Manual Vs Computerized Book Keeping

Manual book keeping: - in it we first create ledger, carry forward previous year’s closing balance as opening balance for the current year record cash transaction in cash book and non-cash transactions in journal, then amount from cash book and journal are posted into respective ledgers. Whenever we need to know balance of any ledger. We acquired to total amounts in both debit and credit columns of the ledger and compute the difference to derive the closing balance for the ledger as on the date to prepare final accounts (profit and loss & balance sheet) for any period, you have to compute closing balance of ledger for the period. And then prepare a trail balance from trail balance you post nominal account to profit & loss a/c real & personal ledger to balance sheet.  Next year when we create New Year book we have to repeat whole the process again.

 

Computerized accounting: - when we opt for computerized accounting first time we have to create all the ledgers and enter opening balance (in subsequent year we need to create the ledges again or carry forward previous year’s closing balance as opening balance since it would be carried forward on its own by the software) and classify at this stage. Thereafter you enter all transaction in vouches(different type of vouches to record diverse nature of transactions) that’s all you have to do and everything else (like posting to ledger preparation ) that’s all you have to do and everything else (like posting to ledger, preparation of trail balance, final account etc.)is done by the software In computerized accounting, while creating new ledger, you are required to classify it suitably under relevant accounts group to tell the software the nature of the ledger and where it will appear. This is necessary at this stage as all reports are prepared on line the moment you enter transactions (vouches). In case of manual book keeping this classification is done at late stage (after preparation of trail balance, nominal accounts are transferred to profit & loss accounts through journal entry, real and personal accounts are posted to balance sheet under propel heading i.e., groups).

 

YEAR END ENTRIES

 

In manual book keeping we required to pass journal entries to transfer closing balance of all nominal account to prepare profit and loss accounts, which we are not required to do in case of composited accounting. The software does this job on its own. In next year, only closing balance of teal and personal accounts are carried and nominal accounts balance is zeroed by the software (for which we pass journal entries in manual book keeping). The advantages are that our accounts are always open any modification is instantly reflected. 

Ledgers

 LEDGERS: - Ledgers are created to classify business dealings in subgroups.

To create ledger after creating company press (escape key) to go gateway of tally. Click on accounts info then create

Ledger

Here we can create ledger using two methods,

1. Single ledger

2. Multiple ledger

Single ledger: -We use single ledger system if we have to give extra information or enable any feature.

Multiple ledger: -We use multiple ledger system if we just want to create ledgers without any extra info.

 

