Experiments Of Computerised

Accounting System

BC – 303
SUBMITTED TO- SUBMITTED BY-

DR. Suman Gulia Tikshit Mittal

(Assistant Professor) 1222231

B.COM (H) 3RDsem

 TABLE OF CONTENTS

Experiment DESCRIPTION Page No. REM

No. ARK
S
1 Steps to install the Tally.ERP 9, Activate Tally.ERP 9 Licence and
Configure Existing Licence. Also explain various steps to create XYZ
Pvt. Ltd. Company with Accounting Features and Security Control
Features.

2 Creation of Groups and Ledgers and create the Ledger and Voucher
entry in Tally.
Journal entries in Tally and also total receipt and payments of company.

3 Display of Balance sheet, Cash/Bank Book, Day Book, Purchase

Register, Sales Register, Debit Note Register, and Credit Note Register

4 Creation of Budget in a Company? Write the steps to activate and create

the Budgets Feature. Write the steps to Display the Budget Reports.

5 Calculate interest on outstanding balance amounts and on outstanding

bills /Invoices/transactions (receivables and payables).

6 Create ABC Pvt. Ltd. Company and do necessary changes in accounting

features (Inventory features).
Create Stock Groups, Create Stock Categories, Create Stock Items, and
Create Unit of Measure (UOM).

7 Enter Purchase Order.

Print the Purchase Order Voucher.
Enter the Receipt Note.
 Suppose M/s. Gulati Brothers returned 2 Washing Machines to LG
Company on 18-5-2019. For this Enter the Rejection Out Voucher. Enter
the Purchase Voucher to Clear the LG Company Account

8 TDS and various steps to activate and create TDS Features and Tax
Ledger in Tally.ERP 9. Display Printing of TDS Challan and TDS
Report.

9 Payroll and steps to activate and configure payroll settings. Write steps
of payroll accounting system, employee groups, payroll masters,
creation of employees, payroll units, leaves.

10 Creation of various Pay Heads. For Example: We want to create a Salary

detail of Mr. Karan. Suppose Karan Salary is Rs. 40,000 p.m. Karan has
take a loan of Rs. 10,000 from the company on a condition that he would
return the loan in 4 equal installments.
 Experiment No:1

Steps to install the Tally.ERP 9, Activate Tally.ERP 9 Licence and Configure

Existing Licence. Also explain various steps to create XYZ Pvt. Ltd. Company

with Accounting Features and Security Control Features

How to Install Tally ERP 9 Software on Windows computer

After downloading the latest version software of Tally ERP 9, you need to perform the
following installation steps.

▪ Go to the folder, where the Tally software has been download on your computer

▪ Double click on the Tally application icon to install on your system. Now a user account
control panel windows opens with the options “YES” or “NO” to allow the program to
make changes to this computer. Click on “YES” option.
▪ Choose the installation folder and click on instal
▪ And install the Tally.ERP 9 on your computer.
▪ Installing Tally ERP using Install Now / Online Installer

If you get any errors while installing the Tally ERP application with the downloaded
software, you can try installation through online by choosing the option Install Now.

▪ Setup application will be download on your system, open the downloaded folder and
double click on setup icon.

▪ Next User Account Control windows displays on the screen, choose Yes option to
continue.
Now click on install option.

Now you will get a status bar of downloaded Tally software and will be installed on your
system automatically.
After installation of Tally, a message will be displayed as ” You have successfully
Installed Tally.ERP 9 series with version.

Successfully Tally ERP 9 Software has been installed on Windows Computer.

1 Also explain various steps to create ABC pvt ltd

Creating a Company involves providing basic information about the company whose
books of accounts are to be maintained in Tally.ERP 9.

Go to Gateway of Tally > (Alt+F3) Company Info. > Create Company

The Company Creation screen appears as shown:

Name

Enter the name of the company whose books are being opened. If you are a professional
accountant and are maintaining the books of your clients, give the Client Company's name.

