Accounting Software

Accounting software manages and records the day- to- day financial
transactions of an organization, including fixed asset management,
expense management, revenue management, accounts receivable,
accounts payable, sub ledger accounting, and reporting and
analytics. A complete accounting system keeps track of an
organization’s assets, liabilities, revenues, and expenses. These
transactions then populate the general ledger in real time,
providing CFOs, treasurers, and controller’s immediate access to real
time, accurate financial data. It also allows P& L owners visibility
into their performance at the operational level.

The systematic recording of these financial transactions enables the

production of quarterly and annual financial statements, including
balance sheets, income statements, statements of cash flows, and
statements of stockholders’ equity. Accounting software is a key
component of an enterprise resource planning (ERP) system.

ERP systems unify essential business functions, such as accounting,

financial planning and analysis (FP& A), supply chain, inventory
management, and procurement. These applications are natively
integrated with a common user interface and data model,
eliminating the need to move between systems or integrate isolated
data to manage different aspects of your business.
INTRODUCTION TO [Link] 9

Tally Solutions launched India's first commercial accounting

software called Tally 1.0, which automated basic bookkeeping on a
DOS platform. In the 1990s, Tally gained widespread popularity
among small businesses due to its simplicity and low cost compared
to other software. Several upgrades were released in this decade
with additional features. A major milestone was Tally ERP 9 in 2000
which integrated inventory, billing and payroll creating a holistic
business management solution. Since then, Tally continued
expanding its capabilities in areas like taxation, payroll and
introduced GST compliance features. It was also localized in multiple
languages. 

Tally solutions pvt ltd:

Tally Solutions Pvt. Ltd. is a pioneer in the business software

products arena. Since its inception in 1986, Tally’s simple yet
powerful products have been revolutionizing the way businesses
run. Having delivered path breaking technology consistently for
more than 30 years, Tally symbolizes unmatched innovation and
leadership. Today, it caters to millions of users across industries in
140 countries and continues to be the unchallenged industry leader
in the enterprise resource planning software domain. With Bharat
Goenka at the helm, Tally remains firmly committed to its purpose of
“making everyone who touches Tally happier.” For over 30 years,
Tally has been a constant source of unmatched innovations and
thus, continues unchallenged as the industry leader in enterprise
resource planning software for medium and small businesses.
What is Tally.erp9?

Tally is an ERP accounting software suite used for capturing a

company’s day- to- day business data. Tally ERP 9 software is a
popular financial accounting and inventory management system. It
is one of the greatest accounting software programs that can be
combined with other company applications such as sales, finance,
purchasing, payroll, inventory, and so on. Tally software keeps
detailed records of all company transactions for each account. It
uses a double- entry accounting method, which eliminates and
corrects potential mistakes. The software is one of the most widely
used accounting programs in India. It is full enterprise software for
small and medium- sized businesses. 
Bharat
Goenka:
Founder of
Tally
Solutions Pvt
Ltd
 Shyam
Sunder
Goenka:
Founder of
Tally
Solutions Pvt
Ltd

Advantages of Tally.erp9

√ Depending upon the needs of the small or large business

groups alongside, its different features make it very useful
software. It helps you to take your decisions easily with its
wide range of features.
√ You can remote access your account with the help of
[Link].
√ With various language supports, it is convenient for a user
to use it in his own language.
 √ In the latest version, if your operating system suddenly
shuts down, your data won't be lost.
√ In the past year, people used to manage their accounts
manually; all the complex calculations were done manually,
which had a high risk of error. But, as we now use Tally it's
pretty simple and easy to use and comes with less risk of
errors.
√ As it has numerous functions performing various tasks is
made simple due to this software. Especially in the case of GST.

GATEWAY OF TALLY

Gateway of Tally is the entry point of performing any task in Tally.

