Lesson 2: MASTERS

“Master” means, name of a ledger/an item/ a employee etc, those are used to record our regular
financial transactions.
TYPES OF MASTERS:-
1. Accounting Masters
2. Inventory Masters
3. Payroll Masters
Accounting Masters:-
• Ledgers
• Groups
• Cost Categories
• Cost Centers
• Budgets
• Scenarios
Ledger: -
• A ledger means name of an individual account participating our day to day business
transactions.
• Which means 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.

E.g.: - Ravi A/c, SBI A/c, Purchases A/c, Capital A/c, Rent A/c… Etc,

In Tally for every company creating there will be 2 ledgers in default. They are,
1. Cash
2. Profit & Loss Acc
Beyond these 2 ledgers we have to create the additional ledgers required as per out transactions.

Groups: -

• A Group is a collection of different ledgers of same nature.

• By using a ledger we can specify the nature of a ledger to Tally and to users.
(Like Asset/Liability/Expense/Income)
E.g.: - Current Assets, Current Liabilities, Capital Account, Bank A/c s, Sundry Creditors,
Sundry Debtors…. etc,
• In Tally for every company creating there will be 28 Groups in default out of which “15”
groups are “Main” and “13” groups are “Sub”.
Note: -
• “Main Group” means a group which is independent in nature.
E.g.: - Current Assets, Current Liabilities….. Etc.,
• “Sub Group” means a group which is dependent on ‘Main group’ in nature
E.g.: - Sundry Creditors, Sundry Debtors, Bank Accounts…Etc,

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 List of Default Main & Sub Groups

Main Groups:-

1.Capital account
2.Loans(Liability)
3.Current Liabilities
4.Fixed Assets
5.Investments
6.Current Assets
7.Branch/Divisions
8.Misc .Expenses
(Asset)
9.Suspense A/c
10. Sales Accounts
11. Purchase accounts
12. Direct Incomes
13. Direct Expenses
14. Indirect Incomes
15. Indirect Expenses

Sub Groups:-
Name of Subgroup Under
16. Reserves & Surplus Capital Account
17. Bank OD A/c Loans (Liability)
18. Secured Loans Loans (Liability)
19. Un Secured Loans Loans (Liability)
20. Duties & Taxes Current Liabilities
21. Provisions Current Liabilities
22. Sundry Creditors Current Liabilities
23. Stock In Hand Current Assets
24. Deposits (Asset) Current Assets
25. Loans & Advances
Current Assets
(Asset)
26. Sundry Debtors Current Assets
27. Cash in Hand Current Assets
28. Bank Accounts Current Assets
NOTE:

“ Capital nature groups” are the groups those will effect the “ Balance Sheet”
and “ Revenue nature groups” are the groups those will effect the “ Trading, Profit & Loss Acc”

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A Discussion on Each of the Reserved 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, and Proprietor’s Capital Account and so on.

Reserves and Surplus [Retained Earnings]:

This contains ledgers like Capital Reserve, General Reserve, and 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.

Bank Accounts:

Current account, savings account, short term deposit accounts and so on.

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.

Deposits (Asset):

Deposits contain Fixed Deposits, Security Deposits or any deposit made by the company
(not received by the company, which is a liability).

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.

Stock-in-hand:
This group contains accounts like Raw Materials, Work-in-Progress and Finished Goods.
Sundry Debtors:

For customer accounts refer to common and possible errors in grouping of accounts
section.
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 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

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.

Provisions:

Accounts like Provision for Taxation, Provision for Depreciation and so on are recorded
under Provisions.

Sundry Creditors:

For trade creditors, refer to common and possible errors in grouping of accounts section.

Investments

Group your investment accounts like Investment in Shares, Bonds, Govt. securities, long term
Bank deposit accounts and so on. This allows you to view the total investments made by the
company.

Loans (Liability)

These are the Loans that a company has borrowed, typically long-terms loans.

