Journal and Ledger

UNIT 11 INTRODUCTION TO
COMPUTERISED
ACCOUNTING AND
CREATION OF COMPANY
Structure
11.0 Objectives
11.1 Introduction to Computerised Accounting
11.2 Difference between Manual and Computerised Accounting System
11.3 Advantages and Disadvantages of Computerised Accounting System
11.4 Consideration while Choosing Accounting Software
11.5 Accounting Software in India
11.6 Introduction to Tally ERP.9
11.6.1 About Tally Software
11.6.2 How to Start Tally ERP.9
11.6.3 Components of Tally

11.7 Creation of a Company

11.7.1 Procedures of Creating a Company
11.7.2 Selecting a Company
11.7.3 Alteration of Details of a Company
11.7.4 Deletion of a Company
11.7.5 Shutting of a Company
11.8 Features and Configurations
11.8.1 Features
11.8.1.1 Accounting Features
11.8.1.2 Inventory Features
11.8.1.3 Statutory and Taxation Features
11.8.2 Configurations

11.9 Shutting Tally ERP.9

11.10 Keyboard Conventions
11.11 Let Us Sum Up
11.12 Key Words
11.13 Answers to Check Your Progress
11.14 Terminal Questions/Exercises

11.0 OBJECTIVES
After studying this unit, you will be able to:
 define computerised accounting system
 distinguish between manual and computerised accounting system;
 highlight advantages and disadvantages of computerised accounting
system; 1
Computerised Accounting  describe Tally ERP.9 system;
 identify various components of Tally ERP.9;
 set, alter, delete and shut a company under Tally ERP.9; and
 understand the features and configuration option in Tally ERP.9

11.1 INTRODUCTION
An accounting system is a collection of processes, procedures and controls
designed to collect, record, classify and summarize financial data for interpretation
and management decision-making. Whether the accounting system is simple or
complex, it must meet certain objectives to keep the business running smoothly.
It is difficult to make informed business decisions without accurate accounting
information that helps the managers to see where the business is, where it has
been and (based upon trends) foresee where it is headed. Thus, an accounting
system should be devised as an effective tool that provides information which
is easy to understand.
While some firms still do their book-keeping by hand, most firms generally have
too many transactions to sustain a manual accounting system. The more
complicated the financial activities of a business are, the more likely it will need
a computerized accounting system to ensure effective financial
reporting. Computerized accounting systems involve making use of computers
and accounting software to record, store and analyze financial data. These are
software programs that are stored on a company’s computer, a network server,
or remotely accessible via Internet.
Computerized Accounting represents a technological advancement in the field
of business accounting which allows the user(s) to set up income and expense
accounts, such as rental or sales income, salaries, advertising expenses, and
material costs. They also can be used to manage bank accounts, to pay bills,
and prepare budgets. Also, depending upon the program, some accounting
systems also allow users to prepare tax documents, handle payroll, and manage
project costing.

11.2 DIFFERENCE BETWEEN MANUAL AND

COMPUTERISED ACCOUNTING SYSTEM
Owners and other stakeholders of any business, whether large or small, want
to know whether the business is making a profit or not. Many small businesses
do their accounting manually and they are happy with this setup. Others may
be considering using a computerized system, since accounting software is also
affordable these days. Manual and computerized accounting systems perform
basically the same processes; the accounting principles and concepts are the
same with differences lying in the mechanics of the process. Let us now see
the difference between these two:
Speed
The main difference between manual and computerized systems is speed.
Accounting software processes data and creates reports much faster than
2 manual systems. Calculations are done automatically in software programs,
minimizing errors and increasing efficiency. Once data is fed into the system, Introduction to Computerised
Accounting and Creation of
one can create reports literally by pressing a button in a computerized system. Company
Cost

Another difference between manual and computerized systems is cost.

Manual accounting with paper and pencil is much cheaper than a computerized
system, which requires a machine and software. Other expenses associated
with accounting software include training and program maintenance. Expenses
can add up fast with costs for printers, paper, ink and other supplies.
However, manual accounting requires more staff. Threfore, more expenditure
on salaries/wages in case of manual accounting.

Backup

A third difference between manual and computerized systems is the ease

of backup of a computerized system. All transactions can be saved and
backed up, in case of fire or other mishap. You cannot do this with paper
records, unless you make copies of all pages − a long and inefficient process.

The following table makes a further attempt to explain the difference between
the manual and computerized accounting systems:

BASIS MANUAL COMPUTERIZED

ACCOUNTING ACCOUNTING

1. Definition Manual accounting is the In this system of accounting, we

system in which we keep make use of a computer and
physical register of journal different accounting software for
and ledger for keeping maintaining a digital record of
` the records of each every transaction.
transaction.

