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TALLY EXERCISE – 1.1

1. Classify The following into Income, Expenditure, Assets and Liabilities (Put Tick
mark in the appropriate column)

Income Expenditure Asset Liability

1 Cash in Hand
2 Salaries
3 Wages
4 Rent paid
5 Land
6 Buildings
7 Bank Balance
8 Over draft
9 Traveling
10 Dividend received
11 Interest paid
12 Sundry Debtors
13 Sundry Creditors
14 Loans and Advances (dr)
15 Capital
16 Reserves and Surplus
17 Income tax
18 Provisions
19 Bills Receivable
20 Furniture and Fittings
21 Indian Bank Deposits
22 Printing and Stationery
23 Telephones bills
24 Computer
25 Scooter

2.Classify The following into Income, Expenditure, Assets and Liabilities (Put Tick mark
in the appropriate column)
Income Expenditure Asset Liability
1 Cash at Bank
2 Factory Rent
3 Lighting
4 Interest paid
5 Tools
6 Furniture
7 Bank Balance
8 Over draft
 9 Bills Payable
10 Dividend earned
11 Interest paid
12 Sundry Debtors
13 Sundry Creditors
14 Loans and Advances (dr)
15 Sheeja Capital
16 Provisions and Reserves
17 Sales tax
18 Land and Buildings
19 Bills Receivable
20 Fittings
21 IOB Deposits
22 Pooja Expenses
23 Telephones bills
24 Computer
25 Van

TALLY EXERCISE 1.2

1.Find the nature of the following entries (Please put tick mark in the appropriate
column)
RECEIPT PAYMENT CONTRA
1 Electricity bill paid
2 Wages paid
3 Interest received
4 Discount allowed
5 Purchases
6 Sales
7 Furniture purchased
8 Scooter purchased
9 Computer Purchased
10 Salaries paid
11 Telephone expenses
12 Dividend income
13 Amount deposited into IOB
14 Money transferred from IOB
TO Indian Bank
15 Amount received from Sundry
Debtors
16 Amount paid to creditors
17 Money deposited into Canara
Bank
18 Money transferred from Canara
bank to Indian Bank
19 Machinery purchased
 20 Loan amount received from
Raman
TALLY Exercise 1.3
1. Prepare Trial balance of MM Associates :
Balances Amount (Rs.)
Capital 50000
Cash 15760
Bank 12800
Purchases 27100
Sales 27000
Furniture 15000
I Opening stock 1800
Brokerage 40
Typewriter 2100
Rent paid 1000
Salary Account 1500
Return inwards 100
Return outwards 1100
Debtors 4400
Travelling 100
Sundry Creditors 4200
Discount allowed 100
Telephone 500

2. Prepare Trial Balance for the following balances taken from the books of MM Traders:
Balances Amount (Rs.)
Capital 40000
Creditors 13000
Salaries 7200
Bills Receivable 15800
Bills Payable 8700
Debtors 28000
Sales 144000
Insurance 1200
Miscellaneous Expenses 600
Land and Buildings 23000
Discount paid 900
Commission received 800
Sales returns 3400
Purchase returns 2400
Carriage inwards 1400
Purchases 97500
Stock Opening 29900

3. Prepare the trial balance for the following balances taken from the books of MM Agency.
 Balances Amount (Rs.)
Opening stock 9300
Repairs 310
Machinery 12670
Furniture 1330
Office Expenses 750
Trading Expenses 310
Land and Buildings 15400
Bank Charges 50
Mis. Income 200
Purchases 15450
Purchase Returns 440
Sales Returns 120
Sundry Creditors 12370
Advertisement 500
Cash in Hand 160
Cash at Bank 5870
Sales 20560
Sundry Expenses 150
Insurance 500
Travelling Expenses 200
Capital 24500
Loan 5000

4. Prepare Trial Balance for the following balances taken from the books MM General
Merchants:
Balances Amount (Rs.)
Capital 180000
Drawings 3200
Opening Stock 9000
Purchases 64500
Sales Returns 2000
Sales 119000
Wages 16000
Insurance paid 1500
Duty paid 10,000
Packing expenses 2000
Carriage outwards 8000
Postage 100
Advertisement 1000
Miscellaneous expenses 300
Discount received 500
Bills Payable 9000
Bank over draft 3000
Land 90000
 Plant 70000
Furniture 1000
Debtors 25400
Creditors 42000
Cash 40500
Deposits 9000

TALLY EXERCISE 1.4

(1)
(a) Journalise the following transactions:
1. Malini started business with Rs.50,000
2. Opened current account with Indian overseas Bank with Rs.5,000
3. Bought goods from Latha Rs.40,000
4. Paid to Latha Rs.25,000
5. Sold goods to Kumar Rs.36,000
6. Kumars account was settled .

