Fundamentals of Tally.

ERP 9

1. Introduction
Tally.ERP 9 is the world's fastest and most powerful concurrent Multi-lingual business
Accounting and Inventory Management software. Tally.ERP 9, designed exclusively to meet the
needs of small and medium businesses, is a fully integrated, affordable and highly reliable
software. Tally.ERP 9 is easy to buy, quick to install, and easy to learn and use. Tally.ERP 9 is
designed to automate and integrate all your business operations, such as sales, finance,
purchasing, inventory, and manufacturing. With Tally.ERP 9, accurate, up-to date business
information is literally at your fingertips anywhere. The powerful new features and blazing speed
and power of Tally.ERP 9 combined with enhanced MIS, Multi-lingual, Data Synchronization
and Remote capabilities help you simplify all your business processes easily and cost-effectively.

1.1 Salient Features of Tally.ERP 9

 A leading accounting package: The first version of Tally was released in 1988 and,
through continuous development, is now recognized as one of the leading accounting
packages across the world, with over a quarter million customers. Tally’s market share is
more than 90%.
 No accounting codes: Unlike other computerized accounting packages which require
numeric codes, Tally.ERP 9 pioneered the ‘no accounting codes’ concept. Tally.ERP 9
users have the freedom to allocate meaningful names in plain English to their data items in
the system
 Complete business solution: Tally.ERP 9 provides a comprehensive solution to the
accounting and inventory needs of a business. The package comprises financial
accounting, book-keeping and inventory accounting. It also has various tools to extract,
interpret and present data.
 Integrated/ Non-integrated accounting and inventory: With Tally.ERP 9, the user is
able to choose between accounting and accounting with inventory. If accounting with
inventory is opted for, the user can choose whether it should be integrated or not.
 Flexible and easy to use: Tally.ERP 9 is very flexible. It mimics the human thought
process, which means that Tally.ERP 9 can adapt to any business need. Tally.ERP 9 users
need not change the way their business is run to adapt to the package.
 Speed: Tally.ERP 9 provides the capability to generate instant and accurate reports, which
assists the management to take timely and correct decisions for the overall productivity and
growth of the company.
 Power: Tally.ERP 9 allows the user to maintain multiple companies and with unlimited
levels of classification & grouping capabilities. It also allows drill down facility from
report level to transaction level.
 Flexibility: Tally.ERP 9 provides flexibility to generate instant reports for any given
period (month/year) or at any point of time besides providing the facility to toggle
between Accounting & Inventory reports of the same company or between companies.
 Concurrent multi-lingual capability: Tally.ERP 9 offers you the exclusive capability of
maintaining your accounts in any Indian language, viewing them in another language and

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 printing them in yet another Indian language.
 Real time processing: Immediate posting & updation of books of accounts as soon as the
transactions are entered, thereby facilitating instant statements & Reports. It also
facilitates real-time multi-user environment.
 Versatility: Tally.ERP 9 is suitable for a range of organizations, from small grocery stores
to large corporations with international locations and operations.
 Multi-platform availability: Tally.ERP 9 is available on Windows 95, 98, ME, 2000 and
NT. It runs on a single PC or on a network. On a network, it supports access via any
combination of platforms.
 Online Help: The Tally.ERP 9 Online Help (Alt+H) provides instant assistance on basic
and advanced features or any other relevant topics of Tally.ERP 9.
 Auditor's Edition : Tally.ERP 9 offers a special Auditors' Edition of Tally.ERP 9, which
pro- vides auditing and compliance capabilities exclusively for Chartered Accountants

1.2 Payroll
Tally.ERP 9 Payroll is integrated with Accounting and benefits the user by simplifying Payroll
processing and accounting. Tally.ERP 9 Payroll enables users to set up and implement salary
structures, ranging from simple to complex, as per the organization’s requirements. The user can
also align and automate payroll processes and directly integrate them with main stream
accounting applications. Tally.ERP 9 Payroll also supports configurable formats for pay slip
printing; flexible salary/wage, attendance, leave and overtime registers; gratuity and expat
reports.

1.3 Data Migration Capability

Tally.ERP 9 has the ideal solution for those who have their data in Tally 7.2 and now want to use
Tally.ERP 9. Tally.ERP 9 provides a migration tool which helps the user to migrate the data easily
to the latest version and continue with day-to-day transactions. Tally 6.3 users can also use the
migration tool which will rewrite the version to Tally 7.2 and then migrate the data to Tally.ERP
9. Tally 8.1 users and Tally 9 Release 2.14 users can rewrite the version of their data to
Tally.ERP9.

2 Getting Functional with Tally.ERP 9

2.2.1 Tally.ERP 9 Start-up

Tally.ERP 9 can be started in any of the following ways:
 Click on Start > Programs > Tally.ERP 9 > Tally.ERP 9 or double click on the Tally.ERP
9 icon on your desktop

The welcome screen Tally.ERP 9 – Power of Simplicity appears while the software
loads. You will be ready to explore Tally.ERP 9, the moment the Tally.ERP 9 startup
screen appears.

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The Tally.ERP 9 Start-up Screen appears as shown below:

Shortcut key of the function

highlighted in red

2.2.2 Tally.ERP 9 Screen Components

 Title bar: Displays the Tally.ERP 9 version number.
 Horizontal button bar: Selection of Language key, Keyboard Language and Tally.ERP 9
Help.
 Close button: Performs the standard Windows Operating Systems function (Windows 95
onwards), allowing you to minimize Tally.ERP 9 and work on other applications. To
restore Tally.ERP 9, click the Tally.ERP 9 icon on the taskbar.
 Gateway of Tally: Displays menus, screens, reports and accepts the choices and options
which you select to view data as required.
 Buttons toolbar: Displays buttons which provide quick interaction with Tally.ERP 9.
Only buttons relevant to the current task are visible.
 Calculator Area: Used for Calculator functions.( Ctrl+N)

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  Info Panel: Displays Version number, License details, Configuration details.