2. Ledger We check the journal and Computerized Accounting

Accounts then we transfer figures to System will automatically
related accounts debit or process the system and will
credit side by manually make all the accounts’ ledgers
posting it. since the voucher entries under
its respective ledger account have
already been passed.

3. Trial We collect the information The computerized accounting

Balance of all the balances of all system will automatically
accounts in our ledger, and produce the Trial Balance.
on this basis we manually
prepare the trial balance.

4. Adjustment Both, the adjustment Only adjustment entries will be

Entries journal entries and its passed in the computerized
Record posting in the ledger accounting software, these will
accounts will be done then be automatically posted to
manually, one after another. respective ledger accounts.
3
Computerised Accounting
11.3 ADVANTAGES AND DISADVANTAGES
OF COMPUTERISED ACCOUNTING
SYSTEM
Advantages of Computerized Accounting
There are many advantages of computerized Accounting System. Let us discuss
few of them in detail.
1. Automation: As all the calculations are handled by the software, computerized
accounting eliminates many of the mundane and time-consuming processes
associated with manual accounting. For example, once issued, invoices are
processed automatically thus saving time.
2. Accuracy: This accounting system is designed to be accurate to the minutest
detail. Once the data is entered into the system, all the calculations, including
additions and subtractions, are done automatically by software.
3. Data Access: Using accounting software, it becomes much easier for
different individuals to access accounting data outside the office, securely.
This is particularly true if an online accounting solution is being used.
4. Easy representation of data in various formats: Viewing the accounts
using a computer allows the users to take advantage of the option to view
the data in different formats i.e. one can view data in tables and using
different types of charts.
5. Reliability: Since the calculations are very accurate, the financial statements
prepared by computers are highly reliable.
6. Scalable: When a company grows, the number of transactions entered into
the system increases, as a result of which the need for accounting not only
increases but also becomes more complex. With computerized accounting,
everything is kept straight forward because shifting data using software is
easier than sifting through a bunch of papers.
7. Speed: Using accounting software, the entire process of preparing accounts
becomes faster. Furthermore, statements and reports can be generated
instantly at the click of a button. Managers do not have to wait for hours,
even days, to lay their hands on an important report.
8. Security: The latest data can be saved and stored in offsite locations so
it is safe from natural and man-made disasters like earthquakes, fires, floods
and terrorist attacks. In case of disasters, the system can be quickly restored
on other computers. This level of precaution is taken by Computerized
Accounting.
9. Cost-effective: Since using computerized accounting is more efficient than
paper-based accounting, than naturally, work will be done faster and time
will be saved.
Disadvantages of Computerized Accounting
Computerized Accounting suffers from many limitations. Let us discuss those
limitations one by one.
4
Cost of Software: In case of computerized accounting, you must buy the Introduction to Computerised
Accounting and Creation of
software. Some software requires you to purchase upgrades or updates for Company
additional features. You must also ensure your computer is capable of running
the software. If not, you’ll need to upgrade your computer as well.
Most accounting software requires you to have additional software in order
to view reports. For instance, some programs allow you to export data as
a PDF file or an Excel spreadsheet. This allows users without the accounting
program to view the data. However, the viewing software may pose an
additional expense to the user.
2. Reliance on Computers: If your computer crashes or data is corrupted
by a virus, you won’t be able to use your accounting software until the
problem is fixed. This also means you won’t have access to any entered
data until the computer is running again. Your data can also be corrupted.
It means you will have to re-enter information unless you’ve backed up
your files. In addition, if there’s a power failure, your software will be
unusable unless you’re on a battery-powered laptop.
3. Fraud: Accounting software data requires extra levels of security to prevent
fraud and embezzlement. Software makes it easier for users to alter data,
making fraud easier to accomplish. As a result, there is an increased need
for internal auditors to check for any data inaccuracies. Security measures
must also be taken to limit the amount of control users have over any
accounting software’s features.
4. Human Error: While it is easy to write down numbers incorrectly, it is
even easier to mistype a number. Entering data into accounting software
too quickly may result in serious errors. With the program performing
calculations, it can be more difficult to trace the cause of the problem.
Spreadsheets, digital ledgers or written ledgers make tracking simpler and
faster.
5. Training: Accounting software requires you to take the time to learn how
to use it. While you may be an experienced accountant, you’ll still need
to learn what each button and menu command does in order to use
accounting software effectively. This learning curve can result in costly affairs.
In some cases, paid training may be necessary to learn how to perform
certain tasks. If you’re not tech savvy, the process could be even more
difficult.
6. Time: Many accountants find that it takes more time to enter data into
accounting software than it does to write it or type it into a spreadsheet.
Due to step-by-step screens, the process often takes longer, especially for
those who don’t use the software often or are still new to using the program.
If the software requires numerous steps to enter basic data, the time
requirements may outweigh the benefits of automatic calculations.