Bank OD Accounts [Bank OCC Accounts]:

To record the company' s overdraft accounts with banks. For example, Bill
Discounted A/c’ s and Hypothecation A/c’ s 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.

Secured Loans:
These are Term loans or other long/medium term loans, which are obtained
against security of some asset. It does not verify the existence of the security. Typical
accounts are Debentures, Term Loans, and so on.

Unsecured Loans:
Loans obtained without any security. Example: Loans from Directors/partners or
outside parties.

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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 TA bill. Some
companies may prefer to open such accounts under Suspense Account.
Loans and Advances (Asset)

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.

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.

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.

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 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]

Under this group all administrative, selling or non-direct expenses will come.
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.

Note: -
If required user can create any no. of additional groups (Main
& Sub) as per our requirement beyond the existing 28 groups

Accounting Groups Creations:

To create a new user defined group in Tally.ERP9,

Go to Gateway of Tally Accounts Info Groups

There are two ways to Create/Display/Alter a group,

Single Group:

We can create/display/alter one group for one time

Multiple Groups:

We can create/display/alter multiple groups at a time.

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Creating a Single Group:

Go to Gateway of Tally Accounts Info Groups “ Create” (Under Single Group)

The Group creation Screen is displayed as shown,

• Name: Enter the name of the group to be created. For E.g., “ Sundry Creditors for Expenses”
• Alias: Enter any alternate name for our group for easy access or leave it blank if we don’ t want any
alias.
• Under: Select any existing group (Parent) to which our new group should belong. For E.g., Here we
have to select “ Sundry Creditors”
Note
If we required we can create our new group as a “ Primary Group” i.e., not belongs to any existing
one treating as an Individual Group. But to create any new group by taking “ Under” “ Primary” it is
mandatory to enable the following option in F12: Configurations

Allow Advanced Entries in Masters: Yes

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• Nature of Group:

If a group is created under Primary, you must select the appropriate option from the list whether it is
any asset, liability, income or expenses. If you select an income or expenses you should specify
whether it will affect the gross profits or not by suitably setting the option “ Does it affect Gross
Profits?” to “ Yes/No” . If the option is selected as Yes, the group will appear under Trading
Account and if the option is selected as No, the group will appear under Profit & Loss Account.

You can use this concept when you wish to segregate your profits into Operative Profit and Net
Profit. This helps you when you want to consider other revenue accounts in addition to Direct
instead of Gross and Net Profit.

Normally, Tally.ERP9 calculates Gross Profit using Opening Stock, Purchase Accounts, Direct
Expenses, Sales Accounts, Direct Incomes and Closing Stock only. To make other accounts
contribute to this without classifying under these reserved heads, set this option to yes.

• Group behaves like a Sub – Ledger:

This option will allow such Groups to behave as defined in the Master to act as equal to the
behavior of Ledger.
When this option is set to No, the same will display the entire Ledgers grouped under the same in
detailed mode while viewing a report as shown,

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 When this option is set to Yes, the same will not display the entire Ledgers grouped under the
same in detailed mode while viewing a report as shown,

• Net Debit/Credit Balances for Reporting: Setting this option to Yes will display either the net debit
or credit balance in the report (whichever is higher). If this option is set to No, both debit and credit
balances will be displayed in the report.

• Used for Calculations (e.g. taxes, discounts): Set this option to Yes, if ledgers under this group
would have percentages for discount/taxes to be used in invoice entry. This gets reflected while
passing voucher entry in Invoice mode and for automatic calculations.

• Method to allocate when used in purchase invoice: Select the appropriate “ Allocation Method”
from the list; this is used to allocate the expense of the item in the ratio of the quantity or value.

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Creating Groups in Multiple Create Mode:

Go to Gateway of Tally Accounts Info Groups Create (Under Multiple Groups)

• Under Group: Select any required Parent group under which we want to create the user
defined sub groups. If we want to create multiple groups in related to different parent groups
here we have to select “ All Items”
• Name: Enter the name of the groups as we required.
• Under: Select the required Parent group to which our new group should belong.

