Mis VVFGC

INTRODUCTION TO MIS
Management Information System
Chapter : 1
Management:
Management covers the planning, control, and administration of the operations of a concern.
The top management handles planning; the middle management concentrates on controlling;
and the lower management is concerned with actual administration.
Information:
Information, in MIS, means the processed data that helps the management in planning,
controlling and operations. Data means all the facts arising out of the operations of the concern.
Data is processed i.e. recorded, summarized, compared and finally presented to the management
in the form of MIS report.
System:
Data is processed into information with the help of a system. A system is made up of inputs,
processing, output and feedback or control.
Thus MIS means a system for processing data in order to give proper information to the
management for performing its functions.
Definition
A Management Information System is an integrated user-machine system, for providing
information, to support the operations, management, analysis &> decision-making functions in
an organization.
In Other Words
The System utilizes computer hardware & software, manual procedures, models for analysis,
planning, control & decision making and a database
MIS
MIS provides information to the users in the form of reports and output from simulations by
mathematical models.
MIS Characteristics
1. Management Oriented/directed
2. Integrated
3. Common Data Flowst
5. Subsystem Concept
7. Flexibility & Ease of Use
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INTRODUCTION TO MIS
8. Database
9.Distributed Systems
10. Information as a Resource
CHARACTERISTICS OF MANAGEMENT INFORMATION SYSTEM
Management information system and top management - management information

system is a comprehensive and coordinated set of information subsystems which are rationally
integrated and which transform data information in a variety of a ways to enhance productivity in
conformity with the manager’s style and characteristics on the basis of established quality.
1. Management oriented –
 The system is designed from top to bottom. This does not mean that the system will be
geared to providing information directly to top management rather it means that the
system development starts from an appraisal of management needs and overall business
objectives it is possible that top management is the focus of the system such as their
needs cornerstone on which the system is built.
 For example- a marketing information system basic sales order processing the shipment
of goods to the customers and the billing of the goods are fundamental operation control
activities. however if the system is designed properly this transaction information can be
traced by salesman, sales territory, size of order, geography and product line.
2. Management directed –
 Because of the management information system it is imperative that management
actively directs the system development efforts to determine what information is
necessary
 To improve its control of operation it is rare to find an MISwhere the manager himself or
a high level representative of his department is not spending a good deal of time in
system design it not a non time involvement for continued review and participation are
necessary to ensure that the implemented system meets the specification of the system
that designed therefore management is responsible for setting system specification and it
must play a major role in subsequent trade off decision.
3. Integrated - integration is significant because of the ability to produce more meaningful

management information for example in order to develop an effective production scheduling
system we must balance such factors as:
A. Set up cost.
B. Work force.
C. Overtime rates.
D. Production capacity.
INTRODUCTION TO MIS
E. Capital requirement
D. Customer service.
4. Common data flows - Because of the integration concept of management information

system there is an opportunity to avoid duplication and redundancy in data gathering storage and
dissemination.
5. Flexibility and ease of use –
Strategic planning
 MIS cannot be designed overnight. It requires very high degree of planning which goes
into creating an effective organization. The reason for this kind of planning is to ensure
that the MIS being built not only satisfies the information need of the managers today but
can also serve the organization for the next five to ten years with modifications.
Sometimes when the planning part is done away with, systems tend to perform well in the
present, but they tend to become obsolete with time. Planning helps to avoid this
problem.
 Despite a careful analysis of the future management information needs it is impossible to

predict what is desire there to five year. This is true in most industries and especially in
industries with rapid change patterns. And the way it is implemented and used.
6. Data base (Bias towards Centralization)–

 The data is the mortar that holds the functional system together each system requires
access to a master file. If the data is stored efficiently can provide the data needed by any
of the functional system.
 It seems logical to gather data ones, properly validate it and place it on a central storage
medium that can be accessed by any system.
7. Distributed data processing –

 The majority of the companies implementing management information system have a
geographic network of sale office, distribution channel, manufacturing plants,division
,subdivision and so on some of these entities are operated in a completely independent
fashion and therefore may not be part of the integrated MIS.
 Distributed data processing can be thought of as the delivery system, placing information
in the hands of those who need it when they need it.
8. Information as a resource –
 Providing the entire organization must be a concept that information is a valuable
resource particularly in the management control and strategic planning areas must be
properly managed.
 This is a subtle but important change in thinking. It was a common in the past to view the
data processing.
INTRODUCTION TO MIS
Components of MIS
A management information system is made up of five major components namely people,
business processes, data, hardware, and software. All of these components must work together
to achieve business objects.
People – these are the users who use the information system to record the day to day business
transactions. The users are usually qualified professionals such as accountants, human resource
managers, etc. The ICT department usually has the support staff who ensure that the system is
running properly.
Business Procedures – these are agreed upon best practices that guide the users and all other
components on how to work efficiently. Business procedures are developed by the people i.e.
users, consultants, etc.
Data – the recorded day to day business transactions. For a bank, data is collect ed from
activities such as deposits, withdrawals, etc.
Hardware – hardware is made up of the computers, printers, networking devices, etc. The
hardware provides the computing power for processing data. It also provides networking and
printing capabilities. The hardware speeds up the processing of data into information.
Software – these are programs that run on the hardware. The software is broken down into two
major categories namely system software and applications software. System software refers to
the operating system i.e. Windows, Mac OS, and Ubuntu, etc. Applications software refers to
specialized software for accomplishing business tasks such as a Payroll program, banking
system, point of sale system, etc.
Management information system concept is a vital to effective computer use in business of two
or major reason:
1- It serves as a system framework for organizing business computer applications.

businessapplication of computer should be viewed as interrelated and integrated computer based
information system and not as independent data processing job.
2- It emphasized the management orientation of electronics information processing in business

the primary goal of computer based information should be the processing of data generated by
business operations.
INTRODUCTION TO MIS
LEVELS OF MANAGEMENT/(Framework for understanding MIS)

The term level of management refers to a line of demarcation between various managerial
positions. The number of levels of management depends upon the size, technology, degree, of
diversity and nature of product. There are mainly three levels of management in most of the
organization. There are
1. Top level management

2. Middle level management
3. Lower level management
Top level management

 Top level consists of the board of directors, general manager and other senior executives.
 They fix the objectives of the organization. They prepare policies and takes important
decisions to accomplish the objectives of the organization.
 They issue instruction and orders to lower level management. Every organization runs by
the managers in that organization, who are taking opinion in the all step of organizational
activities.
 In a big organization the computer department responsible for giving information or data
also called management information department. In an organizational information system
is used to communicate and analyze the in every levels of the organization. In this level
decides on the board objectives of an organization.
Middle level management

 Middle level consists of head of financial departments. They are responsible to top
management.
 They are concerned with organization and direction function of management.
Interpretation of the programs and policies communicate by the top level management,
organizing and manning their departments as per the main plan, plan the departmental
operations, guide direct and motivate their workers to attain the objective, co-operate and
co-ordinate with other departments, evaluate the performance of his subordinates, collect
reports and statics from the lower and send in to top level management.
 These are the functions of middle level management. Acquire and arrange the resources
to meet the goals of an organization. In this level define the detailed tasks to be carried
out at the operational level.
INTRODUCTION TO MIS
Lower level management

 Lower level management is also known as supervisory management.
 This level includes supervisors, foremen, gang boss, accounts officer, sales officer etc.
They are more concerned with direction and control function of management.
 Their functions are:- plan for a day or weak, organize the activities of his group, allot
work to the workers under him, issue instructions at the site, motivate the employees,
arrange materials, machines, tools etc. for workers, give guidance and supervise the
employees to maintain discipline and good relations with the groups.
MIS Support for Decision Making

 Structured / Programmable Decisions
 Unstructured / Non-Programmable Decisions
 Semi-Structured Decisions
MIS SUPPORT FOR DECISION MAKING
Structured / Programmable Decisions:

Decisions that are repetitive, routine and have a definite procedure for handling them.
For e.g. Inventory reorder formula, Rules for granting Credit.
Unstructured / Non-Programmable Decisions:
Non-routine decision in which the decision maker must provide judgment, evaluation, and
insights into the problem definition.
.
SIMON’S MODEL OD DECISION MAKING:
or
 Intelligence which deals with the problem identification and the data collection on the
problem.
Intelligence phase of decision-making process involves:
Problem Searching: For searching the problem, the reality or actual is compared to
some standards. Differences are measured & the differences are evaluated to determine
whether there is any problem or not.
INTRODUCTION TO MIS
Problem Formulation: When the problem is identified, there is always a risk of solving
the wrong problem. In problem formulation, establishing relations with some problem
solved earlier or an analogy proves quite useful.
 Design is the process of designing solution outlines for the problem. Alternative solutions
are designed to solve the same problem. Each alternative solution is evaluated after
gathering data about the solution. The evaluation is done on the basic of criteria to
identify the positive and negative aspects of each solution.
Design which deals with the generation of alternative solutions to the problem at hand.
 Choice : It is the stage in which the possible solutions are compared against one another
to find out the most suitable solution. The 'best' solution may be identified using
quantitative tools like decision tree analysis
Choice which is selecting the 'best' solution from amongst the alternative solutions using
some criterion.
DECISION-MAKING: STRUCTURED VERSUS UNSTRUCTURED DECISIONS IN

MIS
Decisions are of varying complexity. Some decisions are routine, simple and easy to take
Knowledge about such decisions is very well known.
STRUCTURED DECISION -
 These decisions are these that can be programmed and well defined.
 They are essentially repetitive, routine and involve a defined.
 They are essentially repetitive, routine and involve a definite procedure for handling
them so that they do not have to be treated each as if they were new.
 Structured decisions are also called programmable decisions involve situations where
the procedures decisions involve situations where the procedures to follow when a
decisions are structured or programmed by the decisions procedures or decision rules
developed for them.
 A structured decision could possibly involve what is known as a deterministic decision
or an algorithmic decision.
Exp. Decision making of students results. decision about the payroll systems etc
Features of structured decision:-
 Structured decisions can be delegated.
 The cost of taking such decisions is not as high as that of unstructured ones.
 These decisions can be made with the help of computer systems.
INTRODUCTION TO MIS
UNSTRUCTUREDDECISION -
 These types of decisions are occasional and unique in nature.

 There are no predefined procedures available to solve these problems and a new analysis
is required for each occurrence.
 In top level managers are usually faced with more such unstructured decision making
situations.
 They the strategic decision are non-repetitive vital and important and aim of determining
or changing the ends or means of the enterprise.
 Unstructured decisions are not simple.
 They are usually quite complex in nature. So, there is no tried and true method of
handling them.
 Unstructured decisions are those in which the decision makes must provide judgment
evaluation and insight into the problem definition.
 The risk involved in taking decisions to solve the problems in this is usually high.
 Exp. capital budgeting.
Features of unstructured decision:-

These decisions cannot be delegated.
The cost of taking such decisions is quite high. Compared to structured decisions.
FORMAL VS INFORMAL SYSTEM
Basis of Formal Organization Informal Organization

difference
Formal Organization may be defined On the other hand, informal

as such organization in which organization may be defined as such
Meaning authority, responsibility and account- organization in which authority,
ability of each member are clearly responsibility and account-ability of
defined. each member are not clearly
defined.
INTRODUCTION TO MIS
Objectives The purpose or objective of Where as, the objective of

establishing formal organization is to establishing informal organization is
achieve Pre-determined goals of an just to fulfill the psychological and
enterprise. social needs of its members.
Stability Formal organization is generally On the other hand, informal

more stable in comparison to organization is not as stable as
informal organization, because it is formal organization, because it is
established according to proper rules established, in the lack of proper
and regulations for achieving certain rules and regulations.
goals.
Formal organization is gene-rally On the other hand, informal

more needful to every organization, organization is not as essential to
Need in comparison to informal every organization as formal
organization due to stability. organization due to absence of
proper suitability.
Size Formal organization is generally too On the other hand, informal

large in size, in comparison to organization is generally too small,
informal organization. in comparison to formal
organization.
INTRODUCTION TO MIS
Formal organization is established on On the other hand, informal

the basis of proper rule and organization is established
Establishment regulation, where authority, spontaneously. It doesn't require any
responsibility and accountability of rules and regulation to emerge.
each member are clearly defined.
Types of In formal organization generally On the other hand, in informal

Communication written or formal communication organization generally oral or
takes place to express the orders, informal communication takes place
views and feedback etc. to express the orders, views and
feedback etc.
ANALYSIS & DESGIN OF INFORMATION SYSTEM:
Systems development is systematic process which includes phases such as planning, analysis,
design, deployment/Implementation, and maintenance.
 Systems analysis
 Systems design
Systems Analysis
It is a process of collecting and interpreting facts, identifying the problems, and decomposition
of a system into its components.
System analysis is conducted for the purpose of studying a system or its parts in order to
identify its objectives. It is a problem solving technique that improves the system and ensures
that all the components of the system work efficiently.
Systems Design
It is a process of planning a new business system or replacing an existing system by defining its
components or modules to satisfy the specific requirements. Before planning, you need to
understand the old system thoroughly and determine how computers can best be used in order to
operate efficiently.
INTRODUCTION TO MIS
System Development Life Cycle (SDLC)
System Development Life Cycle (SDLC) is a conceptual model which includes policies and
procedures for developing or altering systems throughout their life cycles.
SDLC is used by analysts to develop an information system. SDLC includes the following
activities −
 requirements
 design
 implementation
 testing
 deployment
 operations
 maintenance
INTRODUCTION TO MIS
Planning
 Define the problem and scope of existing system.
 Overview the new system and determine its objectives.
 Confirm project feasibility and produce the project Schedule.
Analysis and Specification

 Gather, analyze, and validate the information.
 Define the requirements and prototypes for new system.
 Evaluate the alternatives and prioritize the requirements.
 Examine the information needs of end-user and enhances the system goal.
System Design
 Includes the design of application, network, databases, user interfaces, and system
interfaces.
 Create a contingency, training, maintenance, and operation plan.
 Finally, prepare a design document which will be used during next phases.
Implementation
 Implement the design into source code through coding.
 Combine all the modules together into training environment that detects errors and
defects.
 A test report which contains errors is prepared through test plan that includes test related
tasks such as test case generation, testing criteria, and resource allocation for testing.
 Integrate the information system into its environment and install the new system.
Maintenance/Support
 Include all the activities such as phone support or physical on-site support for users that
is required once the system is installing.
 Implement the changes that software might undergo over a period of time, or implement
any new requirements after the software is deployed at the customer location.
 Maintenance and support may be needed for a longer time for large systems and for a
short time for smaller systems.
Limitationof MIS
1. Aggression - The people may hit back at the system and may even sabotage it by using
equipment incorrectly by putting incomplete information into the system or buy actual
destruction of hardware or software.
INTRODUCTION TO MIS
2. Projection - It is a psychological mechanism of blaming difficulties on someone or something

else. When employees blame the management information system for problems caused by
human error or other factors unrelated to the system, projection is taking place.
3. Avoidance - It occurs when individuals defend themselves by withdrawing from or avoiding a

frustrating situation. Managers may avoid the system by ignoring its output, in favour of their
own information sources.
Questions from this Chapter