After creation of first Company, you get Gateway of Tally to perform
any task.
 Horizontal Button Bar: This button bar contains ten
stationary buttons. These buttons will remain as it is
throughout all the tally screens. As shown in above figure,
these buttons are :

1) Print - To take printout of any report.

2) Export – To export any report in six different formats, e.g.

ASCII, Excel, HTML, JPEG, PDF and XML.

3) Email – To email any report directly from tally.

4) Upload – To upload any tally report directly on a website.

5) Shop – To purchase various add on packages available on

tally shop.
 6) Language – To select the language for accounting out of
fifteen available languages.

7) Keyboard – To select the keyboard layout out of seventeen

available layouts according to languages.

8) Control Centre - To manage admin and licensing issues

about the software.

9) Support Centre – To obtain online support from Tally, to

check status of your query.

10) Help – To get help on tally software or tally add on

packages.

Vertical Button Bar: Button bar placed at right most

part of tally screen is called as vertical button bar. Buttons on
vertical button bar keeps on changing according to the screen /
report you are viewing.

Some buttons like “F2: Date”, are common in most of the screens
and reports. User may keep a close watch on right hand side
vertical button bar to understand tally functionality in better and
quicker way.

Info Panel : This is area at the bottom of the first screen.

Info panel is divided in to five parts as under:

1. Product – This box is used to display the name of the

software product, i.e. [Link] 9. User can go to
[Link] just by clicking on this box.

2. Version – This box is used to display software details like

version, release, edition that is being used currently. Latest
available release is also displayed here.

3. License – Information about software serial number,

registered email ID with Tally, i.e. account ID and validity of
[Link] Subscription is displayed in this box.

4. Configuration – Software technical details like Statutory

Master fi le version, TDLs, Proxy is displayed in this box.

5. Calculator – Calculator can be used in Tally just by pressing

“Ctrl + N” in any screen. Calculator box is also used for
display many other type of information, e.g. import of data,
query shooting, connectivity with Tally server at Bengaluru,
etc.

Menu Area: This area is used to display menu options in

Tally. This area is located in the middle of screen

1. Select Company – To select the already created company.

2. Login as Remote User – To access the data stored on a

remote computer.

3. Login as Remote User – To access the data stored on a

remote computer.

4. Create Company – To create a new company

5. Backup – To take data backup

6. Restore – To restore the data backup to any specified

 location.

7. Quit – To exit from tally software.

Current Period: Currently set accounting period is

displayed here. It can be anything from one day to multiple
years. Current period can be changed by pressing Alt + F2.

Current Date: It is the current accounting date, i.e. if a

user records a transaction in any type of voucher without
setting any date, it shall be recorded in current date.

Name of Company: Name of currently selected and

active company is displayed here. More than once companies
can be opened. But only one company will be active at any point
of time.

Date of Last Entry : Date of last transaction is

displayed here. Vouchers with post- dated stamp are not
considered here. Also, number of days for back dated voucher
creation / alteration are calculated from this date.

COMPANY CREATION :

Company in Tally means any accounting unit. It may be a sole

proprietorship, partnership firm, a limited company, a trust, society,
etc. Creation of a company is the first step in using any accounting
software. Company creation in Tally is very simple, but configuration
of tally as ERP software takes some extra time. The steps are as
follows:

STEP1: open Tally Software by Double clicking on the tally icon

STEP2: go to Create Company Screen by Selecting, create company

from the Company Info. Menu using up and down arrow key and
press Enter Key.

STEP3: fill up the Details in Company Creation Screen. In this

company creation screen, you should enter all the details of the
company that you been asked for.

Directory : The location where user wants to save the company

data. It can be internal hard

disc drive of local computer or a network computer or any

external drive also.

Name : The name which you want to use for display on screen.

Mailing Name : The name which a user wants to print in reports.

It can be same as that of

Name or can be a different name also.

Address : The full address of the company should be written

here. This will be used in all the reports while printing.