2.2.3 Quitting Tally.ERP 9

You can exit the program from any Tally.ERP 9 screen, but Tally.ERP 9 requires all screens to be
closed before it shuts down.
To quit working on Tally.ERP 9,
 Press Esc until you see the message Quit? Yes or No? Press Enter or Y or click Yes to
quit Tally.ERP 9.
 Alternatively, to exit without confirmation, press Ctrl+Q from Gateway of Tally.
 You can also press Enter while the option Quit is selected from Gateway of Tally.

2.3 Creation/ Setting up of Company in Tally.ERP 9

The first step towards understanding Tally.ERP 9 is to create a company in Tally.ERP 9.
Create a company using the Company Creation screen

2.3.1 Creation of a Company

Go to Gateway of Tally > Company Info. > Create Company

The Company Creation screen displays as shown

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Each field in the Company Creation screen is explained below. To navigate between the fields,
use the enter key or the tab key or arrow keys or the mouse
Fields Description
Directory Tally.ERP 9 assumes that the company is to be created in the data path
given in the Tally.INI file, which is displayed by default. This field is
skipped by default. However, you can change this path, if you want to, by
using the backspace key, so that Tally.ERP 9 saves the data to a different
directory specified by you.
Name This specifies the name of the company as it appears in Tally.ERP
9. If you have several companies to create with similar names, you will have to
distinguish between them to provide a unique name for Tally.ERP 9.

Mailing Name The company name given in the Name field automatically appears in this field.
This can be changed according to your requirements. The correct name of the
company for mailing purposes should be entered.

Address The address of the company (The mailing name and address details are picked
from here for any report such as balance sheet and statement of accounts).

Statutory Compliance for Select India from the list of countries.

State Select the appropriate State from the list of States.

Pin Code Enter the PIN code of the specified address.

Telephone No. Enter the telephone number of the company.

E- Mail E-mail address will be used to e-mail documents, reports and data from
Tally.ERP 9.

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Mobile No. Enter the mobile number of the company.

Currency Symbol This refers to the currency symbol Tally.ERP 9 will use for monetary values.
By default, Tally.ERP 9 displays Rs.

Maintain Select the nature of the company i.e, Accounts only or Accounts with
Inventory.

Financial Year From Specify the Financial Year (FY) for the company. Tally.ERP 9 considers 12
months from the date you give here as the Financial Year. For example, if you
give 1st April 2009, your FY will be April to March - in this case, ending with
31st March 2010.

Books Beginning From The date given for ‘Financial Year From’ is automatically displayed.
However, we can specify the actual date on which the books of accounts start.
In case our accounts are opened mid-way during the financial year specified,
we can enter the required date and start the books of accounts accordingly.

TallyVault Password Tally Vault is an enhanced security feature utilized to protect company data in
an encrypted form by means of a Password. The Tally Vault password entered
ensures that the data is maintained permanently in an encrypted form without
retaining information of the password used. Data is not accessible without the
Tally Vault password. Remember to keep this password private and known
only to those who need to know. If the password is lost, your data cannot be
recovered.
Use Security Control Tally.ERP 9 has a range of security controls, which can define the authority of
various users to access the information and to enter/ alter/delete the vouchers.

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 2.3.2 Exercise to Create another Company
Before looking at how to view and amend company details, let us create another company to
experiment with. Name your company as Indus Enterprises, Financial Year as 1 April 2019 &
Book beginning from 1 April 2019 and you may enter the company details as you like,
To create Indus Enterprises follow this procedure:
1. From the buttons bar select Alt + F3: Create Cmp or simply press Alt + F3 to bring up the
Company Info. Menu.
2. Select Create Company from the menu to bring up the Company Creation screen.
3. Enter Indus Enterprises in the Name field and experiment with entering other data of your
choice (for example, the address details).
4. When you have finished, Press Y or Enter to accept the screen

You can now practice selecting, closing and altering company information.
Practice Exercise
1. Select a Company
2. Shut a Company
3. Alter a Company

To Select a Company
1. Go to the Gateway of Tally > Alt + F3 > Company Info. > Select Company OR Press F1.
Tally.ERP 9 displays the List of Companies screen. All the companies created are displayed
in an alphabetical order. Select the company name from the list given.
In case two or more companies are loaded (like National Traders and Indus Enterprises), click on the
company which you need to work on so that the selected company will be highlighted and will appear on
top of the list.
To Shut a Company
Go to the Gateway of Tally > Alt + F3 > Company Info. > Shut Company. Select the
Company which you need to shut from the List of Companies. You can also use Alt + F1 to shut
a Company from the Gateway of Tally screen.

To Alter Company Details

Go to the Gateway of Tally > Alt + F3 > Company Info. > Alter. Select the company which
you need to alter from the List of Companies and press Enter to view the Company Alteration
screen. Alter the company details as required and accept the screen.

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 Creating Accounting Masters in Tally.ERP 9

After creating a Company with the required information, you can now enable/ modify Accounting &
Inventory features and configurations

3.1 F11: Features

The F11: Features are Company-specific and the F12: Configurations are applicable to all
the companies in a data directory. The F11: Features is divided into the following major
categories:
 Accounting Features
 Inventory Features
 Statutory & Taxation
 Tally.NET Features
You can press F11 (functional key) from any screen of Tally.ERP 9 or you may also click on the F11:
Features button available in the button bar, to enable the required features. The F11: Features are
specific only to the company currently in use (for which the said feature is enabled), thereby allowing
flexibility of independently enabling different features for each of the company

Go to Gateway of Tally > press F11: Features

The Company Features screen is displayed as shown

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 There are various settings available under Accounting Features, Inventory Features and
Statutory & Taxation Features, which facilitates the additional information to be entered
during voucher entry.

