Tally

>> March 9, 2008




Introduction

The top bar of the screen contains the product message, system date and time.
The left hand side of the screen displays the activity status.
The right side contains the menu system and the button bar. The menu Accounts Info. Is the current active menu.

Main functions in Masters menuAccounts Information contains the masters as listed in the menu above. Each master has to have the following functions, besides others and are consistent in all Masters menus throughout Tally:-
Create
This enables creation of new masters. Once a master has been created, any modification to it must be done through the Alter mode.
Display
Use this mode to view Master information. Changes are not permitted.
Alter
Use this mode to view and change master information. You cannot create a new master. We shall begin discussion on Accounts Information with how to build Groups and then follow with other accounts masters.

Introduction
(Classification of Account-heads)
Tally follows the 'Single Ledger' concept of accounting, which is the modern way of managing accounts. This is in direct contrast to Subsidiary Ledger Accounting. Thus, all financial entries are performed using ledgers or account heads. Ledger account heads are created to identify transactions. The single ledger concept does away with the need for sub-ledgers and corresponding control accounts in General Ledger. Ledger balances by themselves do not convey much without some form of classification. Tally, therefore, gives you a powerful way to group ledger information, which is meaningful in reports and compliant with laws. Groups, in Tally, serve to both classify and identify account heads according to their nature and enable presentation of summarised information.
Traditionally, grouping of accounts is a post-accounting activity that is done only when reports are needed. This has an inherent drawback of delayed reports that are not available at hand when required. Tally gives you great flexibility in setting up your chart of accounts. It allows you to group your ledger accounts right at time of creating your accounts chart. Your reports and statements will reflect the desired classification at all times. Further, Tally permits you to re-group your ledgers anytime (with some minimal restrictions), should re-classification be necessary. We acknowledge that re-grouping is always possible and would, in practice, be resorted to, when there are changes in the nature of information. However, re-grouping can be done only by a user account that has requisite authority under the access control list.
At the highest level of grouping, accounts are classified into capital or revenue - more specifically into assets, liabilities, income and expenditure. Based on mercantile accounting principles, Tally provides a set of reserved groups and allows you to modify their names or create sub-groups.
The concept of sub-groups
Groups have a hierarchical organisation. At the top of the hierarchy are Primary Groups. These are the main asset, liability, income or expenditure groups of accounts that determine the entire accounting and their presentation, i.e., whether a ledger affects Profit & Loss Account (as a revenue item) or goes into the Balance Sheet. The Reserved Primary Groups and subgroups (shown indented) are:
Aliases for the groups are given in square brackets [ ].
Primary Groups of capital nature
1.Capital Account
Reserves and 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 and Taxes
Provisions
Sundry Creditors
4.Fixed Assets
5. Investments
6. Loans (Liability)
Bank OD Accounts [Bank OCC Accounts]
Secured Loans
Unsecured Loans
7. Suspense Account
8. Miscellaneous Expenses (Asset)
9. Branch/Divisions
Revenue Primary Groups
10. Sales Account
11. Purchase Account
12. Direct Income [Income Direct]
13.Indirect Income [Income Indirect]
14.Direct Expenses [Expenses Direct]
15. Indirect Expenses [Expenses Indirect]