Mailing Name and Address

In addition to the Company Name, Tally.ERP 9 provides the facility to enter the Mailing
Name field. It displays the Company Name by default. You may change it as required, if
the mailing name is different from the Company Name. The mailing name and address
details are picked up for inclusion in any report that needs the company name and address
as heading. For example: Balance Sheets, Statement of Accounts, and so on.
Statutory compliance for

Select the Country from the List of Countries. The Statutory Features and Base Currency
Symbol are enabled in accordance with the country selected. For example, if the accounts
belong to a company in India, the base currency would be Indian Rupees. The Base
Currency will appear with respect to the Country selected.

Selecting India from the List of Countries brings up a State, Pin Code and Telephone No.
field.

State

You can select the appropriate state from the predefined list.

PIN Code

Specify the PIN Code (Postal Index Number) of the specified address.

Telephone

Enter the Telephone number.

Mobile No

Enter the mobile number of the company.

E-mail Address

Enter the E-mail address that will be used to e-mail documents, reports and data from
Tally.ERP 9.

Currency

Currency symbol is the symbol of the base currency, that is, the currency that will be used
to maintain the books of account.

Maintain

Tally.ERP 9 displays a drop down for the Type of Company with two options Accounts
only and Accounts with Inventory

Select Accounts only if you do not have any inventory transactions (suitable for
professionals and corporate offices).

However, at a later date (if required) you can choose to alter the information as Accounts-
with-Inventory. Select Accounts-with-Inventory, to maintain both financial accounts
and inventory.
 Financial Year From

In most countries, the books of accounts of a company are maintained for a stipulated
period like, 12 months, 15 months, and so on. This stipulated period is referred to as the
Financial Year.

Books Beginning From

Tally.ERP 9 presumes that you wish to maintain books from the beginning of the financial
year. Hence, Tally.ERP 9 displays the date given in Financial Year From field automatically.

Use Security Control?

Set this to Yes, if you want to initiate a password-protected system to control access to
Tally.ERP 9 data. Else, set this to No.

Name of Administrator, Password, Repeat

Assuming the Tally Vault Password and Use Security Control is set to Yes enter the Name
of Administrator, Password and Repeat in the respective fields.

This completes the Company Creation process in Tally.ERP 9.

Experiment No:2
Q2. (a) State Groups for Ledgers and create the Ledger and Voucher entry in

Tally.

(b) Write shortcut key of Ledger creation, while doing Accounting Voucher

entry.

(c) How we see all journal entries in tally and also total receipt and payments of

company.

1. Aslam starts business with Rs. 1, 00,000.

2. Purchase machinery for Rs. 50,000 and furniture for Rs. 10,000.

3. Paid amount for rent Rs. 1,000.

4. Deposits Rs. 10,000/- in Bank.

5. Purchase of goods for Rs. 20,000 from Mr. Shamroz on credit.

6. Sold goods to Mr. Imtiaz for Rs. 10,000.

7. Rs. 5,000 withdraws from bank for personal use.

8. Withdraws Rs. 1,000 for office use.

9. Received cash from Mr. Imtiaz.

10. Paid to Mr. Shamroz.

 (a) State Groups for Ledgers and create the Ledger and Voucher
entry in Tally:
1. Create Ledgers:
• Go to Gateway of Tally > Accounts Info > Ledgers > Create.
• Create the following ledgers:
• Aslam's Capital (under Capital Account)
• Machinery (under Fixed Assets)
• Furniture (under Fixed Assets)
• Rent Paid (under Indirect Expenses)
• Bank (under Bank Accounts)
• Mr. Shamroz (under Sundry Creditors)
• Mr. Imtiaz (under Sundry Debtors)
2. Create Voucher Entries:
• Go to Gateway of Tally > Accounting Vouchers > Select Voucher Type (e.g.,
Payment, Receipt, Sales, Purchase, etc.).
• Enter the transactions using the appropriate voucher types.
 (b) Shortcut key of Ledger creation while doing Accounting
Voucher entry:
In Tally, you can create ledgers on the fly while entering voucher entries. The shortcut
key for creating a new ledger during voucher entry is "Alt + C." When you are on the
field for the ledger name, press "Alt + C" to create a new ledger.