F11: Accounting Features

The Accounting Features consists of configurations/ functionalities, which generally affects
Accounting transactions and reports. The Accounting features is further sub-divided into six
sections, namely:
◼ General
◼ Oustandings Management
◼ Cost/ Profit Centres Management
◼ Invoicing
◼ Budgets/ Scenario Management
◼ Other Features

Go to Gateway of Tally > F11: Features > Accounting Features or click on F1: Accounts
The Accounting Feature screen is displayed as shown

 Enable the required features

 Press Enter to accept

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 F2: Inventory Features
The Inventory features comprises of configurations/ functionalities pertaining to Inventory
transactions and reports. The Inventory features is further sub-divided into seven sections,
namely:
 General
 Storage & Classification
 Order Processing
 Invoicing
 Purchase Management
 Sales Management
 Additional Inventory Vouchers
Go to Gateway of Tally > F11: Features > Inventory Features or click on F2 : Inventory
The Inventory Feature screen is displayed as shown.

 Enable the required features

 Press Enter to accept

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 3.2 F12 : Configurations
3 In Tally.ERP 9, the F12: Configurations are provided for Accounting, Inventory &
printing options and are user-definable as per your requirements.
4 The F12: Configurations are applicable to all the companies residing in that
Tally.ERP 9 Data Directory. The F12: Configuration options vary depending
upon the menu display. i.e., if you press F12: configure from Voucher entry
screen, the respective F12: Configurations screen is displayed.
Go to Gateway of Tally > press F12: Configure

The Configuration screen is displayed as shown.

There are numerous settings available under various menus in the F12: Configurations screen, which
may be configured for any additional information required to be entered during master creations,
voucher entry and printing

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 3.2.1 General
You can configure Country Details, Style of Names, Dates and Numbers in the General
configuration screen.

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3.2.2 Numeric Symbols
You can configure Number Styles and Symbols used to represent Positive Numbers,
Negative Numbers, Debit Amounts and Credit Amounts by using Numeric Symbols. This is
displayed on the Number Styles configuration screen.

3.2.3 Accts / Inventory Info.

The fields pertaining to both Accounting and Inventory Info. can be configured from this menu.

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 3.2.4 Voucher Entry
Both the Accounting and Inventory Vouchers can be configured from this menu for additional
information.

Accounting Vouchers
 Skip Date field in Create Mode (faster entry!): Set to Yes, the Tally.ERP 9 cursor
goes directly to the Dr or Cr field depending on the voucher type. However, if set to
No, the Tally.ERP 9 cursor goes to the Date field. It is advantageous to set this option
to Yes for a faster entry if there are many entries to be made on the same date.
 Use Single Entry mode for Pymt/ Rcpt/Contra : This configuration helps in selecting
multiple debits or credits depending on the type of entry.
 Use Payment/Receipt as Contra: To indicate the transfer of funds from bank to cash,
bank to bank and cash to bank, Tally.ERP 9 provides a voucher type called ‘Contra’.
This configuration is activated while using payment and receipt vouchers for a
‘Contra’ transaction.
 Use Cr/Dr instead of To/By during Entry: This configuration gives the flexibility to
use Cr/ Dr or To/By in Vouchers as per the requirement or the understanding of the
user.
 Warn on Negative Cash Balance: This option in Tally.ERP 9 displays a warning if
the cash balance is NIL.
 Pre-Allocate Bills for Payment/Receipt: This Configuration enables the user to
select the bills first before the total amount can be updated in the amount field.
This option is extremely useful while Cheque Printing.

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  Allow Cash Accounts In Journals: Journals are adjustment entries. However, in
many cases companies require journals to account for day-to-day transactions
involving cash or bank accounts.
 Allow Expenses/Fixed Assets in Purchase Vouchers: This configuration helps
the user to enter the details of purchase of fixed assets in the Purchase Voucher.
 Allow Income Accounts in Sales Vouchers: This configuration helps the user to
allocate the income accounts in the sales voucher.
 Show Inventory Details: This configuration when set to Yes shows the name of
the stock item, quantity, rate and value details.
 Show Table of Bills Details for Selection: This configuration displays a table
which lists out the references of the pending bills
 Show Bill-wise Details: This configuration enables the user to view the bill-wise
details in the voucher.
 Expand into multiple lines: This configuration displays the due date of
repayment based on the credit days given.
 Show Ledger Current Balances: This configuration displays the current balance
of the ledger selected while an entry is made. This is a convenient feature to use
since it helps to get the information without referring to the report.
 Show Balances as on Voucher Date: Set to Yes, a voucher that is viewed in the
alteration mode displays the ledger balances on the voucher screen based on the voucher
date

Inventory Vouchers
 Use Ref. Number in Stock Journal: This configuration provides an additional field called
Ref. in the Stock journal, where the user can enter the reference number.
 Warn on Negative Stock Balance: This configuration warns the user in cases where
the item selected reaches a negative balance in the Invoice mode.
 Honor Expiry Dates usage for Batches: This configuration hides the batch details
that are redundant and have expired.
 Show Balances as on Voucher Date: This configuration enables the user to view the
inventory balances according to the voucher date
 Show Godown wise Details: This configuration enables the user to view Godown details.
 Show Batchwise Details: This configuration enables the user to view Batch details.

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 3.2.5 Invoice / Orders Entry
The Invoice entry and Order entry screens can be configured for additional information such
as export details, shipping details, etc.

3.2.6 Printing
This configuration helps the user to configure the printing screens for the reports and
transactions.

3.2.7 Data Configuration

This configuration helps the user to define location of Language Files, Tally Configuration File,
Export Files, Data Files and details of the companies to be loaded on startup.

3.2.8 TDL Configuration

This screen provides details regarding TDL Configuration viz., Local TDLs, Account TDLs &
Remote TDLs enabled for the product.

3.2.9 Advanced Configuration

This configuration helps the user to specify Client/Server Configuration, Connection configuration
and Proxy configuration for ODBC connectivity and Synchronisation of Data.

3.2.10Licensing
This configuration helps the user to update, surrender, reset license and also configure existing
License.

