Wyyme Technology Junction: ERP Packages

Tally ERP 9 - Accounting

Basic concept of accounting

Accounting: It is an art of recording, classifying and summarizing in significant manner and
in terms of money, transactions and events which are of financial character and interpreting the
results thereof.

Business transaction: A business transaction is “The movement of money and money’s worth
form one person to another”. Or exchange of values between two parties is also known
as “Business Transaction”.

Purchase: A purchase means goods purchased by a businessman from suppliers.

Sales: Sales is goods sold by a businessman to his customers.

Purchase Return or Rejection in or Outward Invoice: Purchase return means the return
of the full or a part of goods purchased by the businessman to his suppliers.

Sales Return or Rejection out or Inward Invoice: Sales return means the return of the full
or a part of the goods sold by the customer to the businessman.

Assets: Assets are the things and properties possessed by a businessman not for resale but for
the use in the business.

Liabilities: All the amounts payable by a business concern to outsiders are called liabilities.

Capital: Capital is the amount invested for starting a business by a person.

Debtors: Debtor is the person who owes amounts to the businessman.

Creditor: Creditor is the person to whom amounts are owed by the businessman.

Debit: The receiving aspect of a transaction is called debit or Dr.

Credit: The giving aspect of a transaction is called credit or Cr.

Drawings: Drawings are the amounts withdrawn (taken back) by the businessman from
his business for his personal, private and domestic purpose. Drawings may be made in the
form cash, goods and assets of the business.

Receipts: It is a document issued by the receiver of cash to the giver of cash acknowledging
the cash received voucher.

Account: Account is a summarized record of all the transactions relating to every person,
every thing or property and every type of service.

Ledger: The book of final entry where accounts lie.

Journal entries: A daily record of transaction.

Trail Balance: It is a statement of all the ledger account balances prepared at the end of particular
period to verify the accuracy of the entries made in books of accounts.

Profit: Excess of credit side over debit side.

Profit and loss account: It is prepared to ascertain actual profit or loss of the business.

Balance Sheet: To ascertain the financial position of the business. It is a statement of
assets and liabilities.

Types of accounts

Personal account: Personal accounts are the accounts of persons, firms, concerns and
institutions which the businessmen deal.

Principles: Debit the receiver

Credit the giver

Real Account: These are the accounts of things, materials, assets & properties. It has
physical existence which can be seen & touch.

Ex. Cash, Sale, Purchase, Furniture, Investment etc.

Principles: Debit what comes in

Credit what goes out

Nominal account: Nominal account is the account of services received (expenses and Losses)
and services given (income and gain)

Ex. Salary, Rent, Wages, Stationery etc.

Principles: Debit all expense/losses

Credit all income/ gains

Tally 7.2

Tally is a complete business solution for any kind of Business Enterprise. It is a full fledged
accounting software.

Procedure for creating company in Tally

Double click on Tally icon on desktop. Alt+F3 Company info-Create company.

Accounts Only: To maintain only the financial accounts of the company. Inventory (stock)
management is not involved in it.

Account with Inventory: This is the default option, which allows maintaining both the
financial account of the company as well as the inventory of the company.

Select Company: We can choose the company which is already created.

Shortcut key - F1.

Shut Company: It is used to close the company which is opened. Shortcut key - Alt+F1.

Alter: It is used to make alterations in the company creation like name, date, maintain etc.

Quit: Exits from Tally. 1. Click on quit button.

2. Esc, Esc, Esc and enter.

3. Ctrl+Q

Short cut keys

Alt+F3 Company information menu

Enter To accept information typed into a field.

To accept a voucher or master.

To get a report with further details of an item in a report.

Esc To remove what has been typed into a field.

To exit a screen.

To indicate you do not want to accept a voucher or master.

Ctrl+A To accept a form wherever you use the key combination the screen or
report will be accepted as it is on this screen.

Ctrl+Q It quits the screen without making any changed to it.

Alt+C To create a master at a voucher screen.

When working within an amount field presses Alt+C to act as a calculator.

Alt+D To delete a voucher.

To delete a master.

Ctrl+Enter To alter a master while making an entry or viewing report.

F2 Date

Alt+F2 Change period

Alt+F1 To see detail

F11 Features company

F12 Configuration options are applicable to all the companies in a data directory.

Ctrl+N Calculator screen.