(c) View Journal Entries, Receipts, and Payments:

1. Viewing Journal Entries:
• Go to Gateway of Tally > Display > Day Book.
• Select the relevant period to view all journal entries.
2. Viewing Total Receipts and Payments:
• Go to Gateway of Tally > Display > Cash/Bank Books.
• Select the bank or cash ledger to view the transactions.
• Alternatively, you can go to Gateway of Tally > Display > Account Books >
Cash/Bank Book.

Transaction Entries:
Now, let's enter the provided transactions:

1. Aslam starts business with Rs. 1,00,000:

• Debit: Aslam's Capital
• Credit: Bank
2. Purchase machinery for Rs. 50,000 and furniture for Rs. 10,000:
• Debit: Machinery, Furniture
• Credit: Bank
3. Paid amount for rent Rs. 1,000:
• Debit: Rent Paid
• Credit: Bank
4. Deposits Rs. 10,000/- in Bank:
• Debit: Bank
• Credit: Aslam's Capital
5. Purchase of goods for Rs. 20,000 from Mr. Shamroz on credit:
• Debit: Purchase
• Credit: Mr. Shamroz
6. Sold goods to Mr. Imtiaz for Rs. 10,000:
• Debit: Mr. Imtiaz
• Credit: Sales
7. Rs. 5,000 withdraws from bank for personal use:
• Debit: Drawings
• Credit: Bank
8. Withdraws Rs. 1,000 for office use:
• Debit: Drawings
• Credit: Bank
9. Received cash from Mr. Imtiaz:
• Debit: Bank
• Credit: Mr. Imtiaz
10. Paid to Mr. Shamroz:
• Debit: Mr. Shamroz
• Credit: Bank
• Remember to consult the Tally user manual or seek assistance from a Tally expert
if you encounter any difficulties, as the interface may vary based on the Tally
version you are using
Experiment No:3
Q 3. Record the following transactions in the books of Mr. Ramesh Co.

• Mr. Ramesh starts business with Rs. 3, 00,000 and deposited into Bank Rs.
50,000 on 1-5-2019.
• Paid for office building Rs. 60,000 and furniture for Rs 20,000 on 2-5-
2019.
• Purchase Raw material of Rs. 5500 on credit from Mr. Suresh on 3-5-2019.
• Paid Wages Rs. 3,000 on 4-5-2019.
• Paid Salary Rs. 1,500 on 5-5-2019.
• Return money to Mr. Suresh in settlement of Rs. 4,500 on 6-5-2019.
• Sold Goods to Mr. Dinesh Rs. 20,000 on 7-5-2019.
• Received interest on bank amount Rs. 200 on 8-5-2019.
• Received from Mr. Dinesh after discount of Rs. 1,000 on 9-5-2019.