3.3 Setting up Account Heads

Tally.ERP 9 allows you to create Account heads and groups as per your requirements. The
flexibility and ease of creating user-defined Account Heads and groups (Chart of Accounts)
as per nature of business or business practice makes Tally.ERP 9 suitable for businesses
across industries, verticals and geographies, without changing the way they do their business.

3.3.1 Chart of Accounts

Tally.ERP 9 follows the Double Entry system of Accounting. It records accounting
information by debiting and crediting different Ledger Accounts using different voucher
types depending upon the nature of transaction. It automatically collates the debit and credit
amounts and arrives at the closing balance of each ledger / group / report.

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3.3.2 Pre-defined Groups of Accounts
There are 28 predefined groups in Tally.ERP 9, which are widely used in the Chart of
Accounts of many trading organizations. Out of these, 15 groups are Primary Groups and the
remaining 13 are Sub-Groups.
Among the 15 predefined groups, 9 Groups are Balance Sheet items and the remaining 6
groups are Profit & Loss A/c items. However, you may also alter the nomenclature of these
predefined 28 Groups

The List of Accounts screen is displayed as shown

1. Capital Account
Reserves & 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 & Taxes
Provisions
Sundry Creditors
4. Fixed Assets
5. Investments
6. Loans (Liability)
Bank OD A/c [Bank OCC A/c]
Secured Loans
Unsecured Loans
7. Suspense A/c
8. Misc. Expenses (Asset)
9. Branch/Divisions

Out of the 15 pre-defined primary groups, the following are the six pre-defined groups that appear
in the Profit & Loss Account
1. Sales Accounts
2. Purchase Accounts
3. Direct Incomes [Income (Direct)]
4. Indirect Incomes [Income (Indirect)]
5. Direct Expenses [Expenses (Direct)]
6. Indirect Expenses [Expenses (Indirect)]

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3.3.3 Groups and Ledgers
Group is a collection of Ledgers of the same nature. In a business, expenditures like
telephone expenses, electricity charges, conveyance etc., are commonly incurred. Ledgers
based on these expenditures are created to be used while accounting vouchers are entered. To
know the total of such expenses for any period (a week or a month), similar natured expense
ledgers are grouped.

Ledger account heads are the actual account heads with which we identify the transactions. All
voucher entries have to be passed using ledgers. To Understand the concept of Groups and Ledgers,
let us create Ledgers and Groups in Indus Enterprises

1. Proprietor’s Capital Account – under Capital Account with an opening balance of

Rs.25000.
2. Land & Building – under Fixed Assets with an opening balance of Rs.60000.
3. Milton & Co – under Sundry Debtors because we have sold some goods to them – with
an opening balance of Rs.15000.
4. Kaltronic Ltd – under Sundry Creditors – because we have purchased some goods from
them with opening balance of Rs. 85000.
5. Local Sales – under Sales Account with no opening balance.
6. Local Purchases – under Purchase Account with no opening balance.
7. State Bank of India – under Bank Accounts with an opening balance of Rs. 35000.
8. Conveyance – under Indirect Expenses with no opening balance.
9. Bank Interest – under Indirect Income with no opening balance.

Notice that we have mentioned ledger names under groups i.e., under Capital Account, under Sundry
Debtor, etc. which are referred to as GROUP names

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Ledgers are created in the following manner:
Go to the Gateway of Tally > Accounts Info. > Ledgers >
Create. The Ledger Creation screen appears as shown below:

Altering and Displaying Ledgers

The procedures for altering and displaying ledgers are similar to those of groups.

 Select Alter from the Single Ledger option.

 Select Cash from the List of Ledgers.
 Change the Name from Cash to Petty Cash.
 Enter the Opening Balance of 500 Dr.
 Press Y or Enter to accept the screen.

If you use Display in Single Ledger now, you will see that the List of Ledgers shows Petty
Cash instead of Cash.

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 Deleting Ledgers
 You can delete a ledger, by pressing Alt+D in the Ledger Alteration screen.

You will not be able to delete a ledger, once the financial transactions (vouchers) have been
entered (excluding the Opening Balance). If there is a need to delete a ledger with any
financial transactions the lowest level must be deleted first by pressing Alt+D.

4 Creating Inventory Masters in Tally. ERP 9

Inventory accounting includes recording of stock details like the purchase of stock, the sale
of stock, stock movement between storage locations or godowns and providing information
on stock availability. Tally.ERP 9 makes it possible to integrate the inventory and accounting
systems so that the financial statements reflect the closing stock value from the Inventory
system.
The inventory system operates in much the same way as the accounting system.
 First you set up the inventory details, which is a similar operation to creating the chart
of accounts although, in this case, there are no pre-defined set of stock groups.
 Second, you create the individual stock items, which is similar to setting up the ledgers.

In a newly created company the Inventory Info. menu comprises of four types of Masters,
viz. Stock Groups, Stock Items, Units of Measure and Voucher Types.
Go to the Gateway of Tally > Inventory Info.
The Inventory info. menu is displayed as shown:

The above Inventory Masters types are explained in detailed in the following sections.

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 Let us take the example of Indus Enterprises that sells Televisions and Music
Systems. Given below is the structure of items being sold.
Group A – Televisions
A1 – Sony A1a – Sony 29 inches TV
A1b – Sony 25 inches TV
A2 – Philips A2a – Philips 29 inches TV
A2b – Philips 25 inches TV
A3 – Videocon A3a – Videocon 29 inches TV
A3b – Videocon 25 inches TV

Group B – Music Systems

B1 – Sony B1a – Sony Tape-Recorder
B1b – Sony CD Player
B2 – Videocon B2a – Videocon Tape-Recorder
B2b – Videocon CD Player

The televisions are sold in numbers. Hence, the Unit of Measure will be Nos.