A discussion on each of the reserved groups:1.Capital Account
This holds the Capital and Reserves of the company. Examples of ledgers that may be opened under this group are Share Capital, Partners' Capital A/c, Proprietor's Capital Account.
Reserves and Surplus [Retained Earnings]
Open ledgers like Capital Reserve, General Reserve, Reserve for Depreciation, etc.
2.Current Assets
Directly under Current Assets, you may find place for assets that do not fall under the following sub-groups:
Bank Accounts
For Current, savings, short term deposit accounts, etc.
Cash-in hand
Tally automatically opens one Cash A/c under this group. You are permitted to open more cash accounts, if necessary.
Note: An account under Cash-in-hand group or Bank Accounts/Bank OCC A/c group is printed as separate Cash Book in the traditional Cash Book format and does not form part of the Ledger.
Deposits (Asset)
In essence, a place for Fixed Deposits, Security Deposits, or any deposit made by the company (not received by the company, which is a liability).
Loans & Advances (Asset)
For all loans given by the company and advances of a non-trading nature, e.g., advance against salaries, or even for purchase of Fixed Assets. We do not recommend you to open Advances to Suppliers account under this group. Doing so gives rise to the difficulty in ascertaining advance position of a particular supplier and to adjust future bills against such advances. For further details, please refer to the section on Common Errors.
Stock-in-hand
This is a special group. You may wish to open accounts like Raw Materials, Work-in-Progress and Finished Goods. How the balances are controlled depends on whether you opted to maintain an integrated account-cum-inventory system in the company features. (refer to Company creation section for more details) Let's consider the options:
Integrated Accounts-cum-Inventory :
You are allowed transactions in Inventory records and the account balances are automatically reflected in the Balance Sheet as Closing Stock. You are not allowed to directly change the closing balance of an account under this group.
Non-integrated Accounts-cum-Inventory:
Accounts that fall under this group are not permitted any transactions. It allows you to hold opening and closing balances only. Since no vouchers can be passed for these accounts, they are the only accounts for which the closing balances can be directly altered (by an authorised user only)
Sundry Debtors
For your customer accounts. Do not open them under the Sales Account group, which is a revenue account. For more information on common and possible errors in grouping of accounts, please refer below to the separate paragraph on the topic.
3.Current Liabilities
You may open accounts like Outstanding Liabilities, Statutory Liabilities and other minor liabilities directly under this group. Sub-groups under Current Liabilities are Duties and Taxes, Provisions and Sundry Creditors
Duties and Taxes
For all tax accounts like VAT, MODVAT, Excise, Sales and other trade taxes. A convenient place to find the total liability (or asset in case of advances paid), as well as the break-up of individual items.
Provisions
For provision accounts like Provision for Taxation, Provision for Depreciation, etc.
Sundry Creditors
For trade creditors of the company. Do not open your supplier accounts under the Purchases Account group, which is a revenue account. For more information on common and possible errors in grouping of accounts, please refer below to the separate paragraph on the topic.
5.Investments
To group your investment accounts like Investment in Shares, Bonds, Govt. securities, long term Bank deposit accounts, etc. A convenient place to view the total investments made by the company.
6.Loans (Liability)
For loans, typically long term, taken by the company.
Bank OD Accounts [Bank OCC Accounts]
Tally gives two distinct types of Bank Accounts, The Bank OCC A/c is meant to record the company's overdraft accounts with banks. e.g., Bill Discounted A/cs, Hypothecation A/cs etc.
Note: An account under Bank OCC A/c group is printed as separate Cash Book in the traditional Cash Book format and does not form part of the Ledger.
Secured Loans
For term loans and other long/medium term loans that have been obtained against security of some asset. Tally does not verify the existence of the security. Typical accounts would be Debentures, Term Loans, etc.
Unsecured Loans
For loans obtained without any security .e.g., Loans from Directors/partners or outside parties.
7. Suspense Account
Theoretically speaking, this group should not exist. However, in modern accounting, many large corporations use a Suspense Ledger to track moneys paid or recovered, the nature of which is not yet known. The most common example is money paid for Travelling Advance whose details would be known only upon submission of the TA bill. Some companies may prefer to open such accounts under
Loans and Advances (Asset) group.
Please note that Suspense Account is a Balance Sheet item. Any expense account even if it has 'suspense' in its name, should be opened under a Revenue group like Indirect Expenses and not under Suspense Account group.
8. Miscellaneous Expenses (Asset)
This group is typically used more for legal disclosure requirements, like Schedule VI of the Indian Companies Act. It should hold incorporation and pre-operative expenses. Companies would write off a permissible portion of the account every year. A balance would remain to the extent not written off in Profit & Loss Account. Tally does not, however, show a loss, carried forward in the Profit & Loss Account, under this group. The Profit & Loss Account balance is shown separately in the Balance Sheet.
9. Branch/Divisions
This group is provided to keep the ledger accounts of all companies that are your company's branches, divisions, affiliates, sister concerns, subsidiaries, etc. This is a group of convenience. You may not wish to utilise it in this manner. Note that Tally permits Sales and Purchase transactions to take place with accounts opened here. Remember, these are their accounts in your books and not their books of accounts. Just treat them as you would any party account. If you wish to maintain the books of that branch/division on you computer, you must open a separate company. (Tally allows maintenance of multiple company accounts).
Revenue Primary Groups
10. Sales Account
For different sales accounts. The natural segregation of your sales accounts could be based on Tax slabs or type of sales. This also becomes a simple mechanism for preparation of Tax returns.
An example of such classification may be helpful:
Classify under Sales Accounts the following sub-groups
Domestic Sales
Export Sales
Now under Domestic Sales open the following ledgers:
Sales (10%)
Sales (5%)
Sales (exempt)
You may even open an account Sales Returns under the group Domestic Sales to view your net sales after returns (or the returns may be directly passed through journal against the specific sales account).
Please do not open customer accounts under this group. For more details on possible errors in this regard, please refer to the paragraph given below.
11.Purchase Account
This is similar to sales accounts, except for the purpose of the transaction.
12.Direct Income [Income Direct]
-For non-trade income accounts that affect Gross Profit. All trade income accounts would naturally fall under Sales Accounts. You may wish to use this group for accounts like Servicing Contract Charges that follow sales of equipment.
If yours is a professional services company, you may not use the Sales Account group at all. Instead, open accounts like Professional Fees under this group.
13. Indirect Income [Income Indirect]
For miscellaneous non-sale income accounts, e.g., Rent Received and Interest Received.
14. Direct Expenses [Expenses Direct]
For manufacturing or direct trading expenses. These accounts determine the Gross Profit of the company.
15. Indirect Expenses [Expenses Indirect]
For all other administrative, selling or non-direct expenses.
Tally automatically opens the Profit & Loss Account which is a reserved primary account. You may use this account to pass adjustment entries through journal vouchers .e.g., transfer of profit or loss to Capital or Reserve account.