 Define MIS?
 What is Management?
 What is information?
 What is system?
 Briefly explain characteristics of MIS?
 Explain Formal vs Informal System?
 Explain Simon’s model of Decision making?
 Explain the framework for understanding MIS(Levels of Management)?
 Briefly Explain analysis and design of an information system?
Introduction to E-Commerce
Chapter 2: Introduction to E-commerce
E-commerce -- electronic commerce or EC -- is the buying and selling of goods and services, or the
transmitting of funds or data, over an electronic network, primarily the internet.
History of e-commerce
The beginnings of e-commerce can be traced to the 1960s, when businesses started using Electronic
Data Interchange (EDI) to share business documents with other companies. In 1979, the American
National Standards Institute developed ASC X12 as a universal standard for businesses to share
documents through electronic networks.
After the number of individual users sharing electronic documents with each other grew in the 1980s,
the rise of eBay and Amazon in the 1990s revolutionized the e-commerce industry. Consumers can
now purchase endless amounts of items online.
Types of e-commerce
E-commerce comes in six basic types:
 Business-to-Business (B2B)
 Business-to-Consumer (B2C)
 Consumer-to-Consumer (C2C)
 Consumer-to-Business (C2B).
 Business-to-Administration (B2A)
Business-to-business (B2B) e-commerce refers to the electronic exchange of products, services

or information between businesses. Examples include online directories and product and
supply exchange websites that allow businesses to search for products, services and
information and to initiate transactions through e-procurement interfaces.
Business-to-consumer (B2C) Business to consumer (B2C) refers to the transactions conducted

directly between a company and consumers who are the end-users of its products or services.
The business to consumer as a business model differs significantly from the business-to-
business model, which refers to commerce between two or more businesses.
Consumer-to-consumer (C2C) is a type of e-commerce in which consumers’ trade products,

services and information with each other online. These transactions are generally conducted
through a third party that provides an online platform on which the transactions are carried
out.
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Consumer-to-business (C2B) is a type of e-commerce in which consumers make their

products and services available online for companies to bid on and purchase. This is the
opposite of the traditional commerce model of B2C.
In other words: Customer to Business (C2B), sometimes known as Consumer to Business, is

the most recent E-Commerce business model. In this model, individual customers offer to
sell products and services to companies who are prepared to purchase them.
Business-to-administration (B2A) refers to transactions conducted online between companies

and public administration or government bodies. Many branches of government are
dependent on e-services or products in one way or another, especially when it comes to
legal documents, registers, social security, fiscals and employment. Businesses can supply
these electronically. B2A services have grown considerably in recent years as investments
have been made in e-government capabilities.
Commerce & the Trade Cycle:

Trade Cycle: is an another term of business cycle. A trade cycle refers to fluctuations in
economic activities especially in employment, output and income, prices, profits etc. It has
been defined differently by different economists.
The e-Commerce Trade Cycle:

1. A trade cycle is the series of exchanges, between a customer and supplier,
which take place when a commercial exchange is executed. A general trade
cycle consists of:
Pre-Sales: Finding a supplier and agreeing the
terms. Execution: Selecting goods and taking
delivery.
Settlement: Invoice (if any) and payment.

After-Sales: Following up complaints or providing maintenance.
2. For business-to-business transactions the trade cycle typically involves the
provision of credit with execution preceding settlement whereas in
consumer-to-business these two steps are typically co-incident. The nature
of the trade cycle can indicate the e- Commerce technology most suited to
the exchange.
3. Commercial transactions that are repeated on a regular basis, such as
supermarkets replenishing their shelves, is one category of trade cycle. EDI
is the e-Commerce technology appropriate to these exchanges,
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Generic Trade Cycle can be identified by :

Regular Repeat transaction (repeat transaction)
Irregular transaction where execution and settlement are separated (credit
transaction) Irregular transaction where execution and settlement are combined
(cash transaction)
Note
1. Consumer transactions tend to be once-off (or at least vary each time) and payment is made at the
time of the order. Internet e-Commerce is the technology for these exchanges.
2. The generic trade cycle is the non-repeating commercial trade cycle and Internet e-
Commerce or an electronic market is the appropriate e-technology.
Electronic Markets: (EM)

Electronic markets (or electronic marketplaces) are information Systems (IS)which
are used by multiple separate organizational entities within one or multiple tiers in economic
value chains. In analogy to the market concept which can be viewed from a macroeconomic
as well as from a microeconomic perspective, electronic markets denote networked forms of
business with many possible configurations.
First, the topology of electronic markets may be centralized or decentralized in

nature. Centralized electronic markets are hubs which often provide services to their
participants. Decentralized settings involve sequential relationships within value chains
which often are found when electronic messages are exchanged directly between
businesses (electronic data interchange, EDI).
Note
• It increases the efficiency of the market
• It reduces the search cost for the buyer & makes it more likely that buyer will
continue the search until the best financial markets & they are also used in
airline booking system
• It is irregular transaction trade cycle. Example: Airline Booking System
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Electronic Data Interchange: (EDI)

EDI (Electronic Data Interchange) is the transfer of data from one computer system to
another by standardized message formatting, without the need for human intervention. EDI
permits multiple companies -- possibly in different countries -- to exchange documents
electronically. Data can be exchanged through serial links and peer-to-peer networks, though
most exchanges currently rely on the Internet for connectivity.
Electronic Data Interchange (EDI) is the electronic exchange of standard business

information, in standard formats, between computers. EDI eliminates the need for a paper-
based system by providing an electronic link between companies. This reduces data entry tasks
and improves business cycle times. The documents likely to be used in EDI are invoices,
purchase orders, shipping requests, acknowledgements and payments. EDI is quite different
from generic correspondence like e-mail and involves the exchange of specific documents with
management and tracking procedures designed to efficiency.
 It is used in trade exchanges

 It is used for regular repeat transactions
 It takes quite lot of work to set up systems
 It is part of schemes for just-in-manufacture and quick response supply
Example: EDI is used in large market chain for truncation with their suppliers.
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Internet Commerce:
Definition of internet commerce: Broad term covering all commercial activity on the internet,
including auctioning, placing orders, making payments, transferring funds, and collaborating
with trading partners. Internet commerce is not a synonym for electronic commerce (e-
commerce) but one of its subsets.
The first stage

Advertising appropriate goods and services
Internet sites offer only information & any further steps down the trade cycle are conducted
on the telephone
The Second stage

An increasing no. of sites offer facilities to execute & settle the transaction
Delivery may be electronic or by home delivery depending on the goods and services
The final stage

After-sales service
On-line support & On-Line services.
Intra-business
 Intra-business is the state of business within the organization. It includes how
departments work together to meet organizational goal.
 E-commerce can be done not only between business partners but also within
organizations. Such activity is referred to as intra business EC or in short, intra
business.
 Intra business can be done between a business and its employees (B2E),
among units within the business (usually done as collaborative commerce), and
among employees in the same business.
 E-Commerce between and among Corporate Employees:
Many large organizations allow employees to post classified ads on the company
intranet, through which employees can buy and sell products and services
from each other.
Example: insurance policy
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E commerce Portal:
A portal content business model is a free subscription website that aggregates content
from multiple sources. Portals are intended to build and feed an audience
The business community has realized the portal solution as an opportunity to develop
and maintain integrated and personalized environments for e-commerce.
Based on the natural behavior of an individual portal, portals have been categorized into
 Business-to-consumer (B2C) portals
 Content management system (CMS) portals
 Business-to-business (B2B) portals.
Business-to-Business Portal:
 This is an additional portal if a B2B relationship exists in the e-commerce portal.
A B2B portal provides access for B2B customers to do online ordering, check
order status, payment status, and product information.
 A B2B portal also provides functions for users to manage their relationship with
suppliers, their purchase orders, tracking of shipment/orders, customer orders,
customer payment, bank reconciliation, and inventory management, which
support the entire supply-chain for a B2B model relationship.
Business-to-Consumer Portal:
 This portal provides a set of standard portal in an e-commerce Web site. Portal
include Web site front section, product section, search engine section, contact
page, shopping cart, recommendation section, and payment section.
 This B2C portal also include a set of e-marketing sections such as tell-a friend
portal, news, or mailing list portal, and bookmark us portal.
Content Management System (CMS) Portal:
 This portal is the authoring tools for customizing B2C, CMS and B2B portals. It
allows the complete customization of data structure and layout presentation in
B2C.
 By utilizing the XML, the portals allow the user to customize the product’s data
schema. In addition, the user can modify or create additional static portal.
E-Governance
Definition: E-governance, expands to electronic governance, is the integration
of Information and Communication Technology (ICT)in all the processes, with the aim of
enhancing government ability to address the needs of the general public.
The basic purpose of e-governance is to simplify processes for all, i.e. government, citizens,
businesses, etc. at National, State and local levels.
Benefits of E-governance
 Reduced corruption
 High transparency
 Increased convenience
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 Growth in GDP
 Direct participation of constituents
 Reduction in overall cost.
 Expanded reach of government
Types of Interactions in E-Governance
1. G2G (Government to Government): When the exchange of information and services is
within the periphery of the government, is termed as G2G interaction.
This can be both horizontal, i.e. among various government entities and vertical, i.e. between
national, state and local government entities and within different levels of the entity.
2. G2C (Government to Citizen): The interaction amidst the government and general public is
G2C interaction. Here an interface is set up between government and citizens, which enables
citizens to get access to wide variety of public services.
3. G2B (Government to Business): In this case, the e-governance helps the business class to
interact with the government seamlessly. It aims at eliminating red-tapism, saving time, cost
and establish transparency in the business environment, while interacting with government.
4. G2E (Government to Employees): The government of any country is the biggest employer
and so it also deals with employees on a regular basis, as other employers do in private sector.
E-Learning and Knowledge Building

is the process of creating, sharing, using and managing the knowledge and information
of an organisation. It refers to a multidisciplinary approach to achieving organizational
objectives by making the best use of knowledge.
 Understanding eLearning is simple. E-Learning is learning utilizing electronic

technologies to access educational curriculum outside of a traditional classroom. In
most cases, it refers to a course, program or degree delivered completely online.
 There are many terms used to describe learning that is delivered online, via the
internet, ranging from Distance Education, to computerized electronic learning,
online learning, internet learning and many others.
 Benefits of eLearning: Your schedule, your pace, your place. If you can maintain the
necessary self-discipline, the benefits of eLearning are almost too numerous to
count. You can cover the material when you have time, go over it as often as you
need, all without traveling to the classroom.
 The Knowledge Building (KB) theory was created and developed by Carl Bereiter
and Marlene Scardamalia for describing what a community of learners needs to
accomplish in order to create knowledge.
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

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Scope of E-Commerce : E-Commerce creates new opportunities for Entrepreneurial start-ups.

Ease of internet access, safe and secure payment modes coupled with aggressive marketing by
E-commerce Giants has revolutionized this segment. Rapid development in mobile technology
has given way to mobile commerce with many E-commerce companies shifting to app only
model

Basic advantages of E-commerce which is going to lead its success
1. Time saving
2. Environment friendly
3. Saves space for physical stores and expenses related to it
4. Round the clock availability
5. Unlimited business opportunity.etc




QUESTIONS
1. What is E-Commerce?
2. What is EDI?
3. What is Trade Cycle?
4. Explain Trade Cycle?
5. Explain Types of E-Commerce
6. Explain scope of e-commerce
7. What is e-governance? Benefits of e-governance
8. Explain EDI
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CHAPTER NO -3
Introduction to Tally ERP9 GST
Unit1 : Introduction to Accounting.
Accounting, as an information system is the process of identifying, measuring and communicating

the economic information of an organization to its users who need the information for decision making. It
identifies transactions and events of a specific entity.
American Institute of Certified Public Accountants (AICPA) which defines accounting as “the
art of recording, classifying and summarizing in a significant manner and in terms of money, transactions
and events, which are, in part at least, of a financial character and interpreting the results thereof”.
Objective of Accounting:
Objective of accounting may differ from business to business depending upon their specific requirements.
However, the following are the general objectives of accounting.
i) To keeping systematic record: It is very difficult to remember all the business transactions that
take place. Accounting serves this purpose of record keeping by promptly recording all the business
transactions in the books of account.
ii) To ascertain the results of the operation: Accounting helps in ascertaining result i.e.,
profit earned or loss suffered in business during a particular period. For this purpose, a business entity
prepares either a Trading and Profit and Loss account or an Income and Expenditure account which shows
the profit or loss of the business by matching the items of revenue and expenditure of the some period.
iii) To ascertain the financial position of the business: In addition to profit, a businessman must know
his financial position i.e., availability of cash, position of assets and liabilities etc. This helps the
businessman to know his financial strength. Financial statements are barometers of health of a business
entity.
iv) To know the liquidity position: Financial reporting should provide information about how an
enterprise obtains and spends cash, about its borrowing and repayment of borrowing, about its capital
transactions, cash dividends and other distributions of resources by the enterprise to owners and about
other factors that may affect an enterprise’s liquidity and solvency.
v) To protect business properties: Accounting provides up to date information about the

various assets that the firm possesses and the liabilities the firm owes, so that nobody can claim a payment
which is not due to him.
Users of Accounting Information.
Internal Users:
• Owners
• Managers
• employees & their representatives
External Users:
• Governments
• Inland revenue (taxation)
• Trade & Industry (companies regulation)
• Environment
• Shareholders/investors
• Potential investors
• Creditors & suppliers
• Debtors & customers
• Competitors.
Accounting information helps users to make better financial decisions. Users of financial
information may be both internal and external to the organization.
Internal users of accounting information include the following:
• Management: for analyzing the organization's performance and position and taking
appropriate measures to improve the company results.
• Employees: for assessing company's profitability and its consequence on their future
remuneration and job security.
• Owners: for analyzing the viability and profitability of their investment and determining
any future course of action.
Accounting information is presented to internal users usually in the form of management accounts,
budgets, forecasts and financial statements.
External users of accounting information include the following:
• Creditor: for determining the credit worthiness of the organization. Terms of credit are set
according to the assessment of their customers' financial health. Creditors include suppliers
as well as lenders of finance such as banks.
• Tax Authourities: for determining the credibility of the tax returns filed on behalf of the
company.
• Investors: for analyzing the feasibility of investing in the company. Investors want to make
sure they can earn a reasonable return on their investment before they commit any financial
resources to the company.
• Customers: for assessing the financial position of its supplier which is necessary for a
stable source of supply in the long term.
• Regulatory Authorities: for ensuring that the company's disclosure of accounting
information is in accordance with the rules and regulations set in order to protect the
interests of the stakeholders who rely on such information in forming their decisions.
External users are communicated accounting information usually in the form of financial
statements.
Basics of Accounting Terms:

2.1 Entity.
ACCOUNTING ENTITY is an organization, institution or being that has its own existence for legal or tax
purposes. An accounting entity is often an organization with an existence separate from its individual
members--for example, a corporation, partnership, trust, etc.
2.2 Event.
External or internal transaction or change that is recorded in the double-entry bookkeeping system as a debit
or credit entry. These are happenings, which are of some relevant important to an entity. For eg: Raw
Materials purchased for use in production process ,goods sold to a customer, salary paid to staff etc.,
2.3 Business Transaction.
An economic event that initiates the accounting process of recording it in a company's accounting system.
Business transactions are the interactions between businesses and their customers, vendors and others with
whom they do business. Transactions can be very simple, like buying a newspaper, or extremely complex,
taking a long time and involving many companies or agencies. New technologies and management
approaches are developing around the management of business transactions.
Definition
The accounting definition of a business transaction, according to the online Business Dictionary, is "an
economic event that initiates the accounting process of recording it in a company's accounting system."
This is the official definition. However, selling an item at a garage sale where no accounting system is in
place also can be a business transaction.
2.4 Voucher.
Written instrument that serves to confirm or witness (vouch) for some fact such as a transaction. Commonly,
a voucher is a document that shows goods have bought or services have been rendered, authorizes payment,
and indicates the ledger account(s) in which these transactions have to be recorded.
2.5 Entry.
A written record of a commercial transaction. This is the record in the books of account in respect of a
business transaction. An entry is made on the basis of a voucher.
2.6 Asset.
"An asset is a resource controlled by the enterprise as a result of past events and from
which future economic benefits are expected to flow to the enterprise."
It is important to understand that in an accounting sense, an asset is not the same as

ownership. Now while the business has control over these assets it is not the ultimate owner of
their inherent monetary value. Because, we also saw that if the business ceased trading and sold
these assets, then the money would be used to first pay out the obligations of the business
(liabilities) with the remaining money going to the owners (Owners equity). This is why the
accounting equation states:
The accounting equation
Types of assets in accounting
Assets are categorized in different ways. Firstly they can be split between tangible and intangible.
Tangible assets are those you can physically touch (i.e. land, buildings, equipment ...) and
intangible assets you can't touch but they still have a monitory value and a business can control
them. (i.e. patents, trademarks, copyrights, franchises, goodwill, websites ... ). The second way in
which assets are categorized is how they are represented on the Statement of Financial Position
(or Balance Sheet) i.e. as current assets and non-current assets (or fixed assets)
Current assets
Current assets are cash and other assets that are expected to be converted to cash, sold or consumed
either within a year or in the operating cycle (whichever is longer). These asset values continually
change in the normal course of business activity. There are 5 major sub-groups including:
o Cash and cash equivalents — includes currency, petty cash, bank deposit accounts and
negotiable instruments (e.g., money orders, cheque, bank drafts).
o Short-term investments — include securities bought and held for sale in the near future
to generate income on short-term price differences (trading securities).
o Accounts receivables — money owed to the business from its customers who purchased
goods and/or services on account.
o Inventory — merchandise held for the purpose of selling to customers. Also includes
work-in-progress for a manufacturing business.
o Prepaid expenses — expenses paid in advance. They still have asset value because the
value has not yet been exhausted or used.
Non-current/fixed assets
Non-current or fixed assets have value beyond the next 12 months and do not constantly change
in value like the current assets do. They are classified as such, as long as they remain for use within
the business and are not items that are purchased with the intent to sell.
o Fixed asset accounts may include land, buildings, furniture, fixtures, equipment,
vehicles, computers, furniture and appliances, .
o Long-term investments are investments that are held for many years and are not
intended to be disposed of in the near future. i.e. bonds, common stock, or long-
term notes.
o Intangible assets are items of economic value that are not physical in nature i.e.
Patents, goodwill and trademarks.
Assets in accounting
2.7 Liabilities.
"Liabilities" is the plural of "liability."
In accounting terms, a liability is a debt or obligation that a company must pay.
Liabilities are recorded on a company's balance Sheet and can include accounts payable, taxes,
wages, accrued expenses, and deferred revenues.
Current Liabilities and Long Term Liabilities.
Current Liabilities:
In accounting terms, current liabilities are debts and obligations that a company must pay in the short-term
(within the next twelve months.)
Long term Liabilities:
Long-term liabilities are a category of debts that appear on the company's balance sheet.
Long-term liabilities differ from current liabilities because they are debts that do not need to be
repaid in the current year.
Long-term liabilities are debts that will be repaid in the next year, or longer.
2.8 Capital.
This is the amount which is invested in a business by its owner. Capital is increased by the amount
of profit earned by the business and the fresh amount introduced into the business by the owner.
Capital is decreased by the amount of losses made by the business and the amount withdrawn from
the business by the owner. Capital represents the owner’s claim on the assets of the business. It is
also called Owner’s Equity or Net assets or Net Worth.
2.9 Drawings.
We use drawing many times in financial accounting .Drawing here means any amount
withdraw from business for personal use. Not only cash but if we withdraw any product from
business or any asset of business for personal use that will be drawing.
It surely reduces the capital of any business. So business man must record drawing in his books so
that accountant can calculate correct profit or loss of business man .
2.10 Purchases.
This is the amount of goods bought by a business for being resold to customers. It could also be bought
for ue in production carried out by business. For eg: If 50 kgs of cotton are bought at Rs. 10 per kg for cash,the
amount of cash purchases is Rs.500. Again if 20 Kgs of cotton is bought at Rs.10 per kg on Credit, the amount
of credit purchases is Rs. 200.
2.11 Sales.
This is the amount of goods or services sold by entity to its customers. For e.g. when a business sells 10
kgs of wheat at Rs. 5 per Kg for cash, the total amount of Cash Sales is Rs. 50. Again if 100 Kgs of wheat are
sold at Rs. 5 per Kg on Credit, the amount of credit sales is Rs. 500.
2.12 Inventory.
It is Commonly called Stock. Stock means goods which are held in business for sale to customers or being
used in the production process carried out by the business. Stock consist of Raw Materials, Semi-finished goods
and finished Goods. We should be familiar with the terms Opening Stock and closing Stock.
Opening stock means goods which are lying unsold at the beginning of the accounting period.
Closing stock means goods which are lying unsold at the end of the accounting period.
2.13 Trade Debtors.
A debtor is a person or entity that owes money. In other words, the debtor has a debt or legal obligation to
pay an amount to another person or entity.
This is the person to whom goods have been sold on credit by the business and from whom money is due
to the business.
2.14 Trade Creditors.
A party to whom money is owed. This is the person from whom goods have been purchased on
credit by the business and to whom money is due by the business.
2.15 Expenditure.
Payment of cash or cash-equivalent for goods, or service, or a charge against available funds in settlement
of an obligations evidenced by an invoice, receipt, voucher, or other such document.
This is the cost of buying an asset or goods or service. It results in outflow of assets or creation of a liability.
An expenditure is measured by its cost.
2.16 Incomes.
Accounting income is defined as an estimate of performance in the operations of a company. It is influenced

by financing and investing decisions. Accounting income or loss generally recognizes realized gains and
losses, and does not recognize unrealized gains and losses.
This is the increase in economic benefits during an accounting period. Income could arise in the form of
Inflow of assets into the business or decrease of liabilities of the business.
2.17 Net Profit.

A company's total earnings (or profit). Net income is calculated by taking revenues and adjusting
for the cost of doing business, depreciation, interest, taxes and other expenses. This number is
found on a company's income statement and is an important measure of how profitable the
company is over a period of time.
It means excess of income over expenses. It increases Owner’s Equity.
A net profit is earned if total expenditure is less than the sales figure.
2.18 Net Loss.

The result that occurs when expenses exceed the income or total revenue produced for a given
period of time. For tax purposes, net losses in one time period can be used to counteract the
income/gains generated in another time period. Under tax law, this loss can be carried back as far
as two years.
It means excess of expenses over income. It decreases Owner’s Equity. Amount by which total of costs and
expenses exceeds total revenue in an accounting period.
Unit: 3 Classification of Accounts:
Classification of Accounts:
We can classify accounts in two different ways. These are:
1) Traditional classification of accounts

2) Moden classification of accounts
Traditional Classification of Accounts:

This is very old method of classifying accounts and is not used in most of the advanced countries. Under
this method, accounts are classified into four types. These are:
Personal accounts
Real accounts
Nominal accounts
Valuation accounts(optional)
These four types of accounts are briefly explained below:
Personal Accounts:
These accounts show the transactions with the customers, suppliers, money lenders, the bank and the owner.
A business may have many credit transactions with the above persons or organizations. A separate account
is to be prepared for each of them. Persons or organizations with whom the business has credit transactions
are either debtors or creditors. If they have to give some money to the firm, they are called debtors.
Conversely, if the firm is to pay them some money they are known as creditors. The main purpose of
preparing personal accounts is to ascertain the balances due to or due from persons or organizations.
Real Accounts:
These accounts are accounts of assets and properties such as land, building, plant, machinery, patent, cash,
investment, inventory, etc. When a machinery is purchased for cash, the two accounts involved are
machinery and cash - both are real accounts. But if the same machine is purchased from Z & Co. on credit,
the two accounts involved will be those of machinery and Z & Co., the former being a real account and the
later being a personal account.
Nominal Accounts:
These are the accounts of incomes, expenses, gains and losses. Examples of nominal accounts are wages
paid, discount allowed or received, purchases, sales, etc. These accounts generally accumulate the data
required for the preparation of income statement or trading and profit and loss account.
Valuation Accounts(optional ):
These are the accounts of provision for depreciation and provision for doubtful debts. Where fixed assets
are maintained in the books of accounts at original cost, to reflect the actual book value of the assets, a
provision for depreciation account on the credit is maintained. In the balance sheet, it is shown as deduction
from the original cost of the asset. Similarly, if the debtors' personal accounts are retained at total amount
due, a valuation account on the credit - provision for doubtful debts is required. In the balance sheet, it is
shown as a reduction from sundry debtors account to reflect estimated realizable value.
Example:
Classify the following into real, nominal, personal and valuation accounts:
Plant and machinery - Real account
Purchases - Nominal account
Investment - Real account
Bank- Personal account
Provision for bad and doubtful debt - Valuation account
Tata Iron & steel Co. - Personal account
Rent - Nominal account
Land and Building - Real account
Carriage outward - Nominal account
Capital - Personal account
Leasehold - Real account
Trademark - Real account
Return outwards- Nominal account
Import duty - Nominal account
Provision for depreciation - Valuation account
Modern Classification of Accounts:

Modern accountants classify accounts as follows:
o Assets accounts
o Liabilities accounts
o Capital accounts
o Revenue accounts
o Expenditure accounts
o Withdrawal accounts.
Rules of Debit and Credit:
Rules of Debit and Credit When Accounts are Classified According to Traditional Classification of
Accounts:
Debit and credit are simply additions to or subtraction from an account. In accounting, debit refers to the
left hand side of any account and credit refers to the right hand side. Asset, expenses and losses accounts
normally have debit balances; liability, income and capital accounts normally have credit balances.
The term debit is derived from the latin base debere (to owe) which contracts to the "Dr" used in journal
entries to refer to debits. Credit comes from the word credere (that which one believes in, including persons,
like a creditor), which contracts to the "Cr." used in journal entries for a credit.
Personal Accounts:
Debit the account of the person who receives something and credit the account of the person who gives
something.
Real Accounts:
Debit the account of the asset/property which comes into the business or addition to an asset, and credit the
account which goes out of the business. When furniture is purchased for cash, furniture account is debited
(which comes into the business) and cash account is credited (which goes out of the business).
Nominal Accounts:
Debit the accounts of expenses and losses, and credit the accounts of incomes and gains. When wages are
paid, wages account is debited (expense) and cash account is credited (asset goes out).
Valuation Account(optional):
Debit the account when the account is to be reduced and credit the account when the account is to be
increased.
Rules of Debit and Credit at a Glance
Types of Account Account to be Debited Account to be credited

Personal account Receiver Giver
Real account What comes in What goes out
Nominal account Expense and loss Income and gain
Valuation account When account to be be When account to be increase
decrease.
“The Golden Rule”:
GOLDEN RULES OF ACCOUNTING

REAL ACCOUNTS DEBIT WHAT COMES IN
CREDIT WHAT GOES OUT
PERSONAL ACCOUNTS DEBIT THE RECEIVER

CREDIT THE GIVER
NOMINAL ACCOUNTS DEBIT ALL EXPENSES AND LOSSES

CREDIT ALL INCOMES AND REVENUES.
Accounting principles: accounting principles based on certain concepts, conventions and

tradition have been evolved by accounting authorities and regulators and are followed
internationally
Accounting principles
Accounting Concepts Accounting Conventions