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Note:

In the Multi Mode we can not create a new group “ Under” “ Primary”
In the Multi Mode we can not access the “ Advanced Options” for a group to change its behavior.

Ledger Creations in Tally.ERP9

To create Ledgers,

Go to Gateway of Tally Accounts info Ledgers

There are two modes to create Ledgers,

Single Ledgers: Here we can create all the ledgers one by one

Multiple Ledgers: Here we can create multiple ledgers at a time.

Ledger Creation in Single mode:-

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 • Name: Specify the name of ledger account
• Alias: Specify any alternate name for ledger account for easy use. (if required)
• Under: Here Tally will display a list of the 28 Default groups & user defined groups and
we have to select any required group based on nature of the ledger account
• Mailing Details:- Specify the Address details of the ledger account
• Tax information:- Specify the registration numbers of different taxes of that ledger
• Opening Balance: - Specify the closing balance of the ledger account from the previous
period as opening balance for the current period.

Note: If we repeat any existing master name again to create then Tally will not accept it showing the
following error,

So if we want to modify any existing one we have to go through “ ALTER” option.

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 Ledger Creations in Multi Mode

Under Group: - Here we have to select any required group to which all our ledgers going to
create should belong.

If we want to create multiple ledgers related to different groups then here we have to select the
option as “ ALL ITEMS” .

How to Delete From Tally

From Tally to delete any company or any master or any voucher we have to use the key “ ALT + D” .
And this deletion is possible in the “ Alteration” mode only.

E.g.:
• To delete a company,

Select the company Press Alt+F3 from gateway of tally select “ Alter” press Enter now
press Alt + D

• To delete a ledger,

Gateway of Tally Accounts info Ledgers Single Alter Select the ledger Press Alt + D

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Comparisons between Single and Multiple Alters of Masters:-

Single Alter Multiple Alter

• We can alter an existing master • We can alter an existing master
• We can delete an existing master • We can not delete an existing master
• We can not create a new master • We can create a new master
• We can access the advanced • We can not access the advanced
parameters for ledger accounts parameters for ledger accounts

COMPANY FEATURES AND CONFIGURATIONS

Tally.ERP9 provides different options those will support to enter the data as Company Features and
Company Configurations.

Company Features [F11]:

In Tally.ERP9 while entering the data of our company to access different concepts like outstanding
balances, cost centers, payroll, all taxations, different inventory related concepts… we can use these
company features.
But any modifications (Yes/No) taking place in these features are applicable to the current active
company only. i.e. these options are localized to a single company only. And also these features are
common at all working areas of a company in Tally.ERP9, i.e. common options at all working areas.

These “ Company Features (F11)” are again classified as shown,

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Types of Company Features:

1. Accounting Features [F1]: Here Tally.ERP9 displays different options related to different
accounting concepts as shown,

2. Inventory Features [F2]: Here Tally.ERP9 display all the options to access different inventory
related concepts as shown,

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3. Statutory and Taxations [F3]: Here Tally.ERP9 shows different Tax options as shown,

4. Tally.NET Features: Here Tally.ERP9 displays different options those will support for
“ Remote Access of Data” as shown,

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Note:
Any settings done in all the above Company features are applicable to the current active
company only
All these features are common at all working areas.

Company Configurations [F12]:

In Tally.ERP9 while entering the data like
Masters and Vouchers entry or while generating
different reports we can generate different
advanced options by using these “ Company
Configurations”
So in Tally.ERP9 these company
configurations are different at different
working areas, i.e. Tally.ERP9 displays the
configurations as per the screen that we are
viewing.
Any modifications taken place in these
configurations will be applied to all the
companies created and going to create,
independent of the current active company.