Common and possible errors in Grouping and account classificationDebtor/Creditor classification
Placing individual party accounts under Sales or Purchase Accounts groups:
Accounts of parties with whom your company has trade relationship must be opened under any of the following groups (or sub-groups under them) only:
Sundry Debtors
Sundry Creditors
Branch/Divisions
Sales and Purchase account groups are meant for revenue accounts and would be reflected in the Profit & Loss Account. If you open party accounts under these groups, you will find it difficult to pass sales or purchase voucher transactions. For example, in a sales voucher transaction entry, you must debit an account which is a sundry debtor, branch/division or even a sundry creditor (why a creditor? - it will be explained soon). Moreover, other facilities like bill-wise allocation and tracking would not become available unless the accounts belong to one of these groups.
Opening two accounts of the same party:
Tally has separately classified debtors, creditors and branch/divisions only for convenience. There is no operational distinction except for the purpose of keeping the accounts of a particular group together during displays and analysis. Thus you can pass both sales and purchase entries for a party account placed under Sundry Debtors. We recommend that you use the classification depending on the most natural group for the party. For example, parties from whom you buy more frequently then you sell to, could be placed under Sundry Creditors, as that would be the natural place for you to look for his account. Tally does not restrict the accounts from having obverse balances. Thus, a Sundry Debtor can have a credit balance depending on the state of his account.
You would, therefore, note that you need not open two accounts of the same party - one under Sundry Debtors and another under Sundry Creditors. Remember, Tally restricts you from opening two identical ledger accounts. Of course, you may decide to circumvent by marking one account as "A & Co - S/Dr" and another "A & Co - S/Cr". Doing this would allow you to have two accounts of the same party under two groups, but you would lose the advantage of analysing his net position in one place. We recommend that you maintain a single account to obtain best benefits.
Placing expenditure items under a Liabilities group, e.g., the expenditure item 'Rates & Taxes' under the group 'Duties and Taxes'.
The group Duties and Taxes is specifically meant to handle taxation liabilities of your company. Rates & Taxes and other statutory expenses should be placed under Indirect Expenses.
Simply adhering to the reserved groups may be sufficient for many organisations. For greater diversity, Tally allows you to create your own groups, either as sub-groups or primary groups. Groups can be sub-classified to practically an unlimited level, to give a virtual accounting tree. At the lowest level, of course, would be the ledger account. An example of sub-groups would help illustrate the power of this facility:-
The group Indirect Expenses can be sub-classified as under (ledgers given in italics):
Remember, that during voucher entry, only the ledger accounts are used, - and the grouping structure remains transparent, irrespective of the use of sub-classification.
This idea can be easily extended to other areas like Sundry Debtors, Sales Accounts, Purchase Accounts, etc. For example, Debtors and Creditors are very useful when sub-grouped according to geographical areas:
You may prefer to classify creditors according to their tax status, e.g.,
You can see that unlimited levels of sub-grouping is a convenience to be used thoughtfully. Use it to give a never before depth to your presentation of accounting information but take care to not carry it too far. Too many levels of sub-groups may make their use redundant and their management unwieldy. A simple guideline could be to create branches of sub-groups or ledgers only if they are two or more than in number. A situation where you have created groups as follows should be avoided:
Obviously, you could have done with simply creating ledgers directly under Marketing Expenses.
NOTE: While it is necessary to assign every ledger to a group/sub-group, it is not essential to have your own sub-classification of accounts; you may simply use the reserved groups for grouping your ledger accounts.
How to manage and operate GroupsGateway of Tally—>Accounts Info—>Groups.
You may create, alter, or display a single Group or multiple Groups. Single group option is useful when you wish to work on one group at a time. Multiple is a time and labour saving option in a list format and is useful when working on many sub-groups at a time. Once a sub-group is created, it behaves exactly like a group. Any reference to group would deem to include a sub-group.