1. Business entity concept 1. Conservatism
2. Money measurement concept 2. Consistency
3. Dual aspect concept 3.Materiality
4. Going concern concept 4. Full Disclosure
5. Cost concept
6. Accounting year concept
7. Matching concept
8. Realisation concept
Accounting Concepts
1. Business entity concept: A business and its owner should be treated separately as far as
their financial transactions are concerned
2. Money measurement concept: only business transactions that can be expressed in terms
of money are recorded in accounting though records of other types of transactions may be
kept separately
3. Dual aspect concept: for every credit, a corresponding debit is made. The recording of a
transaction is complete only with this dual aspect
4. Going concern concept: In accounting a business is expected to continue for a fairly long
time and carry out its commitments and obligations. This assumes that the business will
not be forced to stop functioning and liquidate its assets at low prices.
5. Cost concept: The fixed assets of a business are recorded on the basis of their original cost
in the first year of accounting subsequently these assets are recorded minus depreciation .
6. Accounting year concept: Each business chooses a specific time period to complete a
cycle of the accounting process- Eg: monthly, quarterly, annual.
7. Matching concept: This principle dictates that for every entry of revenue recorded for
correctly calculating profit or loss in a given period.
8. Realisation concept: According to this concept, profit is recognized only when it its
earned. An advance or fee paid is not considered a profit until the goods or service have
been delivered to the buyer.
Accounting Conventions
1. Conservatism: is the convention by which when two values of a transaction are available,
the lower-value transaction is recorded. By this convention, profit should never be
overestimated and there should be a provision for losses.
2. Consistency: prescribed the use of the same accounting principles from one period of an
accounting cycle to the next, so that the same standards are applied to calculate profit and
loss.
3. Materiality: means that all material facts should be recorded in accounting. Accounts
should record important data and leave out insignificant information.
4. Full Disclosure: entiles the revelation of all information, both favorable and detrimental
to a business enterprise and which are of material value to creditors and debitors.
Advantages of Tally
1. Accounting helps to maintain the business records in a systematic manner
2. It helps in the preparation of financial statements
3. Accounting information is also used to compare the result of current year with the previous
year to analyze the changes.
4. It helps the managers in the decision making process
5. Accounting information can be produced as evidence in the legal matter
6. It helps in valuation of business.
Limitations of accounting
1. The items expressed in monetary terms are recorded in the accountings where as the items
which are nonmonetary(EX: investments, profit making) nature not recorded.
2. Sometimes accounting data are recorded on the basis of estimation and which could be
inaccurate.
3. Value of money does not remain stable so accounting value does not show true financial
results
4. Fixed assets are recorded as the original cost.
5. Accounting can be manipulated and biased.
Fundamentals of Tally.ERP 9:
Introduction and Features of Tally.ERP 9:
Tally.ERP 9 is the world’s fastest and most powerful concurrent multi-lingual business accounting
and inventory Management software. Tally.ERP 9,designed exclusively to meet the needs of the
small and medium businesses, is a fully integrated ,affordable and highly reliable software.
Tally.ERP 9 is easy to buy, quick to install, and easy to learn and use. Tally.ERP 9 is
Designed to automate and integrate all your business operations, such as sales, finance, purchasing,
inventory and manufacturing.
Features of Tally.ERP 9:
1 A leading accounting package: The first version of Tally was released in 1988 and, through
continuous development, is now recognised as one of the leading accounting packages across the
world, with over a quarter million customers. Tallys market share is more than 90%.
2. No accounting codes: Unlike other computerised accounting packages which require numeric
codes, Tally.ERP 9 pioneered the no accounting codes concept. Tally.ERP 9 users have the
freedom to allocate meaningful names in plain English to their data items in the system.
3. Complete business solution: Tally.ERP 9 provides a comprehensive solution to the accounting
and inventory needs of a business. The package comprises financial accounting, book-keeping and
inventory accounting. It also has various tools to extract, interpret and present data.
4. Integrated/ Non-integrated accounting and inventory: With Tally.ERP 9, the user is able to
choose between accounting and accounting with inventory. If accounting with inventory is opted
for, the user can choose whether it should be integrated or not.
5. Flexible and easy to use: Tally.ERP 9 is very flexible. It mimics the human thought process,
which means that Tally.ERP 9 can adapt to any business need. Tally.ERP 9 users need not change
the way their business is run to adapt to the package.
6. Speed : Tally.ERP 9 provides the capability to generate instant and accurate reports, which
assists the management to take timely and correct decisions for the overall productivity and growth
of the company.
7. Power : Tally.ERP 9 allows the user to maintain multiple companies and with unlimited levels
of classification & grouping capabilities. It also allows drill down facility from report level to
transaction level
8. Flexibility : Tally.ERP 9 provides flexiblity to generate instant reports for any given period
(month/year) or at any point of time besides providing the facility to toggle between Accounting
& Inventory reports of the same company or between companies.
9. Concurrent multi-lingual capability : Tally.ERP 9 offers you the exclusive capability of

maintaining your accounts in any Indian language, viewing them in another language and printing
them in yet another Indian language.
10. Real time processing : Immediate posting & updation of books of accounts as soon as the
transactions are entered, thereby facilitating instant statements & Reports. It also faciliaties real-
time multi-user environment.
11. Versatility: Tally.ERP 9 is suitable for a range of organizations, from small grocery stores to
large corporations with international locations and operations.
12. Multi-platform availability: Tally.ERP 9 is available on Windows 95, 98, ME, 2000 and NT.
It runs on a single PC or on a network. On a network, it supports access via any combination of
platforms.
13. Online Help : The Tally.ERP 9 Online Help (Alt+H) provides instant assistance on basic and
advanced features or any other relevant topics of Tally.ERP 9.
14. Tally.NET : is an enabling framework which establishes a connection through which the
remote user can access the Client's data without copying / transferring the data.
15. Remote Access : Tally.ERP 9 provides remote capabilities to access the data from anywhere
and anytime.
16. Control Centre : works as an interface between the user and Tally.ERP 9 installed at different
sites and enables the user to centrally configure and administer Site/User belonging to an account.
17 Support Centre : allows a user to directly post his support queries on the functional and
technical aspects of the Product.
18. Auditor's Edition : Tally.ERP 9 offers a special Auditors' Edition of Tally.ERP 9, which
provides auditing and compliance capabilities exclusively for Chartered Accountants.
Some of the new features in Tally.ERP 9 include,

• Remote Access
• Tally.NET (to be read as Tally.NET)
• Simplified Installation process
• New Licensing Mechanism
• Control Centre
• Support Centre
• Enhanced Look & Feel
• Enhanced Payroll Compliance
• Excise for Manufacturers
• Auditors Edition of Tally.ERP 9 (Auditing Capabilities for Auditors)
• Enhanced Tax Deducted at Source.
Facilities with Tally.ERP 9

Groups and Ledgers:
Tally.ERP 9 allows you to create Account heads and groups as per your requirements. The flexiability and
ease of creating user-defined Account Heads and groups as per nature of business or business practice
makes Tally.ERP 9 suitable for businesses across industries,verticals and geographies, without changing
the way they do their business.
Tally.ERP 9 follows the Double entry system of Accounting. It records accounting information by
debiting and crediting different Ledger Accounts using different voucher types depending upon the nature
of transaction. It automatically collates the debit and credit amounts and arrives at the closing balances of
each Ledger or Group.
Meaning of a Group:
Groups are collection of Ledgers of the same nature. Account Groups are maintained to determine the
hierarchy of Ledger Accounts which is helpful in determining and presenting meaningful and compliant
reports.
Tally.ERP 9 has the flexibility of setting user required chart of accounts. You can group the Ledger
accounts under the required Groups at the time of creating the chart of accounts or you can alter them at
any time.
The Group behavior is classified into Capital or Revenue and more specifically into Assets, Liabilities,
Income and Expenditure. The Groups ascertain whether the same will affect Profit and Loss Account which
is revenue in nature or Balance Sheet which is capital in nature.
A Discussion on Each of the Reserved Groups
Non Revenue Primary Groups
Capital Account
This records the Capital and Reserves of the company. The ledgers that belong to Capital Accounts are
Share Capital, Partners' Capital A/c, Proprietor's Capital Account and so on.
Reserves and Surplus [Retained Earnings]
This contains ledgers like Capital Reserve, General Reserve, Reserve for Depreciation and so on.
Current Assets
Current Assets record the assets that do not belong either to Bank Accounts or to Cash-in-Hand sub-groups.
1. Bank Accounts
Current account, savings account, short term deposit accounts and so on.
2. Cash-in hand
Tally.ERP 9 automatically creates Cash A/c in this group. You can open more than one cash account, if
necessary.
Note: An account under Cash-in-hand group or Bank Accounts/Bank OCC A/c group is printed as a separate
Cash Book in the traditional Cash Book format and does not form part of the Ledger.
3. Deposits (Asset):
Deposits contain Fixed Deposits, Security Deposits or any deposit made by the company (not received by
the company, which is a liability).
4. Loans & Advances (Asset):

This records all loans given by the company and advances of a non-trading nature (example: advance
against salaries) or even for purchase of Fixed Assets. We do not recommend you to open Advances to
Suppliers account under this Group. For further details, please refer to the section on Common Errors.
5. Stock-in-hand:
This group contains accounts like Raw Materials, Work-in-Progress and Finished Goods. The balance
control depends on whether you have selected Integrated Account-cum-Inventory option while creating the
company. (refer to Company creation section for more details)
6. Sundry Debtors: a person who receives goods and services from a business in credit.
7. Loans and Advances (current Asset) group:

The Suspense Account is a Balance Sheet item. Any expense account even if it has 'suspense' in its name,
it should be opened under Revenue group like Indirect Expenses and not under Suspense Account group.
Integrated Accounts-cum-Inventory:
This option has a significant effect on the Balance Sheet and Profit & Loss Account. If set to Yes, it brings
the stock/inventory balance figures from the inventory records and provides a drill down to the Stock
registers from the Balance Sheet.
You are not allowed to directly change the closing balance of an account under this group. You are allowed
to pass transactions in Inventory records and the account balances are automatically reflected in the Balance
Sheet as Closing Stock.
Non-integrated Accounts-cum-Inventory:
If Integrated Account-cum-Inventory option is set to No, it ignores the inventory books figures and picks
up manually entered closing stock balances from the ledger account created. This provides the facility to
maintain accounts separately and inventory separately.
You are not allowed to pass transactions if your accounts that come under this Group. It allows you to hold
opening and closing balances only. Since no vouchers can be passed for these accounts, they are the only
accounts for which the closing balances can be directly altered (by an authorised user only).
Current Liabilities:
Accounts like Outstanding Liabilities, Statutory Liabilities and other minor liabilities can be created directly
under this group. Sub-groups under Current Liabilities are Duties and Taxes, Provisions and Sundry
Creditors
1. Duties and Taxes:

Duties and Taxes contain all tax accounts like VAT, CENVAT, Excise, Sales and other trade taxes and the
total liability (or asset in case of advances paid) and the break-up of individual items.
2. Provisions:
Accounts like Provision for Taxation, Provision for Depreciation and so on are recorded under Provisions.
3. Sundry Creditors:
For trade creditors, refer to common and possible errors in grouping of accounts section.
Loans (Liability):
Loans that a company has borrowed, typically long-terms loans.
1. Bank OD Accounts [Bank OCC Accounts]:

Tally.ERP 9 provides you with distinct types of Bank Accounts,
2. Bank OCC A/c:

To record the company's overdraft accounts with banks. For example, Bill Discounted A/cs and
Hypothecation A/cs etc.
Note: An account under Bank OCC A/c group is printed as a separate Cash Book in the traditional Cash
Book format and does not form part of the Ledger.
3. Secured Loans:
Term loans or other long/medium term loans, which are obtained against security of some asset. does not
verify the existence of the security. Typical accounts are Debentures, Term Loans, and so on.
4. Unsecured Loans:
Loans obtained without any security. Example: Loans from Directors/partners or outside parties.
Suspense Account:
In modern accounting, many large corporations use a Suspense Ledger to track the money paid or recovered,
the nature of which is not yet known. The most common example is money paid for Traveling Advance
whose details will be known only upon submission of the Travelling Allowance bill. Some companies may
prefer to open such accounts under Suspense Account.
Miscellaneous Expenses (Asset):

This group is typically used for legal disclosure requirements such as Schedule VI of the Indian Companies
Act. It should hold incorporation and pre-operative expenses. Companies would write off a permissible
portion of the account every year. A balance remains to an extent that cannot be written off in Profit & Loss
Account. Tally.ERP 9 does not show loss, carried forward in the Profit & Loss Account, under this group.
The Profit & Loss Account balance is displayed separately in the Balance Sheet
Branch/Divisions:
This maintains ledger accounts of all your company's branches, divisions, affiliates, sister concerns,
subsidiaries and so on. Tally.ERP 9 permits Sales and Purchase transactions to take place with accounts
opened here. Remember, these are their accounts in your books and not their books of accounts. Just treat
them as any other party account. If you wish to maintain the books of a branch/division on your computer,
you must open a separate company. (Tally.ERP 9 allows maintenance of multiple company accounts).
Revenue Primary Groups:

Sales Account:
You can classify your sales accounts based on Tax slabs or type of sales. This also becomes a simple
mechanism for preparation of Tax returns.
Examples:
Domestic Sales
Export Sales
Now under Domestic Sales open the following ledgers:

Sales (10%)
Sales (5%)
Sales (exempt)
You can even open an account as Sales Returns under the group Domestic Sales to view your net sales after
returns (or the returns may be directly passed through Journal against the specific Sales account).
Note: Do not create customer accounts under this group. For more details, refer to common and possible
errors in grouping of accounts section.
Purchase Account
This is similar to sales accounts, except for the type of transactions.
Direct Income [Income Direct]:

These are Non-trade income accounts that affect Gross Profit. All trade income accounts fall under Sales
Accounts. You may also use this group for accounts like Servicing, Contract Charges that follow sales of
equipment.
For a professional services company, you may not use Sales Account group at all. Instead, open accounts
like Professional Fees under this group.
Indirect Income [Income Indirect]:

These are miscellaneous non-sale income accounts. Example: Rent Received and Interest Received.
Direct Expenses [Expenses Direct]

These are manufacturing or direct trading expenses. These accounts determine the Gross Profit of the
company
Indirect Expenses [Expenses Indirect]:

All administrative, selling or non-direct expenses.
Profit & Loss Account is a reserved primary account in Tally.ERP 9. You can use this account to pass
adjustment entries through journal vouchers. For example, transfer of profit or loss account to Capital or
Reserve account.
Common and Possible Errors in Grouping and Accou nt Classification:

Debtor/Creditor classification:
Accounts of parties with whom your company is trading should be opened under any of the following
groups (or sub-groups under them):
Sundry Debtors
Sundry Creditors
Branch/Divisions
Sales and Purchase account groups are meant for revenue accounts and are reflected in the Profit & Loss
Account. If you open party accounts under these groups, it becomes difficult to pass sales or purchase
voucher transactions.
For example, in a sales voucher transaction entry, you must debit an account, which can be sundry debtor,
branch/division or even a sundry creditor. Moreover, other facilities like bill-wise allocation and tracking
will not be available unless the accounts belong to one of these groups.
Opening two accounts of the same party:

Tally.ERP 9 classifies debtors, creditors and branch/divisions for convenience. This helps you in the process
of keeping the accounts of a particular group together during display and analysis. Thus you can pass both
sales and purchase entries for a party account placed under Sundry Debtors. Use the classification
depending on the most natural group for the party.
For example, parties from whom you buy frequently can be placed under Sundry Creditors, as that is the
natural place to look for their account. Tally.ERP 9 does not restrict the accounts from having obverse
balances. Thus, a Sundry Debtor can have a credit balance depending on the state of his account.
Therefore, you need not open two accounts for the same party - one under Sundry Debtors and another
under Sundry Creditors. Tally.ERP 9 restricts opening of two identical ledger accounts. In such cases, you
may decide to circumvent by marking one account as "A & Co - S/Dr" and another "A & Co - S/Cr". This
will allow you to have two accounts of the same party under two groups, but you will lose the advantage of
analyzing net position at a single instance. It is always better to maintain a single account to obtain best
benefits.
Expenditure items are entered under Liabilities group. For example, the expenditure item Rates & Taxes
under the group Duties and Taxes.
The group Duties and Taxes is specifically meant to handle taxation liabilities of your company. Rates &
Taxes and other statutory expenses should be placed under Indirect Expenses.
Simply adhering to the reserved groups may be sufficient for many organizations. For greater diversity,
Tally.ERP 9 allows you to create your own groups, either as sub-groups or primary groups. Groups can be
sub-classified to practically an unlimited level, giving you a virtual accounting tree. At the lowest level, of
course, would be the ledger account.
Meaning of a 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.
Ex: Purchase, payments, sales, Receipts, etc, all these accounts heads are ledger Accounts.
All Ledgers have to be classified into Groups. Classification of Ledgers to the appropriate groups is very
important. These Groups and Ledgers are classified to Profit & Loss or Balance Sheet. The creation and
usage of Groups in Tally.ERP 9 has been explained earlier. Now you will learn how Tally.ERP 9 works
with Ledgers.
Pre-defined Groups and Ledgers of Accounts:
By default, Tally.ERP 9 provides a list of Groups called pre-defined groups. The user can create any
number of Primary Groups and Sub Groups which are again grouped under a Primary Group/Sub Group.
There are 28 pre-defined Groups in Tally.ERP 9, out of which 15 are Primary Groups and 13 are Sub-
Groups.
15 Primary Groups 13 Sub Groups

Branch/Divisions Bank Accouts.
Capital Account Bank Od A/c
Current Assets Cash-in-hand.
Current Liabilities Deposits (Assests)
Direct Expenses Duties and Taxes.
Direct Incomes Loans and advances(Asset).
Fixed Assets Provisions.
Indirect Expenses Reserves and Surplus.
Indirect Incomes Secured Loans.
Investments Stock-in-hand.
Loans(Liability) Sundry Creditors.
Misc. Expenses(Asset) Sundry Debtors.
Purchases Accounts Unsecured Loans.
Sales Accounts
Suspense A/c.
Among the 15 predefined groups, 9 groups are Balance Sheet items which are capital in nature and
remaining 6 groups are Profit and Loss a/c items which are Revenue in nature.
13 Sub Groups are classified under the 15 Primary Groups and the appear in the Balance Sheet.
Pre-defined Sub Groups: Under
Bank Accounts Current Assets.
Bank OD a/c Loans (Liability)
Cash in hand Current Assets
Deposits(Asset) Current Assets
Duties and Taxes Current Liabilities
Loans and Advances(Asset) Current Assets
Provisions Current Liabilities
Reserves and Surplus Capital Account
Secured Loans Loans(Liability)
Stock in Hand Current Assets
Sundry Creditors Current Liabilities
Sundry Debtors Current Assets
Unsecured Loans Loans(Liability)
Pre-defined Ledgers in Tally.ERP 9:

There are two pre-defined ledgers available in Tally.ERP 9, they are
Cash:
This Ledger is created under the Group Cash-in-hand. You can enter the opening balance as on the date of
books beginning from. You can also alter the name and even delete the Ledger
Profit and Loss Account:

This Ledger is created under the Group Primary. Previous year’s Profit or Loss is entered as the opening
balance for this ledger. The balance entered here is treated as the opening profit/loss and shown in the
Balance Sheet as opening balance of Profit and Loss account in the Liabilities side.
You cannot delete this ledger, but you can modify the same.
Creating Group:
In Tally.ERP 9 there are two options for creating Groups:

Single Group : We can create only one Group by using Single Group creation screen.
Multiple Groups: We can create multiple Groups by using Multiple Group Creation screen.
Creating a Single Group:

Group is a collection of Ledgers of the same nature, Tally.ERP 9 allows you to create groups as per your
requirements.
Go to Gateway of Tally > Accounts Info. > Groups > Create under Single Group
The Group Creation screen is displayed as shown:
Name of Group
Enter the name of the Group to be created. For example Administrative Expenses in the name field.
Alias
Enter an alias name to allow access to the group using the Alias in addition to its name or leave it blank.
For example, for Administrative expenses, you can enter Office Expense or even an alphanumeric code,
say E001, as an alias
Under
Specify under which existing (Parent) group the sub-classification is required.
Note: If it is a new primary group, select Primary (requirement of a new primary group is very rare, but the
option exists). Creation of new Primary Group is not allowed if Allow Advanced entries in Masters is set
to No in F12: Configure. You can also create a new Parent Group by using Alt+C.
Tally.ERP 9 has the flexibility of creating the related Masters from specified screens
Button Shortcut Keys Behaviour
L: Ledgers Ctrl+L Navigate to Ledger Creation screen
V: Vch Types Ctrl+V Navigate to Voucher Creation Screen
Creating Multiple Group:
Tally.ERP 9 allow you to create Multiple Groups simultaneously, you can create them by pressing Enter
on Create under Multiple Groups.
Go to Gateway of Tally > Accounts Info. > Groups > Create (under Multiple Groups):
You can create any number of Groups under an already created/selected Group. In this mode of group
creation, the sub-groups will automatically inherit the characteristics of their parent groups.
You can also create any number of Groups under different Groups by selecting All Items in Under Group
field.
Under Group:
Select the parent group under which you want the new groups to be created from the List of Groups. The
group selected is displayed in the Under Group field.
Name of Group:
Enter the name of the Group.
Under:
If you select any group other than All Items in the Under Group field, then this column is filled in
automatically with the selected Group name and the cursor skips this column. This speeds up data entry.
If you select All Items in the Under Group field, the cursor does not skip this field and allows you to enter
the parent group of each of them.
Note: To change individual group behavior created using multiple groups, use single group alter option.
Altering or Modifying Group:
You can alter the Groups in Single mode or Multiple mode by selecting Alter from the menu to change any
information. You can change the Name of any reserved group, but its characteristics will remain the same.
Single mode:
Go to Gateway of Tally > Accounts Info. > Group > Alter (under Single Group)
Select the Group that you wish to alter from the List of Groups. Make the necessary changes and click Yes
to save the changes.
Altering a Single Group

Multiple Mode:
Go to Gateway of Tally > Accounts Info. > Group > Alter (under Multi Groups)
Altering Multiple Group

Select the Group for which you want to alter from the List of Groups. In Multi Group Alteration screen,
make the necessary changes and click Yes to save changes.
Permanently Deleting a Group:
Go to Gateway of Tally > Accounts Info > Groups > Single/Alter
The Delete function is performed through the single alteration mode. You cannot delete groups from the
Multiple Alteration mode.
Select the Group to be deleted.
Press Alt+D to delete.
Displaying a Group:
You can display the Groups in Single mode or Multiple mode, since it is only display Tally.ERP 9 does not
allow you to alter any information in display mode.
Single Mode:
Go to Gateway of Tally > Accounts Info. > Group > Display (under Single Group)
Select the name of the Group from the List of Groups. You cannot make any changes in the Display mode
Displaying a Single Group

Multiple Mode:
Go to Gateway of Tally > Accounts Info > Group > Display (under Multiple Group)
Displaying Multiple Groups
Select the Group from the List of Groups to display all the Groups under the selected Group or select All
Items to display all Groups. The Multi Group Display screen lists Groups and the corresponding details of
the Groups.
The Ledger:
Creating a Single Ledger.
By default, Tally.ERP 9 contains two Ledger accounts namely, Cash (Under Cash-in- Hand) and
Profit and Loss Account (direct Primary Account). You need to create all other accounts heads.
There are no restrictions in Ledger creation except that you cannot create another Profit & Loss
A/c. Any number of Cash Accounts may be created in any other name for ex: Petty Cash.
Go to Gateway of Tally > Accounts Info > Ledgers > Create
The creation of a Ledger depends on the features you have selected under F11: Features of your
company and F12: Configure. You can create a single ledger account with the default options
enabled.
Go to Gateway of Tally > Accounts Info > Ledgers > Single Ledger > Create
Name
Enter the Name of the account. You can provide the full name of the account. Tally.ERP 9 fits it
all in. Press Enter to move to the next field. Tally.ERP 9 does not allow the entry of duplicate
names. The uniqueness check is made here itself.
Note that the punctuation and other non-relevant information are ignored by Tally.ERP 9 in its
recognition of a name. Thus, CST, C.S.T. and C. S. T. are all considered as same.
Tally.ERP 9 converts the first letter of all relevant words to upper case, which helps you; speed up
data entry.
Alias
Enter an alias name if required. You can access the Ledgers using the original name or the alias
name.
Under
All accounts must be classified under their appropriate Groups. Select the Group under which the
Ledger is created from the List of Groups. (To create a new Group from this field press [ALT +
C]). A wrong classification would affect the treatment of the Ledger account in final statements
and during voucher entry.
You can, alter a Ledger account to change its group classification at any time. Refer Importance
of Grouping and Accounting Classifications: for more details in Grouping
Opening Balance
If yours is an existing company whose books you are entering into Tally.ERP 9, Opening Balance
would be applicable in circumstances where the Ledger is an asset or a liability and if it has a
balance in the account as on the date of beginning of books in Tally.ERP 9.
Tally.ERP 9 recognizes normal accounting principles of debit balances for Assets and credit
balances for Liabilities. It accepts the reverse for obverse balances. Revenue accounts normally do
not have balances. Tally.ERP 9, however, permits you to give balances even for such accounts -
You may be transferring your books on to Tally.ERP 9 in the middle of the year and may not have
closed them in your earlier system. Hence, you may specify whether the balance is Debit or Credit.
Simply D or C would suffice.
Creating a Multiple Ledger:
You can create multiple Ledgers at a time in this mode. This will save the time of the user.
Go to Gateway of Tally > Accounts Info > ledgers > Multiple ledgers > Create
Under Group
Select the name of the group under which you want to create the Ledgers from the List of Groups.
Below this field, the other fields are arranged in a table. The cursor rests at the field Name of
Ledger.
The other fields in the column are:
Sl.No
This is auto generated.
Name of Ledger
Enter the name of the Ledger.
Under
If you select All Items in Under Group field, you have the option to select the group in this column.
You can even create a new group from this field by pressing Alt+C. If you have selected any other
Group in Under Group, the selected group in Under Group gets displayed here automatically and
the cursor skips this column.
Opening Balance
This is the balance remaining when you first enter your books on Tally.ERP 9 9, i.e., the date of
beginning of books. If you have opted to maintain balances bill-by-bill, you must give the bill
details.
Dr/Cr
Specify whether the Opening Balance is Debit or Credit. Tally.ERP 9 follows the normal
accounting principles of accounting.
Displaying or Alter a Single Ledger Account.
Go to Gateway of Tally > Accounts Info. > Ledgers > Display or Alter
Modification of Account Ledgers is possible under Single Ledgers as well as Multiple Ledgers
option. However under Multiple Ledgers, all the fields are not available for alteration
9.5.4 Deleting a Single Ledger Account:

You can delete the ledger if no vouchers have been created under this ledger.
Go to Gateway of Tally > Accounts Info > Ledgers > Alter > Press Alt+D
If you want to delete a Ledger for which Vouchers have been created, then you have to first delete
all the Vouchers from that Ledger and then delete the Ledger Account.
Setting of Inventory Masters:
Inventory Information
The Inventory Info menu, lists the inventory masters like Stock Group, Stock Items, Units of
Measure of the company, using which you can create, alter and display the inventory master
details.
Go to Gateway of Tally > Inventory Info
Note: The Inventory Info menu is displayed in the Gateway of Tally, if you select Type of company
as Maintain Accounts with Inventory in the Company Creation screen.
Configuration of Inventory
By using F12:Configure, you can enable the required settings of Inventory Masters.
By default, the settings pertaining to Inventory Masters are set to No. If you set them to Yes, the
features will be enabled. Typically, they are additional fields that appear during Masters creation
which enable you to obtain more information and detailed analyses for more details.
Functions in Inventory Info. Menu
Inventory information contains the inventory masters. Each master has Create, Display and Alter
functions.
These three functions are grouped under:
1. Single
2. Multiple
In Single, you can execute the function on one master. In Multiple, you can execute the function
on multiple masters.
Functions
Create
The Create option is used to create new masters. Any modification to the masters can be done only
through the Alter mode.
Display
The Display option is used to view the Master information. Master information cannot be
modified in Display mode.
Alter
The Alter option allows you to view and make the necessary changes to the master information.
This does not allow creation of masters. In Alteration mode, you can delete the master. [Press
ALT+D for deletion]
Stock Groups:
Creating a Single Stock Group:
Stock Groups in Inventory are similar to Groups in Accounting Masters. They are helpful in the
classification of Stock Items.
You can group Stock Items under different Stock Groups to reflect their classification based on
some common features such as brand name, product type, quality, etc.
Grouping enables you to locate Stock Items easily and report their details in statements.
Go to Gateway of Tally > Inventory Info. > Stock Groups

Stock Items are classified into stock groups to reflect their classification based on some
community.
To create a Stock Group,
Go to Gateway of Tally > Inventory Info. > Stock Groups > Create (under Single Stock Group)
A brief description on each of the fields in the Stock Group Creation screen follows:
Name
Enter the name of the Stock Group to be created. For example, Grade One.
Alias
Enter additional name apart from primary name [if required]. You can create any number of
additional names.
Under
Specify whether it is a primary group or a sub-group of another group, by selecting from the list.
Press Alt+C to create a parent group, if you do not have it in the list.
Can quantities of items be ADDED?

