Basic of Accounts Tally Is A Package: Accounting

Basic of Accounts
Tally is a Accounting Package

Meaning:
Account is a art of recording all business Transaction in a systematic manner.
Transaction is a exchange of anything to others
A business transaction is “The movement of money and money’s worth form one person to
another”. Or exchange of values between two parties is also known as “Business Transaction”.
Transaction
Debit Credit
Dr Cr
By to
Debit
The debit falls on the positive side of a balance sheet account, and on the negative side of a result
item. ... The opposite of a debit is a credit.
Credit
Credit is generally defined as an agreement between a lender and a borrower, who promises to
repay the lender at a later date—generally with interest. ... In accounting, a credit may either
decreases assets or increases liabilities and equity on a company's balance sheet.
Example:
Paid cash to Salary Rs.10000
Cr Dr
Goods purchased from india traders Rs.20000

Accounting Rule:
Manual Accounts Vs Tally Accounts

Transaction Transaction
Journal Ledger
Voucher
Ledger
Trail Balance
Trading Account
Automatic Generation
Profit & Loss Account
Balance Sheet
Accounting Terms
 Purchase: A purchase means goods purchased by a businessman from suppliers.
 Sales: Sales is goods sold by a businessman to his customers.
 Purchase Return or Rejection out or Outward Invoice: Purchase return means the return of
the full or a part of goods purchased by the businessman to his suppliers.
 Sales Return or Rejection in or Inward Invoice: Sales return means the return of the full or a part
of the goods sold by the customer to the businessman.
 Assets: Assets are the things and properties possessed by a businessman not for resale but for
the use in the business.
 Liabilities: All the amounts payable by a business concern to outsiders are called liabilities.
 Capital: Capital is the amount invested for starting a business by a person.
 Debtors: Debtor is the person who owes amounts to the businessman.
 Creditor: Creditor is the person to whom amounts are owed by the businessman.
 Debit: The receiving aspect of a transaction is called debit or Dr.
 Credit: The giving aspect of a transaction is called credit or Cr.
 Drawings: Drawings are the amounts withdrawn (taken back) by the businessman from his
business for his personal, private and domestic purpose. Drawings may be made in the form cash,
goods and assets of the business.
 Receipts: It is a document issued by the receiver of cash to the giver of cash acknowledging
the cash received voucher.
 Account: Account is a summarized record of all the transactions relating to every person,
every thing or property and every type of service.
 Ledger: The book of final entry where accounts lie.
 Journal entries: A daily record of transaction.
 Trail Balance: It is a statement of all the ledger account balances prepared at the end of particular
period to verify the accuracy of the entries made in books of accounts.
 Profit: Excess of credit side over debit side.
 Profit and loss account: It is prepared to ascertain actual profit or loss of the business.
Balance Sheet: To ascertain the financial position of the business. It is a statement of assets and
liabilities.
Practical Examples of Ledger Accounts
In order to better understand the working of ledger accounts, let’s discuss some ledger accounts
examples:-
Example #1
Mr. John Wick wants to start a new clothing business. He has a total sum of Rs.100,000 in his savings that
can be invested. He owns a small shop at a primary location that can be used to start a retail clothing
outlet. For the store, he purchased furniture, including shelves, a counter desk, and other equipment for
Rs.15,000. He also hires a staff of two for customer support and other office work for Rs.5,000 each.
Mr. Wick decided to start with men’s clothing and purchased a complete range of men clothes from the
wholesale market, which costs him around Rs.75,000. The initial purchase got sold in a period of not more
than one month for a total of Rs.95000.
Mr. Wick wants to journalize these transactions and create ledger accounts for the month of April 2019.
 Journal Entries
 Ledger Accounts Example

Example #2
David Baker wants to start a forging factory, where he can manufacture
high-quality chef and military knives. On January 1, 2018, he invested a
sum of Rs.1,000,000 as capital and started The Damascus Forging Works.
He took a bank loan of Rs.750,000 at 5% PA and invested the remaining
amount of Rs.250,000 from his own savings. He opened a current
account and deposited Rs.800,000.
Afterward, he made the following transactions.
 On Jan 2, he rented a factory in the nearby industrial area for Rs.20,000

per month and deposited Rs.100,000 in advance by cheque.
 On Jan 4, Mr. Baker purchased the necessary machinery for Rs.500,000,
paid by cheque.
After setting up the factory, he started production from 5 thJan, and

following transactions took place during the 1 st year:-
Since Mr. Baker maintained all the accounting records himself, he wants
our help to create ledger accounts for the firm.
The ledger accounts:-

Basic of Accounts Tally Is A Package: Accounting

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Basic of Accounts

Tally is a Accounting Package

Goods purchased from india traders Rs.20000

Manual Accounts Vs Tally Accounts

Profit & Loss Account

 Ledger Accounts Example

Afterward, he made the following transactions.

 On Jan 2, he rented a factory in the nearby industrial area for Rs.20,000

After setting up the factory, he started production from 5 thJan, and

The ledger accounts:-

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