11.4 CONSIDERATION WHILE CHOOSING

ACCOUNTING SOFTWARE
When it comes to selecting accounting software, there are a number of options
available in the market and it can be overwhelming to choose the best one.
The following is a list of factors to be considered while choosing accounting
software: 5
Computerised Accounting 1. The Size of the Business Organization: The size of the organization
and the volume of the business transactions entered into influence the choice
of software. While a large organization will require software that meets
the multi-user requirements because it is geographically scattered and
connected through complex networks, a smaller organization may opt for
simple, single user operated software.
2. Ease of Use: The interface and navigation should be simple and self-
explanatory. There should also be an option for data back-up. Preference
can be given to vendors that offer help at no additional cost, have reasonable
service plans or offer tutorial training that walks the clients through the most
popular business tasks and transactions.
3. Features: What particular software offers is an important consideration.
A list of the primary things that the business needs to track and account
for should be carefully prepared. The business must know how much each
service or product costs and be able to track the cost of goods sold
(COGS). Features like invoicing, online payments, payroll, auto payments,
reporting, bank balances will help to stay up to date on sources of business
income, expenses and where it may need to make adjustments.
4. Protects Classified Data: When financial data is stored in the cloud, there
is no longer the possibility of vital information being lost in the event of
a hard drive crash, power surge, or coffee spill. The data is backed up
on external servers. However, with cloud-based software comes, the threat
of classified data falling victim to malicious activity. Online banking has set
a standard for security, so it becomes necessary to ensure that the chosen
software either meets or exceeds this standard. This means Secure Socket
Layer (SSL) encryption, multi-layered firewall server protection, and routine
external audits and inspection.
5. Compatibility: If there are other financial tools that are used in the
business – for example, an e-commerce system, then business would want
to look into the compatibility of the financial software with any other essential
software to run the online or storefront portion of the business. In an ideal
world, it may want a solution that provides most of what it requires in
a single program. However, if it must have multiple software packages,
it will have to ensure that the data can automatically be linked for real-
time updates or transferred daily with the upload of an Excel or CSV file.
6. Price: While price is a necessary factor to be considered, it shouldn’t
necessarily be the deciding one. The ability to manage money is far more
important if it’s the difference of saving just a few rupees. What one should
be aware of is the different pricing models that are used by software product
providers.
Having suitable software in place, will allow a business to stay on top of cash
flow and focus on what it does best (i.e. allow the business to focus on its
core competence). It also helps keep the records clean.

11.5 ACCOUNTING SOFTWARE IN INDIA

Only a few years ago, accounting applications lived on the desktop of the
small business owner or an accountant’s computer. The books were not
6
accessible from another location and only one person could view them at Introduction to Computerised
Accounting and Creation of
a time. Then cloud computing took off and business accounting software Company
providers caught on.

In a computerized accounting system, the framework of storage and

processing of data is called operating environment that consists of hardware
as well as software in which the accounting system works. The type of
accounting system used determines the operating environment.

Some of the most prevalent business accounting software systems are:

1. Tally ERP.9: Tally ERP.9 is a business accounting software for the

purposes of accounting, inventory and payroll. Tally has been one of the
dominating accounting software for almost two decades. The software has
been developed by Tally Solutions Pvt Ltd. It is the most user-friendly for
accounting software and thus, employers prefer Tally for easy availability
of trained professionals for this specific software. Almost all accounting
activities like inventory, purchase, sales, cost, payroll and statutory year end
processes can be easily handled by Tally.

2. Profitbooks: This is an Online accounting software developed for small

enterprises. It can only be operated on the internet as it is cloud based.
The data can be securely placed in a cloud and can be accessed anywhere.

3. Marg: Accounting Software is developed by Marg Compusoft Pvt Ltd

and is well accepted in small and medium enterprises of India. The software
is marketed for the last two decades in the Indian market.

4. Wave: Wave’s accounting tools are 100% free, secure, and very popular
in accounting community. It is one of the best web based accounting
software solution available at present.

5. Xero: Developed by Xero, it is an award winning web based accounting

software for small business owners and accountants. The user interface is
nicely designed and is easy to use for online bookkeeping.