Statutory compliance for : [Link] 9, release 4.5 offers choice

of 41 countries here. Any option can be selected as per
requirement. Tally will apply all the statutory features for the
selected country only.

State : State option is available only if India is selected as a

country. State selection is important for VAT compliance. VAT
 feature in tally will not work correctly if incorrect state is
selected.

Telephone No. : Type the landline telephone number here.

Mobile No. : Type the mobile number here.

E- mail : Type email address here.

Enable Auto Backup : This option shall be no by default. If this

option is made “Yes”, tally will automatically take the backup of
company data at the time of loading the company. The backup
shall be stored at the same location and same folder where
original data files are stored. The name of the auto backup file
shall be “ABK.900”. Auto backup feature may be of great help in
case of loss of data, but please note :

1. Auto back up will consume heavy disc space. Sixty different

copies of auto back up for sixty days shall be kept by Tally as
backup. This will increase disc space consumption to a very big
extent. File size of ABK.900 fi le may be more than 100 times of
original data size.

2. Auto back up will consume heavy disc space. Sixty different

copies of auto back up for sixty days shall be kept by Tally as
backup. This will increase disc space consumption to a very big
extent. File size of ABK.900 fi le may be more than 100 times of
original data size.

Currency Symbol : New rupee symbol has be introduced by

Tally. This will be displayed withamount in many reports.

Maintain : Two options are available. 1. Accounts only, 2.

Accounts with Inventory. Any optioncan be selected as per need.
 Financial Year from : This is the starting date from which a
user wants to start accounting year.

Books beginning from : This is the starting date from which

a user wants to start recording transactions.

Tally Vault Password : Tally vault is the highest level of

security provided by [Link] is a system of encrypting data. Tally
vault password can be set while creation of company or it can
be set later on also.

Use Security Control : Set this option to “Yes” to enable the

security and access control feature in a particular company.
Multiple users IDs with different access rights can be created
and used using this feature. Setting this option to “Yes” will
prompt fi ve new fi eld in the same screen.

Name of Administrator : Administrator is the user

responsible to administer tally company. Administrator will be
having total rights over all the facilities and features in the
particular company. Other users rights can be controlled
through administrator ID only.

Password : Set the password for administrator here.

Maximum allowed password length is 51 characters. It is
suggested to use a password with alphabets, numbers and
special characters.

Use Tally Audit Features : Tally has got two types of audit
features. One is quantitative audit and other is qualitative
 audit. Set this option to “Yes” to start quantitative audit
feature. Here a user can track the changes made in vouchers
and masters.

Disallow opening in Educational mode : Setting this option

to “Yes” will prevent a user from opening the company in
educational mode. Company will get opened with licensed Tally
only.

Base Currency Information : This may be set as per need.

At the end, accept the screen by pressing “Enter” key or “Y” key to
create the company. After creation of Company, following screen
shall appear.

This screen is called as “Gateway of Tally”. Let us try to understand

menu options in this screen.
There are five menu headings and relevant sub menus under each
heading:

1. Accounts Info – To create/alter financial accounting masters

like Ledger, Group, Voucher Type, etc.

2. Inventory Info – To create/alter inventory accounting masters

like Stock Item, Stock Group, Godowns, etc.

3. Quick Setup – To quickly setup taxation and [Link]

features.

Transactions:
I. Accounting Voucher – To create financial transactions which
affect trial balance

II. Inventory Vouchers – To create pure inventory transactions

that does not affect trial balance, e.g. transfer of stock from
one location to another.

Utilities:
I. Import of Data – To import data from another tally company

II. Banking – To perform banking related activities like bank

reconciliation, cheque printing and view bank transaction
reports.

Audit:
I. To analyse the data using various audit tools. Till release 3.6,
this feature was available in Auditor Edition of Tally only. But
from Release 3.6 onwards, this feature is made available to all
the users.
Reports:

I. Balance Sheet – To view balance sheet as on any particular

date.