• Mr. Ramesh starts business with Rs. 3,00,000 and deposited into Bank Rs.
50,000 on 1-5-2019:
o Debit: Cash/Bank (Rs. 50,000)
o Debit: Capital (Rs. 2,50,000) [3,00,000 - 50,000]
o Credit: Bank (Rs. 50,000)
• Paid for office building Rs. 60,000 and furniture for Rs 20,000 on 2-5-2019:
o Debit: Office Building (Rs. 60,000)
o Debit: Furniture (Rs. 20,000)
o Credit: Bank (Rs. 80,000)
• Purchase Raw material of Rs. 5,500 on credit from Mr. Suresh on 3-5-2019:
o Debit: Raw Material (Rs. 5,500)
o Credit: Mr. Suresh (Rs. 5,500)
• Paid Wages Rs. 3,000 on 4-5-2019:
o Debit: Wages (Rs. 3,000)
o Credit: Bank (Rs. 3,000)
• Paid Salary Rs. 1,500 on 5-5-2019:
o Debit: Salary (Rs. 1,500)
 o Credit: Bank (Rs. 1,500)
• Return money to Mr. Suresh in settlement of Rs. 4,500 on 6-5-2019:
o Debit: Mr. Suresh (Rs. 4,500)
o Credit: Bank (Rs. 4,500)
• Sold Goods to Mr. Dinesh Rs. 20,000 on 7-5-2019:
o Debit: Mr. Dinesh (Accounts Receivable) (Rs. 20,000)
o Credit: Sales (Rs. 20,000)
• Received interest on bank amount Rs. 200 on 8-5-2019:
o Debit: Bank (Rs. 200)
o Credit: Interest Income (Rs. 200)
• Received from Mr. Dinesh after discount of Rs. 1,000 on 9-5-2019:
o Debit: Bank (Rs. 19,000) [20,000 - 1,000]
o Credit: Mr. Dinesh (Accounts Receivable) (Rs. 20,000)

These entries should accurately reflect the financial transactions in the books of Mr.
Ramesh Co. Adjust the ledger names according to your chart of accounts in Tally or any
other accounting software you are using.
 Experiment No:4
Q 4. What is the purpose of Budget in a Company? Write the steps to activate

and create the Budgets Feature. Write the steps to Display the Budget Reports.

Purpose of Budget in a Company:

A budget in a company serves several crucial purposes:

1. Financial Planning:
• Helps in planning and allocating financial resources effectively.
• Sets financial goals and objectives for the company.
2. Resource Allocation:
• Guides the allocation of resources to different departments and
activities.
• Ensures that resources are used efficiently to achieve organizational
objectives.
3. Performance Evaluation:
• Provides a benchmark for evaluating actual financial performance
against planned performance.
• Enables management to identify and address deviations from the
budget.
4. Decision Making:
• Assists in making informed decisions about investments, expenses, and
revenue generation.
• Provides a basis for prioritizing projects and activities.
5. Cash Flow Management:
• Aids in managing cash flows by predicting cash inflows and outflows.
• Helps in avoiding liquidity issues by planning for future financial needs.
6. Communication and Coordination:
• Communicates financial expectations and goals to various departments
and teams.
 •Facilitates coordination among different units within the organization.
7. Motivation and Accountability:
• Sets targets and goals that can motivate employees and teams.
• Establishes accountability for financial performance at various
organizational levels.

Now, let's outline the steps to activate and create the budget feature, as well
as display budget reports:

Activating and Creating Budgets:

1. Activate Budget Feature:

• Access the settings or configuration section of your accounting software.

• Look for an option related to budgeting and activate it.

2. Define Budget Period:

• Determine the time period for the budget (e.g., monthly, quarterly, annually).

3. Create Budget Classes or Categories:

• Identify and create budget classes or categories (e.g., sales, expenses, capital
expenditures).
 4. Set Budget Limits:

• Specify the budget limits for each category based on historical data,
projections, or management decisions.

5. Assign Responsibility:

• Assign responsibility for each budget category to the relevant department or

individual.

6. Enter Budget Data:

• Enter the budgeted amounts for each category based on company goals and
financial plans.

7. Review and Approval:

• Review the proposed budget with stakeholders.

• Obtain necessary approvals before finalizing the budget.

8. Save or Publish Budget:

• Save or publish the finalized budget in the accounting software.

Activating and Creating Budgets:

 Displaying Budget Reports:

1. Navigate to Reports Section:

• Go to the reporting section of your accounting software.

2. Select Budget Reports:

• Look for an option related to budget reports or variance analysis.

3. Choose Budget Period:

• Select the desired budget period for analysis.

4. View Summary or Detailed Reports:

• Explore summary reports for an overview or detailed reports for a more

granular analysis.

5. Analyze Variances:

• Compare actual financial data with the budgeted amounts to identify

variances.
• Analyze the reasons behind any significant differences.