(b)Write the above entries in the following manner:

Account to Debited Account to be credited
Malini started business with Rs.50,000
Opened current account with Indian overseas
Bank with Rs.5,000
Bought goods from Latha Rs.40,000
Paid to Latha Rs.25,000
Sold goods to Kumar Rs.36,000
Kumars account was settled .
(c)List the ledger accounts to be opened for the above said transactions.
(2).
(a) Journalize the following transactions:
3.2.2003 Bought goods for cash Rs.14,500
7.2.2003 Sold goods to Laxhmi on credit Rs.5,000
9.2.2003 Received Commission Rs.300
10.2.2003 Cash sales Rs.29,000
12.2.2003 Bought goods from Meenakshi on credit for Rs.6,000
15.2.2003 Received five chairs from Saravana Trader at Rs.300 each.
20.2.2003 Paid Cash to Saravana Stores.
28.2.2003 Paid Salaries Rs.1,000
28.2.2003 Paid Rent Rs.500
(b) Write the above entries in the following manner:
Account to be Debited Account to be Credited
Bought goods for cash Rs.14,500
Sold goods to Laxhmi on credit Rs.5,000
Received Commission Rs.300
Cash Sales Rs.29,000
Bought goods from Meenakshi on credit for
Rs.6,000
 Received five chairs from Saravana Trader at
Rs.300 each.
Paid Cash to Saravana Stores.
Paid Salaries Rs.1,000
Paid Rent Rs.500

(c)List out the ledger accounts to be opened for the above said transactions
(3) (a)Journalise the following Transactions:
1. Mani started business with the capital of Rs.50 Lakhs
2. Land Purchased for Rs.2lakhs
3. Goods Purchased from Raju Rs.2500000 on cash.
4. Goods Purchased from Raghu Rs.1,00,000 on credit
5. Goods sold on cash Rs.15 lakhs
6. Goods sold on credit to Raja Rs.20 lakhs.
7. Salaries paid Rs.10,000
8. Carriage inwards paid Rs.25000
9. Interest received Rs.25000
10. Computer purchased Rs.25,000
11. Money collected from Raja Rs.50,000
12. Cash paid to Raghu Rs.10,000
13. Money deposited into Indian Bank Rs.2,00,000
14. Amount transferred to Canara Bank from Indian Bank Rs.35,000
15. Payment made to Raghu by Indian Bank Cheque for Rs.1,00,000
16. Telephone expenses paid Rs.2000
17. Goods sold for cash Rs.5,00,000
18. Goods sold on Credit to Radha Rs.50,000
19. Goods purchased from Amar for Rs.2lakhs on credit
20. Cash purchases made Rs.25,000
21.Additionl Capital introduced by Mani Rs.10,00,000
22. Money deposited into Indian Bank Rs.2,50,000
23. Ten tables are purchased from Wood world each Rs.1,000
24. Payment made to Wood World by Indian Bank
25 Goods purchased from Lal and co on Credit Rs.35,000

3(b) Write the above transactions in the form of accounts to be debited and
credited.
3(c) List out the ledger accounts to be opened for the above said transactions

ACCOUNTING VOUCHERS
Procedure:
1. If the tally package was present in the desk top window double click the icon to open it.
2. In company information select create company-> to create a new company.
3. Creation of Ledger Accounts:
In Gate way Tally select Account information
Select Ledger – Select single ledger create
Then type all the ledger accounts required based on the transactions.
Control A to save-enter-press escape yes-press escape up to getting gateway tally
menu.
4. Creation of Inventories:
In gate way tally select inventory information

Select stock group-select single stock group

Then type all the stock groups under Primary
Control A to save & escape to reach the gate way tally screen.