Ctrl+V Voucher mode (Cr. Dr)

Invoice mode (name of item, rate, quantity, and amount)

Gateway of tally-Accounts info-Group

Bank account Bank Account

Bank Od account Branch/division

Capital account Cash in hand

Current asset Current liability

Deposit Direct expenses

Direct income Indirect expense

Indirect income Duties and tax

Fixed asset Investment

Loans and advance Loan (liability)

Miscellaneous expenses Provisions

Retained earning Reserves and surplus

Purchase account Sales account

Secured loan Stock in hand

Sundry debtor’s Sundry creditors

Suspense Unsecured account

Meaning:

Current asset:

It is converted into cash with in a year. Ex. Bills receivable

Direct expenses:

These are the expenses which are directly related to manufacturing of goods.

Ex. Wages, factory rent, heating, lighting etc

Indirect expense:

These are the expenses which are indirectly related to manufacturing of goods.

Ex. Salary, rent, stationery, advertisement, printing

Depreciation: Decrease the value of the asset.

Sundry debtors: The person who is the receiver or customer

Sundry creditors: The person who gives or supplier.

Expenses Outstanding or Unpaid expenses or Expenses due:

Expenditure incurred during current year but the amount on which is not yet paid.
(Added to the expenditure on the debit side and entered on the liability side.)

Income received in advance or Income received but not earned

Income received during the current year but not earned or a part of which relates to the
next year. (Deducted form the concerned income on the credit side and entered on the liability side)

Prepaid advance or Expenses or Prepaid expenses

Expenditure paid during current year but not incurred or a part of which relates to the next
year is called expenditure prepaid. (Deducted form the concerned expenditure on the debit side
and entered on the assets side)

Income outstanding or income earned but not received or Income accrued

Income outstanding means income earned during the current year but the amount on
which is not yet received (added to the concerned income on the credit side and entered on the
asset side)

Gateway of Tally-Accounts info-ledger-create

Ledger	Group
Opening stock	Stock in hand
Purchase	Purchase account
Purchase return	Purchase account
Fright charges	Direct expenses
Carriage inwards or Purchases	Direct expenses
Cartage and coolie	Direct expenses
Octroi	Direct expenses
Manufacturing wages	Direct expenses
Coal, gas, water	Direct expenses
Oil and fuel	D irect expenses
Factory rent, insurance, electricity, lighting and heating	Direct expenses
Sales	Sales account
Salary	Indirect expenses
Postage and telegrams	Indirect expenses
Telephone charges	Indirect expenses
Rent paid	Indirect expenses
Rates and taxes	Indirect expenses
Insurance	Indirect expenses
Audit fees	Indirect expenses
Interest on bank loan	Indirect expenses
Interest on loans paid	Indirect expenses
Bank charges	Indirect expenses
Legal charges	Indirect expenses
Printing and stationery	Indirect expenses
General expenses	Indirect expenses
Sundry expenses	Indirect expenses
Discount allowed	Indirect expenses
Carriage outwards or sales	Indirect expenses
Traveling expenses	Indirect expenses
Advertisement	Indirect expenses
Bad debts	Indirect expenses
Repair renewals	Indirect expenses
Motor expenses	Indirect expenses
Depreciation on assets	Indirect expenses
Interest on investment received	Indirect income
Interest on deposit received	Indirect income
Interest on loans received	Indirect income
Commission received	Indirect income
Discount received	Indirect income
Rent received	Indirect income
Dividend received	Indirect income
Bad debts recovered	Indirect income
Profit by sale of assets	Indirect income
Sundry income	Indirect income
Loan from others	Loan Liabilities
Bank loan	Loan Liabilities
Bank overdraft	Bank OD
Bills payable	Current Liabilities
Sundry creditors	Sundry creditors
Mortgage loans	Secured loans
Expense outstanding	Current Liabilities
Income received in advance	Current Liabilities
Other liabilities	Current Liabilities
Capital	Capital account
Drawings	Capital account
Cash in hand	Cash in hand
Cash at bank	Bank account
Fixed deposit at bank	Deposit
Investments	Investments
Bills receivable	Current asset
Sundry debtors	Sundry debtors
Closing stock	Stock in hand
Stock of stationery	Current asset
Loose tools	Fixed asset
Fixtures and fittings	Fixed asset
Furniture	Fixed asset
Motor vehicles	Fixed asset
Plant and machinery	Fixed asset
Land and building	Fixed asset
Leasehold property	Fixed asset
Patents	Fixed asset
Goodwill	Fixed asset
Prepaid expenses	Current asset
Income outstanding	Current assset

Trading account: Buying and selling of goods.

