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Important Terms & Definition of

Accounting
Navigation through Tally Software, Tally
Start up
Accounting & Inventory
Printing & Housekeeping
Business Management, Connectivity &
Other Resource

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Important Terms & Definition of Accounting

Definition of Accounting
Accounting involves the collection, recording, classification and
presentation of financial transaction for the benefit of internal and
external users. It is a discipline which records, classifies,
summarizes and interprets financial information about the
activities of the concern so that intelligent decisions can be made
about the concern.

Business Transaction
Simply Buying and Selling Goods and Services in terms of some
monetary value or on credit is termed as Business Transaction.
No more explanation.
Assets
Assets are economic resources which are owned and controlled
by a firm. Assets may be of Physical and Abstract appliances. For
example: Land, Building, Computer are the example of physical
assets (Tangible Assets) and creditors, patients rights (Intangible
Assets) are the example of abstract assets which are unseen and
just felt out.
Assets classified into two types:
Fixed Assets : Assets that are purchased for long term business,
Example : land, building, machinery and are generally not for
reselling purpose.
Current Assets : Assets that are needed to be transformed into
monetary value or in cash, Example : (Sundry Debtors – a group
of person to whom credit are offered), stock, cash
Liabilities
It is the amount that business owes and need to be repaid to
outsiders for some past events. It is also known as claim of the
outsiders. Example : Sundry Creditors – a group of person who
offered a credit). The purchase of Goods and Services on credit
known as 'Account Payable' and the person to whom it is
payable is Creditors.
Capital
This is the amount invested by the business to start a business. It
is also known as owner's equity. Capital is liability to the
business.
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Capital = Assets – Liabilities
Debtors
Debtors is a person who owes money to the business or Debtor is
a customer to whom goods/services are sold on credit. A group of
debtors is called Sundry Debtors.
Creditors
Creditors is a person to whom business owes money or creditor is
any person who gives credit to the business. A group of creditors
is called Sundry Creditors.
Expenses
Expenses are the cost incurred for generating revenue. For
example : salary, transportation
Revenue
Revenue is the outcome of the business activities. It is the regular
inflow of money or monetary value from the sales of goods and
services during a period of time. It also includes the amount
received as rest, commission, dividend, interest etc. Revenues are
recurring in nature.
Inventories
Inventories are assets that are held for resale in the normal course
of business. These are the tangible current assets held for sale.
Accounts & Accounting
The Books where transaction are recorded is known as Books of
Accounts and the process of interpreting, transacting the daily
transaction in books of Accounts if known as accounting.
Purchase
Purchase is considered as the main expenses of a business.
Purchase of goods for selling purposes to generate income is
called Purchase. Purchase of stationary, assets will not comes
under the term "purchase". Purchases may be cash purchase or
credit purchases.
Purchase Return
Goods once purchased are retuned back for either damage,
inferior quality etc. Like sales, but not as sales.

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Sales & Sales Return
The main income generating source of business is sales. It's main
purpose is for profit earning.
Goods sold and are returned back from the customers either for
inferior quality or damages are sales return

Classifications of Accounts
The Accounts maintained in the General Ledger may be
broadly classified into:
Personal Accounts
Accounts related to any Person, Firm, Institution etc. Personal
Account may be further classified as :
Natural Persons : Example – Ram , Hari Kumar etc.
Artificial Person : Example – Companies & Organisations like
Shyam Electronics, Swaraj Pvt Ltd.
Dr. Cr.
Receiver Giver

Real Accounts
Accounts where properties & possessions are recorded, like Fixed
and Current Assets [Example : Cash, Building, Plant &
Machinery, Vehicles], Real Accounts appear in Balance Sheet
Dr. Cr.
What Comes in What Goes out

Nominal Accounts
Accounts relating to Expenses & Income, Losses & Gains
[Example : sales, Purchase, Discount Allowed, Discount
Received, Repairs, Salaries, Interest Paid, Depreciation etc.]
Nominal Accounts appear in Profit & Loss Account
Dr. Cr.
Expenses/Lossess Incomes and gains
Dual Aspect
If there is a debit there has to be a corresponding credit. Let's
explain this with an example. Purchased a car for Rs.100000.00.
In this transaction first aspect is "car" by spending money
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business acquiring a car worth Rs.100000.00., the second aspect
is cash spending money towards value of car.
1. Car is coming in business
2. Cash going out from the business

Tally Navigation & Startup

Tally
Tally is a user friendly software; due to its user friendliness tally
offer various options for navigation. This will enable faster data
entry, and time saving for its users. Navigation can be done by
using both keyboard and mouse.
Starting Tally
• Click on Start Menu > Click on Programs > Click on Tally
9.1 > Click on Tally9.1
On loading Gateway of Tally would appear
Product Info

Buttom Bar

Work Area

Calculator

Fig – 1
• Press F1 to Select Company

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• Press Escape to go Gateway of Tally

Fig - 2
F1 = Select Company
Alt+F1 = Shut Company
F2 = Current Date (The Date you worked last during
current Period. When
you will enter voucher, by default you get Current
Date
Alt+F2 = Period (Financial Period with which you are
working is displayed.
F11 = Features allows to set operations for individual
company. Depending on
the Features activated, Tally displays Menu
options, set prompts in Master entry/edit screens.
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F12 = Configure helps to set the required setting as per
our requisition. It's
effect depends on where you press the buttom like
general, Numeric Symbols, voucher entry etc.

