Tally Prime and Overview

 

TALLY PRIME AND ACCOUNTING OVERVIEW

 

What is Tally Prime?

 

Tally Prime is Accounting Software most popular in India, Most of the Company use Tally Prime for their Business for maintain Inventory, Accounting Records and Taxation. There are many more software which is related to Tally Prime e.g. Busy Accounting, Marg books etc.… Currently Tally Prime Version 2 use for maintain record.

 

·         Uses of Tally Prime

 

• Day Book Transaction (Payment/Receipt and orders)

• Balance sheet Finalization

• Stock (Inventory) Maintenance

• Taxation Record (GST) Maintain. and more

Manual Accounting V/s Computerized (Tally) Accounting

 

Manual	Computerized
First, Pass Entry then make Ledger	Only create Ledger and pass Entry
Make Trial Balance, P&L Acc and Balance Sheet	Automatically Create when ledger or Entry Pass.
Here is more chance for mistakes and time consuming	Here less chance of error and very less time consuming (But entry should be correct otherwise error occurs)
Balance sheet and Liability rarely tallies	Balance sheet automatically tallies with each entry pass
Financial statement prepared at the end of the year	Financial statement shows on single click any time.

·        Important Points (Should be remember) –

In Tally Prime there are 28 Predefined Group or we can create more, some of example are:

 

•        What are Direct Expenses?

Those expenses which is associate with the cost of product (Related to Manufacture of Product) / or Service is called Direct Expenses. E.g. Wages, Carriage, Import Duty, or any Kind of Factory Expenses. All Direct Expenses Comes in Debit (Dr.) Side.

•   What are Indirect Expenses?

Indirect Expenses are those Expenses which is not related to production, it is related to sales of the product or any business Daily routine Expenses. E.g. Salary, Carriage on Sales, Export Duty, Electric Bill, Bonus, Discount, Commission, Depreciation on Assets or any kind of Office Expenses. All Indirect Expenses Comes in Debit (Dr.) Side.

•     What is Direct Income?

That income which is directly received from the business work or selling of goods/Product or Services. For E.g. Courier fees Received (if Courier Company), Coffee, Snacks and Beverage Income (If Run a Café or Shop) same as other Direct Income earn from the Business. All Direct Income Comes in Credit (Cr.) Side.

•   What is Indirect Income?

That income which is earned by non-business Activity. For example, Interest Received, Commission Received, Rent Received, Sale of old Newspaper or bad debts recovered from the party are the example of Indirect Income. All Indirect Income Comes in Credit (Cr.) Side.

•     What are Current Assets & Fixed Assets?

Current Assets are those which can be converted into cash within one year or short-term assets E.g. Bill Receive (BR) from company and convert cash into next month, or Prepaid Expenses which is recovered in current financial Year.

Fixed Assets are those which company expects to use for more than one accounting period or Long-term assets. E.g. Property or Land/Building, Furniture, Patents/Trademarks, Motor Vehicles, Machinery & Tools Equipment etc.… is the example of Fixed Assets. Current and Fixed Assets maintain in Dr. Side.

•    What are Outstanding Expenses/ Income?

Outstanding Expenses that are charges in the future or not to be paid yet, it Comes under the Current Liability head. E.g. Outstanding Wages, Outstanding Rent, Outstanding Salary etc. Outstanding Expenses Maintain in Cr. Side.

Outstanding Income that are due to be received. It means income earn but not received it Comes under the Current Assets head and maintain in Dr. Side.

•     What are Prepaid Expenses/ Income?

Prepaid Expenses are future expenses that are paid in advance. Prepaid Expenses are initially recorded as Current Assets. E.g. Prepaid Rent, Prepaid Insurance etc.

Prepaid Income is fund received from a customer prior to the provision of goods and service. It is considered a Current liability since seller has not yet delivered. Once the goods or services have been delivered the liability is cancelled and the fund recorded as revenue.

•    What are Sales and Sales Return

In the firm, all transaction related (Cash/Credit) Sales Records under the head sales Account. The same account related to the return of goods (Sales Return/Return inward) comes under Sales A/C and we just maintain it Dr. Side if any sales return entry occurs in business transaction.

•      What is Loan Liability and Loan Assets?

•  If firm taken a short-term loan from the bank or any other company that comes under Loan (Liability) group.

•  If firm gives a loan amount to employee or any other company it comes under Loan (Advance assets) Group.

 

•     What is Current Liability?

Current liability is short term liability of the firm that need to paid within a year. E.g. Bills Payable, Taxes Payable, Interest Payable, Short term loans Payable.

•     What are Purchase and Purchase Return

In the firm, all transaction related (Cash/Credit) Purchase Records under the head Purchase Account. The same account related to the goods return (Purchase Return/Return Outward) comes under Purchase A/C and we just maintain it Cr. Side if any Purchase return entry occurs in business transaction due to any defects of product.

 

•     What is Cash / Petty Cash / Bank and bank overdraft

 

Cash: Cash account refers to a business transaction which is conducted an immediate payment basis and it comes under cash-in-hand A/c, but we no need to create cash Ledger in Tally. Cash ledger already exist when new company created.

 

Petty cash: it is mainly used for office supplies, stationery, lunch and snacks for employee, printing and other small expenses. It comes under cash in hand A/c

 

Bank: Bank is an account which is used for business transaction deposit, withdraw payment or receipt in form of online and cheque related transaction. It comes under Bank A/c group in Tally.

 

Bank overdraft: Overdraft is a loan provided by the bank that allow to pay bill or any other expenses when the account reaches zero it can be pass under bank overdraft group or can pass in Bank account and pass Cr. Side.

•     What are Debtors and Creditor

Creditor – Suppose our firm (ABC firm) buy good or service from the XYZ Company, it means XYZ firm is creditor who collect money from our (ABC firm) and we pass the Party ledger under Sundry creditor group.

 

Debtor – Suppose our firm (ABC firm) Sold good or service to the PQR Company, it means PQR firm is debtor who send money to our (ABC firm) and we pass the Party ledger under Sundry Debtor group.

 

•    What is Capital and drawings

Capital: Refers to the money or any assets invested in the business by the owner of business. Capital Ledger comes under capital Account.

 

Drawing: If owner withdraw the invest amount or a part of amount from the capital for personal uses it comes under the capital account but we maintain it in Dr. Side for deduction from the capital balance.

 

•      What is Opening and Closing Stock

Opening stock, the amount or value of material that company has available for sales at the beginning of the Accounting year.

 

Closing stock, the unsold amount that remain with the business and pass from the next financial year as opening balance.

 

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