This field pertains to information on measuring the units of the Stock Items that you would
categorise under the Stock Group.
The Stock Items categorised under the group should have similar units for them to be added up.
You cannot add quantities in Kgs to quantities in Pcs.
Modifying a Single Stock Group:
This option allows you to view the existing Stock Group in edit mode, here you are allowed to
change the various information.
To alter a Stock Group,
Go to Gateway of Tally > Inventory Info. > Stock Groups > Alter (under Single Stock Group)
Select the Stock Group from the List of Groups. The Stock Group Alteration screen is displayed
as shown.
Make the necessary changes and click Yes to accept or press Ctrl+A to Save.
Deletion is possible only in the mode,. For deleting the Stock Group, Press ALT+D.
Displaying a Stock Group.
Go to Gateway of Tally > Inventory Info. > Stock Groups > Display (under Single Stock Group)
Select the Stock Group whose particulars you want to display from the List of Groups. The Stock
Group Display screen is displayed as shown.
Deleting a Single Stock Group.
Deletion is possible only in the alter mode,. For deleting the Stock Group, Press ALT+D.
Note: You cannot delete a stock group, if it is used by any sub groups or stock items. In order to
delete the Stock Group, first delete the relevant sub groups and Stock items.
Creating a Multiple Stock Group.
Tally.ERP 9 allows you to create Stock Groups using single or multiple options.
To create Multiple Stock Groups,
Go to Gateway of Tally > Inventory Info. > Stock Groups > Create (under Multiple Stock Groups)
Select the parent group under which you want the new groups to be created from the List of Groups
A brief description on each field in the Multi Stock Group Creation screen is given below:
Name of Stock Group
Enter the name of the Stock Group.
Under
If you select any group other than All Items in the Under Group field, then this column is filled in
automatically with the selected Group name and the cursor skips this column. This speeds up data
entry.
If you select All Items in the Under Group field, the cursor does not skip this field and allows you
to enter the parent group for each one of them.
Items are Addable? (Y/N)

You can select whether units of the Stock Items under Stock Group are to be added or not.
Units of Measure:
Stock Items are purchased or sold on the basis of quantity. The quantity is measured by Units.
Hence, it is necessary to create Units of Measure. You can have simple units such as numbers,
meters, kilograms, and pieces or compound units like box of 10 pieces [1box =10 pieces]
Go to Gateway of Tally > Inventory Info. > Units of Measure
Creation of Stock Units:
Stock Items are mainly purchased and sold on the basis of quantity. The quantity in turn is
measured by units. In such cases, it is necessary to create the Unit of Measure. The Units of
Measure can either be simple or compound. Examples of simple units are: nos., metres, kilograms,
pieces etc.
To create Simple Units of Measure,
Go to Gateway of Tally > Inventory Info > Units of Measure > Create
The Unit Creation screen is displayed as shown.
A brief explanation of each field in the Unit Creation screen is given below:
Type
This field will show the Type of Units.
▪ Simple
▪ Compound.
Simple units are nos, pcs, etc. Compound unit is a combination of two simple units.
By default Tally.ERP 9 will show the Simple unit for creating the unit of measure.
You can select the Compound Units by clicking on that field or by using SHIFT+TAB [cursor will
go to the previous field].
Example:
Kilogram unit. 1.255 Kgs, here 1 is for Kg and fraction 255 is for gram. For this unit, number of
decimal places required is 3.
Alternation / Deletion of Stock Units:

To alter Units of Measure
Go to Gateway of Tally > Inventory Info. > Units of Measure > Alter
Select the Unit of Measure you want to alter from the Units list. The Unit Alteration screen is
displayed as shown.
Make the necessary changes and accept Yes to save or Press CTRL+A.
You can delete a Unit of Measure from this screen by pressing Alt + D. However, you cannot
delete a Unit of Measure that is part of a compound measure. You must delete the compound
measure first.
Creation of Compound Units.
A Compound Unit is a relation between two Simple Units. Hence, before you create a Compound
Unit, ensure that you have already created two Simple Units.
Example:
To Create Compound unit Doz (Dozen) of 12 Nos (Numbers), you have to create two simple
units, Doz (Dozen) and Nos (Numbers) and set the conversion factor as 12.
Go to Gateway of Tally > Inventory Info > Units of Measure > Create
The Unit Creation screen is displayed as shown. Now Click on Type field or Press SHIFT + TAB
or Press Backspace Key.
Select Compound from the Types of Units and press Enter. The Conversion field will be displayed
for creating Compound unit.
Field Information:
First unit: Select the First unit from the Units List. In the above example, Dozen will be the First
Unit.
Conversion: Specify the conversion Factor. In the above example, Conversion factor will be 12.
Second Unit: Specify the Second Unit from the Units List. In the above example, Number will be
the Second Unit. This unit is also called Tail Unit.
Use CTRL + A or Accept the Screen for Saving of Compound Unit Creation.
10.2.4 Alternation/Deletion of Compound Units:
To alter and Deletion is possible only in the alter mode,. For deleting the Stock Group, Press
ALT+D.
Stock Categories:
Stock Category offers a parallel classification of stock items. Like stock Groups, classification is
done based on similarity in behaviour.
The advantage of Categorizing items is that you can classify the stock items (based on
functionality) together across different stock groups which enables you to obtain reports on
alternatives or substitutes for a stock item.
For enabling Stock Category option in the Inventory Info menu, press F11 > Inventory Features >
Set Yes for Maintain Stock Categories.
Go to Gateway of Tally > Inventory Info. > Stock Category

Creating a Single Stock Category:
This option allows parallel classification of stock items. Like Stock Groups, Stock Categories are
also classified based on some similar behavior.
This enables you to obtain reports for alternatives or substitutes of a stock item.
To create a Stock Categories,
Go to Gateway of Tally > Inventory Info. > Stock Categories > Create (under Single Stock
Category)
The Stock Category Creation screen is displayed as shown.
A brief description of each field in the Stock Category Creation screen is given below:
Name
Enter the name of the Stock Category.
Under
Specify whether it is a primary category or a sub-category of another category. Select Primary
from the list, if you do not have a parent group. Use ALT + C to create a parent if you do not have
the required category in the list.
Modifying a Single Stock Category:

This option allows you to view the existing Stock Category in edit mode, here you are allowed to
change the various information.
To alter a Stock Category,
Go to Gateway of Tally > Inventory Info. > Stock Categories > Alter (under Single Stock
Category)
Select the Stock Category from the List of Categories.
The Stock Category Alteration screen is displayed as shown.
Make the necessary changes and click Yes to accept or press CTRL+A to Save.
Deletion is possible only in the alteration mode,. For deleting the Stock Category, Press ALT+D.
Displaying a Stock Category
You can display the existing Stock Category in Single mode and multiple mode, since it is only
display Tally.ERP 9 does not allow you to alter any information in display mode.
Displaying a Single Stock Category

Go to Gateway of Tally > Inventory Info. > Stock Categories > Display (under Single Stock
Category)
Select the Category for which you want to view the display details from the List of Categories.
The Stock Category Display screen shows the details entered in Stock Category Master.
Deleting a Single Stock Category
Deletion is possible only in the alteration mode,. For deleting the Stock Category, Press ALT+D.
Go to Gateway of Tally > Inventory Info. > Stock Categories > Alter (under Single Stock
Category)
Creating a Multiple Stock Category
Tally.ERP 9 allows you to create Stock Categories using single or multiple options.
To create Multiple Stock Categories,
Go to Gateway of Tally > Inventory Info. > Stock Categories > Create (under Multiple Stock
Category)
The Multiple Stock Category Creation screen is displayed as shown.
A brief description of each field in the Multi Stock Category Creation screen is given below:
Under Category
This field will display the List of Categories. You can select a category for which a multiple sub-
category can be created.
If you select All Items in List of categories, selection of parent category Under column is possible
during creation of sub-category.
If you select specific category in List of Categories, that category will get populated automatically
whenever creation of sub-category and cursor skips Under column.
Name of the category

Specify the name of the Stock Category.
Under
If you have select All Items in Under Category, you must specify a parent category in this column.
Displaying of Multiple Stock categories:
Go to Gateway of Tally > Inventory Info. > Stock Categories > Display (under Multiple Stock
Categories)
Select the Stock Category from the List of Categories.

If you select All Items from the List of Groups, all the categories and sub categories are displayed.
If you select Monitor from the List of Categories, all the sub categories related to Monitor will be
displayed.
Altering Multiple Stock Categories:
To alter Multiple Stock Categories,
Go to Gateway of Tally > Inventory Info. > Stock Categories > Alter (under Multiple Stock
Categories)
Select the Stock Category from the List of Stock Categories. The Multi Stock Group Alteration
screen is displayed as shown.
Make the necessary changes and click Yes to accept or Press CTRL+A to save.
Note: You cannot delete a Stock Category in multiple mode.
Godowns /Locations
Locations/Godowns are places where Stock Items are stored. You can monitor the location-wise
movement of stock by creating multiple Godowns.
Example:
Suppose you have three Godowns, where you store the Goods. In Chennai, you have two Godowns
and in Bangalore, one Godown.
You can create Godowns as shown below:
Godown Under
Godown A Chennai
Godown B Chennai
Godown C Bangalore
First you have to Create Chennai and Bangalore locations and then you have to create Godowns
under the respective location.
Tally.ERP 9 has a default Godown named Main Location. You can alter Tally's default godown
and create a new one. Tally.ERP 9 permits the creation of any number of godowns, under groups
and subgroups to match the structure you need.
You can create Locations/ Godowns only if Maintain Multiple Godowns is enabled in F11:
Features > F2: Inventory Features.
Go to Gateway of Tally > Inventory Info. > Godowns
10.4.1 Creating of Godowns:
To create a Location/Godown,
Go to Gateway of Tally > Inventory Info. > Locations/Godowns > Create (under Single Godown)
The Location/Godown Creation screen is displayed as shown:

A brief explanation of each field in the Location/Godown Creation screen is given below:
Name
Specify the name of the Location/Godown.
Alias
Enter an alias name for the Location/Godown name, if required.
Under
Specify the Location/Godown under which the Location/Godown is to be categorised. Use Alt +
C to create the parent Location/Godown if it is not in the list. Select Primary, if it is not a sub
Location/Godown of any Location/Godown.
Use for
This section is provided in Tally.ERP 9 Release 3.0 where users can create the godowns to store:
The stock of the company lying with third party like Consignment Agent, Bonded Ware house,
Job worker, etc.
Or
Third Party stock lying with the company in case company has received the stock for Job Work or
acting as consignment agent or for any other reason.
• Our Stock with Third Party: Set this option to Yes if the godown is used to account the
company's goods lying with the third party.
• Third Party Stock with us : Set this option to Yes if the godown created is used to account
the goods received from third party and the stock of third party should not affect the
company stock value.
Displaying of Godowns:
Go to Gateway of Tally > Inventory Info. > Locations/Godowns > Display (under Single
Location/Godown)
Alteration of Godowns:
Go to Gateway of Tally > Inventory Info. > Locations/Godowns > Alter (under Single
Location/Godown)
Deleting of Godowns:
You can delete a Godown/ location via Single Godown/Location Alter by pressing [Alt]+[D].
However, you cannot delete a Godown/location with sub-locations. The lower levels must be
deleted first.
Stock Items:
Stock Item refers to goods that you manufacture or trade. It is the primary inventory entity and is
the lowest level of information on your inventory. You have to create a Stock Item in Tally.ERP
9 for each inventory item that you want to account for.
Go to Gateway of Tally > Inventory Info. > Stock Items
Creation of Single Stock Item.

To create a Stock Item, Go to Gateway of Tally > Inventory Info > Stock Item > Single Create
(under Single Stock Item)Stock Item creation is displayed as shown:
A brief description of each field in the Stock Item Creation screen follows:
Name
Specify the name of the Stock Item.
Alias
Specify the Alias name of Stock Item (if required).
Under
This field will show the List of Groups. Here you can select the Stock Group to which the Stock
Item belongs. By default, Primary Stock Group appears in this field.
Note: You can create a new stock Group by pressing ALT+C at this field.
Units
This field will show the Unit List. Here you can select the Unit of measurement applicable for the
stock item. By default, Not Applicable appears in this field.
Note: You can create a new Unit by pressing ALT+C at this field.
Rate of duty
Specify the Rate of Duty applicable for the stock item. This field is used for the calculation of
excise duty or if duty is based on item rate. During Invoicing, whenever you select a Stock Item,
the Rate of duty entered here is displayed in the Invoice creation screen.
Note: In F11 Inventory features, if Allow Invoicing is set to No then Rate of Duty field will not
be visible.
Opening Balance
Specify the details of Opening Stock, if any, for the Stock Item as on the date of Beginning of
Books.
1. In the Quantity Field, specify the stock item Quantity, say 5 Nos.
2. In the Rate Field, specify the stock item Rate, say Rs. 8000 per piece.
3. In the Value Field, Tally.ERP 9 automatically calculates the value by multiplying the
Quantity and Rate. You can also edit the value, Tally.ERP 9 automatically refreshes the
Rate field accordingly.
Note: If Unit field is Not Applicable then the cursor will move from Quantity and Rate Field.
Note: Category and Godown buttons are visible only if you opted for the same in F11: Features.
Deleting of Single Stock Item:
This option allows you to view the existing single Stock Item master in edit mode, here you are
allowed to change the various information.
In the Alteration mode, you can change the item master settings.
If a transaction is entered for that item, it is not possible to alter the units and delete the stock item.
To Alter a Single Stock Item,
Go to Gateway of Tally > Inventory Info > Stock Items > Alter (under Single Stock Item)
Select the Stock Item you want to alter from the List of Items. The Stock Item Alteration screen is
displayed as shown.
10.5.3 Displaying of Single Stock Item:
You can display the existing Single Stock Item master, since it is only display you are not allowed
to alter any information in display mode.
To display a Single Stock Item,

Go to Gateway of Tally > Inventory Info > Stock Items > Display (under Single Stock Item)
Select the Stock Item you want to display from the List of Items. The Stock Item Display screen
is displayed as shown
Creation of Multiple Stock Item:
Now next step is here we are creating multiple stock item:
Click Create under multiple stock item
Modification of Multiple Stock Item: Go to Gateway of Tally > Inventory Info > Stock
Items > Alter (under Multiple Stock Item)
Select a Stock Group or All Items from List of Groups to alter the Stock Item under the selected
group or All Items.
The Multi Stock Item Alteration screen is displayed as shown.
Note: In the Multi Stock Item Alteration screen, you can create an Item by specifying item name
after the last item, but you cannot delete an item.
Displaying of Multiple Stock Item.
Go to Gateway of Tally > Inventory Info > Stock Items > Display (under Multiple Stock Item)
Select a Stock Group or All Items from List of Groups to display the Stock Item under the selected
group or All Items.
The Multi Stock Item display screen is displayed as shown.
Deletion of Multiple Stock Item.

Deletion is possible only in the mode,. For deleting the Stock Group, Press ALT+D.
Note: You cannot delete a stock group, if it is used by any sub groups or stock items. In order to
delete the Stock Group, first delete the relevant sub groups and Stock items.
****************
QUESTIONS
1. which are the two predefined ledger in Tally ERP9?