6. Drill Down Into Categories:

• Drill down into specific budget categories for a more detailed analysis.
7. Export or Print Reports:

• Depending on your needs, export budget reports to other formats (e.g., PDF,
Excel) or print them for further review or distribution.

8. Periodic Review and Adjustments:

• Regularly review budget reports and make adjustments as needed to align

with changing business conditions.
 Experiment No:5
Calculate interest on outstanding balance amounts and on outstanding bills
/Invoices/transactions (receivables and payables).

Receivables (Interest on Amounts Owed to You):

Formula for Simple Interest:

Interest=Principal×Interest Rate×Time365Interest=Principal×Interest
Rate×365Time

1. Determine the Principal:

• Identify the outstanding receivable amount.
2. Determine the Interest Rate:
• Determine the annual interest rate applicable to the outstanding
receivable.
3. Convert Annual Rate to Decimal:
• If the interest rate is given as a percentage, convert it to a decimal by
dividing by 100.
4. Determine the Time:
• Identify the time the receivable amount is outstanding in days.
5. Apply the Formula:
• Use the formula to calculate the interest amount.
 Payables (Interest on Amounts You Owe):
Formula for Simple Interest:

Interest=Principal×Interest Rate×Time365Interest=Principal×Interest
Rate×365Time

1. Determine the Principal:

• Identify the outstanding payable amount.
2. Determine the Interest Rate:
• Determine the annual interest rate applicable to the outstanding
payable.
3. Convert Annual Rate to Decimal:
• If the interest rate is given as a percentage, convert it to a decimal by
dividing by 100.
4. Determine the Time:
• Identify the time the payable amount is outstanding in days.
5. Apply the Formula:
• Use the formula to calculate the interest amount.

•
 Example:
Let's consider a scenario:

• Receivable Amount: $5,000

• Annual Interest Rate: 6%
• Time Outstanding: 90 days

Interest Receivable=5000×0.06×90365Interest Receivable=5000×0.06

×36590

Similarly, for payables, you would use the same formula but for the relevant
payable amount, interest rate, and time outstanding.

Notes:
• The provided formula assumes simple interest. Compound interest
calculations involve additional considerations.
• Ensure you are using the correct interest rate and time period based on the
terms agreed upon or any applicable regulations.
• Consider any contractual agreements that may specify the method and terms
for calculating interest.
•
 Experiment No:6
Create ABC Pvt. Ltd. Company and do necessary changes in accounting features
(Inventory features).
Create Stock Groups, Create Stock Categories, Create Stock Items, and Create
Unit of Measure (UOM).

Step 1: Create ABC Pvt. Ltd. Company

1. Open Your Accounting Software:
• Launch your accounting software and log in.
2. Create a New Company:
• Look for an option to create a new company or organization profile.
• Enter essential details: company name (ABC Pvt. Ltd.), address, fiscal year,
currency, and other relevant information.
3. Configure Company Settings:
• Set up general company settings, including taxation details, financial year
settings, and any other applicable configurations.

Step 2: Activate Inventory Features

1. Navigate to Settings:
• Find the settings or configuration section within your accounting software.
2. Enable Inventory Features:
• Look for an option related to inventory or stock management.
• Activate or enable inventory features to incorporate stock-related functionalities.

Step 3: Create Stock Groups

1. Access Stock Groups Section:
• Within the inventory or stock management module, find the option to create
stock groups.
2. Define Stock Groups:
• Create stock groups to categorize similar items. Examples could include
"Electronics," "Clothing," or "Office Supplies."
• This helps in organizing your inventory for better tracking and reporting.
 Step 4: Create Stock Categories
1. Navigate to Stock Categories:
• Inside each stock group, find the option to create stock categories.
2. Establish Stock Categories:
• Define stock categories for further classification. For example, within the
"Electronics" group, you might create categories like "Smartphones" or "Laptops."
• This provides a more detailed classification of items.