Indus Enterprises has two Godowns, the Bangalore Godown and the Mumbai Godown.
The grouping structure in Tally.ERP 9 is as follows:

4.1 Stock Group

1. Televisions (main stock group)
 Sony TV – stock group under Televisions
 Philips TV – stock group under Televisons
 Videocon TV – stock group under Televisions
2. Music Systems (main stock group)
 Sony Music Systems – Stock Group under Music Systems
 Videocon Music Systems – Stock Group under Music Systems

Under the stock group Televisions, let us create stock groups based on the different brands
being sold viz. Sony, Philips and Videocon. This helps to find the total sales of a particular
brand of tele- visions at any given point of time. In order to compare the total sales of the 29
and 25 inches tele- visions respectively, Tally.ERP 9's feature of Stock Categories for parallel
classification can be used.
Experiment Creation of Inventory Masters in Indus Enterprises.

4.2 Stock Groups

Stock Groups are provided to help in the classification of stock items. Classification is done

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 based on some common behaviour. Grouping stock items makes it easy to identify and report
them in the statements. For example, items of a particular brand can be grouped together so
that you can get the inventory details of all the items of that brand.

4.2.1 Creating Stock Group

i. Create the Stock Group – Television under Primary.
Go to the Gateway of Tally > Inventory Info. > Stock Groups > Create (under the Single
Stock Group).
Ensure that the screen appears as shown below:

Press Y or Enter to accept the screen.

Similarly, create Music Systems under Primary.

ii. Create Sony TV under Televisions.

The screen is displayed as shown below:

Create the following Stock Groups in the similar manner

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 Name Under Can Quantities
of items be
ADDED
Philips TV Televisions Yes
Videocon TV Televisions Yes
Sony Music Systems Music Systems Yes
Videocon Music Systems Music Systems Yes

4.3Stock Categories
This is a feature, which offers a parallel classification of stock items. Like Stock Groups, Stock
categories are also classified based on some similar behaviour. The advantage of using Tally.ERP
9 lies in categorizing Stock items together, (based on functionality) across different stock groups.
This enables you to obtain reports for alternatives or substitutes of a stock item

 Set Yes to Maintain Stock Categories in F11: Features (F2: Inventory Features) to
get an additional option Stock Categories under Inventory Info.

4.3.1 Creating Stock Category

Go to the Gateway of Tally > Inventory Info. > Stock Categories > Create.
i. Create Stock Category 29 inches TV Under Primary

Press Y or Enter to accept the screen

Similarly, create Stock Category 25 inches TV under Primary.

4.4 Godowns / Locations

A place where stock items are stored is referred to as Godowns. You can specify where the
stock items are kept. For example: A warehouse, shelf or rack etc., and obtain stock reports
for each Godown and account for the movement of stock between locations/Godowns.
Set Yes to Maintain Multiple Godowns in F11: Features (F2: Inventory Features) to get
additional option like Stock Categories under Inventory Info.

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4.4.1 Creating a Godown
Go to the Gateway of Tally > Inventory Info. > Godowns > Create.
i. Create a Godown – Bangalore under Primary.
Ensure that the screen is displayed as shown below:

 Press Y or Enter to accept the screen

.
Similarly create the godown – Mumbai under Primary.

4.5 Units of Measure

Stock Items are mainly purchased and sold on the basis of quantity. The quantity
inturn is measured by units. In such cases, it is necessary to create the Unit of
Measure. The Units of Measure can either be simple or compound. Examples of
simple units are: nos., metres, kilo- grams, pieces etc. Examples for compound
units are: a box of 10 pieces etc. Create the Units of Measure before creating the
Stock Items.

4.5.1 Creating Units of Measure

Go to the Gateway of Tally > Inventory Info. > Units of Measure > Create.

The Unit Creation Screen appears as shown below:

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Type
Tally.ERP 9 has the option to create simple units as well as compound units. Examples: box, nos, pcs,
etc. A Compound Unit is a combination of two simple units of measure. Example: A box of 10 pcs is
a compound unit of measure

Symbol
It is the abbreviated form by which a stock item is identified. For example, the abbreviation pcs
indicates – pieces

Formal Name
This represents the complete or formal name of a symbol used while creating a unit. Different
companies use different symbols to represent the same units. Formal names help you to match the
symbols with their respective units. For example, the symbol for numbers (formal name) can be
nos or num.

Number of Decimal Places

A unit can be expressed as fractions. For example, a 3.15 Kg refers to 3Kg and 150 grams. The
number of digits expressed in grams after the decimal places are three. Likewise, fractions up to
four decimal places can be expressed in the same manner. For expressing numbers, without a
decimal place, specify 0 in this option.

Let us create the unit Nos.

1. Type: Simple
2. Symbol: Nos
3. Formal Name: Numbers
4. Number of Decimal Places: 0

The Unit Creation screen is displayed as shown below:

Press Y or Enter to accept the screen.

25
4.6 Stock Items
Stock items are goods that you manufacture or trade (sells and purchase). It is the
primary inventory entity. Stock Items in the Inventory transactions are similar to ledgers
being used in accounting transactions. Therefore, Stock Items are important in an
inventory just as ledgers are important in accounting.

The Stock Item Creation Screen appears as shown below:

Enter the following details:

Name: The name of the stock item.
Under: The stock group under which you want to classify the stock item.
Category: The stock category you want to classify the stock item for parallel classification.
Units: The unit of measure for the stock item being created.
Rate of Duty: Enter the rate of duty charged on the item.
Opening Balance: The opening balance of a stock item, refers to the stock available with us.
Godowns that have already been created, must have the opening balance quantity and the
location specified.

26
 Create a Stock Item Sony 29 inches TV, under the Group Sony TV.
Ensure that the details appear as shown below:

Press Y or Enter to accept the screen

Similarly, create the following Stock Items under Televisions

Name Under Category Units

Sony 25 inches TV Sony TV 25 inches TV Nos
Philips 29 inches TV Philips TV 29 inches TV Nos
Philips 25 inches TV Philips TV 25 inches TV Nos
Videocon 29 inches TV Videocon TV 29 inches TV Nos
Videocon 25 inches TV Videocon TV 25 inches TV Nos

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Similarly, create the following Stock Items under Music Systems.