Creating a groupIf you are creating groups for the first time, it is advisable to configure them before you proceed:
You may configure your groups to enable/disable advanced mode.
[F12]—>Acct/Inv info—>Accounts masters
These are the default settings.
(The Masters Configuration screen allows settings for all types of masters, and not just those that are relevant to the current operations. Here, only the two mentioned options are of relevance to accounts masters. Additionally, the ALIAS setting in Master Configuration also affects accounts masters)
Single Group
Gateway of Tally—>Accounts Info—>Groups—>Single Create.
Buttons in single group screens
F3:Company: To work with a different company. In the creation mode, you can create groups in the other company. In alter mode, you can copy the information by accepting the screen The old company's information remains. Not available in Display mode.
F3: New Cmp: To work on the same report of another company. Available only in display mode.
Groups, Ledgers, Cost Categories, Cost Centres, Voucher Types:
To enable you to switch to these areas without having to quit from the current screen.
F11:Features:To change company features. A detailed discussion on features has been done in earlier section under Gateway of Tally.
F12:Configure:To change configuration of master information.
Configuration changes affect all companies whereas Features changes affect only the current company.
* Advanced mode allows entry of additional information
as follows:Creation of Primary GroupControl behaviour like sub-ledgerUsed for calculation for taxes and discounts in invoices(These are further explained at the end of the section)
If you have not opted for advanced entries in masters, you will need to enter only the following information to create a group:
Name of Group
Enter the name of the desired group or sub-group. (e.g., Administrative expenses).
Alias
Give an alias to allow access the group using the Alias in addition to its name; or leave it blank. (e.g., for Administrative expenses, you can give 'Office
Expenses' or even an alphanumeric code, say 'E001', as an alias)
Under
Specify under which existing (Parent) group the sub-classification is needed. You may create a new Parent Group by using +. The use of + is explained in the Annexure "Key operations".


