Fundamental of Accounting and Tally Prime Notes 1

Fundamental of Accounting and Tally Prime Notes Fundamental of Accounting and Tally Prime Notes 1

Fundamental of Accounting and Tally Prime Notes for Self Study and Computer Coaching classes. Step by Step training Notes with Practice assignment. Fundamental of Accounting and Tally Prime Notes 1

Definition of Accounting

Accounting is the process of identifying, recording, classifying and reporting information on financial transactions in a systematic manner for the purpose of providing financial information for decision making.

Types of Accounts

There are basically three types of Accounts maintained for transactions

Personal Account
Real Account
Nominal Account

Personal Account: Any individual person or any firms or any company or a bank is considered in a Personal account. For example:- Rajesh Singh, Muna Enterprise, Wipro Pvt Ltd, PNB Bank, Capital etc.

Real Account: Account of any physical things. The cash account or goods account are examples of Real account. For example:- Cash, Land, Building, Furniture, Computer etc.

Nominal Account: Account of any invisible things that means that things are in terms of cash are examples of Nominal account. For example:- Discount, Commission, Salary, Wages, Freight etc.

Golden Rules of Accounting

Personal Accounts

The Receiver	Debit (Dr)
The Giver	Credit (Cr)

Real Accounts

What comes in	Debit (Dr)
What goes out	Credit (Cr)

Nominal Accounts

All Expenses or Losses	Debit (Dr)
All Income or Gains	Credit (Cr)

Entries in Account Book

1. Suresh started a business with cash Rs 1,80,000

Cash a/c Dr	180000
To Capital a/c	180000

2. Cash deposited into PNB bank Rs 55000

PNB bank a/c Dr	55000
To Cash a/c	55000

3. Purchase goods for cash Rs 22000

Purchase a/c Dr	22000
To Cash a/c	22000

4. Bought goods fromSona Enterprise Rs 72000

Purchase a/c Dr	72000
To Sona a/c	72000

5. Sold goods for cash Rs 16200

Cash a/c Dr	16200
To Sales a/c	16200

6. Paid rent for the year by PNB bank chequeRs 6000

Rent a/c Dr	6000
PNB bank a/c	6000

7. Withdraw cash into PNB bank Rs 40000

Cash a/c Dr	40000
To PNB bank a/c	40000

8. Purchased furniture for cash Rs 5000

Furniture a/c Dr	5000
To Cash a/c	5000

9. Sold goods to SuperRs 12700

Super a/c Dr	12700
To Sales a/c	12700

10. Received cash from SuperRs 12446 and allowed him discount Rs 254

Cash a/c Dr	12446
Discount allowed a/c	254
To Super a/c	12700

11. Paid wages Rs 1800

Wages a/c Dr	1800
To Cash a/c	1800

12. Paid cash for trade Expenses Rs 2000

Trade Expenses a/c Dr	2000
To Cash a/c	2000

13. Withdraw cash for private Expenses Rs 8000

Drawings a/c Dr	8000
To Cash a/c	8000

14. Depreciation on Machinery Rs 50000

Depreciation a/c Dr	50000
To Machinery a/c	50000

Financial Year Start 1 April To 31 March

Thanks for study the Fundamental of Accounting and Tally Prime Notes

Study Guide: Fundamentals of Accounting and Tally Prime

Part 1: Fundamentals of Accounting

Objective: Understand the basic principles of accounting and prepare accurate financial records.

1. Introduction to Accounting

Key Concepts:

Definition: Accounting is the systematic process of recording, summarizing, and analyzing financial transactions.
Objectives: Record financial transactions, provide information for decision-making, ensure regulatory compliance.

Study Tips:

Memorize the definition and objectives of accounting.
Understand the importance of accurate financial records.

2. Basic Accounting Principles

Key Concepts:

Accrual Principle: Record revenues and expenses when they are incurred, not when cash is exchanged.
Consistency Principle: Use the same accounting methods over time to ensure comparability.
Conservatism Principle: Recognize expenses and liabilities early, but revenues only when they are assured.

Study Tips:

Learn the definitions and examples of each principle.
Practice applying these principles to different accounting scenarios.