6. Reach: Reach Accounting Software is developed by Reach Accountant.

It is an online Accounting Software aimed at Small & Medium Businesses.
The significant part of Reach is that all the business operations are bundled
in single software and it ensures that the business owner is able to track
every aspect of the business.

11.6 INTRODUCTION TO TALLY ERP.9

11.6.1 About Tally Software
Tally ERP.9, developed by Tally Solutions Ltd., is one of the most popular
and widely used business management software available in India and other
countries. It can be used by small to large business organization. It is available
with two types of licensing system:

1. Silver Edition Mode (Single user): It is for single use PC. It can be
activated online or offline. It can be accessed from the system on which
it is installed by only a single user. 7
Computerised Accounting 2. Gold Edition Mode (Unlimited Multi user): It is for unlimited number
of user PCs. It is installed on LAN (local area network) and supports
a maximum of ten users.
11.6.2 How to Start Tally ERP.9
Go to start button, click ‘all programs’. With in ‘All Program’, go to Tally
ERP.9 or installation of Tally icon on the desktop. If you double click on
Tally icon, Tally will open and you can start working on it.
11.6.3 Components of Tally
The gateway of Tally displays menus, screens, reports and options that you
select. The components of Tally ERP.9 are:
 Top Horizontal Button Bar: This is a collection of buttons that are fixed
and provide quick interaction
 Close Button: This helps in moving out of Tally application.
 Screen Name: It shows the name of the current screen.
 Right Pane: In right pane menus are displayed. The red letter in each
menu represents short cut and by pressing that alphabet from keyboard
one can open the menu.
 Left Pane: It shows current period, current date and name of companies
with last date of voucher entry done in each company.
 Vertical Panel Bar: It is used for quick interaction.
 Calculator: It can be used for calculation work and figures can be
computed. (Ctrl + N)
 Information Panel: This displays details of product, version, license and
configurations.
 Task Bar: It shows the complete navigation path of the current menu or
screen selected.

8 Fig. 11.1
Check Your Progress A Introduction to Computerised
Accounting and Creation of
1. Choose the correct answer: Company

i) The disadvantages of Computerised Accounting System is/are:

(a) Speed (b) Efficiency (c) Breach of Security (d) All of the above
ii) Tally Software is developed by
(a) Apple (b) Adobe (c) Microsoft (d) Tally Solutions
iii) The screen of Gateway of Tally consists of following components:
(a) Task Bar (b) Information Panel (c) Vertical Button Pane (d) All
of the above
iv) Which of the following is not an accounting software?
(a) Tally.ERP.9 (b) Wave (c) SPSS (d) Marg

11.7 CREATION OF A COMPANY

Creating company is the first step towards starting working with Tally ERP.9.
A company is an organization for which financial records are to be maintained
and therefore, it can be called as a central repository from where any financial
statement or report can be extracted at any time. A company can be Partnership
Firm or a Sole Proprietor or a Limited Liability Partnership or Non-Governmental
Organization or a Company registered under Companies Act, 2013.
11.7.1 Procedure of Creating a Company
To create a company, click on the ‘create company’ in ‘Company Info’.
Alternatively, one can press ALT+ F3 and the company info screen will appear
as appeared in Fig. 11.2.

Fig. 11.2 9
Computerised Accounting Once, you click ‘create company’, the following screen will appear as
appeared in Fig. 11.3 in front of you.