Advanced mode of master entries for GroupsThe following are applicable only when advanced mode is activated.
*Under
If it is a new primary group, select 'Primary' (requirement of a new primary group would be extremely rare but the option exists). Creation of new Primary Group is not allowed if Advanced entries are not permitted (set to No).
If a new Primary Group is created, you must specify whether it is an asset, liability, income or expenditure by selecting the appropriate option. If you specify an income or expenditure you may also determine whether it affects gross profits by suitably answering the question
Does it affect Gross Profits? Yes/No.
(This concept can be used in cases where you would like to segregate your profits into Operative Profit and Net Profit where you may want to consider other revenue accounts in addition to Direct instead of Gross and Net Profit). Normally, Tally calculates GP using Opening Stock, Purchase Accounts, Direct Expenses, Sales Accounts, Direct Incomes and Closing Stock only. To make other accounts contribute to this, and yet not classified under these reserved heads, you would set the answer to Yes.
Group behaves like sub-ledger?
To display Sundry Debtors without Ledger break-up in statements. Normally Sundry Debtors would have a large number of ledger accounts under it and it can be exploded during display to show ledger balances. To avoid this detailed display, choose Yes.
*Used for Calculation (e.g. taxes, discounts?
Yes if ledgers under this group would have percentages for discounts/taxes to be used for invoice entry. Remember that only voucher entry in 'invoice' mode uses the automatic calculation capability (for example, it would be fruitless to specify a group 'Depreciation of Assets', and created ledgers such as 'Depreciation 10%', 'Depreciation 25%' in the hope of getting them used for automatic calculation purposes.)

Display or Alter a GroupGateway of Tally—>Accounts Info—>Groups—>Single Display/Alter—> select name from List of Groups
(Since display mode is identical to alter but without the modification capability we would discuss only alter mode here. Depending upon the access rights available, you may display a master in simply display mode or in alteration mode.)
From the popup list of groups, select the group you wish to alter. The information in the alteration/display screen is the same as in 'group creation' with an additional field 'Position Index in Reports'. This field is displayed or hidden with the toggle key/button[F10]- Change sort/Skip sort. A discussion on position index follows.
You are allowed to alter any information in the screen except in specific circumstances given below (these apply to multiple alteration of groups as well):
You cannot change the parent or behavioural attributes of a Reserved group. Exceptions are the groups Branches/Divisions and Suspense Account, where the 'Asset' or 'Liability' concept is modifiable. This determines the location of the group in the VERTICAL Balance Sheet only.
Deleting a group
Gateway of Tally—>Accounts Info—>Groups—>Single/Alter.
The Delete function is performed through the single alteration mode. You cannot delete groups from the multiple alteration mode.
Select the group to be deleted.
Press + to delete.
You will not be allowed to delete a group if: it is a reserved group; orthere are sub-groups or ledgers under it.

Advanced UsagePosition index in reports
Position index is the primary key for sorting groups and ledgers for reports; the group name being the secondary key. It determines the position of the group in relation to other groups in a report. It is the default sorting method in most reports. Sorting method can be changed when viewing lists by changing the configuration [F12].
At the time of its creation, a group is automatically assigned the position of its parent (or 500 if it is a new primary group) and hence you do not need to give the index field when creating a group. The default position indices for reserved groups are:
All reports, e.g. Trial Balance, including the above list, will be sorted according to the position index in increasing order. You will observe that it is not alphabetic. The positions have been ascribed for the Balance Sheet and Profit & Loss Account, which is based roughly on the liquidity concept and company law. These indices may be changed to effect a shift in the location of an account, as illustrated in the following example. The same index number can be assigned to more than one group in which case they will appear one after another in alphabetic order (sorted on the secondary key).
Create a Group "My Own Group" under Primary as an Asset. It's sort index would default to 500.
You may verify this using single alteration of the group "My Own Group".
Open a ledger account "My Own Ledger" under this group with opening balance of 10,000. The group's position in the Balance Sheet would be thus:
Let us now alter the Position Index (sort position) of the group "My Own Group" to 45. (You may do this quickly by positioning the cursor on 'My Own Group' and pressing +).
The Balance Sheet would now be rearranged as follows:
You are therefore able to decide the position of an item in your reports.
Though position indices can be altered, you are advised not to do so without being absolutely sure of its effect. Please remember that the change affects all reports. If you have altered the index but which you now do not wish to adopt, you may revert to the above default settings through group alteration.