Step 5: Create Stock Items

 1.Access Stock Items Section:

• Look for the option to create individual stock items within each stock category.
2.Input Stock Item Details:
• Enter details for each stock item, including item code, description, rate, and initial
stock quantity.
• Assign each item to its respective stock category for better organization.

Step 6: Create Unit of Measure (UOM)

1. Navigate to UOM Settings:
• Look for the section where you can define units of measure.
2. Define Units of Measure:
• Establish units of measure for stock items, such as "Each," "Dozen," or "Kilogram."
• Specify the primary unit of measure for each item.
• This ensures consistency in tracking and managing inventory quantities.

Step 7: Record Transactions and Manage Inventory

1. Record Purchase Transactions:
• Enter purchase transactions when acquiring new stock.
• Specify details such as quantity, rate, and supplier information.
2. Record Sales Transactions:
• Enter sales transactions to update stock levels when items are sold.
• Include customer details, item quantities, and rates.
3. Monitor Stock Levels:
• Regularly review and monitor stock levels to avoid shortages or overstock
situations.
• Utilize reports or dashboards provided by your accounting software for a quick
overview.

Conclusion:
Following these steps, ABC Pvt. Ltd. can efficiently manage its inventory, organize items
into logical groups and categories, track stock levels accurately, and optimize its
inventory management processes. Always refer to the specific guidelines provided by
your accounting software for detailed instructions tailored to the platform you are using.
Experiment No-7
(a) Suppose M/s. Gulati Brothers sent a Purchase Order of 10 Washing Machine
to LG Company on 12-5-2019 @ Rs. 8500. For M/s. Gulati Brothers do the
followings:
Enter Purchase Order.
Print the Purchase Order Voucher.
Enter the Receipt Note.
Suppose M/s. Gulati Brothers returned 2 Washing Machines to LG Company on
18-5-2019. For this Enter the Rejection Out Voucher. Enter the Purchase Voucher
to Clear the LG Company Account

1. Enter Purchase Order:

- Go to "Gateway of Tally."

- Select "Purchase Order" under "Transactions."

- Enter the details for M/s. Gulati Brothers, the item (Washing Machine), quantity (10), rate (Rs.
8500), and date (12-5-2019).

- Save the Purchase Order.

2. Print the Purchase Order Voucher:

- Go to "Gateway of Tally."
- Navigate to "Display" > "Day Book."
- Select the Purchase Order entry.
- Click on "Print" to print the Purchase Order Voucher.

3. Enter Receipt Note:

- Go to "Gateway of Tally."
- Choose "Receipt Note" under "Transactions."
- Enter the details for M/s. Gulati Brothers, select the item (Washing Machine), quantity
received (10), and date (12-5-2019).
- Save the Receipt Note.
 4. Enter Rejection Out Voucher:

- Go to "Gateway of Tally."

- Select "Rejection Out" under "Transactions."

- Enter the details for the rejected items (2 Washing Machines), select the item, and mention the
date (18-5-2019).

- Save the Rejection Out Voucher.

5. Enter the Purchase Voucher to Clear the LG Company Account:

Go to "Gateway of Tally."

- Choose "Purchase Voucher" under "Transactions."

- Enter the details for the purchase, select the item (Washing Machine), quantity (8), rate

(Rs. 8500), and date (18-5-2019).

- Save the Purchase Voucher.

 Experiment No-8
TDS and various steps to activate and create TDS Features and Tax Ledger in
Tally.ERP 9. Display Printing of TDS Challan and TDS Report.

Activating TDS Features:

1. Open Tally.ERP 9:
• Start Tally.ERP 9 and open the company for which you want to configure
TDS.
2. Activate TDS:
• Go to Gateway of Tally.
• Press F11 to go to Features.
• Under Statutory & Taxation Features, find and enable the option
Enable Tax Deducted at Source (TDS).
• Set other TDS-related options as needed (e.g., enabling TDS calculations
for expenses).
3. Configure TDS Options:
• Under F12: Configure, configure TDS options such as rounding off,
calculation methods, and other related settings.

