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    Tally ERP 9 (Power of Simplicity): -
    Tally ERP 9 (Power of Simplicity): -
    Tally ERP 9 (Power of Simplicity): -
    Ebook280 pages2 hours

    Tally ERP 9 (Power of Simplicity): -

    By SHRADDHA SINGH

    4.5/5

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    About this ebook

    Tally.ERP 9 is the latest ERP offering of the Tally software series. This book gives you an in-depth knowledge of working with Tally.ERP 9 in a precise and easy to understand language with lots of examples and illustrations. It begins with the basic concepts of accounting so that the beginners in this field can get the desired knowledge before laying their hands on Tally.ERP 9. All the topics from creating a company in Tally.ERP 9 to adding Godowns, Stock Items, Ledger Accounts, etc. are covered in detail with examples. The book also covers the Payroll Inventory System and its related entries in an easy to understand language, and in the end, you are introduced to the basics of Tally.NET.

    Therefore, the book is a must read for all, who wish to learn the latest version of Tally, particularly, it's a boon in disguise for the students from commerce background.

    LanguageEnglish
    PublisherV&S Publishers
    Release dateJun 1, 2015
    ISBN9789350574539
    Tally ERP 9 (Power of Simplicity): -

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    Reviews for Tally ERP 9 (Power of Simplicity)

    4.5/5

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    • 2/5
      Cant download it. Is there any way to download it?
    • 5/5
      very useful book
      I just loved this. the basic is so good
    • 4/5
      very good book for basic tally learners, i wish to every one to read this book

    Book preview

    Tally ERP 9 (Power of Simplicity) - SHRADDHA SINGH

    Script

    MANUAL ACCOUNTING

    Historically, accounting was a manual process using paper books and documents for financial information. Therefore, recording of business transaction has become an important feature. Manual accounting is very detailed, because accountants need to carefully record information into physical books.

    Chapter 1

    INTRODUCTION TO BASIC ACCOUNTING

    Basic accounting will introduce you to some accounting concepts and accounting terminologies. Once you become familiar with some of these terms and concepts, you will feel comfortable navigating through the explanations and other features of Tally. The main object of keeping the books of accounts is to ascertain the profit or loss of business and to assess the financial position of the business at the end of the year. The object is better served if the businessman first satisfies himself that the accounts written up during the year are correct, or at least arithmetically accurate. When the transactions are recorded under double entry system, there is a credit for every debit, when an a/c is debited; another a/c is credited with equal amount.

    Meaning of an Account

    An account is a summary of all relevant transactions relating to one person at one place for a particular period. It is a statement in which the date wise details regarding the business transactions as persons, companies, representatives, assets-liabilities, income and expenditures and profit and loss are given. This is also known as the condensed form of a statement. It records not only the amount of transactions but also their effect and direction. Generally, an account is in 'T' form. This form looks like a letter 'T', so it is called a T-account. T-account is a convenient form to analyze accounts, because it shows both debit and credit sides of the account.

    Following is the proforma of an account.

    An Account contains 8 columns and is divided into two parts. The left side of an account is termed as the debit side whereas, right side of an account is the credit side. Debit and credit are generally represented by Dr. and Cr.

    The first four columns are of the debit side and other four columns are of the credit side. As it is clear from the above form of account that the entire space is divided in two equal parts and column 1 is meant for date, column 2 for particulars, column 3 for journal folio and column 4 for amount, etc. The same procedure is carried out in case of the other 4 columns.

    Meaning of an Accounting

    Accounting is generally termed as the language of business. It records all the transactions which can be expressed either in money or money's worth and have taken place during a particular period. 'Accounting is as old as money itself'. Since in early ages, commercial activities were based on Barter System, so record keeping was not a necessity.

    Accounting is defined as either recording or recounting the information of the business enterprise, transpired during the specific period in the summarised form.

    Accounting is a combination of various functions, viz.

    Recording

    Classifying

    Summarising

    Types of Accounts

    For the purpose of ruling of debit and credit, under the double entry system, the accounts are classified on the basis of two approaches. These are:

    (a) American Approach

    (b) English Approach

    1. American Approach: As per this approach, the accounts relating to financial transactions are classified as follows:

    Assets Accounts: Under this heading, those transactions are kept which are relating to the business assets as plant, machinery, land, building, etc.

    Liabilities Account: Under this heading, those accounts are kept which are relating to the credit purchases and outstanding expenses, loans, capital, etc.

    Revenue Accounts: Revenue accounts include the transactions relating to income, commission, interest, dividend, sales, etc.

    Expenses Accounts: These include those accounts which are relating to the expenses of business as repairs, rent, maintenance, insurance and lighting, etc.