Fig. 11.3

The various fields appearing in company creation in Fig. 18.3 are explained
below:
 Directory: It will display the path where your company data is stored.
By default, it would automatically be stored in Tally ERP.9 data folder,
but you can change its path and can specify any location where you want
to store the data relating to the company by pressing backspace key
 Name: It means providing a name to the company. Example: Surbhi Ltd.
 Primary Mailing Details:
Mailing Name: You can specify any other name if you want for mailing
purpose. By default, it will always show the name which you have entered
in the Name field earlier
Address: Provide the address of the company in this field
Statutory Compliance: Choose the country in which the company is located.
For example, we have selected India.
State: Choose the state in which the company is located. For example,
we have selected Delhi.
Pin-code: Provide the Pin code for the company where it is located.
 Contact Details
 Provide telephone number, mobile number and Fax number (if any) of the
company. Also, provide the official email address of the company which
10 would be further used for emailing of reports and statements.
 Auto-Back up: Putting ‘Yes’ to enable auto backup will result in Introduction to Computerised
Accounting and Creation of
automatically creating backup of the data of the company in the company Company
data folder.
 Company Details:
Currency Symbol: Once country is selected, Tally will automatically choose
the currency of the country. In this example, we have selected India, so
currency symbol would be of ‘Rupee’.
Maintain: If company maintains inventory with them, select accounts with
inventory otherwise accounts only. Selecting accounts with inventory would
combine both financial accounts and inventory books.
Financial Year: Financial year is a period of 12 months starting from 1st
April. The accounting period in this example, will begin from 1st April, 2017.
Books beginning from: Provide a date at which you started maintaining
your books. It can be a date later than 1st April, 2017. By default, it would
automatically take date mentioned in previous field.
 Security Control:
Tally Vault Password: Entering this password will require, opening the
company with password each time. The name of the company having tally
vault password will be shown with asterisk ‘*’ mark.
Repeat Password: Password entered in various field has to re-enter for
confirmation.
Use Security Control: Enabling this field as ‘Yes’ will allow to define access
administrator user name and password. Every time you open a company,
it would ask for name of administrator and password.
 Base Currency Information:
Base Currency Symbol: The selection of country will define base currency
symbol. In this example, we have selected India, so currency symbol would
be of ‘Rupee’
Formal Name: The formal name of the currency like INR (Indian Rupee)
will be displayed.
Suffix Symbol to amount: This will allow putting symbol of currency after
the amount.
Add space between amount and symbol: This will allow space between amount
and symbol.
Show amounts in millions: This will allow the values of amount to be expressed
in millions i.e. international system of numeration.
Number of Decimal Places: By default, it will be set to 2 places only and Indian
currency has 2 decimal places whereas some currency has 3 decimal places.
It can go upto 4 decimal places.
Words representing amount after decimal: By default, it will be automatically
set according to currency.
11
Computerised Accounting Number of Decimal places for amounts in words: Provide the number of
decimal places for which printing is required. It can be equal to or less
than number of decimal places field but can’t be more than that.
After filling all the requisite details, the company creation screen will appear
as follows shown in Fig. 11.4

Fig. 11.4
Once the details are filled and you press enter again, screen will displays
a box saying accept Yes or No? If all the details are correctly filled, then
proceed to select ‘yes’ otherwise select ‘No’ as shown in Fig. 11.5.

Fig. 11.5
12
Once you select ‘Yes’, the company creation is complete and the following Introduction to Computerised
Accounting and Creation of
screen will appear as sown in Fig. 11.6. Company

Fig. 11.6

The Gateway of Tally will appear as above with current period and current
date on left side pane of tally screen. Below that it will display the name of
the company which is open. Since it is a new company created, therefore in
date of last entry it is written no vouchers entered. In the right pane, you can
see masters where ledger and group creation along with inventory are created.
In transactions, vouchers are created related to accounting and inventory. Utilities
consist of importing of data from outside and other banking related operations
like cheque printing, deposit slip etc. Finally reports include all financial statements
like balance sheet and profit and loss, stock summary and ratio analysis. Display
includes trial balance, day book, cash/fund flow etc. and in the end finally quit
where you will be able to close the tally programme if selected ‘Yes’.

11.7.2 Selecting a Company

By using ‘select company’ field you can open another company from list
of companies already existing in tally. Click Alt+F3 and company info will
open as shown in Fig. 11.7. Click select company field or press S.

Fig. 11.7
13
Computerised Accounting Once you click select company, the following screen will appear as shown
in Fig. 11.8:

Fig. 11.8

You can select the company which you want by using arrow key and then
pressing enter or by clicking the company through mouse.

11.7.3 Alteration of Details of a Company

Once company is created, you might need to update details related to
company already created before. Again go to gateway of tally, click company
info or Press F3, the following screen will appear as shown in Fig. 11.9.

Fig. 11.9

Once you click ‘alter’, the following screen shall appear as shown in Fig.
14 11.10.
 Introduction to Computerised
Accounting and Creation of
Company

Fig. 11.10

Select the company for which you wish to alter details and after selecting,
the following screen will appear and you can alter any details you want
as shown in Fig. 11.11.

Fig. 11.11

After altering the same, once again a box will appear saying Accept ‘Yes’
or ‘No’? Click ‘yes’ if alteration is done and click ‘no’ if you further wish
to alter the details of the company. 15
Computerised Accounting 11.7.4 Deletion of a Company
For deletion of a company, you have to go to gateway of tally and then
company info and then alter (same like alteration of details of a company).
Once you click alter and select the company, the company details screen
will appear as follows as shown in Fig. 11.12:

Fig. 11.12

Now, Press Alt+ D and it will ask you to delete the company i.e. yes or
No. If you wish to delete the company press ‘Yes’ or otherwise ‘No’. Once
you press Y or select ‘Yes’ through mouse click, company will be deleted
and the data will not be available as shown in Fig. 11.13:

16 Fig. 11.13
11.7.5 Shutting of a Company Introduction to Computerised
Accounting and Creation of
Company
Once company is created, if you want to shut the company which is already
open, again go to gateway of tally, click company info or Press F3, the following
screen will appear as shown in Fig. 11.14:

Fig. 11.14

Press shut company field or Press H or Alt+ F1 or click F1: Shut Company
on the right pane.