Creating TDS Tax Ledger:

1. Go to Ledger Creation:
• Navigate to Gateway of Tally > Accounts Info > Ledgers > Create.
2. Set Ledger Type:
• Set the type of ledger as Duties & Taxes.
3. Choose TDS Category:
• Select the appropriate TDS category based on the nature of the
transaction (e.g., TDS on Salary, TDS on Rent, etc.).
4. Enter TDS Details:
• Enter the TDS rate applicable for the selected category.

• Set other details such as the section, threshold limit, and type of
deduction as per the requirements.

TDS Deduction in Transactions:

1. Create Voucher Entry:
• While entering a transaction (e.g., Payment or Purchase), press F2 to
change the date if needed.
• Enter the necessary details and amounts.
• Press Alt + A to enable TDS deduction in the voucher.
2. Select TDS Ledger:
• Choose the appropriate TDS ledger created earlier.
• Tally will automatically calculate the TDS amount based on the
configured rate.
 Display and Print TDS Challan:
1. Display Challan Reconciliation:
• Navigate to Gateway of Tally > Display > Statutory Reports > TDS
Reports > Challan Reconciliation.
2. Select Period:
• Choose the relevant period for which you want to display the TDS
Challan.
3. Print Challan:
• After displaying the Challan, press Alt + P to print it.
• Configure the printing settings and print the TDS Challan.

Display and Print TDS Reports:

1. Display TDS Reports:
• Go to Gateway of Tally > Display > Statutory Reports > TDS
Reports.
• Choose the required report (e.g., TDS Deduction Summary, TDS
Deduction Register, etc.).
• Set the appropriate period for the report.
2. Print TDS Reports:
• After displaying the TDS report, press Alt + P to print it.
• Configure the printing settings and print the TDS report.

Notes:
• Regularly update Tally.ERP 9 to ensure you have the latest statutory updates.
• Consult with a tax professional to ensure accurate configuration based on
local tax regulations.

Following these detailed steps should help you effectively activate, configure,
and manage TDS features and related processes in Tally.ERP 9.
 Experiment No:9
Payroll and steps to activate and configure payroll settings. Write steps of
payroll accounting system, employee groups, payroll masters, creation of
employees, payroll units, leaves.

Activating and Configuring Payroll Settings:

1. Open Tally.ERP 9:
• Launch the Tally software and open the company for which you want to
set up payroll.

2. Activate Payroll Feature:

• Go to Gateway of Tally.
• Press F11 to go to Features.
• Enable the option Enable Payroll.

3. Configure Payroll Settings:

• Under Gateway of Tally > Accounts Info > Payroll Info, configure
settings such as the calculation period, method of calculation, and other
relevant options.
 Payroll Accounting System:
1. Create Pay Heads:
• Go to Gateway of Tally > Accounts Info > Payroll Info > Pay Heads
> Create.
• Define various pay heads such as Basic Salary, HRA, Provident Fund, etc.
• Assign appropriate calculation types and percentages.

2. Create Earnings and Deductions:

• Differentiate between Earnings (like Basic Salary) and Deductions (like
Provident Fund).
• Specify whether each pay head is a component of Cost to Company
(CTC).

Employee Groups:
1. Create Employee Groups:
• Go to Gateway of Tally > Accounts Info > Payroll Info > Employee
Groups > Create.
• Define groups based on your organization's structure (e.g., Sales,
Administration, etc.).
 Payroll Masters:
1. Define Payroll Masters:
• Go to Gateway of Tally > Accounts Info > Payroll Info > Employee
Categories > Create.
• Create categories like Permanent, Contractual, etc.
2. Configure Attendance/Production Types:
• Define types of attendance or production (e.g., Present, Absent,
Overtime) under Gateway of Tally > Accounts Info > Payroll Info >
Attendance/Production Types > Create.