2. Define Godowns
3. Define stock items
4. Define equity
5. Define voucher
6. What Is the difference between purchase order and sales order?
7. What is debit and credit?
8. What are the functions of accounting?
9. What are the special features of tally?
10. Explain different types of unit measures.
11. Define ledger. Name any few ledger accounts which be created under the group of indirect
expenses and bank account.
12. Briefly explain accounting principles.
13. Explain subgroups 1. Cash in hand 2.duties and taxes 3.loans and advances 4.
Provisions 5.reserves and surplus 6. Bank OD a/c 7.unsecured loan.
14. Define single ledger and multiple ledger and write the steps to create, delete and modify.
CHAPTER-4
VOUCHERS
Unit-1 Accounting Voucher Entry inTally.ERP 9
Introduction:
Accounting Vouchers are used to record all accounts related transactions in Tally.ERP 9. You can
selectively set the configuration for entry to allow only those features, which you require while
entering vouchers.
Go to Gateway of Tally > F12: Configure > Voucher Entry
Types of Vouchers:
Pre-defined Vouchers in Tally.erp 9:
Tally comprises of the following predefined Vouchers, to suit different business

requirements for recording various transactions. Tally also allows you to create user-defined
Vouchers (Voucher Types) as per your requirements.
• Contra Voucher.
• Payment Voucher.
• Receipt Voucher.
• Journal voucher.
• Sales Voucher / Invoice.
• Debit Note Voucher.
• Credit Note Voucher.
• Purchase Voucher / Invoice.
• Memorandum
• Reversing Journal
The Voucher Entry screen is divided into three parts:
• The Main Voucher Entry

• Button Bar
• Calculator
Voucher Entry Screen components

Main Voucher Entry Area
The Main Voucher Entry Area is where you enter all your transactions. This area has fields for
Date, Ledger Name and Amount as well as additional pop-up screens that are dependent on your
voucher configuration and the nature of transaction you make.
Button Bar
The Button Bar area displays buttons that provide quick links to various functions and features of
Tally.ERP 9. Buttons that are relevant to the current task are enabled and the other buttons are
disabled.
Calculator Area
The Calculator area provides a working space where you can enter any number of mathematical
formulae for complex calculations.
Switching between Screen Areas

The Main Voucher Entry Area is the active area by default on the Voucher Creation screen. Press
Ctrl+N to navigate to the Calculator Area and press Ctrl+M to toggle back to Main Voucher Entry
Area. A green bar highlights the active area of the screen.
Note: Press Alt+C to use calculator when at amount field.
Special Keys for Voucher Narration Field
ALT+R: Recalls the Last narration saved for the first ledger in the voucher, irrespective of the
voucher type.
CTRL+R: Recalls the Last narration saved for a specific voucher type, irrespective of the ledger.
Checking the accuracy of the vouchers

To check the accuracy of the vouchers that you have entered:
Go to Gateway of Tally > Display > Day Book
1. Select F2: Period from Button Bar and enter the period for which you want to view
Vouchers.
Note: It defaults to the current date only but you may display all the transactions for a particular
period.
Select F1: Detailed
You can check the vouchers for correctness. To correct a mistake, position the cursor on the item
where you have found the error and press Enter. Tally.ERP 9 displays the voucher details for
alteration. The alteration facility is subject to security and access rights. All alterations are
available for audit.
Contra Voucher (F4):
As per the Accounting Principles, a Contra entry is a transaction involving transfer of cash between one
Cash A/c to another or one Cash A/c to another Bank A/c i.e., is a transaction indicating transfer of funds
from:
Payment Vouchers (F5):
Journal Vouchers (F7)
Sales Vouchers (F8):

Credit Note Voucher (Ctrl + F8):
Purchase Vouchers (F9):
Debit Note Vouchers (Ctrl + F9):

Optional and Non Accounting Vouchers in Tally.ERP 9
The Non Accounting/Unconventional Vouchers are the special vouchers that are used to
record provisional or non-accounting transactions. Unconventional vouchers are mainly used to
exclude unnecessary entries or provisional entries from the books of accounts and make them
available for what if (future reports, projections, forecasts etc.) reports required at any given time.
Memorandum Voucher
This is a non-accounting voucher and the entries made using memo voucher will not affect your
accounts. In other words, Tally.ERP 9 does not post these entries to ledgers, but stores them in a
separate Memorandum Register. You can alter and convert a Memo Voucher into a regular
voucher when you decide to bring the entry into your books.
Some of the uses of Memorandum Vouchers are:
Making suspense payments
Consider that a company gives its employees cash to buy office supplies, the exact nature and
cost of which are unknown. For this transaction you can enter a voucher for the petty cash
advance, a voucher to record the actual expenditure details when they are known, and another
voucher to record the return of surplus cash.
However, a simpler way of doing it is to enter a Memo voucher when the cash is advanced, and
then turn it into a Payment voucher for the actual amount spent, when the details are known.
Consider the following Example:
The Company pays its employee Rs. 1000 as petty cash advance for Office Expenses.
The following entry has to be passed.
To use Memorandum voucher, Enable the following option from F11: Accounting Features
• Use Reversing Journals & Optional Vouchers
Go to Gateway of Tally > Accounting Vouchers > Select Ctrl+F10: Memos from the Button
Bar or click Ctrl+F10.
1. Debit Office Supplies Account

2. Credit Cash Account
Reversing Journals
Reversing Journals are special journals that are automatically reversed after a specified date. They
exist only till that date and are effective only when they are included in reports. These are used in
interim reporting in the course of the financial year where accruals are to be reported. These
accruals are usually short term and are cleared in the subsequent period. However, to get a proper
perspective, decision makers require the reports with full impact of all aspects and transactions.
To activate Reversing Journals,

Go to Gateway of Tally
1. Select F11: F1: Accounting Feature

2. Set Use Reversing Journals & Optional Vouchers? to Yes.
3. Accept the screen to save.
You may use reversion journal for accounting for or providing for depreciation. Since, depreciation
is usually provided during at the end of the year, using the Reversing journal you may include
them for monthly reporting or a specific period to give more accurate status or position.
Let us take an example:
On 30th June you want to view the Balance Sheet but June month’s rent is not been paid. You may
create a Scenario (refer Scenario Management for more information) and pass a Reversing Journal
entry to view the reports which will be effective up to the applicable date. When you view the
Balance Sheet, Tally.ERP 9 displays the report with the reversing journals included. The voucher
affects the report only for that day, 30th June.
Applicable up to
The reversing Journal is available for inclusion in a scenario report till this date. The Reversing
Journal can be created as of a particular date and made Applicable up to a different date.
Reversing Journal Register
All vouchers are maintained in a Reversing Journal Register. These are not posted to any books of
accounts and cannot be included in regular reports. They can only be seen using a scenario.
Go to Gateway of Tally> Display> Exception Reports> Reversing Journals
Unit -2 Inventory Vouchers in Tally.ERP 9
Purchase order (Alt+F4):

Purchase Order Processing is the process of placing orders with suppliers for a purchase to be
made from them and Sales Order Processing is the process of receiving orders from customers for
the purpose of selling. Usually, companies need to track the Order details for Sales and Purchases
as this significantly helps in planning the production process accordingly.
In Tally.ERP 9, Order Processing is linked to Inventory. This allows tracking of the order position
for a Stock Item. Using this you can track the arrival of goods ordered and whether the ordered
Stock Item are delivered on time etc.
Purchase Order is an order placed by a business entity with a supplier for the delivery of specified
goods at a given price and at a predetermined time.
To enable Purchase Order in Tally.ERP 9, activate the following in F11: Features (F2: Inventory
Features)
Set Allow Purchase Order Processing to Yes in the Order Processing section.
.
When the order is placed with the suppliers for the supply of goods, the Items, quantities, date of
receipt etc., details are given with the Purchase Order Number. Later, when these goods are
received, the Purchase Order is tracked for the Order Details either in the receipt note or in the
purchase Invoice.
The Outstanding Purchase Order reports are available in Tally.ERP 9. It is possible to know the
order position of any item in the Stock Summary. Separate Purchase Order Outstanding report and
Purchase Order Summary report are also available.
To enable Purchase Order Processing refer Enabling Order Processing in Tally.ERP 9.
To create a Purchase Order,

Go to Gateway of Tally > Inventory Vouchers > press Alt + F4 or click on Purc Order
Party's A/c Name
Select the Suppliers name from the List of Ledger Accounts. Use Alt + C to create a new account.
Order No:
Enter the purchase order number under Order No column
Name of the Item

Select the Stock Item that needs to be purchased from the List of Stock Items. The Item Allocations
sub-screen is displayed. Enter the details as shown.
Due on
Enter the due date for receipt of the items. This monitors outstanding receipts.
If orders are split for different dates, then specify the due date for the first lot to be received, after
selecting the quantity, rate and amount; specify the due date for the second lot and so on. After
specifying the due dates for all the lots, press Enter in the Due on field to return to the Voucher
Creation screen.
Note: Godown/ Location field will appear, if multiple-location feature is enabled in F11:Features
(F2:Inventory Features).
Quantity, Rate and Amount

Enter the quantity of the item required and its rate. The amount will be calculated automatically.
Accept to save.
Narration
This field is optional. Enter the required particulars concerning the order.
Altering and Deleting the Purchase Order:
To alter a Purchase Order,
Or
Go to Gateway of Tally > Display > Inventory Books > Purchase Orders Book
Make the necessary alterations and save.
Deleting a Purchase Order:
To delete a Purchase Order, press Alt + D in the Purchase Order alteration screen.
Receipt Note. (Alt+ F9):

This voucher type is used for recording goods received from the supplier.
To enter the Receipt Note Voucher,
1. From F11: Inventory Features, Enable the option Use Tracking Numbers (Delivery /
Receipt Notes).
2. Go to Gateway of Tally > Inventory Vouchers
3. Press the button Alt+F9 or Select the button F9: Rcpt Note from the button bar.
Under F12: Configure (Receipt Note Configuration) set the option Accept Supplementary Details
to Yes.
For more details on Receipt Note configurations refer Voucher Entry Configuration
For example, consider the situation where a company receives Item A from a supplier B, if a
Purchase Order exists for that Supplier B, select the Order Number from the List of Orders pop up
menu to bring up the order particulars automatically.
Once you accept the Order details, the cursor will move to the column Name of Item. On pressing
Enter, the Item Allocations screen is displayed.
You can select existing Tracking number or create a new Tracking Number. Tracking number is
the reference to have a link between transactions. For eg: if Tracking Number is selected in the
Receipt Note, the details of the items are automatically displayed in the Purchase Invoice.
The Receipt Note after completion will appear as shown :

Partys A/c Name
Select the Party Ledger from the List of Ledger Accounts from whom the goods have been
received.
Name of Item
Once you select the Order Number from the List of Orders, the item name will be displayed
automatically.

Since the Order number is selected from the List of Orders, quantities, rate and amount will be
displayed automatically.
Rejection Out (Alt +F6): ( Purchase Returns).
The Rejections Out Voucher records goods that are rejected and returned to a supplier.
To view Rejections Out Voucher:
1. From F11: Inventory Features, Enable the option Use Rejection Inward / outward Notes.
3. Press Alt+F6 or Select the button F6: Rej. Out from the Button Bar
For example, the company returns Item A received from Supplier A.

Ledger Account
Select the Partys name from the List of Ledger Accounts, to whom you are returning the goods.
Suppliers Name and Address
Once Partys name is selected under Ledger Account, this column will be filled up automatically
with the address, if provided in the Ledger Master creation screen.
Name of Item
Select the Item from the List of Stock Items. Press Enter on the Item, it will display the Item
Allocations screen.
Under the List of Tracking Numbers, the details of Receipt note along with Tracking number will
be displayed, Select the same and mention the quantity rejected.
Narration
Give the narration, if required.
Sales Order. (Alt + F5):

Purchase Order Processing is the process of placing orders with suppliers for a purchase to be
made from them and Sales Order Processing is the process of receiving orders from customers for
the purpose of selling. Usually, companies need to track the Order details for Sales and Purchases
as this significantly helps in planning the production process accordingly.
In Tally.ERP 9, Order Processing is linked to Inventory. This allows tracking of the order position
for a Stock Item. Using this you can track the arrival of goods ordered and whether the ordered
Stock Item are delivered on time etc.
Sales Order is an order placed by a customer for the delivery of specified goods at a given price
and at a predetermined time.
To enable Sales Order Processing in Tally.ERP 9, activate the following in F11: Features (F2:
Inventory Features)
Set Allow Sales Order Processing to Yes in the Order Processing section.
When the order is received from a customer for goods to be supplied, the Items, quantities, date of
delivery, etc., details are given with Sales Order Number. Later when these goods are delivered,
this Sales Order is tracked for the order Details either in the delivery note or in the sales invoice.
The Outstanding Sales Order reports are available in Tally.ERP 9. It is possible to know the order
position of any item in the Stock Summary. Separate Sales Order Outstanding report and Sales
Order Summary report are also available.
Sales order entry is exactly like the Purchase Order Entry. Sales Order details will also depend on
configuration settings.
To create a Sales Order,
Go to Gateway of Tally > Inventory Vouchers > press Alt + F5 or click on Sales Order
Party's A/c Name

Select the Customers name from the List of Ledger Accounts. Press Alt + C to create a new
account.
Order No
The Order number is automatically displayed. By default it will take the Voucher number as Order
No. You can change this number if required.
Name of the Item
Select the Item for which the order is to be placed from the List of Stock Items. The Item
Allocations sub-screen is displayed as shown.
Enter the details as shown.

Due on
Enter the due date for the Delivery of the items. This monitors outstanding Delivery of the items.
If orders are split for different dates, then specify the due date for the first lot to be received. After
selecting the quantity, rate and amount; specify the due date for the second lot and so on. After
specifying the due dates for all the lots, press Enter in the Due on field to return to the Voucher
Creation screen.
Note: Godown/ Location field will appear, if multiple-location feature is enabled in F11:Features
(F2:Inventory Features).
Enter the quantity of the item and its rate. The amount will be calculated automatically.
Narration
This field is optional. You can give some particulars about the order.
Altering a Sales Order:

To alter a Sales Order,
Or
Go to Gateway of Tally > Display > Inventory Books > Sales Orders Book
Make the necessary alterations and save.
Deleting a Sales Order
To delete a Sales order, press Alt + D in the Sales Order alteration screen.
Delivery Note. (Alt + F8):
The Delivery Note Voucher is used for recording goods delivered to a customer.
To pass the Delivery Note voucher,
1. From F11: Inventory Features, Enable the option Use Tracking Numbers (Delivery /
Receipt Notes).
3. Press Alt+F8 or select the button F8: Dely Note from the button bar.
Under F12: Configure (Delivery Note Configuration) set Accept Supplementary Details to Yes.
For example, the company delivers goods to Customer A. If a Sales Order exists for that customer,
selecting the appropriate Order Number from the List of Orders pop-up menu will automatically
bring up the relevant particulars.
Once you accept the Order details, the cursor will move to Name of Item column. On pressing
Enter, the Item Allocations screen is displayed.
You may select an existing Tracking number or create a new Tracking Number. Tracking number
is the reference to have a link between transactions. For eg: if Tracking Number is selected in the
Delivery Note, this will automatically display the details of the items in the Sales Invoice.
The Delivery Note Voucher after completion will appear as shown :

Partys A/c Name
Select the Party Ledger from the List of Ledger Accounts to whom goods are delivered.
Name of Item
Once we select the Order Number from the List of Orders, the item name will be displayed
automatically.

