Tally Prime and Overview
TALLY PRIME AND ACCOUNTING OVERVIEW
What is Tally Prime?
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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.
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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
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Manual |
Computerized |
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First, Pass Entry then make
Ledger |
Only create Ledger and pass Entry |
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Make Trial
Balance, P&L Acc and Balance Sheet |
Automatically Create
when ledger or Entry Pass. |
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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) |
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Balance sheet
and Liability rarely tallies |
Balance sheet automatically
tallies with each entry pass |
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Financial
statement prepared at the end of the year |
Financial statement shows
on single click any time. |
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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.