Name Under Category Units

Sony Tape - Recorder Sony Music Systems Not Applicable Nos
Sony CD - Player Sony Music Systems Not Applicable Nos
Videocon Tape - Recorder Videocon Music Systems Not Applicable Nos
Videocon CD - Player Videocon Music Systems Not Applicable Nos

Voucher Entry in Tally.ERP 9

In accounting terms, a voucher is a document containing the details of a financial transaction.
For example, a purchase invoice, a sales receipt, a petty cash docket, a bank interest
statement, and so on. For every such transaction made, a voucher is used to enter the details
into the ledgers to update the financial position of the company. This feature of Tally.ERP 9
will be used most often.
Tally.ERP 9 follows the Golden Rule of Accounting:

Real Accounts Personal Accounts Nominal Accounts

Debit What Comes in The Receiver Expenses and Losses
Credit What Goes out The Giver Incomes and Gains

5 Accounting Vouchers
Tally.ERP 9 is pre-programmed with a variety of accounting vouchers, each designed to
perform a different job. The standard Accounting Vouchers are:
 Contra Voucher (F4)
 Payment Voucher (F5)
 Receipt Voucher (F6)
 Journal Voucher (F7)
 Sales Voucher /Invoice (F8)
 Credit Note Voucher (CTRL+ F8)
 Purchase Voucher (F9)
 Debit Note Voucher (CTRL+ F9)

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Let us see how to use the above vouchers using an example:-

In the books of Rakesh and Company pass the following entries in tally:-
1. Started business with cash Rs. 2,000, Bank Rs. 20,000.
2. Issued cheque for goods purchased Rs. 1,000.
3. Bought furniture from Anil for cash Rs.100.
4. Bought goods from chandan on credit Rs. 5,800
5. Returned damaged goods to Chandan Rs.800.
6. Sold goods to Guptha Rs. 1,000.
7. Goods returned by Guptha Rs 200
8. Received a cheque from Guptha Rs.750 for goods sold in full settlement
9. Paid wages by cheque Rs.4,000
10. Depreciate furniture by 10%
11. Cash deposited into bank Rs 200
12. Stationery purchased on credit Rs 150 from Ramesh

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Solution:-
Steps
Step 1

• Creating a company
Start> Tally ERP Icon> Gateway of Tally> Alt+F3 Comp info
Below screen appears:-

• Select the option Create Company, Following screen appears on selection:-

30
 • Enter the company details such as Company name, Mailing address etc., book and financial
year details etc as below-

Note- DONOT set Tally vault Password

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Following screen will appear once the company is created-

Step 2
Creating ledgers
To create ledgers follow the below instruction-

• Gateway of Tally>Masters> Accounts info

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• Navigate to Ledgers from the screen

• Select Create from Single Ledger

33
• Create Rakesh Capital account under Capital Account-

• Alternative rest of the ledgers can be created using multiple ledger creation option-

34
• Enter the ledger details as below using multiple ledger creation option-

• Go back to Gateway of tally

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Step 3
Passing Accounting entries using Accounting Vouchers-

• Screen on selection of Accounting vouchers-

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 • Change the accounting mode to Double entry system and Use Dr/cr instead of By/To using
F12 Configure

• Passing entries-

1. Started business with cash Rs. 2,000, Bank Rs. 20,000.

Particular Debit Credit

Cash 2,000 -

Bank 20,000 -

Rakesh Capital Account - 22,000

➢ Press F6 to select Receipt Voucher

➢ Change the Voucher date using F2

37
➢ Pass the entry as below-

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 2. Issued cheque for goods purchased Rs. 1,000.
Particular Debit Credit

Purchase 1,000 -

Bank - 1000

➢ Change the voucher to Payment using F5

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➢ Pass the entry as below-
o Change the voucher date using F2
o Pass the entry as below-

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 3. Bought furniture from Anil for cash Rs.100.
➢ Payment Voucher F5
Particular Debit Credit

Furniture 100 -

Cash - 100

➢ Entry

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4. Bought goods from chandan on credit Rs. 5,800
➢ Change the voucher to Purchase voucher using F9

➢ Screen appears as Purchase invoice mode; it should be changed to voucher mode using Ctrl+v

42
➢ Entry should be passed as below-

43
5. Returned damaged goods to Chandan Rs.800

➢ Change the voucher to debit note

➢ To enable debit note
o Press F11
o Accounting Features > Use debit and credit notes > Change it to “YES”

44
➢ To pass the entry
o Change the voucher to Debit note using Ctrl+F9
o Pass the entry as below-

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 6. Sold goods to Guptha Rs. 1,000
➢ Change the voucher to Sales using F8
➢ Change the entry mode from invoice mode to Voucher mode using Ctrl+v
➢ Pass the entry as below

Note:
As sales ledger was not created initially, the same can be created on the go in the voucher
using Alt+c
Following shows the ledger creation

46
ALT+c

47
7. Goods returned by Guptha Rs 200
➢ Change the voucher to Credit note using Ctrl+F8

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8. Received a cheque from Guptha Rs.750 for goods sold in full settlement

➢ Change the voucher to Receipt- F6

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9. Paid wages by cheque Rs.4,000
➢ Change the voucher to Payment -F5

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10. Depreciate furniture by 10%
➢ This is an example of non-cash transaction and non-operating expense which doesn’t fit any
of the vouchers like
o Receipt/Payment voucher- as cash/bank is not involved in the transaction.
o Purchase/sales voucher as the transaction doesn’t involve goods or services
➢ Hence these transactions are to be recorded through Journal Voucher (JV) – F7

❖ Tips

Use Ctrl+n to use calculator within Tally ERP 9

51
 11. Cash deposited into bank Rs 200
➢ Use contra Voucher – F4

Note- Contra voucher should be used when transaction is between Bank to bank, bank to cash, cash to
cash etc within the same organization.

