledgers

Chart of Accounts is the segmentation of Liabilities & Assets of Balance Sheet and Income & Expenses of Profit & Loss Accounts. It represents the hierarchical view of organization of Account Group & Ledger Account.

Ledger Accounts represent the assorted summarized and Income & transactions of similar nature. For example the ledger account Conveyance represents the set of transactions related to Conveyance expenses and their summarized net figure. All Accounting transactions are linked to Ledger Accounts.

Account Groups are just a convenient method of organizing the large population of Ledger Accounts into a tree structured hierarchical view for better understanding and interpretation.

We will now see how Tally ERP classifies and organizes these into Groups.

Hierarchy of Account Groups & Ledgers

In Tally ERP you may organize Accounts Ledgers and Groups in hierarchical way . There is no limit on depth of nesting number of Group/sub Groups and number of Ledger Accounts that can be placed under a Group/sub Group.

In Tally ERP organized reports with control totals at each level. Only Ledger Accounts are transacted in Vouchers. Account Groups do not participate in any voucher (they are used to organize the Ledger Accounts). You Debit or Credit a Ledger in any Voucher in Tally ERP.

Reserved Account Groups

As soon as you create a Company Tally ERP auto creates pre defined Account Groups called Reserved Groups having specific properties and behavior in the system (these Groups cannot be deleted0 to maintain consistency and integrity of the accounting system representing Assets Liabilities Income and Expenditure . Of these Tally ERP Reserved Account Groups are top level primary Groups .

All the child Groups and Ledgers inherit the specific properties of the parent Reserved Group

Account Group of Balance Sheet

We now describe the Account groups that appear in Balance Sheet.

Account Groups of Liabilities

The Group of Liabilities of Balance Sheet are Shown below:

Account Group – capital

This is a primary Group that contains the Capital and Reserves & Surplus of the Company

Account Group that- Capital Account: Ledger Accounts for Owners Capital may be placed under Capital Account group is Share Capital Partners Capital Accounts Proprietors Capital Account. Members Capital A/c etc. Separate Ledgers may be created for Equity capital Preference Capital A/c etc in Tally ERP.

Account Group – Reserves & Surplus: It’s child group to Capital Account. All Reserve Accounts are placed under this group . Common examples are: General Reserve Capital Reserve Investment Allowance Reserve Share Premium Account etc.

Account Groups – Loans (Liabilities)

All loans taken by Company should be placed here. Tally ERP ERP creates reserved sub-groups

Account Groups – Bank OD Accounts:

While Current Bank A/c should be placed under Current Assets Bank Overdraft and Cash/Credit Accounts availed under hypothecation Bill Discounting etc. operated on a day-to-day basis should be placed under this group. Though these bank accounts may be a kind of secured loans to allow transactions in Payment Receipt and Contra Vouchers like normal Bank Accounts . The ledger accounts under this groups participate in the Vouchers in same manner like ledgers placed under Bank Accounts as explained later.

Account Group – Secured Loans: debentures Term Loans secured Loans taken from Banks Financial Institute etc. against security should be placed under this group.

Account Group – Unsecured Loans: Loans from outside Parties Directors Friends and Relatives Deposits etc should be placed under this group.

Account Group – Current Liabilities

This group normally constitutes a large number of Ledger Account and Sub Groups and is subdivided into sub-groups: Duties & Taxes Provisions and Sundry Creditors .

Account Group – Duties and Taxes: This sub-group is for all Excise Sales and other Trade Taxes. This head normally constitutes all the Duties & Taxes that you collect or pay through Sales & Purchase transactions whose balance will appear in Balance Sheet . Examples are Sales Tax , Excise Duty, Marketing Fee, Purchase Tax etc.

Account Group – Provisions: It is place for all sorts of Provisions . Place similar Provisions as applicable. However Depreciation Provided should go under Fixed Assets .

Account Group – Sundry Creditors: Place the ledger accounts of all Trade Creditors / suppliers . If you sell to or purchase from same party create only one ledger account and place under Sundry Debtors or Sundry Creditors Group .

Account Group – Current Liabilities: Place all other liability accounts like Liabilities for Expenses, Employees contribution for ESI/PF or TDS realized from Contractors/Employees etc.

Account Groups of Assets

Account Groups – Fixed Assets

This constitutes all the Fixed Assets like Immovable Properties Trade Rights etc Work-in-progress etc. Fixed Assets may have several subgroups for each type of assets if you wish to have separate Ledger Accounts for individual Assets. You may keep the figures of Original Cost and Accumulated Depreciation for Fixed Assets separately.

Account Group – Investments

Place here all Ledger Accounts related to Investments in Shares Bonds Govt. Securities and Investment in other companies.

Account Group – Current Assets

It constitutes Reserved Sub Groups: Stock-in-hand Deposits Loans & Advances Cash-in-hand Bank Accounts Sundry Debtors.

You should place individual Ledger Account under the appropriate subgroups and avoid placing any Ledger directly under primary groups Current Assets.

Account Group – Stock-in-hand: create all ledger Account for Closing Stock under this group. Normally you should create separate Ledger Accounts for Raw Materials Work-in-process and finished and Finished Goods as required.

Account Group – Deposits (Assets): Place all the Deposit made by the Company like Fixed deposits Security deposits Deposits with Electricity dept Deposits in other companies Rental Deposits etc. Under this Group.

Account Group – Loans and Advanced :

Place all Loans & Advances of non-trading nature given . Examples are Advances against Salary loans to Employee Advances to Fixed Assets Suppliers etc.

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Author is working with Vocational Training which provides Placement services and computer franchiseAuthor: Sanjeev Malik