Since the Order number is selected from the List of Orders, quantities, rate and amount will be
displayed automatically.
Rejection in. (Ctrl + F6):
A Rejections In Voucher is used to record goods that are rejected and returned by the customer.
To enter the Rejections In Voucher,
1. From F11: Inventory Features, Enable the option Use Rejection Inward / outward Notes.
3. Press Ctrl+F6 or select the button F6: Rej. In from the Button Bar
For example, Customer A returns Item A delivered by the company.
Ledger Account
Select the Partys name from the List of Ledger Accounts, from whom the goods have being
returned.
Customers Name and Address

Once Partys name is selected under Ledger Account, this column will be automatically populated
with address, if provided in the Ledger Master creation screen.
Name of Item
Select the Item from the List of Stock Items. Press Enter button on the Item, it will display the
Item Allocations screen.
Under the List of Tracking Numbers, the details of Delivery note along with Tracking number will
be displayed, select the same. Mention the quantities returned.
Narration
Give the narration, if required.
Stock Journal ( Alt + F7):
For Inter Project / Site Transfer, use Stock Journal
Go to Gateway of Tally > Inventory Vouchers > Stock Journal.
1. Select the Godown from the List of Godowns, to where Items are to be transferred.
2. Select the item from the List of Items.
3. Select the Godown from the List of Godowns, from where goods are transferred.
4. Enter the Quantity and Rate, Amount will be displayed automatically.
5. Enter the Narration, if required.
Physical Stock Voucher
Physical Stock Voucher is used for recording the actual stock which is verified or
counted. It could happen that the Book Stocks and the Physical Stock do not match. It is
not unusual that the company finds a discrepancy between actual stock and computer stock
figure.
Physical vouchers will be useful for recording purposes only if you have configured inventory
vouchers to ignore physical stock differences. If you have configured the vouchers so that physical
stock difference is not ignored, then all transactions subsequent to the physical stock voucher will
use the balance as mentioned in that voucher.
To view the Physical Stock Voucher,
Go to Gateway of Tally > Inventory Vouchers
1. Select the button F10: Phys Stk from Button Bar or press Alt+F10.
2.
Date
Enter the stock taking date.
Name of Item
Select the name of the item from the List of items, for which physical stocks need to be recorded.
Godowns
Select the Godown (Godown will appear only if, Maintain multiple Godowns is activated in
F11:Features :F2:Inventory Features), in which the Physical Stock taking was conducted.
Batch / Lot No
Select the Batch number (Batch details will appear only if, Batch wise details are activated in
the Stock Item Master screen) for which the Physical Stock quantity is to be recorded.
Quantity
Enter the Physical Stock quantity
Note: Physical Stock quantity will be displayed as Actual Stock in the Stock Summary from
the date of entry of the Physical Stock.
GSTR-1:
Say for e.g. If a person has entered into a transaction of supply of goods, then there must be
someone who would be the recipient of the supply of goods. Supplier of the goods would be
originating point of the transaction and he would specify, in his return, details of the supply along
with the recipient to whom supply has been effected. The return for the inward supplies of the
recipient of the supply would get auto-populated with the details provided by the supplier in his
return for the outward supplies. Thus, GSTR-1 becomes the base document upon which the entire
compliance structure in GST would be based.
GSTR-2:
Once the supplier furnishes the details of the supply and recipient in GSTR-1, details would be
auto-populated and communicated to the recipient in GSTR-2A. Recipient would confirm the
details filled in by the supplier in GSTR-1 and reflected in GSTR-2A. If he agrees with the same,
the transaction would be frozen and GSTR-2 would be prepared. However, if the recipient
disagrees then recipient would communicate to the supplier about his disagreements which then
would be reflected in GSTR-1A to the supplier. Supplier in turn would have the option to modify
the details furnished in GSTR-1 as per the request of the recipient auto-populated before him in
GSTR-1A or keep the details unchanged.
GSTR-3:
GSTR-3 would be a consolidated monthly return and will contain details of tax liability along with
the tax collected on outward supplies and tax paid on inward supplies by registered person. It
would be auto-populated through GSTR-1 and GSTR-2 of the registered person. There would be
minimal manual intervention and system itself would be updating records.
GSTR-3:
Filing GSTR 3B form is mandatory for all those who have registered for the Goods and
Services Tax (GST). The GSTR 3B is a simple tax return form introduced by the Central Board
of Excise and Customs (CBEC) for the month of July and August. The forms - GSTR-1, GSTR-2
and GSTR-3 - for the months of July and August are to be filed in the month of September. In
the interim, all GST registrants have to file GSTR-3B form.
It is must that you have a separate GSTR 3B file for each Goods and Services Tax Identification
Number (GSTIN) you have. You can mention only total values for each field in this form;
invoice level information is not required for this form.
An important point to note is that some portions of Part B of GSTR-3 will be

automatically populated from GSTR 3B file. So, in case there is any discrepancy between the
two forms you can correct GSTR-3 later and deposit the taxes payable.
GSTR 3B must be filed by everyone who has registered for GST. However, individuals
such as - Input Service Distributors, Composition Dealers, Suppliers of online information and
database access or retrieval services (who have to pay tax themselves as per Section 14 of the
IGST Act, and Non-resident taxable person - do not have to file GSTR 3B.
Invoice Entry: When a sales transaction is made ,a document detailing the

transaction(itemname, tax etc) has to be given to the buyer or debtor as proof of purchase by
him. This document is called invoice or bill or cash memo.
Note: sales voucher is the invoice entry
Payroll: Tally payroll is integrated with accounting to give the user the benefits of
simplified payroll processing and accounting. Tally payroll enables the user to set up and
implement salary structures, ranging from simple to complex as per the organization’s
requirements. You can also align and automate payroll processes and directly integrate them with
main stream accounting applications.
Enabling payroll in tally
Goto gateway of tally -> f11: features -> accounting features ->set maintain payroll to yes and
also you can set more than one payroll/ cost category to yes if you wish to process the payroll.
Questions
1. what is an invoice?
2.write a note on:
a) Memorandom voucher
b) credit note
3. Explain 1.purchase return 2.Reversing journal 3.sales order
4.Explaing Gstr1,Gstr2 and Gstr3

CHAPTER-5
Tally Reports
Introduction
Reports play an important role for businesses to help manage their day-to-day business operations
efficiently. Understanding this need, Tally.ERP 9 provides many insightful reports. Reports in Tally.ERP
9 are designed to suit all the aspects of accounting management, inventory management and statutory.
Balance Sheet
The Balance Sheet gives a complete glance of the financial position of a business. The
Balance Sheet in Tally.ERP 9 shows the assets and liabilities of a company. From the Gateway of
Tally screen, a business owner can access the Balance Sheet. The Balance Sheet can be configured
using F12 configuration in Tally.ERP 9. Tally.ERP 9 also offers Schedule VI Balance Sheet for
businesses. The Balance Sheet can be viewed for any given dates. Multiple valuation types are
given for defining stock valuations such as FIFO, LIFO, Average Cost, Average Price and many
more.
Stock Summary
The Stock Summary report displays the current position of stocks or stock in hand for a
particular date. From this Tally report a business owner can view item-wise rates, quantity and
value of stocks available. The Stock Summary report in Tally.ERP 9 also enables business owners
to view gross profit at each item level based on landing cost and sales price. It also shows the status
of stocks available across various godowns. The user can see the net stock position by considering
purchase and sales orders which are yet to be processed.
Profit & Loss Account
The Profit & Loss report in Tally.ERP 9 shows a company’s net profit or loss in a given period.
By default, this Tally report considers the period starting from the date when the books begin to
the entry date of the last voucher. The Profit & Loss report in Tally.ERP 9 can be configured with
F12 configuration available within the report. A business owner can see Schedule VI Profit & Loss
account or P&L statement in vertical format based on the requirements.
Ratio Analysis Report in Tally.ERP 9
The Ratio Analysis report is a powerful report for financial analysis in Tally.ERP 9. The multiple
ratios in the report give a clear understanding of the financial position of a business. These are
Debt Equity Ratio, Quick Ratio, Return on Working Capital, Return on Investment and so on. This
is one of the key Tally report.
Trial Balance
A trial balance is a summary of all ledger balances, and helps in checking whether the transactions
are correct and balanced. If journal entries are error-free and posted correctly to the general ledger,
the total of all debit balances should be equal the total of all credit balances.
Note : By default, the Trial Balance report will be generated as on the date of the last voucher entry.
You can change the date to view the report for the required period.
Account Books in Tally 9
Books of account record the individual transaction details you have entered. Although you may
post items to many different ledgers, Tally brings all the transactions of one category together into
a book of account for viewing and printing. For example, the Cash Book records all the transactions
affecting cash, the Sales Book records all the sales transactions.
1) All books are displayed first as a monthly summary with opening and closing balances.
2) Select a month and press [enter] to display all transactions for the month. The opening and
closing balances as well as transaction totals are also displayed.
3) Select a transaction to bring up the voucher. This voucher comes up either in display or in
alteration mode depending upon the access rights available to you.
Cash Book
A cash book is a financial journal that contains all cash receipts and payments, including
bank deposits and withdrawals. Entries in the cash book are then posted into the general ledger.
Bank Book
A Bank book is a financial journal that contains all bank deposits and withdrawals.
Sales Register
Sales Register displays the monthly summary of sales transactions and closing
balances. The list of transactions pertaining to each month can be viewed by
selecting that month. You can change the display according to the information
required.
The period of the report and the content details can be modified. Columnar periodic
reports can be generated using Alt+N: Auto Column for different periods as shown
by the columnar details list. You can also compare similar data of two or more
companies stored in the same data directory.
With the sales register you can:
● Analyse the periodic turnover using the option F2: Period .
● Compute the periodic taxes on such turnovers.
● Trace the errors made while recording the transactions.
● Analyse the sales returns during the year and take timely action to
remove undesirable causes.
● Analyse the performance of godown, salesperson, sales area, and so on, with
the help of cost centre and cost category report.
To know more, click the links below:
● Columnar Sales Register
● Monthly Sales Summary
● Extract of Sales Register
● Sales Register with Profitability
● Comparative Sales Register

Purchase Register
A Purchase Register displays the information on the periodic purchases of a business concern. Purchase register
helps in analyzing the details of movement of purchased goods to various godowns, on the basis of which the
stock movement at each godown is determined.
Go to Gateway of Tally > Display > Account books > Purchase Register
The following screen is displayed.
Purchase returns made during a year can also be traced. The parties to whom the purchase returns have been
made and the causes thereof can be analysed to draw conclusions on the supplier and the quality of purchases
made.
A Purchase Register can be configured using the Ctrl+F12: Value button to view the following information.
• Actual Quantity
• Billed Quantity
• Date
• Bill Name
• Cost Centre
• Cost Category
• Voucher Number
• Narration
• Stock item
• Godown Name
Journal Register
It shows the report of Debit Note, Credit Note & Journal voucher reports.
Cash Flow/Fund Flow
The Cash Flow report in Tally.ERP 9 has been provided to help get a view of cash inflow and
outflow during an accounting period. This report makes it easy for business owners to understand
the cash flow situation for a specific period and helps make decisions.
Pay roll Reports
Chart showing Payroll Reports in Tally.ERP 9
Payroll Reports in Tally.ERP 9
We shall discuss each report in detail in the sections as explained below:
Pay Slip
A Pay Slip refers to a document issued to an employee, which itemises each component of
his/her earnings and deductions and the net amount paid for a given pay period. It provides
particulars on how the net amount has been arrived at i.e., how much money has been earned and
how much tax / deductions have been made.
Display Pay Slip
Go to Gateway of Tally > Display > Payroll Reports > Statements of Payroll > Pay Slip >Single
Pay Slip
• Select the required Employee and press Enter
The Pay Slip for the selected employee is displayed as shown:
Pay Slip
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INTRODUCTION TO MIS

Management Information System

CHARACTERISTICS OF MANAGEMENT INFORMATION SYSTEM

Management information system and top management - management information

3. Integrated - integration is significant because of the ability to produce more meaningful

4. Common data flows - Because of the integration concept of management information

5. Flexibility and ease of use –

 Despite a careful analysis of the future management information needs it is impossible to

6. Data base (Bias towards Centralization)–

7. Distributed data processing –

1- It serves as a system framework for organizing business computer applications.

2- It emphasized the management orientation of electronics information processing in business

LEVELS OF MANAGEMENT/(Framework for understanding MIS)

1. Top level management

Top level management

Middle level management

Lower level management

MIS Support for Decision Making

MIS SUPPORT FOR DECISION MAKING

Structured / Programmable Decisions:

DECISION-MAKING: STRUCTURED VERSUS UNSTRUCTURED DECISIONS IN

 These types of decisions are occasional and unique in nature.

Features of unstructured decision:-

FORMAL VS INFORMAL SYSTEM

Basis of Formal Organization Informal Organization

Formal Organization may be defined On the other hand, informal

Objectives The purpose or objective of Where as, the objective of

Stability Formal organization is generally On the other hand, informal

Formal organization is gene-rally On the other hand, informal

Size Formal organization is generally too On the other hand, informal

Formal organization is established on On the other hand, informal

Types of In formal organization generally On the other hand, in informal

ANALYSIS & DESGIN OF INFORMATION SYSTEM:

System Development Life Cycle (SDLC)

Analysis and Specification

2. Projection - It is a psychological mechanism of blaming difficulties on someone or something

3. Avoidance - It occurs when individuals defend themselves by withdrawing from or avoiding a

Questions from this Chapter

Chapter 2: Introduction to E-commerce

Business-to-business (B2B) e-commerce refers to the electronic exchange of products, services

Business-to-consumer (B2C) Business to consumer (B2C) refers to the transactions conducted

Consumer-to-consumer (C2C) is a type of e-commerce in which consumers’ trade products,

Consumer-to-business (C2B) is a type of e-commerce in which consumers make their

In other words: Customer to Business (C2B), sometimes known as Consumer to Business, is

Business-to-administration (B2A) refers to transactions conducted online between companies

Commerce & the Trade Cycle:

The e-Commerce Trade Cycle:

Settlement: Invoice (if any) and payment.

Generic Trade Cycle can be identified by :

Electronic Markets: (EM)

First, the topology of electronic markets may be centralized or decentralized in

Electronic Data Interchange: (EDI)

Electronic Data Interchange (EDI) is the electronic exchange of standard business

 It is used in trade exchanges

The first stage

The Second stage

The final stage

E-Learning and Knowledge Building