5. Settings:
Gateway Tally (Master)->Select Account information enter
Press F11->Set the Account features as:
Maintain bill wise details YES
Control A – Press escape up to Gate way Tally (Master)

Select Inventory information enter

Press F12->it goes to configuration
Select Acc/Inv information
Set the Choice as
Allow Standard Rates for Stock items YES
Control A to save -> Configuration
Select voucher entry enter set the choice as
Use Single entry
NO
Use Dr/Cr instead of To/By

YES
Control A to save
Press Escape up to Gate way Tally

6. Create Units of Measure:

In gate way tally screen Select Units of Measure
Type Symbol as Nos and Formal name as Numbers

7. Creation of Stock Items:

In Gate way Tally Screen select Inventory information
Select stock items & Select single stock item create
Name: Sony 10 Kg
Under: Washing Machine
Units: Nos

Allow Std. Rates: Yes -> enter

Fill standard cost (purchase price) and Selling Price
Control A to save Press escape up to getting Gate way Tally Screen.
8. Entering the Transactions:
In Gat way Tally Screen select accounting vouchers
F4
Contra F5 Payments
F6
Receipts
F8
Sales
F9 Purchases
Note:1. While entering the transaction if any new ledger to be created use Alt
C
2. Save every entry by control A.
TALLY QUESTION BANK
PART A
1. Define the term ‘Accounting’.

2. What is the need for Accounting to the Business Organizations?

3. Name the few important terms in accounting.
4. What is Accounting Cycle?
5. List out the usual transactions in a Business.
6. What are the three types of accounts maintained for transactions?
7. How do you classify the business organizations based on its transactions?
8. What is service organization?
9. What is manufacturing organization?
10. What is Trading organization?
11. State the concepts in of accounting.
12. What is Book Keeping?
13. Explain single entry system of book keeping.
14. Explain Double entry system of book keeping.
15. What is Real Accounts?
16. What is Personal Accounts?
17. What is Nominal Accounts?
18. State the rules for Personal Account.
19. State the rules for Real Account.
20. State the rules for Nominal Account.
21. What is a Journal?
22. What is a compound Journal Entry?
23. What is voucher?
24. What is a trial balance?
25. State the advantages of trial balance.
26. State the purpose of preparing the trading account.
27. List out the purposes of preparing Profit and Loss account.
28. What is a Balance Sheet?
29. Explain the term ASSETS.
30. Explain the term LIABILITIES.
31. How can be assets classified?
32. How can be liabilities classified?
33. State any four features of Tally Package.
34. How do you create company details in Tally?
35. How do you select the company in Tally?
36. How do you delete the company in Tally?
37. Name the few functional keys in Tally?
38. What are groups?
39. Mention any four primary groups in Tally.
40. Mention any four-sub groups in Tally.
41. What is ledger?
42. How do you create ledgers in tally?
43. How do you classify the accounting transactions while working in Tally?
44. What do you refer as Contra Entry?
45. Mention any four components of company creation screen.
46. State the benefits of accounting on computers.
47. How can you view the trial balance in Tally?

PART B

51. Discuss the different concepts and conventions of Accounting.

52. Describe the features of TALLY Package.
53. Elucidate the needs of Accounting for Business Organizations.
54. How do you classify the business organizations based on its transactions and explain them in
detail.
55.Compare and Contrast Computerized Vs Manual Accounting.
56. What are the advantages and limitations of Double Entry System of Book Keeping?
57. Describe the nature of a Balance sheet and give the format of a Balance Sheet.
58. Distinguish between a Trial Balance and Balance Sheet.
59. Draw the flow chart for company creation and company alteration details in Tally.
60. State any twenty functional keys and its purpose while using the Tally.

TALLY
PART A
Accounting Definition:
Accounting is the art of recording, classifying and summarizing the business transactions
in a significant manner.
Need for Accounting:

To know the results of operations.

To know the financial position as on date.
To know the liquidity position
 For business acquisition.
For statutory compliance.
Few Important terms in Accounting:

 T r ansact io ns
 Acco u nt
 V o u cher
Capital
Purchases and Sales
Stock etc.
Accounting Cycle:
The accounting cycle is a complete sequence of accounting procedures, which are
repeated in the same order during accounting period.
Usual Transactions involved in Business:

Purchase of goods
 Payment for Expenses
Sale of goods or services
Receipts etc.
Types of Accounts maintained for Transactions:

Real Accounts
Personal Accounts
Nominal Accounts
Classification of Business Organizations based on transactions:
Trading organization
Manufacturing organizations
Service organizations
Service Organization:
An organization providing services is called as service organization.
Trading organization:
An organization involved in the process of buying and selling is called as trading
organization.
Manufacturing Organization:
An organization in the process of transforming raw materials into finished goods for
consumers, or for further processing by others is called manufacturing organization.
Concepts in Accounting;