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Creation of a Company
How to Create a Company in Tally
• Company Info Menu C
Select Company – Select Existing Company
Shut Company – To shut the current opening Company
Create Company – To Create a new Company
Create Group Company – To consolidated account of multiple
companies. This
options actives only while selecting multiple companies. Discuss
later
Alter – To modify or change out the current company
[Ctrl+A=Save, Alt+D=Delete]
Security Control – Allow you to create security control, user &
passwords
Change TallyVault – To change the TallyVault Password
Split Company Data – To split data of a company into 2
• Gateway of Tally Menu Alt+F3, C

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Masters – Create Ledgers and Groups in

Accounts and Inventory info

Transactions – Entry the Accounting and

Inventory Transaction

Import - Import the data from existing other

file format. Eg : Excel

Reports – Display the transaction part into

required sheet and state the real position of
business

Quit – To exit the Tally

• Company Creation Screen appears : divided into two

sections
Top Section : Enter information related to the Company
Bottom Section : Information related to Base Currency in
which Accounts of the Company would be maintained.

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Directory – The drive or path where you wish to keep the data
files for the company.
Name – Enter Name of the Company
Mailing Name – By default the name entered in previous field is
carried as married name. However you can enter the another
mailing name.
Address – Enter Address for the Company
Statutory compliance for – Select Country from the list of the
countries (for nepal none)
State – You can select the appropriate state from the predefined
list
PIN Code – Specify the pin code of the specific Address
Telephone No. – Enter the telephone number of the Company
E-mail – Enter the Email address for official purpose
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Currency Symbol – The base currency that will be used to

maintains the books of account
Maintain – Types of Company Accounts only or Accounts with
Inventory
Financial Year from – Generally 12 months considered as
accounting period. Enter the date of financial year started
Books Beginning from – Tally reassumes that Books are started
from the date where financial year started
Tallyvault Password – It is an enhanced security system, which
allows for encryption of the company data. When tallyvault
password is created, the information is only accessible to users
with password holder.
User Security Control – Comprehensive password based access
control to different features. Generally itself known as user
control
User Tally Audit Features – Tally Audit allows the
administrator or an auditor profile user to track changes in
accounting information.
Base Currency Information
Base Currency Symbol – The currency symbol given earlier in
the Company Creation screen is displayed here automatically.
Formal Name- Formal Name is the full name of the Currency
specified.
Number of Decimal Places - By default is set to 2, However
necessary can specify upto 4 decimal places.
Is Symbol SUFFIXED to Amounts – For countries, which
specify the symbol after the amount(value) – this facility is
provided. For example, yes is specified after the amount (500
yen) unlike in India where the symbol is specified before the
amount (Rs.500)
Symbol for Decimal portion – Enter the symbol for decimal
portion
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Show Amounts in Millions – Enter Yes or No
Put a SPACE between Amounts and Symbol – Enter yes or No
Decimal Places for printing amounts in words – Specify the
decimal for printing amount
Backup & Restore in Tally
Backup in Tally
• In Company Info – Select Backup [B]

• Select Source > Destination > Company to be backed up

• Click on Yes or Enter

Restore in Tally
• In Company Info – Select Restore [R]

• Select Source > Destination > Company to be Restored

• Click on Yes or Enter

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Master
After Creating a Company and Having a Configuration and
Features settings for company, the next step is creation of master.
As soon as you create a company, Tally creates 28 Accounting
Groups by default (Reserved Groups) and 2 ledgers (Cash in
Hand, Profit & Loss Account).
Accounts Info & Inventory Info
• Go to Gateway of Tally

• Choose Accounts Info [A]

• Choose Groups[G]/ Ledgers[L]/ Voucher Types[V]/ Quit[Q]

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Groups –Groups are the collection of the ledger of same nature.

Ledger – A Ledger is the actual account head to which you identify a

transaction and must be used in all Accounting Vouchers. Without a
ledger we cannot record any transactions.

Voucher Types – It's purpose is recording various transactions

according to the user needs. If voucher Types are created , helps to
determine separate report as per required.

• Groups as below will appear and create your Group

Single Groups –Create Groups Single by Single

(create/Display/Alter) the groups as per required

Multiple Groups - Create Groups at once

• Ledgers as below will appear and create your ledger

Single Ledger –Create Ledger Single by Single

(create/display/alter) the ledger as per required

Multiple Ledger - Create Ledger at once

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• Voucher type as below will appear and create your own
voucher types

Voucher Types –There are 18 different pre-defined Voucher

types in Tally. Voucher type pertains to both Accounting and
Inventory.
Multiple Ledger - Create Ledger at once

Groups & Sub Groups

Reserved Groups that goes into Balance Sheet
Liabilities Side
Capital Account
Reserve & Surplus (Retained Earnings)
Loans (Liabilities)
Bank OD Accounts [Bank OCC Accounts]
Secured Loans
Unsecured Loans
Current Liabilities
Duties & Taxes
Provisions
Sundry Creditors
Assets Side
Fixed Assets
Investments
Current Assets
Bank Accounts
Cash-in-hand
Deposits(Assets)
Loans & Advances (Asset)
Stock-in-hand
Sundry Debtors
Branch/Divisions
Misc. Expenses (Asset)
Suspense Account
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Reserved Groups that goes into P/L Account

Income Side
Sales Account
Direct Income (Income Direct)
Indirect Income (Income Indirect)
Expenses Side
Purchase Account
Direct Expenses [Expenses Direct]
Indirect Expenses [Expenses Indirect]

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