Getting Started with Tally Prime
What is Accounting?
Accounting can be described as the process of recording financial transactions with the object of determining and interpreting profits. That means it is a particular type of processing method which gives us financial status of our company or organization, preparation of financial statements, audits, cost studies, income tax work and analysis and interpretation of accounting information for internal and external end-users as an aid to making business decisions.
Functions of Accounting:
1. Keeping of a systematic and permanent record of monetary transactions with a view to help the preparation of Final Statements of Accounts.
2. Communication of results of the transactions recorded to various people like owners, creditors etc.
3. Fulfilling the legal requirements for taxation.
4. Helping in the protection of assets and property by recording correct and fair value.
Branches of Accounting:
Financial Accounting is art of recording, classifying and summarising financial transactions and preparing preparation of profit & loss account and balance sheet and also interpretation of financial statements.
● Cost Accounting:-
Cost Accounting is the branch of accounting which deals with the classification, recording, allocation, summarisation and reporting of current and prospective costs. It is the process of accounting for cost and helps the controlling of cost.
● Management Accounting:-
Management Accounting is process to supply of information which is useful to management in decision making for efficient running for the business and also for the maximisation profit. It covers such as cost accounting budgetary control, inventory control, capital budgeting, cost of capital, capital structure decisions, dividend decisions, internal audit etc.
These types of account in which a trader’s dealing with persons or firms are recorded. e.g. Ram’s A/c, JK Enterprises, Outstanding etc. Outstanding is a personal account because it represents regarding person.
2. Impersonal Accounts:
These types of accounts are not concerned with any individual person of firm. It is divided in two categories.
a. Real Accounts:
It is also called Property Account which are recorded the dealings relating to property, e.g. Stock A/c, Furniture A/c, Investment A/c etc.
b. Nominal Accounts:
These types of account are those in which a trade’s dealings relating to expenses, losses or gains and income are recorded, e.g. Rent A/c, Salary A/c, Discount A/c etc.
Tally Prime is the world’s fastest and most powerful concurrent Multi-lingual business Accounting and Inventory Management software. Tally Prime is one best accounting software that can integrated with other business applications such as Sales, finance, Purchasing, Payroll, Inventory, etc.
Feature of Tally Prime
- Tally prime is a whole new user experience.
- Easy Navigation.
- More comprehensive Reports
- Blazing Fast Speed
- Support Multi Tasking
- Dropdown Menu Support
The concept of groups
Groups have a hierarchical organisation. Through it we can categories our ledger heads. It is just like as identifier of transaction head. There are 28 groups in Tally Prime.
It is divided in two parts.
1. Primary Group(Total 15)
2. Secondary Group.(Total 13)
Primary Group: It is pre-created groups which are classified by secondary groups.
Secondary Group: It is hierarchical categories of primary group. Tally provides also to create new secondary group either under primary or secondary group.
Now we will learn about groups.
1. Capital:- In this primary group we can open the ledger of those person or organization who commence business with cash either honourship or partnership. It has a secondary group.
a. Reserve and Surplus
In this secondary group we can open the ledger of companies reserve funds such as employee well –fare fund, Provident fund etc.
2. Fixed Assets:- In this primary group we can open the ledger of those assets which are used for long period duration and depreciation or appreciation will be possible.
3. Current Assets:- In this secondary group we can open six secondary groups.
a. Cash-in-hand:- In this secondary group we can open the ledger of cash, petty cash, cash in transit etc.
b. Bank Account:- In this secondary group we can open the ledger of those banks by which we can perform transaction.
c. Sundry debtor:- In this secondary group we can open the ledger of those person or organizations who bought good on credit.
d. Deposit:- In this secondary group we can open the ledger of security deposit.
e. Loans and Advances (Asset) group.:- In this secondary group we can open the ledger of loans and advances of employee or worker.
f. Stock-in-hand:- In this secondary group we can create stock with item wise details with opening and closing stock.
4. Current Liability:- In this primary group we can use following secondary group.
a. Duties & Taxes:- In this secondary group we can open the ledger of all types of taxes such as Income tax, Sale tax, VAT tax etc.
b. Sundry Creditor:- In this secondary group we can open the ledger of those person or organizations by whom we bought goods on credit.
c. Provision:- In this secondary group we can open the ledger of all types of provision such as provision for bad debts, provision for doubtful debts etc.
5. Investments:- By this primary group we can open ledger of investment accounts like Investment in Shares, Bonds, Govt. securities, long term Bank deposit accounts, etc.
6. Loans (Liability):- For loans, typically long term, taken by the company. It is divided in following secondary groups.
a. 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.
b. Secured Loans:- Under it open the ledger of conditional loan. 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.
c. 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 Traveling Advance whose details would be known only upon submission of the TA bill.
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 &anp; 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 our company's branches, divisions, affiliates, subsidiaries, etc. If we wish to maintain the books of that branch/division on we computer, we must open a separate company. (Tally allows maintenance of multiple company accounts).
10. Sales Account:- We can create all types of sales under it which are being either cash or credit. We may even open an account Sales Returns under the group Domestic Sales to view our net sales after returns (or the returns may be directly passed through journal against the specific sales account). Tax slabs or type of sales. This also becomes a simple mechanism for preparation of Tax returns.
11. Purchase Account:- This is similar to sales accounts, except for the purpose of the transaction. We can create ledger for all types of purchase which are being either cash or credit.
12. Direct Income [Income Direct]:- For non-trade income accounts that affect Gross Profit. All trade income accounts would naturally fall under Sales Accounts. We may wish to use this group for accounts like Servicing Contract Charges that follow sales of equipment. It is a professional services company, we 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. Under it declare all expenses which are connected during manufacturing or purchasing. These accounts determine the Gross Profit of the company.
15. Indirect Expenses [Expenses Indirect]:- For all other administrative, selling or non-direct expenses. It put effects on PL. Tally automatically opens the Profit & Loss Account which is a reserved primary account. We may use this account to pass adjustment entries through journal vouchers .e.g., transfer of profit or loss to Capital or Reserve account.
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