II. Profit & Loss Account – To view Profit & Loss Account for any
particular period.

III. Stock Summary – To view stock position as on any particular

date.

IV. Ratio Analysis – To view various ratio calculations.

V. Multi Account Printing – To take printout of books of accounts

in different ways. This option shall be available only if Tally is
activated. This will not be available in educational mode.

Statutory Reports:
I. Vat Reports

II. Service Tax Reports

III. TDS Reports

Setting of Features in New Company

Every newly created company needs to be configured according to
the user’s needs. By default only financial accounting module is set
to ON in tally. All other modules need to be ON and configured as per
needs of every business.

There are two buttons on right hand side bottom corner.

F11: Features – To set various features ON / OFF

F12: Configure – To configure tally screens / reports

Changes made by pressing “F11” are applicable to a particular

company only, irrespective of individual computer settings. These
changes shall be applicable no matter which computer is used to
open the company and even in remote login also.

Changes made by pressing “F12” are applicable for all the

companies opened on a particular computer. These changes shall
not be applicable if computer is changed.

F11 changes are company specific, F12 changes are computer

specific.
F11: Features button offers following options:

√ Accounting Features
√ Inventory Features
√ Statutory & Taxation
√ Audit Features
√ [Link] Features
√ Add On Feature
Accounting Features screen
 Inventory Features screen

Statutory & Taxation Features screen

 Audit Features screen

[Link] Features screen

Vouchers:

In [Link] 9, vouchers are crucial for recording different types of

financial transactions. Here are the main types of vouchers you can
use:

Accounting Vouchers
a) Contra Voucher: For fund transfers between cash and bank
accounts.
b) Payment Voucher: Records all payments made.
c) Receipt Voucher: Records all receipts.
d) Journal Voucher: Used for adjustments and non- cash
transactions.
e) Sales Voucher: Records sales transactions.
f) Purchase Voucher: Records purchase transactions.
g) Credit Note Voucher: Issued for sales returns or when a
customer is credited.
h) Debit Note Voucher: Issued for purchase returns or when a
supplier is debited.

Inventory Vouchers
i. Delivery Note: Records the delivery of goods.
ii. Receipt Note: Records the receipt of goods.
iii. Rejections In: Records goods returned by customers.
iv. Rejections Out: Records goods returned to suppliers.
v. Stock Journal: Used for stock adjustments.
 vi. Physical Stock: Records physical stock count.

Order Vouchers
a) Sales Order: Records customer orders.
b) Purchase Order: Records orders placed with suppliers.
c) Job Work in Order: Records job work orders received.
d) Job Work out Order: Records job work orders given.

Payroll Vouchers
i. Attendance Voucher: Records employee attendance.
ii. Payroll Voucher: Records salary payments.

These vouchers help in maintaining accurate financial records and

ensuring smooth business operations.

Generation of reports:
[Link] 9 provides us the capability to generate various financial
statements and Management Information system reports, thereby
facilitating better management, effective control and well informed
decisions.
Financial reports:

1) Balance sheet:

A Balance Sheet is a financial statement that reports a firm’s

financial position at a specific time. It shows a balance between the
assets and liabilities of a firm and the owner’s funds

Go to Gateway of Tally > Balance Sheet.

Select F1: Detailed/Condensed to explode the summarized

information. Press F12: Configuration and set the required
parameters to display the Balance Sheet according to our
preferences.

2) P& L account:
Profit and Loss Account or Income Statement is a periodic
statement, which shows the net result of business operations for a
specified period

Go to Gateway of Tally > Profit & Loss A/c

Press F2: Period to change the period as required. Press F12:

Configuration and set the required parameters to display the Profit
& Loss A/c according to our preferences.

3) Trail Balance:

A Trial Balance is a summary of all ledger balances to check whether

the figures are correct and balanced.

Go to Gateway of Tally > Display > Trial Balance.