Multiple ledger

Purchase Accounts	All type of Purchase Accounts & Purchase return
Sales Account	All types of Sales Accounts & Sale Return
Duties and Taxes	All types of Taxes like, Excise Duty Payable, Service Tax Payable, TDS, Output Vat Accounts, CENVAT Accounts, Sale tax Payables, Input Vat Accounts, Income Tax, VAT Payable & GST.
Direct Expenses	All expenses which appear in Trading Account like: - Labor, Power, Electricity Expense (Factory), Loading Unloading Expense, Carriage, Freight & Cartage, Warehousing Expenses, Custom Clearing Charges, Wages on Production, Import duty, Wages, Coal & Fuel, Coal, Gas & Water of Factory, Consumed Material, Export Duty, Delivery Charges (In Purchase Bill)
Indirect Expenses	All Indirect Expenses like: - Rounded Off, Salary, Advertisement Expense, Bad Debts, Maintenance Expense, Rent Expense, Postage & courier, Repair charge, Printing Expense, Stationary Expense, Audit Fees, Professional Charges, Legal Expenses/Charges, Depreciation , Interest paid, Penalty, Bank charges, Commission allowed, Discount allowed, Donation & charity, Free sample, Insurance premium, Interest on loan paid, Legal charge, Loss by fire, Taxi fare, Telephone charge, Travelling expenses, Outstanding expenses, Accrued expenses, Bad debt, Loss on theft, depreciation, Coffee Expenses, Coke Expenses, Manager’s Commission, Fuel Expenses A/c, Liability of Expenses, Preliminary Expenses A/c, Professional Fees
Indirect Income	Discount Received, Interest on Investment, commission received, rent received or any other income other than goods.
Deposit Account	All types of deposits like, Rent Deposit
Capital A/c	All types of Capital Account like, Share Capital, Partner Capital Account, Partner Current Account, Proprietor Account, Drawings, Life insurance, Equity Capital A/c, Partners’ Capital A/c
Current Assets	Prepaid Maintenance Expense, Prepaid Expense, Prepaid Rent, Prepaid Insurance Charges, Interest Receivables, Bill receivable, Accrued income, Mutual Fund
Current Liabilities	Bill drawn, Bill Payable
Sundry Creditor	Any Party from Whom Goods Purchased, Party from Whom any Bill of Expense Received,
Loans and Advances (Assets)	Any Party to whom we gave loan like: - Loan Given to Friends Relatives/Related Companies, Any Party to whom we gave Advance, like Advance to Supplier
Loans Liabilities	Any Party from whom we take loan., We can also put group Secured loan or Unsecured loan, Debenture A/c, Loans from Bank, Loans from Outside Party, Loans from Aravind(Friend)
Fixed Assets	All Fixed Assets on which Depreciation charged like Furniture, Machine, Plant and Machinery, Mobile, Computers, Furniture and Fittings, Car, Scooter, Laptops, Office lighting, Land & Building, Good will, Factory lighting, Air Conditioner etc.
Bank OCC	Cash Credit Limit (CC) taken from bank
Bank OD	Overdraft Limit (OD) taken from bank
Bank Accounts	Indian Bank A/c, SBI Bank A/c
Branch/Divisions	Any Branch whose Separate Accounting Done, (If branch account maintained by head office only, then this account not required), Delhi Branch, Branch in division
Cash in Hand	Cash in business & balance of Petty Cash
Investments	All types of Investments like, Investment in Shares, Investment in Bonds, Investment in Property/Plot etc., Long term investment, Debtor name, Short Term Investment
Stock-in-hand	Stock, Closing Stock, Consignment Stock, Opening Stock
Misc. Expense (ASSET)	Preliminary Expenses, NOT yet written off
Suspense A/c	Suspense Account, any payment or receipt from party whose name not known Suspense
Secured Loan	Loans for whom Security Given, like loan from bank/ Financial Institution
Unsecured Loan	Loans taken for whom no Security given, Like Short term loan from directors or loan from friends /relatives
Reserve & Surplus	Any type of reserve like, General Reserve, Capital Reserve, Capital Reserve A/c, Investment Allowance Reserve A/c, Share Premium A/c, Reverse and Surplus
Provisions	All Provisions except Provisions for bad debts, Provision for Tax, Provision for Expense, Provision for Sinking Fund, All types of Payables like Salary Payable, Audit fees Payable,
Sundry Debtors	Any Party to Whom Sales Made and Provision for Bad Debts

Vouchers

 VOUCHER: -A Document in Which the Transaction Details Are Noted. Like what, who, how much and to whom items sold or purchased.

 

CONTRA	All the transaction from bank entered in this voucher Like: - Withdrawal or deposit from bank. Cash deposit into bank Rs. 1000.                        Bank a/c     Dr.     1000                                 To cash                            1000 Cash withdrawal from bank Rs 1000.                       Cash a/c    Dr.        1000                                  To Bank.                           1000
PAYMENT	When we purchase any item, it may good or non-goods or any type of expenses paid in cash entered in this voucher. Paid wages Rs. 1000.                       Wages A/c Dr.     1000                                   To cash                          1000 Purchase furniture Rs. 1000 cash.                       Furniture A/c      Dr.    1000                                   To cash                                   1000
RECEIPT	All cash receipts entered in it. From any source. Commission received Rs. 1500.                       Cash A/c    Dr.                 1500                                   To commission                1500 Sold furniture Rs. 1500.                       Cash A/c    Dr.                 1500                                   To furniture                       1500
PURCHASE	All credit purchase will enter in it but only goods item. Purchase good from Mohan Rs. 3000                        Purchase A/c   Dr.             3000                                   To Mohan.                                 3000
SALE	All credit sale will have entered in it but only goods item. Sold goods to Raj Rs 3000                        Raj a/c             Dr.               3000                                    To sale                                     3000
CREDIT NOTE	Sale return Raj returned goods cost price Rs.1000.                        Sales return A/c      Dr.     1000                                    To Raj                                      1000
DEBIT NOTE	Purchase return Returned goods to Mohan Rs. 1000.                         Mohan A/c                 Dr.     1000                                   To purchase return               1000
JOURNAL	All credit purchase other than goods and balance entries will enter in it. Like: - Ram withdraw furniture for his personal use Rs 1500                       Drawings A/c           Dr.     1500                                   To furniture                           1500

 

Bill By Bill Adjustment

BILL BY BILL: -Normally in a business the transaction with suppliers & customers are numerous and repeating. in most cases credit is available for some period and payment become due after credit days.