11.8 FEATURES AND CONFIGURATIONS

Once you have created a company, it is now time to set features and
configurations as per requirement. Features will affect only the company in which
they are enabled as ‘Yes’ or ‘No’ where as configurations will have an effect
on all companies in the directory data.
11.8.1 Features
Features are set of capabilities which are provided as options, which will
enable you to set and maintain your records of financial statements as per
your need. It can be found by Clicking FEATURES on vertical button bar
on right pane. Alternatively you can press F11 and features screen will
appear as follows as shown in Fig. 11.15:

Fig. 11.15 17
Computerised Accounting

Fig. 11.16

You can now see various features like accounting, inventory, statutory and
taxation and add on features as shown in Fig. 18.16. You can open say
accounting feature by clicking it or pressing ‘A’ or pressing F1 or by clicking
F1: Accounts on the vertical button bar on right pane. Once you do so, the
following screen will appear as shown in Fig. 11.17:

Fig. 11.17
There are three categories of features viz; (i) Accounting Features; (2)
Inventory features, and (3) Taxation and statutory features.
18
11.8.1.1 Accounting Features Introduction to Computerised
Accounting and Creation of
The accounting features consists of general, outstanding management, cost/ Company
profit centres management, invoicing, budgeting and scenario management,
banking features and other features as shown in Fig. 11.17:
 General: If you have chosen accounts with inventory while creating
company, maintain accounts only option will be set as ‘No’ and integrate
accounts with inventory option as ‘Yes’. If you have chosen accounts only
while creating company, maintain accounts only option will be set as ‘Yes’
and integrate accounts with inventory option will not be highlighted and
will be grey in color. If you wish to have income and expenditure account
in place of Profit and loss account (Like for NPO) you can enable this
as ‘Yes’.
 Outstanding Management: This will help maintain bill wise details and also,
calculate interest on outstanding.
 Cost/Profit Centres Management: It helps in maintaining payroll and cost
centres.
 Invoicing: To enable recording purchase in invoice mode, type ‘Yes’. To
record sales and purchase return, debit and credit note is used. Set Debit
and credit note as ‘Yes’
 Budgeting and scenario management: To maintain budget, enable the option
as “Yes’.
 Banking Features: To enable cheque printing, enable cheque option as ‘Yes’.
 Other Features: To enable zero valued transactions while recording
transactions, enable this option as ‘Yes’.
After carrying out all requisite changes in accounting features, Accept ‘yes’ or
‘No’. The tally screen will appear as follows as shown in Fig. 11.18:

Fig. 11.18 19
Computerised Accounting 11.8.1.2 Inventory Features
The inventory features consists of general, storage and classification, order
processing, invoicing, purchase and sales management and other features. You
can open inventory feature by clicking it or pressing ‘I’ or pressing F2 or by
clicking F2: inventory on the vertical button bar on right pane. Once you do
so, the following screen will appear as shown in Fig. 11.19:

Fig. 11.19

In general, integrate accounts and inventory will be set as ‘Yes’ if you have
selected accounts with inventory while creating company. If you want to enable
zero valued transactions, set this option as ‘Yes’.
In storage and classification, if you want to maintain stock according to location
or warehouse, enable maintain multiple godowns/locations as ‘Yes’. To maintain
stock category wise, enable maintain stock categories as ‘Yes’.
Set invoicing as ‘Yes’ and use debit and credit notes in invoice mode as ‘Yes’.
To record discount in invoice in separate column, enable this option as ‘Yes’.
After all settings, the screen will appear as follows as shown in Fig. 18.20:
and accept ‘Yes’ to proceed further:

20 Fig. 11.20
11.8.1.3 Statutory and Taxation Features Introduction to Computerised
Accounting and Creation of
Next feature is Statutory and taxation. You can open inventory feature by Company
clicking it or pressing ‘S’ or pressing ‘F3’ or by clicking ‘F3’: statutory on
the vertical button bar on right pane. Once you do so, the following screen
will appear as shown in Fig. 11.21:

Fig. 11.21

Please note statutory compliance is country specific. Since we have selected

India as option in statutory compliance for, therefore the displayed statutory
and taxation features are those that are relevant to India. One can set these
according to business specific requirement. To enable GST, VAT, Service Tax,
TDS & TCS enable option as ‘Yes’ along with set/alter details option. Suppose,
GST is relevant to our business, then setting GST as ‘Yes’ will appear like
above as shown in Fig. 11.22:

Fig. 11.22 21
Computerised Accounting In tax information, put PAN number and Corporate Identity Number if
available. After all settings, the screen will show accept ‘Yes’ or ‘No’.
If all the settings have been done, accept as ‘Yes’ otherwise ‘No’ and do
the required settings.
Sometimes, there are specific problems which relates to specific organization
or company or business. The solution provider i.e. Tally partners provide a new
feature as solution which is specific to that organization or company or business
only. It is known as customized solution and it gets placed as add on feature.
One can see add on feature by clicking it or pressing ‘O’ or pressing ‘F6’
or by clicking ‘F6’: Add-Ons on the vertical button bar on right pane as shown
in Fig. 11.23:.

Fig. 11.23

To return to the main screen, either click quit or Ctrl +M.

11.8.2 Configurations
Configurations are options that help you modify the way a feature works.
Configuration can be located on vertical button bar in the last. You can also
press F12 or click F12: Configure.

Fig. 18.24
22
Once you press F12 or open F12: Configure, the following screen will Introduction to Computerised
Accounting and Creation of
appear as shown in Fig. 11.24: Company

Fig. 11.25

This gateway of tally screen of configuration will allow different configuration

like general configuration, numeric symbols, accounts/inventory info, voucher
entry, order entry, payroll and banking configuration etc. as shown in Fig.
11.25:

Fig. 11.26
In the above screen as shown in Fig. 11.26, you can see general
configurations where you can select country from India/SAARC or international,
different styles of displaying names of reports and stock items, different styles
of writing dates, formatting of numbers (character to use for decimal,
23
Computerised Accounting separator to use for thousands etc) and other options like monthly reports
in form or graph. If you enable use separate menu for final account statement
as ‘Yes’, then on main screen of gateway of tally, balance sheet and profit
and loss will come under Final Accounts field as below as shown in Fig.
11.27:

Fig. 11.27

To configure the numeric symbols, select the option ‘Numeric Symbols’ and
the following screen will appear as shown in Fig. 11.28:

Fig. 11.28

It includes symbols to be used for negative and positive numbers and debit
and credit amounts.
The screen below as shown in Fig. 11.29 shows master configurations related
to accounts and inventory.

24
 Introduction to Computerised
Accounting and Creation of
Company

Fig. 11.29

Next is voucher entry related configurations pertaining to both accounting

and inventory info. On opening voucher entry, the following screen will
appear as shown in Fig. 11.30.

Fig. 11.30
If you wish to skip date for faster entry, enable this option as ‘Yes’. It
will jump to next field automatically.
Set use single entry mode for Pymt/Rcpt/Contra and Use payment/Receipt
as contra as ‘NO’ and use Cr/Dr instead of To/By during entry as ‘Yes’.
Set warn on negative cash balance as ‘Yes’ so that whenever cash balance
goes negative, it will show warning as shown in Fig. 11.31.
25
Computerised Accounting

Fig. 11.31

Invoice /Order Entry will let you configure additional things like export
details, shipping details etc.
Payroll configuration is used to configure additional details for the employees.
Banking configuration will let you configure banking details.
Printing configuration helps to configure the printing screens for the reports
and transactions.
E-mailing will help you configure email related details.
Data configuration will enable configuration of data i.e. location of tally
files, export files etc.
Product and features will tell you about the details of current product
installed in your system.
Licensing will help you update, surrender, reset license and also configure
existing license.
Quit will enable you to return to the main screen of gateway of tally.

11.9 SHUTTING TALLY ERP.9

To exit out of Tally application, close all the screens. Once all the screens
are closed, you can see gateway of tally, now press ‘EscÆ key from
keyboard and when promoted to quit, press yes. Otherwise you can also
click Ctrl +M on the extreme right corner and when promoted to quit, press
yes.
You can also click Ctrl+Q to exit without confirmation.
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 Introduction to Computerised
11.10 KEYBOARD CONVENTIONS Accounting and Creation of
Company