Masters Configurations:

Here we are going to know the F12 configurations that will be applied to “ All types of Masters”

1. In Tally.ERP9 during a master creation by default Tally prompts to specify “ ALIAS” after
specification of “ NAME” . So here it is user choice to have “ ALIAS” in along with “ NAME” , if the
user don’t want to have “ ALIAS” after NAME, Press F12 and disable the following option,

Allow Aliases in along with names : Yes/No (By default this option is set to YES)

2. If we want specify any master name in more than one language then Press F12 and enable the
following option,
Allow Language Aliases in along with names: Yes/No (By default this option is set to NO)

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Ledger Configurations:
Following are the options that can be used for Ledgers only,

1. A) During a Ledger Creation to specify the “ Address” details then Press F12 and enable the
following option

Use Addresses for ledger accounts: Yes/No (By default this option is set to YES)

B) If we want to specify the “ Contact Details” [Contact Person, Telephone No, Fax, E-Mail
Id] in along with the “ Address” details, Press F12 and enable the following option,

Use Contact Details for ledger accounts: Yes/No (By default this option is set to NO)

2. If we want to specify any Description to the names of Ledger accounts, Press F12 and enable the
following option,
Add NOTES for Ledger Accounts: Yes/No (By default this option is set to No)

If we enable the above three options then the ledger creation screen will be displayed as shown,

3. NOTES to Ledger

1. Address to Ledger account

2. Contact Details of Ledger

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Ledger References:

Sl.No Name of Ledger Under Group Dr/Cr

1 Capital A/c Capital Account Cr
2 With Drawings A/c Capital Account Dr
3 Furniture A/c Fixed Assets Dr
4 Computer A/c Fixed Assets Dr
5 Plant & Machinery A/c Fixed Assets Dr
6 Security Deposit - Rent Deposits(Asset) Dr
7 Loan From Ravi Loans(Liability) Cr
8 Loan to Rama Loans Advances Dr
9 Cash Cash In Hand Dr
10 Petty Cash Cash In Hand Dr
11 HDFC A/c Bank Accounts Dr
12 SBI A/c Bank Accounts Dr
13 SBI OD A/c Bank OD A/c Cr
14 Purchases A/c Purchases Accounts Dr
15 Return Outwards (Purchases Returns) Purchases Accounts Cr
16 Sales A/c Sales Accounts Cr
17 Return Inwards (Sales Returns) Sales Accounts Dr
18 Carriage Inwards Direct Expenses Dr
19 Carriage Outwards Indirect Expenses Dr
20 Wages Direct Expenses Dr
21 Packing Charges Direct Expenses Dr
22 Bad Debts Indirect Expenses Dr
23 Bad Debts Received Indirect Incomes Cr
24 Discount Allowed Indirect Expenses Dr
25 Discount Received Indirect Incomes Cr
26 Loan on Mortgage Secured Loans Cr
27 Good Will Fixed Assets Dr
28 Shares Current Assets Dr
29 Rent Indirect Expenses Dr
30 Rent Payable Provisions Cr
31 Salaries Indirect Expenses Dr
32 Salaries Payable Provisions Cr
33 Insurance Indirect Expenses Dr

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34 Prepaid Insurance Current Assets Dr
35 Stock Stock In Hand Dr
36 Advance From Customers Current Liabilities Cr
37 Advance to Suppliers Current Assets Dr
38 Land Fixed Assets Dr
39 Buildings Fixed Assets Dr
40 Insurance Indirect Expenses Dr
41 Provision for Bad Debts Provisions Cr
42 Rent by Sub Tenant Indirect Incomes Cr
43 General Reserves Reserves & Surplus Cr
44 Investments Investments Dr
45 Bank Charges Indirect Expenses Dr
46 Income Received in Advance Current Liabilities Cr
47 Prepaid Expenses Current Assets Dr
48 Outstanding Expenses Current Liabilities Cr
49 Professional Charges Indirect Expenses Dr
50 Stock of Stationary consumables Current assets Dr

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