Creation of Employees:
1. Create Employee Ledger:
• Go to Gateway of Tally > Accounts Info > Payroll Info > Employees
> Create.
• Enter details like Employee Name, Address, Date of Joining, etc.
• Assign the appropriate Employee Group and Employee Category.
2. Assign Pay Structure:
• Specify the salary structure by assigning the appropriate pay heads with
their respective amounts.
 Payroll Units:
1. Define Payroll Units:
• Go to Gateway of Tally > Accounts Info > Payroll Info > Units >
Create.
• Define units like Days, Hours, etc., based on your organization's policy.

Leaves:
1. Configure Leave Types:
• Go to Gateway of Tally > Accounts Info > Payroll Info > Leave
Types > Create.
• Define various leave types such as Casual Leave, Sick Leave, etc.
2. Allocate Leave Entitlement:
• Allocate the number of leaves each employee is entitled to for each
leave type.

Process Payroll:
1. Enter Attendance:
• Go to Gateway of Tally > Payroll Vouchers > Attendance Voucher.
• Enter the attendance details for each employee.
2. Process Payroll:
• Go to Gateway of Tally > Payroll Vouchers > Payroll Voucher.
• Enter the payroll processing details, and Tally will automatically calculate
the salary based on the configured pay structure.
3. Generate Payroll Reports:
• Navigate to Gateway of Tally > Display > Payroll Reports to view
reports like Pay Slip, Payroll Register, and Attendance Sheet.
 Experiment :10
Creation of various Pay Heads. For Example: We want to create a Salary detail
of Mr. Karan. Suppose Karan Salary is Rs. 40,000 p.m. Karan has take a loan
of Rs. 10,000 from the company on a condition that he would return the loan in
4 equal installments

1. Basic Salary Pay Head:

• Name: Basic Salary

• Amount: Rs. 40,000 per month
• Frequency: Monthly

The Basic Salary pay head represents the fixed amount that Mr. Karan receives
as his regular monthly salary.

2. Loan Deduction Pay Head:

• Name: Loan Deduction

• Amount: Rs. 10,000 (total loan amount)
• Frequency: Monthly
• Duration: 4 months
• Calculation Type: Fixed Amount

The Loan Deduction pay head is created to account for the loan Mr. Karan has
taken from the company. The loan amount is Rs. 10,000, and it will be
deducted in 4 equal installments of Rs. 2,500 each month. The frequency is set
to monthly to ensure the deduction occurs every month.
 3. Other Allowances Pay Heads (if applicable):

• Additional pay heads can be created for various allowances, such as House
Rent Allowance (HRA), Travel Allowance, etc.
• For example:
• Name: HRA
• Amount: Rs. [Amount]
• Frequency: Monthly

Depending on the company policy, you might have various allowances that
contribute to the overall salary structure.

4. Provident Fund Deduction Pay Head:

• Name: Provident Fund

• Percentage: [Percentage]
• Calculation Type: Percentage of Basic Salary
• Frequency: Monthly

Provident Fund is a common deduction based on a percentage of the Basic

Salary. The exact percentage can vary based on the company's policies.

5. Income Tax Deduction Pay Head:

• Name: Income Tax

• Formula: [Tax calculation formula]
• Frequency: Monthly

If applicable, an Income Tax Deduction pay head can be set up based on the
income tax calculations relevant to Mr. Karan's salary.
 6. Net Salary Pay Head:

• Name: Net Salary

• Formula: Basic Salary + Allowances - Deductions
• Frequency: Monthly

The Net Salary pay head is a calculated pay head that reflects Mr. Karan's
actual take-home pay after accounting for all earnings and deductions.

Setting up these pay heads in the payroll system ensures accurate and
automated calculation of Mr. Karan's salary, including the loan deductions and
any other relevant components. It's essential to review and adjust these pay
heads as per company policies and legal requirements. Additionally, regular
monitoring of the payroll system ensures compliance and accuracy in salary
processing.