[Link] 9 shows group wise Trial Balance. Press Shift+Enter to

view details of all groups, except for groups behaving like sub-
ledgers.

Press F1: Detailed to detail the grouped information for further

detail. Press F5: Led- wise to list all ledgers and their closing
balances.
Balance Sheet

P& L Account
 Trail balance

Books and Registers:

Books and Register Method

Cash book/ Bank book Gateway of Tally > Display >

Account Books > Cash / Bank
Book(s).

Purchase Register Gateway of Tally > Display >

Account Books > Purchase
Register.

Sales Register Gateway of Tally > Display >

Account Books > Sales
Register.

Journal Register Gateway of Tally > Display >

Account Books > Journal
 Register > Journal Register.

Debit Note Register Gateway of Tally > Display >

Account Books > Journal
Register > Debit Note
Register.

Credit Note Register Gateway of Tally > Display >

Account Books > Journal
Register > Credit Note
Register.

Day Book Gateway of Tally > Display >

Day Book.

Stock Summary Gateway of Tally > Stock

Summary.

Statement of Accounts:
[Link] 9 provides us the capability to generate print, mail or
upload various statements and reports viz., Receivables, Payable
statements, Ageing Analysis Report and so on.

Receivables and Payables

Accounts Receivables refer to amounts to be received from the
sundry debtors while Accounts
Payables are the amounts to be paid to sundry creditors. [Link] 9
provides complete bill- wise
information of amounts receivable as well as payable on party wise,
group wise or Bill- wise.

1)To view Outstanding:

 Set Maintain Bill- wise Details to Yes in F11: Accounting
Features.
Create a Party (Ledger A/c) under Sundry Debtors / Sundry
Creditors group.
Set Maintain balances bill by bill to Yes for the parties during
ledger creation.
Go to Gateway of Tally > Accounting Vouchers > Sales (F8) or
Purchase (F9) accordingly and enter the transaction by
specifying a Bill reference No. along with due dates for the
amount to be received or paid in the Bill Allocations for screen.

2)To view Receivables / Payables Reports:

Go to Gateway of Tally > Display > Statement of Accounts >
Outstanding > Receivables.
The report displays bill- by- bill outstanding for all the parties
with the pending amount along with the due date.
To view amounts payable by the company, select Payables in
the Out standings menu. We can also toggle between Payables
or Receivables reports, by clicking F4.

Ledger wise Outstanding

To view individual Party wise outstanding:
√ Go to Gateway of Tally > Display > Statement of Accounts >
Outstanding > Ledger.
√ [Link] 9 provides a report displaying bill- by- bill details of
all outstanding for the selected party ledger with the total
outstanding amount. To view details of cleared bills, press F12:
Configure and enable the required options.

Group wise Outstanding

 Select Group in the outstanding menu and then select the
specific c group or sub group.

Ageing Analysis Report

[Link] 9 facilitates generation of Ageing Analysis reports for

Outstanding. We can define
Various range of periods and view outstanding across the specified
periods viz., we can specify 0 to 30 days, 30 to 45 days and 45 to 75
days and so on.

i. Go to Gateway of Tally > Display > Outstanding > Receivables

or Payables.
ii. Select F6 (Age wise).
iii. Specify Ageing Methods and the Periods.
iv. We may also view the Ageing Analysis report by due date or by
bill date.

Financial analysis:
[Link] 9 provides us the capability to generate numerous
advanced and critical Management Information System Reports and
analytical tools, thereby facilitating better management, effective
control and well- informed decisions.

Analytical Reports Method

Cash Flow Statement Gateway of Tally > Display >

Cash/Funds Flow > Cash
Flow.

Fund Flow Statement Gateway of Tally > Display >

Cash / Funds Flow > Funds
Flow.

Ratio Analysis Gateway of Tally > Ratio

Analysis.

Budget & Control To enable:

Gateway of Tally > F11:
Features > F1: Accounting
Features.