Dr. Receiving aspect Giving aspect Cr.

Direct expenses		Amount	Direct Income		Amount
To	Opening stock	xxx	By	Sales	xxx
To	Purchases	xxx	By	(-)Sales return	xxx
To	(-)purchase return	xxx	By	Closing stock	xxx
To	Freight charges	xxx
To	Cartage and coolie	xxx
To	Lorry hire	xxx
To	Manufacturing expenses	xxx
To	Wages	xxx
To	Factory rent, fuel power	xxx
To	Gross profit (transfer to profit and loss account)	xxx

To Profit and loss account: Actual profit and loss of the business

Indirect expenses or payments		Amount		Indirect income or receipts	Amount
To	Salary	xxx	By	Gross profit	xxx
To	Postage and Telegram	xxx	By	Interest on investment received	xxx
To	Telephone charges	xxx	By	Interest on deposit received	xxx
To	Rent paid	xxx	By	Interest on loans received	xxx
To	Rate and taxes	xxx	By	Discount received	xxx
To	Insurance paid	xxx	By	Discount received	xxx
To	Interest on bank loan	xxx	By	Rent received	xxx
To	Bank charges	xxx	By	Bad debts received	xxx
To	Printing and stationery	xxx	By	Net loss	xxx
To	Discount allowed	xxx
To	Advertisement
To	Carriage outward (sales)
To	Depreciation on assets
To	General expenses
To	Traveling
To	Bad debts
To	Net profit

Balance sheet: Actual financial position

Liabilities	Amount	Assets	Amount
Bank loan	xxx	Cash in hand	xxx
Bank overdraft	xxx	Cash at bank	xxx
Bills payable	xxx	Fixed deposit at bank	xxx
Sundry creditors	xxx	Investments	xxx
Expenses outstanding	xxx	Bills receivable	xxx
Capital	xxx	Sundry debtors	xxx
(-)drawings	xxx	Closing stock	xxx
Net profit	xxx	Stock of stationery	xxx
		Furniture	xxx
		Plant machinery	xxx
		Land and building	xxx
		Motor vehicles	xxx
		Prepaid expenses	xxx
		Income outstanding	xxx

Alt+F3 Company Creation

Gateway of tally-Accounting voucher

F4 Contra: Records funds transfer between cash and bank accounts.

Deposit into bank or Opened bank account Cr. Cash

Dr. Bank

Withdraw form bank Cr. Bank

Dr. Cash

F5 Payment: Record all bank and cash payments.

Paid or Give Dr.

Cr. Cash/bank (in case cheque)

F6 Receipt: Records all receipts into bank or cash accounts.

Received or Borrow or Take Cr.

Dr. Cash/bank (in case cheque)

F7 Journal: Records adjustments between ledger accounts.

F8 Sales: Records all sales.

Dr. Cash/party (incase of credit-party)

Cr. Sales

F9 Purchase: Records all purchase.