ACTIONS PARTICULARS

Fn (F11: FEATURES) Press the Key

Fn (K: KEYBOARD) Press Alt+ Key

Fn (K: CONTROL CENTRE) Press Ctrl+ Key

Check Your Progress B

1. The option used in Tally to close an open company is:
(a) Alter Company (b) Close Company (c) Shut Company (d) Exit
Company
2. In features option, F2 option contains:
(a) Accounting Features (b) Inventory Features (c) Statutory Features (d)
Tally NET Features
3. For creating a company we use the following shortcut:
(a) Alt+ F1 (b) Alt +F2 (c) Alt +F3 (d) Esc Key
4. One can modify an existing Company:
(a) Company Info > Alter (b) Company Info > Alter Company (c) Gateway
of Tally > Modify Company (d) None of the above
5. To change date from gateway of Tally, Press
(a) F1 (b) F2 (c) F3 (d) F4
6. The shortcut to use calculator
(a) Ctrl +N (b) Ctrl + M (c) Ctrl +P (d) Ctrl + L

11.11 LET US SUM UP

With the advancement of technology, maintaining records of financial
transactions has also changed from manual to electronic form. Computerised
Accounting system has been adopted by most business organizations because
of its comparative advantages like speed, ease, security, reliability to name
a few. But these advantages come at a cost. There are chances of data being
corrupt, electricity issues, theft of data and too much reliance on computer.
Still its advantages outperform in relation to disadvantages.
Business organization should keep in mind various factors while choosing
accounting softwares as varied softwares are available in market. The main
difference between computerized accounting and manual accounting is that
ledgers are created first and then journal entries are done through vouchers
instead of journal entries being followed by ledger posting as done in manual
accounting system.

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Computerised Accounting First step in computerized accounting system is creation of company where
all the basic details like name, address, email, mobile number, maintaining
accounts with or without inventory, financial year are filled in the software.
The company details can be altered at any stage if needed. The company
can also be deleted if required. The features and configurations help the
business organization to maintain financial record as per requirement of
business. Features are applicable to only company where as configurations
are for overall Tally Software. The next step after company creation is
creating masters.

11.12 KEY WORDS

Accounting Features: The accounting features consists of general, outstanding
management, cost/profit centres, management, invoicing, budgeting and scenario
management, banking features and other features.

Alteration of Details of a Company: A process of making changes in the

details of company or any data which is misspelt or wrongly taken while putting
information during company creation process.

Computerised Accounting System: A process of digitally collecting,

recording, classifying and summarising financial data using accounting
software for managerial decision making.
Configuration: Configurations are options that help you modify the way a
feature works. Configuration can be located on vertical button bar in the
last. You can also press F12 or click F12: Configure.
Features: Features are set of capabilities which are provided as options,
which will enable you to set and maintain your records of financial statements
as per your need.
Gateway of Tally: The gateway of Tally displays menus, screens, reports
and options that you select.
Inventory Features: The inventory features consists of general, storage and
classification, order processing, invoicing, purchase and sales management
and other features.
Manual Accounting System: A process of physically maintaining books of
accounts.
Statutory and Taxation Features: You can open statutory and taxation
feature by clicking it or pressing ‘S’ or pressing F3 or by clicking F3:
statutory on the vertical button bar on right pane.
Shutting a Company: Once company is created, if you want to shut the
company which is already open, go to gateway of tally, click company info
or Press F3, a screen will appear, press shut company field or Press H
or Alt+ F1 or click F1: Shut Cmp on the right pane.
Tally ERP.9: A business accounting software for purposes of accounting,
inventory and payroll.

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 Introduction to Computerised
11.13 ANSWERS TO CHECK YOUR PROGRESS Accounting and Creation of
Company
A 1. i) (c) 2. ii) (d) 3. iv) (d) 4. v) (c)
B 1. (c) 2. (b) 3. (c) 4. (a) 5. (b) 6. (a)

11.14 TERMINAL QUESTIONS/EXERCISES

Questions
1. Define a computerised accounting system. Distinguish between manual
and computerised accounting system.
2. Explain the considerations which are required to be kept in mind while
choosing accounting software.
3. Explain the components of Tally.
4. Distinguish between features and configurations.
Exercises
Create a company with following details in Tally ERP.9:
Name of Company S Bose Beverages Ltd. Bhartiya Book Trading
Company
Address 147/A, Jheel Industrial 4044/A/F, Rajpura Road,
Area, Delhi – 110051 Mumbai – 400007
Country India India
State Delhi Maharashtra
Contact No. 011-22590475 022-22224477
Email-id [email protected] [email protected]
Mobile No. 9911000012 9899477701
Books Beginning 01-04-2017 01-04-2017
From
Financial Year 01-04-2017 01-04-2017
Beginning From
Maintain Accounting with inventory Accounting with inventory
Maintain Accounting with inventory Accounting with inventory

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