Payment is made when bill become overdue. Sometimes instead of making full payment of a bill, pay part of bill or pay lump sum amount against outstanding bills and then settle the account periodically. In view of these complexities, it may not be sufficient to know just the ledger balance of such accounts but you may need to know the bill wise balance of outstanding. You need to maintain more details like original bill amount, credit days, and outstanding payment with bill wise break up. Get such finer details of required ledger accounts of the sundry debtors & creditors, 

 

Tally provides an additional feature termed bill by bill details. It also has features to calculate the interest as per user defines.

Bill by bill

1)     Create company

2)      Press f11 and then press f1 (Enable all four options of outstanding management). Then press (ctrl+ a).

3)     Then go to the gateway of tally and create single ledger  

4)     Notes: -

a)      Maintain balance bill by bill :-Only enable in case of sundry creditor and sundry debtor.

b)     Inventory values are affected: -Enable only in case of Purchase, sales, purchase return and sales return.

c)      Activate interest calculation: -Enable in case of sundry debtor and sundry creditors.

 

5)     In ACTIVATE INTEREST CALCULATION define parameter as followings: -

 

 

6)     after create ledger go to gate way of tally and create voucher entry as your sums: -

7)     press f2 for changing the date according your entry.

 

SUMS FOR PRACTICE

TEST-1

1st April              Started business with furniture 50000 and land and building 500000 Rs....

3rd April             Purchase some goods from Mohan cost price 150000 Rs.... @ 15% trade discount paid half amount same time and balance on 5 days credit period then after 5% interest will be charged.

10th April           Sold half of above goods @ 20% profit and received 25% amount same time by cheque and balance on 3-day credit period then after 6% interest will be charged (Sohan)

15th April          Sohan returned half of above goods due to some technical fault.

20th April          Paid to Mohan balance amount by cheque.

25th April          Sohan settled his account by   full and final payment by cheque.

 

TEST-2

1st April              Started business with cash 5, 00,000 and bank balance 25,000.

3rd April             Purchased some goods from ram cost price 1,50,000 @ 10% trade discount and 5% cash discount paid 70% amount same time and balance on 3 days’ credit period then after 5% interest will be charged.

5th April              Sold furniture to Hari Shankar cost price 25000 @ 10% loss and received half amount same time and balance on 10 days credit then after 5% interest will be charged.

10th April           Returned half goods to ram due to some technical fault.

25th April           Paid to ram balance amount.

28th April           HARI Shankar become insolvent and received only 60% amount from him.

25th may            Received balance amount from Hari Shankar which was already transferred into the bad debts account.

TEST-3

1ST APRIL          Started business with cash 1, 50,000 Rs.... bank balance 250000 Rs....

2nd April            Purchased some items from A Kumar cost 15,000 Rs.... @ 10% trade discount and paid half amount same time balance on 3 days credit period then after 5% interest will be charged.

12th April           Purchase again some items from A kumar cost 25,000 Rs.... @ 5% trade discount and all item on 3 days credit period then after 5% interest will be charged.

18th April           Sold some items to B Kumar cost 45,000 Rs.... And paid half amount same time and Balance on 5 days credit period then after 5% interest will be charged.

19th April           Paid to A Kumar 30,000 Rs.... Against due amount by cheque.

25th April           Received from B Kumar whole balance amount. By cheque.

30th April           Above cheque deposited into the bank.

 

TEST-4

1st April              Started business with land and building 250000 and furniture 50000 Rs....

3rd April             Sold some items to Mona cost price 25000 Rs... @ 10% trade discount and 5% cash discount half amount received by a draft and balance on 3 days credit period then after 5% interest will be charged.

4th April              Sold furniture to raj Kumar cost 150000Rs.on 3 days credit period then after 5% interest will be charged.

10th April           Received 10000 Rs... From Mona as, full settlement of his account.

15th April           Purchase goods from Sona cost price 200000 @ 5% trade discount and paid 25000 Rs... Same time and balance on 5 days credit period then after 5% interest will be charged.

25th April           Raj paid us full amount by cheque.

 

TEST-5

1st April              Started business with cash 15000 Rs. and bank balance 25000 Rs. and land and building 150000 Rs....

3rd April             Purchased some goods from Vinod cost price 250000 Rs... Paid 20% amount same time and balance on 5 days credit then after 5% interest will be charged.

8th April              Sold furniture to Krishna cost 125000 paid 70% amount same time and balance on 3 days credit period then after 5% interest will be charged.

15th April           Paid balance amount to Vinod by cheque.

20th April           Krishna paid balance amount in cash

3rd may              Above cheque bounced.