Cr. Cash/party (incase of credit-party) Dr. Purchase

Journalize the following transactions

1. Commenced business with cash Rs.10, 000.

2. Deposit into bank Rs. 15,000

3. Bought office furniture Rs.3,000

4. Soled goods for cash Rs.2,500

5. Purchased goods form Mr X on credit Rs.2,000

6. Soled goods to Mr Y on credit Rs.3,000

7. Received cash form Mr. Y on account Rs.2,000

8. Paid cash to Mr X Rs. 1,000

9. Received commission Rs. 50

10. Received interest on bank deposit Rs. 100

11. Paid into bank Rs. 1,000

12. Paid for advertisement Rs.500

13. Purchased goods for cash Rs. 800

14. Sold goods for cash Rs. 1,500

15. Paid salary Rs. 500

Gateway of tally-Account info-Ledger-Create

Gateway of tally – Accounting voucher

Sl.No	Key	Voucher	Ledger	Group	Type of account	Principles	Amount
1	F6	Receipt	Cr. Capital	Capital account	Personal	Giver	10,000
1	F6	Receipt	Dr. Cash	Cash in hand	Real	Comes in	10,000
2	F4	Contra	Cr. Cash	Cash in hand	Real	Goes out	15,000
2	F4	Contra	Dr. Bank	Bank account	Real	Comes in	15,000
3	F5	Payment	Dr. Office furniture	Fixed asset	Real	Comes in	3,000
3	F5	Payment	Cr. Cash	Cash in hand	Real	Goes out	3,000
4	F8	Sales	Dr. Cash	Cash in hand	Real	Comes in	2,500
4	F8	Sales	Cr. Sales	Sales account	Real	Goes out	2,500
5	F9	Purchase	Cr. X	Sundry creditor	Personal	Giver	2,000
5	F9	Purchase	Dr. purchase	Purchase account	Real	Comes in	2,000
6	F8	Sales	Dr. Y	Sundry debtors	Personal	Receiver	3,000
6	F8	Sales	Cr. Sales	Sales account	Real	Goes out	3,000
7	F6	Receipt	Cr. Y			Giver	2,000
7	F6	Receipt	Dr. cash	Cash in hand	Real	Comes in	2,000
8	F5	Payment	Dr. X			Receiver	1,000
8	F5	Payment	Cr. Cash	Cash in hand	Real	Goes out	1,000
9	F6	Receipt	Cr. commission	Indirect income	Nominal	Credit all income	50
9	F6	Receipt	Dr. cash	Cash in hand	Real	Comes in	50
10	F6	Receipt	Cr. Interest on bank deposit	Indirect income	Nominal	Credit all income	100
10	F6	Receipt	Dr. Bank	Bank account	Real	Comes in	100
11	F4	Contra	Cr. Cash	Cash in hand	Real	Goes out	1,000
11	F4	Contra	Dr. Bank	Bank account	Real	Comes in	1,000
12	F5	Payment	Dr. Advertisement	Indirect expenses	Nominal	Debit all expenses	500
12	F5	Payment	Cr. Cash	Cash in hand	Real	Goes out	500
13	F9	Purchase	Cr. Cash	Cash in hand	Real	Goes out	800
13	F9	Purchase	Dr. purchase Cr cash	Purchase account	Real	Comes in	800
14	F8	Sales	Dr. cash	Cash in hand	Real	Comes in	1,500
14	F8	Sales	Cr. Sales	Sales account	Real	Goes out	1,500
15	F5	Payment	Dr. salary	Indirect expense	Nominal	Debit all expenses	500
15	F5	Payment	Cr. Cash	Cash in hand	Real	Goes out	500

To view- Gateway of tally-Accounts info-Ledger-Multiple ledger Alter-All items (for ledger)

Gateway of tally-Display-Day book-Alt+F1 (to see detail) (Accounting Voucher)

Inventory information

Alt+F3 Company creation-Maintain-Accounts with inventory

Gateway of Tally-Inventory information-Unit of measure

Gateway of tally –Inventory information-Godown

Gateway of tally-Inventory information-Stock group

Gateway of tally – Inventory information-Stock item

To View

Gateway of tally-Display-Day book-Alt+F2 (change period) Alt+F1 (to see detail) or

Gateway of tally-Stock summary

1. On 1-4-06 Raman commenced business with cash of Rs. 25,00,000. He further introduced Land
and Building costing Rs. 30,000, Plant and Machinery costing Rs. 25,000 and furniture and fixture
costing Rs. 36,000.

