How accounting works in Tally

Tally essentially has two groups of data

1) Masters > which contains ledgers and inventory against which any transaction is
recorded. Ledgers are classified into groups (think like a PnL statement) basis which
companies accounting is carried out
2) Vouchers are essentially - entries against a bunch of ledgers

Types of masters

Accounting master

Groups
The group is a collection of leaders of the same natures. Tally software automatically creates 28 groups
that are used in the account chart. Out of 28 predefined groups in tally, primary groups are 15, and the
sub-groups are 13. The different types of groups are as follows:
1. Primary Group - This group is the main group. Primary groups are at the top of the hierarchy.
Among 15 groups, 6 groups are profit and loss a/c items, and 9 groups are balance sheets items
1. Branch/Division 6. Current Assets 11. Indirect Income

2. Capital Accounts 7. Fixed Assets 12. Misc. Expenses

3. Loans 8. Investments 13. Purchase Accounts

4. Suspense Account 9. Sales Accounts 14. Direct Income

5. Current Liabilities 10. Indirect Expenses 15. Direct Expenses

2. Sub Group - This group is part of the primary group. It can be divided into 13 groups.

1. Sundry Creditors 6. Secured Loans 11. Bank Accounts

2. Stock in Hand 7. Deposits 12. Cash in Hand

3. Duties & Taxes 8. Banks OD Accounts 13. Loan & Advances (Assets)

4. Unsecured Loans 9. Provisions

5. Reserves & Surplus 10. Sundry Debtors

Ledgers

A ledger is a book where all ledger accounts are maintained in a summarized way. All accounts
combined together make a ledger book. Predominantly there are 3 different types of ledgers; Sales,
Purchase and General ledger.

1. Sales Ledger or Debtors’ Ledger

First among different types of ledgers is “Sales or Debtors’ ledger”. It is a grouping of all accounts related
to customers to whom goods have been sold on credit (Credit Sales). Sum of all the money owed to a
business by their customers is shown here and is termed as Accounts Receivable, Trade Debtors or
Sundry Debtors

2. Purchase Ledger or Creditors’ Ledger

It is a grouping of all accounts related to sellers from whom goods have been purchased on credit (Credit
Purchases). Sum of all the money owed by a business to their sellers is shown here and is termed as
Accounts Payable, Trade Creditors or Sundry Creditors.
3. General Ledger

A general ledger or GL is a centralized compilation for all the ledger accounts of a business. It contains all
types of accounts which can be found in an organization such as assets, liabilities, capital or equity,
revenues, expenses, etc.

Companies usually make a single general ledger which includes 2 additional subtypes of ledgers i.e.
nominal ledger and private ledger. These two may or may not be included in the list for different types
of ledgers in accountings

List of different ledgers along with groups -

https://www.teachoo.com/725/228/Tally-Ledger-Groups-List-(Ledger-under-Which-Head-or-Group-in-Acco
unts/category/Ledger-Creation-and-Alteration/
Inventory master

Stock Groups

Stock Groups in Inventory are similar to Groups in Accounting Masters. They are helpful in the
classification of Stock Items

Stock Categories
Stock category is next dimension to classify same stock item
Stock Items

Units of Measurement

Bills of Materials

Batches & Expiry Dates

Stock Journal Voucher Class - Transfers

Types of Voucher

Accounting Vouchers

● Sales Voucher in Tally - Depending on the nature of your business, it can be created in invoice
mode, accounting mode or voucher mode
○ Invoice mode is suitable when you are billing inventory
○ Accounting invoice’ is suitable for recording service bills
○ 'As voucher’ to record the transactions in “Dr CR” mode

Some sample vouchers as per use cases

-https://drive.google.com/drive/folders/1dsC8nEjhv88wL4XIQPgxJvMjZmFmwgCz?usp=sharing