 

Inventory

 Inventory as A Dealer

1.     Create company

2.     Go to gate way of tally and in account info > create ledger > (press f11 if bill by bill info required) 

3.     Go to gate way of tally again and in inventory info > create stock group (row met, finished goods)

4.     Then create unit of measure (pcs, kg, or Ltr. as per ur sum required)

5.     Then create stock items like (monitor, mouse etc.)

6.     Then go to gateway of tally and in accounting voucher create voucher as per your sum

SUMS FOR PRACTICE

TEST-1

1st April.    Purchased some goods from Raj and Sons on 3 days credit Period then after 5% interest will

                   be charged items are as followings: -

                   Samsung mobile 15 @ 25000 Rs. each

                   Nokia mobile 15 @ 12500 Rs. each

                   China mobile 15 @ 2500 Rs. each

                    And 500 Rs. carriage extra paid half amount same time and balance on credit.

5th April             Sold some of above item on 25% profit Items are as followings: -
                           5 Samsung, 5 Nokia & 5 China mobile.

12th April           2 China mobile gave as charity to Harish.

19th April           2 Nokia mobile returned to Raj and Sons.

20th April           Paid wages to Hari Shankar 15000 Rs. by Cheque.

21ST April          Loss by thief 2 Samsung mobile.

25th April           Mobile recovered by police and handover.

1st April      Started business with land and building Rs. 2, 50,000 and bank balance Rs. 25000.

3rd April     Purchased some goods from Raj Kumar (manufacturer) on 5 days credit period  then after 5% interest will be charged items

                   are as followings: -

                    1000 Mtr.           Leather                100 per/ Mtr.

                    1000 Mtr.           Threads               .50 per/ Mtr.

                    800 Mtr.              Clothes                10 Per/ Mtr.

                    250 pcs                Hooks   1 per/ pcs

10th Apr      Sold followings @ 20% profit to Karan Kapoor: -

60 MTR. leather

100 MTR. threads

120 PCS hooks

60 MTR. Clothes

 INVENTORY AS MANUFACTURER: -

1.    Create company

2.    Go to gate way of tally and in account info > create ledger > (press f11 if bill by bill info required) 

3.    Go to gate way of tally again and in inventory info > create stock group (row met, finished goods)

4.    Then create unit of measure (pcs, kg, or Ltr. as per ur sum required)

5.     Then create stock items like (monitor, mouse etc.)

6.    Then go to gateway of tally and in accounting voucher create voucher as per your sum

7.     If in sum assembling option given then go to the inventory voucher option after purchase voucher entry and transfer stock from row met to finish goods

        Like if we want to assemble 5 computers from its part then

                 Monitor                   5             15000   ……….               Computer           5             ……         total value

                  Keyboard               5             15000   ……….

                  Mouse                    5             15000   ……….

                   CPU                      5             15000   ……….

SUMS FOR PRACTICE

TEST-1

1st April              Started business with cash 15000 Rs. and bank balance 15000 Rs.

3rd April             purchased some items from Mohan Pvt. ltd. Delhi on 3. Days credit period then after 5% interest will be charged items are as followings: -

15 timer @ 1500 Rs. each

15 fuse conductor @ 150 Rs. each

15 body of bomb @ 2000 Rs. each

15 plates of gold @ 15000 Rs. each

15 plates of silver @ 2500 Rs. Each

Carriage 15000 Rs. extra paid half amount same time and balance on credit.

7th April              Assembled 7-time bomb in Faridabad and also spend followings on its assembling: -

Wages 7000 Rs.

Monogram 700 Rs.

18th April           sold 4-time bomb to Khushboo @ 40% profit in cash.

19th April           Khushboo returned one-time bomb due to some technical fault.

21st April           One-time bomb loss by fire

25th April           Bomb was insured so make insurance claim

30th April           Insurance Company admit the claim and payment made by Cheque.

 

TEST-2

1st April              Started business with land and building value 5,00,000 Rs.

2nd April            Purchase some items from Hari Shankar on 5 days credit period then after 10% interest will be charged items are as followings: -

15 Mother board @ 3,500 Rs. Each

15 Processor @ 7,900 Rs. Each

15 Ram @ 1,500 Rs. Each

15 Hard disk @ 3,350 Rs. Each

15 DVD r/w @ 1,000 Rs.  Each

Carriage 1,500 rs. Paid half amount same time and balance on credit.

5th April        Assemble 8 CPU and also spend followings on its assembling

8000 Rs wages

800 Rs misc. Exp.

15th April   Sold 5 of above CPU @ 20% profit to Shyam on 6 days credit then after 10% interest will be charged.

20th April           2 CPU loss by theft.

25th April           Above CPU was insured so make claim.

30th April           Insurance company recovered the CPU and handover to the business.