Expert Usage
Multiple creation of groups
Gateway of Tally—>Accounts Info—>Groups—>Multiple Create
Explanation on Buttons
F3:Company: To work with a different company. In the creation mode, you can create groups in the other company. In alter mode, you can copy the information by accepting the screen ( or +). The old company's information remains. Not available in Display mode.
F3: New Cmp: To work on the same report of another company. Available only in display mode.
F4:Chg Parent: To change parent of the selected group from popup names of groups list.
for example, you are currently altering groups classified under Loans Liability, and wish them all to be re-classified under 'Bank OCC A/c'. Instead of individually altering each, name, you may do so by pressing F4.
F4: New Parent: To change the parent group. (relevant in Alteration/Display mode only)
for example, you are currently altering groups classified under Loans Liability, and now wish to
ABANDON the current activity, and alter groups under Bank OCC instead.
Skip names: For faster data entry when you need to alter only the parent of many sub-groups but not the name of the sub-group itself.
F8:Skip Parent: For faster data entry when you do not need to alter the parent of sub-groups but the sub-group names and/or position indices.
F10:Chg Sort or Skip Sort: Toggle for altering the Sort Position
Groups, Ledgers, Cost Categories, Cost Centres, Voucher Types:
To enable you to switch to these areas without having to quit from the current screen.
F11:Features:To change company features. A detailed discussion on features has been done in earlier section under Gateway of Tally.
F12:Configure:To change configuration of master information.
* Configuration changes affect all companies whereas Features changes affect only the current company.
Choose multiple creation when you wish to create a number of sub-groups which will automatically take the parent's advanced mode information.
Under Group
F4:Parent or first letter of existing group
The entry screen allows you to specify the parent group under which the sub-group can be created in a columnar list. You are allowed to create a new parent using +. Select [All Items] if the new sub-groups may have different parent groups.
Below the Parent Group, of the three columns 'Sl. no.', 'Name of Group' and 'Under', Sl. no is filled up automatically. You must give the new sub-group names in the Group Name column. The "Under" column defaults to the Parent group name you had specified in 'Under Group'. If you had selected [All Items], you must specify the Parent Group for each sub-group. When finished, press in the blank 'Name of Group' field and again or yes to accept the list.
In multiple group creation, the sub-groups will automatically adopt the characteristics of their parent groups including those specified in advanced mode. If you wish to change individual group behaviour created using multiple groups, use 'single group/alter' option.
Display/alter multiple groups
Gateway of Tally—>Accounts Info—>Groups—>Multiple Display/Alter.
You would normally choose this option when you need to alter names or change parents of many groups. Select a particular group for altering sub-groups under it or [All Items] to list all groups, their parents as well as the position indices. Change restrictions as given above in Single Groups also apply to multiple groups.
Managing groups in multiple companies
Copy masters from one company to another
Master information is generally similar for most group companies and it is certainly beneficial to maintain same group structure and ledgers, more so if you have a parent company with subsidiaries or branches. This ensures uniformity of reports in all companies and proper consolidation of accounts. To avoid the tedious task of re-creating masters in other companies, Tally enables you to copy the groups created in one company to another.
The companies must be selected to allow switching of companies.
Gateway of Tally —> Select Company A
Gateway of Tally —> Select Company B
Copy a single group from one company to another
First select the source company [F1], unless already selected.
Gateway of Tally —> Select Company A
Gateway of Tally—>Accounts Info.—>Groups—>Single/Alter.
Select the particular group—>[F3]:Change to destination company (Company B)
—>Accept the screen, after making alterations, if any.
If the parent of the group does not exist, you will not be able to accept the screen without selecting a parent in the destination company.
On accepting the screen, you are returned to the source company 'list of groups'. The same group now also exists in the destination company.
Copy multiple groups from one company to another
[F1] Select the source company (Company A)
Gateway of Tally—>Accounts Info—>Groups—>Multiple/Alter.
Select the particular group or [All Items] —> [F3]:
Change to destination company —>Accept the screen, after making additions/alterations, if any.
On accepting the screen, you are returned to the source company 'list of groups'. The same group now also exists in the destination company. It may be obvious that the above method of copying masters is possible only if the books of accounts are maintained on the same computer system.
* The alternate mechanism to transfer information between companies is to use the 'Export' and 'Import' of data. Export/import is more flexible in that it allows incoming information from companies which do not exist on your system. For example, you could export your Masters and send the resultant files to your branches for their initial master creation.
* Note : The above method can be used for copying other masters like ledgers, cost categories and cost centres





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1 comments:

Anonymous,  March 27, 2010 at 2:03 AM  

How can treat a pre-operative exp in Balance sheet? as fixed asset or current asset ?

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