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12. Stationery purchased on credit Rs 150 from Ramesh
➢ Record the transaction using Journal Voucher -F7

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Do It Yourself!

1.Started business with cash Rs.10,000 furniture Rs.4,000 and

machinery Rs.5,000.
2.Bought goods from Anil on credit Rs. 4,000 and for cash Rs.5,000.
3.Sold goods to Rajesh on credit Rs.5,000 and for cash Rs.3,000.
4. Bought goods from Arun Subject to trade discount of 2% of
Rs.2,000.
5. Sold goods to Ramesh subject to trade discount of 5% of Rs.4,000.
6. Paid salary Rs.1,000, printing Rs.150 and wages rs.100.
7.Received rent Rs.500, commission Rs.400.
8. Received a cheque from Ganesh Rs.1,000.

Hints
1. Receipt voucher (F6)
2. Purchase voucher (F9) and Payment voucher (F5)
3. Sales voucher (F8) and Receipt voucher (F6)
4. Purchase voucher (F9)- Trade should not be shown in accounts
5. Sales Voucher (F8)
6. Payment Voucher (F7)
7. Receipt voucher (F6)
8. Receipt Voucher (F6)

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6 Inventory Vouchers

Before getting into the Inventory vouchers, one must understand its two important cycle i.e.
Purchase and sales processes

6.1 Purchase process

Purchase
Receipt Note
Order

Purchase
Payment
accounting
Entry
entry

6.1.1 Purchase Order

A Purchase order entry has to be made in the books of the company to assist them
in checking whether the goods have been received or not. The Purchase Order number can be used
as a reference. For example, the company wishes to place an order with the supplier for some
goods. The responsibility of raising purchase orders is Purchase department

6.1.2 Receipt Note

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 Goods that are received from the supplier are recorded in a Receipt Note (Goods
Receipt Note – GRN) voucher.

6.1.3 Purchase entry

Once ordered goods are received from the supplier, the supplier will issue an Invoice
which will be the conclusive evidence of the transaction. The accounts department will account
liability in the books.

6.1.4 Payment entry

Once liability is created for the goods purchased on credit, the next step is to pass a
payment entry as and when the liability is settled.

6.2 Sales Process

Delivery
Sales Order
Note

Sales
accounting Receipt Entry
entry

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In the syllabus we are going to learn the following inventory vouchers

Purchase order
Receipt note
Sales order
Delivery note

6.3 Purchase order illustration

We need to enable the purchase order, Sales order and tracking feature from F11> inventory
features

57
 Place a purchase order to Digital India Enterprises for the following items

Na Nos Rate(RS) Godown

me
Sony 25 inches TV 15 35,000 Bangalore
Philips 29 inches TV 12 36,000 Bangalore
Philips 25 inches TV 10 29,000 Mumbai
Videocon 29 inches TV 20 34,000 Mumbai
Videocon 25 inches TV 16 20,000 Bangalore

Solution-

As we have already created the stock items and gowdown in Indus enterprises, we can
proceed with creating a Purchase order

Step 1

Go to Gateway of tally> Order Vouchers>Purchase Order- F4

Step 2
Create party ledger using the shortcut key Alt+c

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Step 3

Create a purchase ledger using shortcut key Alt+c – Ledger name – Purchases of
televisions under purchases account.

59
Step 4

Select the required stock items and quantities

6.4 Receipt Note illustration

In continuation of the previous illustration, We need to create a receipt note(GRN) for

confirming the receipt of the goods.

Name Nos Rate (RS)

Sony 25 inches TV 15 35,000
Philips 29 inches TV 12 36,000
Philips 25 inches TV 10 29,000
Videocon 29 inches TV 20 34,000
Videocon 25 inches TV 16 20,000

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 Step 1
Goto Gateway of Tally>Inventory Vouchers> Receipt Note – Alt+F9 (F9)

Step 2

Select the Party A/c Name- Digital India Enterprises

Step 3

Select the Purchase Order reference no 1

Step 4

Once the reference is selected, Purchase order details will pop up. Same shall be accepted by
pressing Enter.

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6.5 Purchase Entry
In continuation we need to create an accounting entry for purchase to book liability

Step 1
Goto Gateway of Tally>Accounting Vouchers> F9

Step 2
Select the Party A/c name and select the Receipt note reference number.

Step 3

Receipt note details will appear and same can be accepted by pressing ENTER

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6.6 Sales Order Illustration

M/s Indus Enterprises received a sales order for the following items from One stop retailers:-

Name Nos Rate(RS) Godown

Sony 25 inches TV 6 39,000 Bangalore
Philips 29 inches TV 5 41,000 Bangalore
Philips 25 inches TV 3 33,000 Mumbai
Videocon 29 inches TV 4 38,000 Mumbai
Videocon 25 inches TV 11 23,000 Bangalore

Step 1

Go to Gateway of tally> Order Vouchers>Sales Order- F5

Step 2
Create party ledger using the shortcut key Alt+c

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Step 3

Create a sales ledger as sale of televisions using Alt+c

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 Step 4
Input the required stock items, rate and quantity-

6.7 Delivery Note

In continuation of the illustration, we need to create a Delivery note.

Step 1
Goto Gateway of Tally>Inventory Vouchers> Delivery Note – Alt+F8 (F8)

Step 2

Select the Party A/c Name- One stop retailers

65
Step 3

Select the Sales Order reference no 1

Step 4

Once the reference is selected, Sales order details will pop up. Same shall be accepted by pressing
Enter.

6.8 Sales entry

In continuation we need to create an accounting entry for Sales made to book

receivable

Step 1
Goto Gateway of Tally>Accounting Vouchers> F8

Step 2
Select the Party A/c name and select the Receipt note reference number.

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Step 3

Delivery note details will appear and same can be accepted by pressing ENTER

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 7 Payroll

The term Payroll refers to a series of accounting transactions involved in the process of
paying employees for the services rendered after taking all the statutory and non-statutory
deductions into account, in conformance with the terms of employment, company policy and
the law of the land i.e., payment of payroll taxes, insurance premiums, employee benefits and
other deductions.