Entity concept
 Dual Aspect concept
 Going concern concept
 Accounting period concept
Money measurement.
Book Keeping:
Art of recording in a systematic manner in the books of accounts. Single Entry system of Book
Keeping: It refers the system where only the personal and cash aspects of the transaction are
recorded in the books. Double Entry system:

It is the most common system of book keeping whereby the two aspects of every transaction i.e.
the receiving aspect and the giving aspect are recorded in the books of accounts.
Real Account:
Real Account refers the visible and real items. E.g. cash, bank etc
Personal Account:
Personal Account refers the person with whom the company has dealings. E.g. customers
and suppliers.
Nominal Account:
It refers the expenses and income accounts. E.g. salaries , rent received
Journal:
A journal may be defined as the book of original or prime entry containing a record of
transactions from which the posting is done to the ledger.
Voucher:
A voucher is a document containing the details of financial transactions. E.g., Sales
invoice, purchase invoice, pay slip etc.
Trial Balance:
Trial balance can be defined as a list of balances standing on the ledger accounts and cash
book of a concern.
Advantages of Trial Balance:

 It is a consolidated statement of all the balances.

 It helps to verify the accuracy of the entries made in the ledger.
It helps to prepare the final accounts. Purposes of Preparing the Trial Balance:
 To verify the accuracy of the entries made in the ledger.
To prepare the final accounts.
Purpose of preparing the Trading Account:
To find the margin over purchase and sale of goods.
Purpose of Preparing the Profit and Loss Account:
It is the statement prepared to compare the incomes and expenses and finally reports
whether Net Profit or Net Loss incurred during the accounting period.
Balance sheet:
A statement which sets out the Assets and Liabilities of a business firm and which serves
to ascertain the financial position of the same on any particular date.
Assets:
Assets represent everything, which a business owns and has money value.
Liabilities:
It represents the responsibility of the business to repay in terms of Rupees.
Classification of Assets:
Fixed Assets
 Current Assets
 Tangible Assets
Fictitious Assets
Classification of Liabilities:

 Long term liabilities

 Current liabilities
 Contingent liabilities.
Features of Tally Package:

Maintain complete range of accounts.

 Provided multiple reports.
Various options
Allows accounts of multiple companies simultaneously.
Creaton of Company in Tally:
Go to Gateway Tally > Company info >Create Company
Alteration of Company Details in Tally:
From Gateway Tally -> Company information menu –> Select Alter –> Enter.
(To go to company information Alt F3)
Selection of Company in Tally:
From Gate way of Tally -> Company information menu -> Select Company (enter).Tally
displays the name of the company screen. Select the company as you wish.
Deleting a Company:

Follow the same path as that used for Alter company to display company alteration screen. Here
use Alt + D key and Tally displays a message ‘Delete’ Yes or No. By pressing yes or enter key .
Tally displays another message ‘Are you sure?’ Yes or No. By pressing yes company will be
deleted.
Functional Keys in Tally:

F1 = To select company.
Alt+F1 = To shut company.
F2 = To change Date
Alt + F2 = To change period
Alt +F3 = To get into company info screen
Control + A = to save the screen.
Groups:
Collection of ledgers based on similar nature of ledgers are known as groups.
Primary Group:
Primary Groups are the main groups which will be useful at the time of reporting
Sub-Groups:
Sub groups are the secondary groups, which is based on the primary Group.
Primary Groups:

Capital Accounts
 Current Assets
 Current Liabilities
Fixed Assets
 Loans and liabilities etc.
Sub Groups:

 Cash in hand
 Cash at Bank
Sundry Debtors
Provisions etc.,
Ledger:
Ledger is an accounting head which is used to enter the transaction and identify the same.
Creation of Ledger in Tally.
Gate way of Tally -> Accounts information -> ledgers -> create.
Contra Entry:
Contra entry is a transaction indicating transfer of funds from cash account to bank
account / bank account to cash account / one bank account to another bank account.
Benefits of Accounting in computers:

 Multiple reports available in short time

Accuracy
 Enables faster decision-making.
Components of Company creation Screen:

Directory
 N a me
 Mailing Name
Address and State
 Email Address
Use Indian VAT
Currency symbol etc.
View of Trial Balance in Tally:
Gate way of Tally > Display > Trial balance.
Financial Reports Available in Tally:
 Balance Sheet
 Profit and Loss Account
Trial Balance
 Account Books
Day Books
Day Book:
The day book is a list of all transactions for a particular day.
Tally Financial Accounting Certification:
The tally financial accounting certification is an online test for business accounting Tally.
Once certified you will join the global community of Tally Certified Professionals.
PART B
Business organizations perform a variety of transactions and can be classified as follows:

Service Organizations
 Trading Organizations
 Manufacturing Organizations.
Service Organizations:
Meaning: An organization providing services is called service organizations.
Nature:
Service organizations provide their services at the point of consumption by the
customer . Thus, such organizations could be severely hit on price if there is
demand dip at the time for production.
Services are perishable, So the pressure on the service organization to provide
services is more than that on a manufacturing organization or a trading
organization.
Customer interaction is greater in service organizations than in manufacturing
or trading organizations.
In service organization, services are usually provided by people, not
machines. So, service organizations are more labour intensive than
manufacturing organizations.
Customer goodwill is an intangible asset for service organizations, which can
be destroyed quickly.
Accounting in a Service Organization
:The organization maintains regular books of account. Most service organizations do
not deal in inventory and therefore, do not need to maintain inventory records. They
do not follow a standard pricing policy for all customers, at all times.
CUSTOMER

Services Payment of bills

Service Organization

Dr. S. Muthumani/Management Studies/Sathyabama University. Trading Organization: Meaning: An organization

involved in the process of buying and selling is called Trading Organization. Nature:
 The actual market price is established and valid for a short based on the current supply and demand.
 The value of the product is determined by the customers expectations of quality.
 A trading organization has to continually keep track of market demand and ensure that inventory planning is
done to take advantage of demand whenever it arises.
 Different customers may be charged different prices by varying the percentage of discount on the price list.
Accounting in a Trading Organization:

The trader must keep track of stock availability, customer requirement, cost of procurement and market changes.
The accountant in trading organization has to maintain updated inventory records apart from regular accounting.

Collections

Custome0072 Demand Trading organization

Inventory based on customer demand

Sale Arrival of stock

 A company needs to account for inventories like raw materials, work in
 progress and finished goods to arrive at the profit made for the period.
 Changes in the inventory valuation method change the profits made during the period.
 Accounting in manufacturing organizations requires more planning, preparation and
scheduling as compared to accounting in trading and service organizations.

FEATURES OF TALLY PACKAGE:

A leading accounting package: The first version of Tally was released in 1988 and through
continuous development, is now recognized as one of the leading accounting packages across the
globe, with over quarter million customers. Tally’s market share is more than 90% NO
Accounting codes: Unlike other computerized accounting packages that require numeric codes,
Tally pioneered the no accounting codes concept. Tally users have the freedom to allocate
meaningful names in plain English to their date items in the system.
Complete business solution: Tally provides a comprehensive solution to the accounting and
inventory needs of business. The packages comprises of financial accounting and book-keeping
and inventory accounting.
Flexible and easy to use: Tally is very flexible. It minimize the human thought process, which
means that Tally can adapt to any business need, rather than the user trying to change the way
the business is run to adopt to the package.
Versatility: Tally is suitable for a range of organizations from small grocery stores to large
corporations with international locations and operations.
Multi-Platform availability: Tally is available on Windows 95, 98, ME, 2000 and NT. It runs on
a single PC or a network , supports access via any combination of platforms.
Simple and rapid installation: Tally has a simple, menu-driven installation procedure. The user
can install the program files on any drive, if the hard disk has partitions.
Unlimited multi-user support: A multi-user version of Tally can be installed on a net work
having any number of computers with different operation systems like Win 95, 98, NT 2000, XP
and Linux. Internal back up/restore: Tally has in built, user friendly back up and restores option.
Tally helps the user to take back ups of one or more companies or all companies in a single
directory in the local hard disk or in any external media.
Tally Audit: The Tally audit feature provides the user with administrator rights, a capability to
check the correctness of the entries made by the authorized users and alter these entries, if
necessary. Once the entries are audited, Tally displays the altered entries, if any, along with the
name of the user who has altered the entry and the date and time of the alteration.
Multi-directory for company management: The user can create multiple directories where he can
store data. The data stored in these directories can be accessed directly in Tally by specifying the
path

FUNCTIONAL KEYS IN TALLY:

F2 - To change Date
Control A - To save
Control Q - Exit
Alt F2 - To change period
F4 - Contra
F6 - Receipts
F8 - Sales
F9 - Purchase
F 11 - To set features
F 12 - To set configuration
Esc - To go back to the previous screen
F1 - Select company
Alt C - To create new ledgers, settings etc.
Alt F2 - To shut the company