    2. English Approach: Under this approach, accounts are classified into the following three categories:

    Personal Account: It is an account which deals with a due balance either to or from individuals on a particular period. Here those accounts are included which are relating to persons, firms, companies, representatives and organisations such as Ram Lal & Company's Account, etc.

    Real Account: This is an account that specially deals with the movement of the assets. It is an account that reveals the value and movement of the assets taking place between the firm and other parties due to any transaction.

    Accounts which are relating to the assets and properties of the business are counted under this heading. Assets can be real or intangible. Real assets are as land and buildings, plant and machinery, cash and stock, etc. While intangible assets may be as goodwill, patents and trademarks, etc.

    Nominal Account: Accounts which are relating to the revenues, incomes, expenses and losses of the business are called nominal accounts. This is an account that deals with the amount of expenses incurred or incomes earned. It includes all expenses and losses as well as incomes and gains of the enterprise. This nominal account records the expenses and incomes which are not carried forward to the near future. For example, rent, commission, interest, dividend, etc.

    Principles of Double Entry

    As per the principles of the double entry system, each transaction of the business is recorded at two places. In other words, two entries are made for every financial transaction of the business. Double-entry implies that transactions are always recorded using two sides, debit and credit. If someone is giving something in the business, it has two sides - one is the giver and the other is the receiver. The system of double entry can be understood easily by an equation which is called accounting. Following are some transactions of the business to explain it.

    For example

    1.  Mr. Amit started business with cash of '10, 00,000.

        In this transaction, one side cash is coming into business and in the other side capital is being brought by Mr. Amit. Thus:

    2. In the next transaction, if a plant of ' 50, 000 is purchased in cash, this transaction will also

    leave two sides. In one side, cash is going and in other side the plant is coming. In this situation, the accounting equation will be as follows:

    Accounting Principles

    The entire accounting system is governed by the practice of accountancy. The accountancy is being practised through the universal principles which are wholly led by the concepts and conventions.

    Let us understand the Accounting Concepts and Conventions one by one.

    Accounting Concepts

    The following are the most important concepts of accounting:

    1. Money Measurement Concept: As per this assumption, only those transactions of the business are recorded in the accounting which can be measured in money. Those transactions/activities of the business which cannot be measured in money are not recorded in accounting.

    2. Business Entity Concept: This concept treats the owner as totally a different entity from the business. To put into nutshell, Owner is different and Business is different.

    3. Going Concern Concept: The concept deals with the quality of long lasting status of the business enterprise irrespective of the owners' status, whether he is alive or not. This concept is known as the concept of long-term assets.

    4. Matching of Cost and Revenue Concept: To compute the operational profits/losses of the business in a year, it is necessary to find the expenses and revenues relating to the period. Then all the revenues of that period are matched with all the expenses/costs incurred to earn that revenue. This matching is called the principle of matching of cost and revenue. The results of this match are as follows:

    5. Duality or Double Entry Concept: As per this concept, every financial transaction of the

    business has a dual effect and recorded at two places. Therefore, it is called the double entry system. On the basis of this concept, it is said that every debit must have an equivalent credit and every credit must have an equivalent debit because every transaction of the business has two aspects.

    6. Cost Concept: As per this principle, every transaction of the business should be recorded at its historical cost and not at its market price. At the time of recording of the transactions, their market price is not considered.

    Accounting Conventions

    In order to prepare the true and fair financial statements, there is a need to Accounting Conventions.

    These accounting conventions are as follows:

    1. Convention of Conservation (Prudence): As per the law of conservatism, at the time of preparing the financial statements, all the possible losses must be kept in mind and all the anticipated profits/gains should be left out. In other words, the accounts must follow the policy of playing safe.

    2. Convention of Consistency: In order to enable the management to do the comparison of the results of several years of business, whatever accounting policy is adopted in a year, must be adopted in the coming years.

    3. Convention of Disclosure: Convention of disclosure requires that all materials and relevant facts concerning financial statements should be fully disclosed. Full disclosure means that there should be full, fair and adequate disclosure of accounting information. 'Full' refers to complete and detailed presentation of information. 'Fair' indicates an equitable treatment of users. Thus, the convention of disclosure suggests that every financial statement should fully disclose all relevant information.

    4. Convention of Materiality: The convention of materiality means that only that information should be disclosed and attached with financial statements which influence the decisions of shareholders, investors and creditors, etc. and the other insignificant details must be ignored. Moreover, an item of information may be material for one purpose, while that may be immaterial for the other. This is a subjective matter.

    Rules of Double Entry Accounting System

    In Double Entry Accounting, both the aspects of the transaction are recorded. Every transaction has two aspects and according to this system, both the aspects are recorded. If the business acquires something, it must have been acquired by giving something. While recording each transaction, the total amount debited must be equal to the total amount credited. The terms, 'Debit' and 'Credit' indicate whether the transaction is to be recorded on the left hand side or right hand side of the account.

    The following

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