7.1 Salient Features of Tally.ERP 9’s Payroll

The key features of the Payroll functionality in Tally.ERP 9 are as follows:

• It is fully integrated with accounts to give you the benefits of simplified Payroll
processing and accounting
• It has user defined classifications and sub-classifications for comprehensive
reporting.This may be related to the employees, employee groups, pay components,
departments etc
• It provides the facility to create user-defined earnings and deductions Pay
Heads.

7.2 Enabling Payroll in Tally.ERP 9

It takes a one-time configuration in Tally.ERP 9 for the Payroll functionality to
be activated. Create a new company in Tally.ERP 9 and follow the steps
given below to enable Payroll.

Go to Gateway of Tally > press F11: Company Features > press F3: Statutory &
Taxation

In F11: Statutory & Taxation Features screen:

• Set Enable Payroll Statutory to Yes
• Set Set/Alter Payroll Statutory Details to Yes

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7.3 Creating Payroll Masters

7.3.1 Employee Setup

The Employee Master records employee information – department, date of
joining, date of leaving, ID number, designation, location, function, employee
bank details, statutory details, Passport and Visa details and so on.

Let us setup employees details in the books of Indus enterprises

Employee Name Date of joining

Arjun 01-04-2019
Bheem 01-04-2019
Chaitra 01-04-2019

Go to Gateway of Tally > Payroll Info. > Employees > Create

69
Similarly create other 2 employees’ master.

7.3.2 Pay Heads setup

Goto Gate way of tally> Payroll info.> Pay Heads> Create

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Let us create salary components such as Basic Salary, House Rent Allowance
(HRA), Other Allowances, Professional Tax, Employee Contribution to
Provident Fund

Classification of Salary components

Salary Nature Under Calculation Computation
Component type
Basic Salary Earnings Indirect Flat rate Flat rate
for expenses
employees
HRA Earnings Indirect As 40% on
for expenses computed Basic
employees Value
Other Earnings Indirect Flat rate Flat rate
Allowance for expenses
employees
PT Deductions Current As Upto Total
from Liability Computed earnings
employees Value 14,999 PT
=0
More than
Total
earning
14999,
PT=200
EPF Deductions Current As 12% of
from Liability Computed Basic salary
employees Value limited to Rs
1800 i.e
12% of
15000

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7.3.2.1 Basic Salary

7.3.2.2 HRA

72
7.3.2.3 Other Allowances

7.3.2.4 Professional Tax

73
7.3.2.5 Employee Contribution to PF

7.3.3 Salary details (Defining salary structure)

Once Pay Heads are created and defined, the next step is to defining the
individual employee’s salary.

In continuation of previous example, let us understand how to define the

salaries to the employees.

Employee Basic Salary HRA Other PT PF

Name Allowances
Arjun 12000 As 6000 As As
defined defined defined
Bheem 16000 As 4000 As As
defined defined defined
Chaitra 23000 As 2000 As As
defined defined defined

Go to Gateway of Tally> Salary Details>Define

74
Select the employee

Enter the details as per the data provided

75
Similarly define salary details to the other 2 employees.

76
7.3.4 Passing Payroll Entry

Now we are ready with all basic payroll requirement. Let us pass a monthly
salary entry using Payroll Voucher

Go to Gateway of Tally>Payroll Voucher> F2( To change date to 30th April

2019)> Salary>Alt+a ( A)

77
8 Shortcut keys

Function Key
Sl no Key Functionality Availability
1 F2 To change At almost all
the menu screens in
period. Tally.ERP 9.
2 F4 To select the At
contra accounting
voucher voucher
creation and
alteration
screens.
3 F5 To select the At
payment accounting
voucher voucher
creation and
alteration
screens
4 F6 To select the At
receipt accounting
voucher. voucher
creation and
alteration
screens
5 F7 To select the At
journal accounting
voucher. creation and
alteration
screens
6 F8 To select a At
sales accounting
voucher voucher
creation and
alteration
screens.
7 F9 To select a At
purchase accounting
voucher voucher
creation and
alteration
screens.
8 F11 To select the At almost all
features screens in
screen. Tally.ERP 9.

78
9 F12 To select the At almost all
configure screens in
screen. Tally.ERP 9

Special Function Key Combination

Sl no Key Functionality Availability
1 Alt + F1 To Choose a At all the menu
company screens
2 Alt+ F2 To change the At almost all
system period. screens in
Tally.ERP 9.
3 Alt+ F3 To select the At Gateway of
company info Tally.ERP 9
menu. screen.
4 Alt + C To create a At accounting
ledger at a voucher and
voucher alteration
screen screens, at a
field where you
have to select
a ledger from a
list. If the
necessary
account has
not been
created earlier,
use this key
combination to
create the
ledger without
quitting from
the accounting
voucher
screen.
5 Alt + P To print At all reports
reports. screens in
Tally.ERP 9
6 Ctrl + F8 To select a At accounting
Credit note voucher
creation and
alteration
screens.
7 Ctrl+ F9 To select a At accounting

79
 Debit note voucher
creation and
alteration
screens.
8 Ctrl + Q To quit a At almost all
screen - screens in
wherever you Tally.ERP 9.
use this key
combination, it
quits that
screen without
making any
changes to it. It
also does not
ask for
confirmation
from user
before quitting
9 Alt + D To delete a At Voucher
voucher or To and Master
delete a master (Single)
or To delete a alteration
column in any screens
columnar
report
10 Alt - 2 To Duplicate a At List of
voucher. Vouchers –
creates a
voucher
similar to the
one where you
positioned the
cursor and
used this key
combination
11 Alt - A To Add a At List of
voucher or To Vouchers –
Alter the adds a voucher
column in after the one
columnar where you
report. positioned the
cursor and
used this key
combination.

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