2. On 2-4-06 Purchased Vehicle and Patents Rs. 20,000 and Rs. 15,000.

3. On 5-4-06 He deposited Rs. 1, 00,000 into Canara Bank.

4. On 6-4-06 Purchased from Cadbury Company

500 5 Stars @ Rs. 5 1000 Cadbury @ Rs. 5

100 Kit kat @ Rs. 4 200 Dairy milk @ Rs. 7

5. On 10-4-06 Purchased from Paras

500 Moov @ Rs. 20

500 D’Clod @ Rs. 12

6. On 13-4-06 Sold to Pankaj

200 Moov @ Rs. 20.50

100 D’Clod @ Rs. 12.25

200 Adhensive tape roll @ Rs. 15.25

100 Band Aid box @ Rs. 252

200 Boric Acid powder @ Rs.14

7. On 15-4-06 Sold to Akbar

500 Cadbury @ Rs. 6

200 5 Star @ Rs.5.25

50 Kit Kat @ Rs. 6

8. On 16-4-06 Paid to Cadbury company Rs.

9. On 18-4-06 Received from Pankaj

10. On 20-4-06 Paid to Paras Rs.

11. On 25-4-06 Received from Akbar Rs.

12. On 26-4-06 Purchase from Well Cloth

T-Shirts Lee-25Pc-Rs.200

Nike-30Pc-Rs.300

Formal Shirts Pan America-35Pc-400

Peter England-30Pc-450

Jeans Pants Tiger-20Pc-500

Ruff and Tuff-30Pc-350

Cotton Pants Arrow-40Pc-200

Ex-Calibar-20Pc-250

13. Paid Postage Rs. 500 by cheque

14. Received commission Rs. 15,000

15. Paid wages Rs. 2,500

Journalize the following Transactions using the debit and credit given by the American
accounts

1. Commenced business with cash 10,000

2. Deposited into bank 5,000

3. Purchased goods for cash 3,000

4. Sold goods for cash 2,500

5. Purchased goods from A on credit 4,000

6. Sold goods to B on credit 4,500

7. Withdraw from bank 3,000

8. Paid A on account 2,000

9. Received from B on account 2,500

10. Took loan from C 5,000

11. Gave loan to D 4,000

12. Paid salary 1,000

13. Cash withdraw from the business for personal use 200

14. Rent paid to E 1,000

Ledger	Group
Capital	Capital Account
Cash	Cash in hand
Bank	Bank account
Purchase	Purchase account
Sales	Sales account
A	Sundry creditor
B	Sundry debtor
C	Sundry creditor
D	Sundry debtor
Salary	Indirect expenses
Drawings	Capital account
Rent	Indirect expenses

Rakesh and company

1. Started business with cash Rs. 2,000, Bank Rs. 20,000.

2. Issued cheque for goods purchased Rs. 1,000.

3. Bought goods for cash Rs.8,000.

4. Bought furniture from Anil for cash Rs.100.

5. Bought goods from harish Rs. 1,500.

6. Bought goods from chandan on credit Rs. 5,800.

7. Returned damaged goods to Chandan Rs.800.

8. Bought goods from Naveen and paid by cheque immediately Rs.400.

9. Sold goods to Guptha Rs. 1,000.

10. Received a cheque from Guptha Rs.1,000 for goods sold.

11. Paid commission Rs.2,000.

12. Paid wages by cheque Rs.4,000.

13. Draw cheque for personal use Rs.4,000.

14. Draw cash for personal use from bank Rs.3,000.

15. Receive a cheque from Manju Rs.2,800.

16. Borrow loan from Anands Rs.1,000.

17. Paid Anands Loan with interest Rs.1,000.

Ledger	Group
Capital	Capital account
Bank	Bank account
Purchase	Purchase account
Anil	Sundry Creditor
Chandan	Sundry Creditor
Harish	Sundry Creditor
Purchase return	Purchase account
Naveen	Sundry Creditor
Sales	Sales account
Guptha	Sundry debetor
Commission	Indirect expenses
Wages	Direct expenses
Drawings	Capital account
Manju	Sundry Creditor
Anand	Sundry Creditor

Haridas and company

1.Started business with cash Rs.10,000,furniture Rs.4,000 and machinery Rs.5,000.

2.Bought goods from Anil on credit Rs. 4,000 and for cash Rs.5,000.

3.Sold goods to Rajesh on credit Rs.5,000 and for cash Rs.3,000.

4. Bought goods from Arun Subject to trade discount of 2% of Rs.2,000.

5. Sold goods to Ramesh subject to trade discount of 5% of Rs.4,000.

6. Paid salary Rs.1,000, printing Rs.150 and wages rs.100.

7.Received rent Rs.500, commission Rs.400.

8. Received a cheque from Ganesh Rs.1,000.

Ledger	Group
Capital	Capital account
Furniture	Fixed asset
Machinery	Fixed asset
Purchase	Purchase account
Anil	Sundry Creditor
Sales	Sales account
Rajesh	Sundry debtor
Arun	Sundry creditor
Ramesh	Sundry debtor
Salary	Indirect expenses
Printing	Indirect expenses
Wages	Direct expenses
Rent	Indirect expenses
Commission	Indirect expenses
Ganesh	Sundry creditor
Trade discount	Indirect expenses

Memorandum book

Particulars:

1. Commenced business with cash Rs. 10,000.

2. Purchased goods for cash Rs.3,000.

3. Opened a bank account with Rs.2,000.

4. Purchased stationary Rs.1,00.

5. Purchased furniture Rs.1,000.

6. Sold goods to A Rs.2,000.

7. Purchased goods from B Rs.2,000.

8. Sold goods for cash Rs.1,000.

9. Paid for postage Rs.20.

10. Took loan from C Rs.1,500.

11. Paid rent Rs.300.

12. Withdraw from bank Rs.800.

13. Received from A on account Rs.500.

14. Paid commission by cheque Rs.200.

Ledger	Group
Capital	Capital account
Purchase	Purchase account
Bank	Bank account
Purchase	Purchase account
Stationary	Indirect expenses
Furniture	Fixed asset
Sales	Sales account
A	Sundry debtor
B	Sundry Creditor
Potage	Indirect expenses
C	Sundry Creditor
Rent	Indirect expenses
Commission	Indirect expenses

Roa and company

Particulars: Rs.

1. Bought goods for cash 2,500

2. Bought office furniture for cash 500

3. Paid for postage 10

4. Purchased goods from Rajkamal 2,000

5. Sold goods for cash 150

6. Bought goods from Rahim 400

7. Sold goods to Suresh 400

8. Sold goods to Nayak 250

9. Purchased goods for cash 400

10. Recevied cash from Nayak 200

11. Paid cash to Rahim 50

12. Returned goods to Ralkamal 200

13. Suresh returned goods 50

14. Paid salary 150

15. Sold goods for cash 500

16. Rao withdraw for his personel use 800

17. Paid for stationery 100

18. Paid rent 50

19. Received commission 225

Ledger	Group
Capital	Capital account
Purchase	Purchase account
Postage	Indirect expenses
Rajkamal	Sundry Creditor
Sales	Sales account
Rahim	Sundry Creditor
Suresh	Sundry Debtor
Nayak	Sundry Debtor
Purchase returns	Purchase account
Salary	Indirect expenses
Drawings	Capital account
Stationary	Indirect expenses
Rent	Indirect expenses
Commission	Indirect income

Tally - Accounting Kick off Tutorial

Creditor:

A person to whom money is owed by a debtor; someone to whom an obligation exists

Debtors:

A person who owes a creditor; someone who has the obligation of paying a debt (Or) borrower, mortgagor, loanee, drawee.

Summary table of standard increasing and decreasing attributes for the five accounting elements:

ACCOUNT TYPE	DEBIT	CREDIT
Asset	+	−
Liability	−	+
Income	−	+
Expense	+	−
Equity	−	+

Transactions are recorded by a debit to one account and a credit to another account using these three "golden rules of accounting":

Real account: Debit what comes in and credit what goes out
Personal account: Debit who receives and Credit who gives.
Nominal account: Debit all expenses & losses and Credit all incomes & gains

	Debit	Credit
Real (assets)	+	-
Personal	+	-
Personal (owner's equity)	-	+
Nominal (revenue)	-	+
Nominal (expenses)	+	-
Nominal (gain)	-	+
Nominal (loss)	+	-

Asset accounts

Cash, bank, accounts receivable, inventory, land, buildings/plant, machinery, Furniture, equipment, vehicles, trademarks and patents, goodwill, prepaid expenses, debtors (people who owe us money), etc.

Liability accounts

Accounts payable, salaries and wages payable, income taxes, bank overdrafts, trust accounts, accrued expenses, sales taxes, advance payments (unearned revenue), debt and accrued interest on debt, etc.

All of the accounts listed in this subsection are payables

Equity accounts

Capital, drawings, common stock, accumulated funds, etc.

Income/Revenue accounts

Services rendered, sales, interest income, membership fees, rent income, interest from investment, recurring receivables, etc.

Expense accounts

Telephone, water, electricity, repairs, salaries, wages, depreciation, bad debts, stationery, entertainment, honorarium, rent, fuel, etc.