For e.g. this is the sample for sales entry without inventory

● Purchase Voucher in Tally - The Purchase Voucher too can be recorded either in the Voucher or
Invoice mode based on the nature of business operations. For changing modes TallyPrime helps
you to convert a voucher into an invoice, or vice versa, without expecting you to re-enter the
details.
● Payment Voucher in Tally - lets you provide all types of details when creating it. While making
payment to a party, you can provide details such as the instrument number (it can also help you
create cheques). TallyPrime supports over 500 banks from both India and abroad. After making
the payment, you can generate a Payment Advice in Tally and share it with your supplier as it will
update him with the details of all your payments.
● Receipt Voucher in Tally - When you create a Receipt Voucher, TallyPrime prompts you to take
a look at all the pending invoices for which payments are yet to be received. As and when your
customer makes a payment, you can record details such as against which invoice the payment is
made; whether you received the payment by cash, cheque or via NEFT/RTGS; and what the
 instrument numbers are. You can even email this information to your customer. This way, you will
never lose track of the payments.
● Contra Voucher: Contra Vouchers are generally used by businesses to withdraw cash from
banks or to deposit cash in banks. With TallyPrime, you can also generate a cash deposit slip.
Tally also provides the denomination of notes to let you track and take a print of the same at the
time of depositing money.
● Journal Voucher - The Journal Voucher is used by businesses for multiple purposes, based on
their business types. Some accountants use them for purchases and sales as well. Both
accounting and inventory Journal Vouchers are available in TallyPrime, the new version that has
replaced Tally.ERP 9. The Inventory Journal Vouchers can be used to adjust inventory or for the
movement of inventory from one godown to another.
● Credit Note Voucher - The Credit Note Voucher is used generally for a sales return. While
passing Credit Note, you can refer to the original invoice number as well. Upon selection of a
party, Tally.ERP 9 will by default show you all the invoices which have been raised against the
particular party for easy reference.
● Debit Note Voucher - A Debit Note is used for purchase returns. With Tally.ERP 9, a user can
either pass a Debit Note as a voucher or as an invoice where the inventory values also get
affected. You can provide details of the original invoice numbers as well.
● Bank Statements

Inventory vouchers in TallyPrime

● Physical Stock Verification -During physical stock verification, in cases of changes in the
inventory count, one has to update the changes in books as well.
● Material In and Material Out Voucher - The Material In and Material Out vouchers are available
in TallyPrime to track inventory sent for job work and inventory received after job work. By using
these vouchers, you can easily get an overview of inventory across all job works.
● Delivery Note and Receipt Note Vouchers in Tally - As the name suggests, the Delivery Note
Vouchers can be used to record the delivery of goods. Sometimes, they are also referred to as
Delivery Challans. While passing a Delivery Note, you can provide transporter details such as
lorry number, dispatch document number, bill of lading, and so on. Similarly, you can create a
receipt notes as and when you receive consignments from suppliers.
● Stock Journal
● Mfg. Journal
● Rejection-In & Rejection-Out

Other Vouchers

● Job-In Order & Job-Out Order

● Inward Invoice and Outward Invoice
● Purchase Order and Sales Order Vouchers in Tally - Many businesses receive purchase orders
from their parties or place orders to their suppliers. Purchase Order or Sales Order Vouchers can be
passed using Tally to keep a track of the complete order cycle. The Purchase Order and Sales
Order Vouchers in TallyPrime simplify order processing for businesses. Businesses typically receive
 purchase orders from their parties or place orders with their suppliers. While passing these orders,
you can provide details such as when would the order be processed, rates, and so on. Later, as and
when required, you can partially fulfil an order and track the remaining order, or you can even
pre-close the order.

Integration of masters and Vouchers in Tally

There are 2 underlying requirements for integration -

1) The reference of entries (Masters) should be in sync

2) The context of entries (Vouchers) should be in sync

Key decision points-

● Level of master and transaction integration

○ For e.g. With Biz Analyst, you can create Sales Orders, Purchase Orders,
Receipts and Payments and the Tally master is the primary master (from what I
understand) - you can do the following action

● What all can TA read vs write in Tally -

○ For e.g. Open writes all bank related transactions which are Payments,
Collections(Receipt) & Contra and reads the Sales, Purchase, Debit note and
Credit notes
 ○ So following vouchers are in sync - Sales invoice, Purchase bills, Credit notes,
Debit notes, payments, receipts and contra voucher
○ Open sends the actual bank transactions from Open to Tally, all payment, receipt,
contra transactions will be auto reconcile in Tally
○ While masters can sync two ways not sure about duplicacy

Points to Note:
● Respective voucher entries can only be added if there is a corresponding item master
added in tally (for e.g. in sales order while creating one the there should be a party with
the same name added in sundry debtors)
● Both for master entry and voucher entry only incremental data has to be added as tally
doesn’t identify unique entries (hence double entry will happen every time the entire
master/voucher is loaded)
● For parties that can be both debtors and creditors (buy and sell) - Tally has different
names registered in the sundry creditor/debtor column
● Apart from standard columns and other information can be passed in tally as narration
● While uploading vouchers entries of each voucher should be done separately
○ For Cash purchase or sale, then you can skip the vendor details. Only for credit
details, we need vendor details.
● Vouchers can be altered, deleted once created through XML

Ways of integrating data:

Tally Interfaces – For Integration

Tally communicates with the external world mainly using two Interfaces.

● Tally ODBC Interface (Read Only)

● Tally XML Interface (Read and Write)
Tally Developer -
https://help.tallysolutions.com/article/DeveloperReference/integration-capabilities/introduction.ht
m

Mode of Data transfer

● Tally to Tally
● Tally to External Application and Vice Versa
● Tally to web Services Offline Mode
● Export and Import of multiple formats of Data
● Customization for implementing security control