To create:
Gateway of Tally > Accounts
Info. > Budgets > Create.
Variance Analysis To view:
Select any report
Press Alt + C
Specify details for
period, Currency and
Method of Stock
Valuation.
Select the created
budget name for Types
of Value to show.
Set Show Variance to
No.

Bank Reconciliation Gateway of Tally > Display >

Statement Account Books > Cash/Bank
Book.

E- filling

E- filing of tax returns and other documents is a major change in

Indian tax administration scenario. In this era of information
technology, everything is changing to “electronic” format. Change in
tax Administration was much awaited and expected. Today, all major
tax administration matters are
Converted to electronic format. This has proved to be a big step
towards increasing transparency and efficiency in tax administration.
Difference between manual and e- filling
1 Convenienc Can be fi led during any To be filed
e time of during office
working
Day. There is no concept
called as hours only.
office working hours.

2 Place of Can be filed from To be filed at

filing anywhere in the a particular
office
world. No concept of office
place only.
for filing.

3 Possibility Very less as all possible Very high as

of electronic there cannot
be any
errors checks and controls are
there. control or
check before
filing of
return.

4 Processing Very fast Very slow

of
returns

5 Obtaining Status of return It is very

processing, difficult and
informatio
time
n status of refund, etc. can
be consuming to
6 from tax obtained within minutes as obtain any
all type of
authorities
the information is stored information.
on the
website only. Also, it is
possible
to obtain the information
without
any human intervention.

7 Access to The documents filed with Majority of

past tax documents
were
records authorities can be
retrieved at filed in
physical form
later date for further use
will
like
require
obtaining loans,
individual to
preparation for
retain these
tax assessments,
documents in
verification of
secure form.
historical records Where
original
copies get
mutilated,
lost,
destroyed
will cause
 lots of
problems to
the assesse.

Common E- filing process:

1. Obtaining e- format file :

This is the first step in e- fi ling process. In some cases, this step may
not be needed. File formats are designed by tax authorities for fi ling
of e- returns. The tax authorities each year at the beginning of the
year notified tax returns format including the e- filing format in excel
and other java based format for filing. These fi le formats have to be
obtained first. E.g. for fi ling of income tax return of a practicing
chartered accountant, the appropriate return form is ITR- 3. This is
an excel file and this file can be downloaded from
[Link]fi [Link], the official website for e- filing of
tax returns with income tax department. Similarly, various other
formats are available on websites of different tax authorities for fi
ling of returns. Assesse has to select and download the correct
format for e- filing.

2. Filling information in e- format file:

This is the next step after obtaining the e- format fi le. Information
relating to tax compliance has to be filled in in this fi le. There are
two ways of doing it.

Filling the information manually

Using some software for filling of information.

In some cases, due to typical fi le format, it is not possible for any

human being to fill the information manually. In such cases, some
software has to be used for filling of information in e- file format.

3. Validating e- format file :

This is a process where e- file format is checked for mistakes/errors.
Different types of errors can be committed while filling the
information. E.g. Calculation of tax payable on taxable income,
Interest payable on late payment of advance tax or setoff of carried
forward losses by the assesse, date of filing return may not be a
current date, PAN details of assesse may not be filled correctly, etc.
These types of mistakes can be easily detected in the process of fi le
validation. In some cases, file validation utility is built in in the e- file
format itself. In some cases, it may be used externally. File validation
utility is software, which checks for mistakes in the fi\le. Once the
file gets validated the utility program showing errors and once these
have been removed the e- filing file will be generated specified
format as per tax authorities.

Uploading e- format file:

Once the file is validated and % error free, it can be uploaded on the
website of respective tax authority. This is actual submission of
information. It is just like attaching the fi le to an email. There are
two types of uploading.

Uploading by assesse directly.

Uploading by agent of tax authority.

After successful uploading of any tax return, acknowledgement is

generated automatically. This can be printed immediately or later on
also.