Example:

Quick Services business purchases a computer for £500, on credit, from ABC Computers. Recognize the following transaction for Quick Services in a ledger account (T-account):
Quick Services has acquired a new computer which is classified as an asset within the business. According to the accrual basis of accounting, even though the computer has been purchased on credit, the computer is already the property of Quick Services and must be recognised as such. Therefore, the equipment account of Quick Services increases and is debited:

Equipment (Asset)
(dr)	(cr)
500

As the transaction for the new computer is made on credit, the payable "ABC Computers" has not yet been paid. As a result, a liability is created within the entity's records. Therefore, to balance the accounting equation the corresponding liability account is credited:

Payable ABC Computers (Liability)
(dr)	(cr)
	500

The above example can be written in journal form:

	dr	cr
Equipment	500
ABC Computers (Payable)		500

The journal entry "ABC Computers" is indented to indicate that this is the credit transaction. It is accepted accounting practice to indent credit transactions recorded within a journal.
In the accounting equation form:
A = E + L
500 = 0 + 500 (The accounting equation is therefore balanced)

Further examples

A business pays rent with cash: you increase rent (expense) by recording a debit transaction, and decrease cash (asset) by recording a credit transaction.
A business receives cash for a sale: you increase cash (asset) by recording a debit transaction, and increase sales (income) by recording a credit transaction.
A business buys equipment with cash: You increase equipment (asset) by recording a debit transaction, and decrease cash (asset) by recording a credit transaction.
A business borrows with a cash loan: You increase cash (asset) by recording a debit transaction, and increase loan (liability) by recording a credit transaction.
A business pays salaries with cash: you increase salary (expenses) by recording a debit transaction, and decrease cash (asset) by recording a credit transaction.
The totals show the net effect on the accounting equation and the double-entry principle where, the transactions are balanced.

	Account	Debit (dr)	Credit (cr)
1.	Rent	100
	Bank		100
2.	Bank	50
	Sales		50
3.	Equipment	5200
	Bank		5200
4.	Bank	11000
	Loan		11000
5.	Salary	5000
	Bank		5000
6.	Total (dr)	21350
	Total (cr)		21350

"T" accounts

The process of using debits and credits creates a ledger format that resembles the letter "T".^[9] The term "T-account" is accounting jargon for a "ledger account" and is often used when discussing bookkeeping.^[10] The reason that a ledger account is often referred to as a "T" account is due to the way the account is physically drawn on paper (representing a "T"). The left side (column) of the "T" for Debit (dr) transactions and the right side (column) of the "T" for Credit (cr) transactions.

Debits (dr)	Credits (cr)

Contra account

All accounts have corresponding contra accounts depending on what transaction has taken place i.e. when a vehicle is purchased using cash, the asset account "Vehicles" is debited as the vehicle account increases, and simultaneously the asset account "Bank" is credited due to the payment of the vehicle using cash. Some balance sheet items have corresponding contra accounts, with negative balances, that offset them. Examples are accumulated depreciation against equipment, and allowance for bad debts against long-term notes receivable.

Real, personal, and nominal accounts

Real accounts are assets. Personal accounts are liabilities and owners' equity and represent people and entities that have invested in the business. Nominal accounts are revenue, expenses, gains, and losses. Accountants close nominal accounts at the end of each accounting period.^[11] This method is used in the United Kingdom, where it is simply known as the Traditional approach^[5]

Account with Tally:

Transactions Scrap:

Step 1 Create Company:

Transaction Account Creation:

Vendors Ledger Account Creation: (Cr)

Customer Ledger Account Creation: (Dr)

Purchase Return:

Sales Return:

Payment Made to Vendors:

Payment Made from Customers:

Return Receipt:

MS Dynamics (AX, SL, GP and NAV)

Many companies do not realize that there are four separate ERP software products that are part of the Microsoft Dynamics offering. Microsoft Dynamics AX (formerly Axapta), Microsoft Dynamics NAV (formerly Navision), Microsoft Dynamics GP (formerly Great Plains) and Microsoft Dynamics SL (Solomon). What is the difference between these 4 products and how can you tell which is the right fit for your business?

Microsoft Dynamics AX is typically for large, multinational organizations and kind of plays in a league of its own. Microsoft Dynamics GP, SL and NAV focus on the small to midmarket. Microsoft Dynamics SL is primarily focused on the professional services industry. So what are the differences between the other two packages, Microsoft Dynamics GP and Microsoft Dynamics NAV?

eSoftware Professionals recommends both Microsoft Dynamics NAV and Microsoft Dynamics GP depending on which is the best fit for the client. So we feel we can give an honest comparison.

Dynamics NAV is completely customizable – it’s ideal when you need to build specific functionality for your niche market and need your system to adapt as your business grows.

Dynamics GP isn’t as customizable, but it’s faster to implement and has hundreds of add-ons available.

ERP Packages