3. Accounting Equation and Double-Entry System

Key Concepts:

Accounting Equation: Assets = Liabilities + Owner’s Equity.
Double-Entry System: Each transaction affects at least two accounts, with one debit and one credit entry to keep the accounting equation balanced.

Study Tips:

Memorize the accounting equation.
Practice recording transactions using the double-entry system.

4. Types of Accounts and Rules

Key Concepts:

Personal Accounts: Debit the receiver, Credit the giver.
Real Accounts: Debit what comes in, Credit what goes out.
Nominal Accounts: Debit all expenses and losses, Credit all incomes and gains.

Study Tips:

Learn the classification of accounts and their rules.
Practice categorizing different accounts and recording sample transactions.

5. Financial Statements

Key Concepts:

Income Statement: Shows revenues, expenses, and net profit/loss over a period.
Balance Sheet: Displays assets, liabilities, and equity at a specific point in time.
Cash Flow Statement: Tracks cash inflows and outflows from operating, investing, and financing activities.

Study Tips:

Understand the structure and components of each financial statement.
Practice creating simple financial statements with hypothetical data.

6. Journal and Ledger Entries

Key Concepts:

Journal Entries: Initial recording of transactions in the journal, including date, accounts affected, amounts, and a brief description.
Ledger: Posting journal entries into specific accounts to create a permanent record of transactions.

Study Tips:

Learn the format and components of journal entries.
Practice recording journal entries and posting them to the ledger.

7. Trial Balance and Rectification of Errors

Key Concepts:

Trial Balance: A list of all ledger accounts with their respective debit or credit balances to ensure that total debits equal total credits.
Rectification of Errors: Identifying and correcting errors in the books of accounts.

Study Tips:

Understand the purpose of a trial balance.
Practice preparing a trial balance and identifying errors in sample transactions.

Part 2: Tally Prime Overview

Objective: Learn and practice using Tally Prime for accounting and business management.

1. Getting Started with Tally Prime

Steps:

Installation:

Download Tally Prime from the official website.
Follow the installation instructions.

Company Creation:

Open Tally Prime.
Go to “Company Info” > “Create Company”.
Fill in company details and save.

Study Tips:

Familiarize yourself with the installation and setup process.
Practice creating a new company in Tally Prime.

2. Creating and Managing Accounts

Steps:

Chart of Accounts:

Go to “Gateway of Tally” > “Accounts Info” > “Ledgers” > “Create”.
Enter ledger name, group, and other details.

Voucher Entry:

Go to “Accounting Vouchers”.
Select voucher type (e.g., payment, receipt).
Enter details and save.

Study Tips:

Practice creating ledger accounts and recording various voucher types.
Understand the role of each type of voucher in accounting.

3. Inventory Management

Steps:

Creating Stock Items:

Go to “Gateway of Tally” > “Inventory Info” > “Stock Items” > “Create”.
Enter item details like name, unit, opening balance.

Inventory Vouchers:

Record stock transfers, deliveries, and receipts.

Study Tips:

Learn how to create and manage inventory items.
Practice recording inventory transactions using different vouchers.

4. Payroll Management

Steps:

Employee Creation:

Go to “Gateway of Tally” > “Payroll Info” > “Employees” > “Create”.
Enter employee details.

Processing Payroll:

Record attendance.
Process and disburse salaries.

Study Tips:

Understand the steps to manage employee records.
Practice processing payroll and recording attendance.

5. GST and Tax Management

Steps:

Enabling GST:

Go to “Gateway of Tally” > “F11: Features” > “Statutory & Taxation”.
Enable GST and enter details.

Recording GST Transactions:

Record sales and purchase invoices with GST.

Study Tips:

Learn how to enable and configure GST settings.
Practice recording transactions with GST.

6. Generating Reports

Steps:

Financial Reports:

Profit & Loss, Balance Sheet.

Inventory Reports:

Stock Summary, Movement Analysis.

GST Reports:

GSTR-1, GSTR-3B.

Study Tips:

Understand the purpose and components of each type of report.
Practice generating reports in Tally Prime.

Practice Assignments Summary

Assignment 1: Define accounting and its objectives.
Assignment 2: Explain accrual principle with examples.
Assignment 3: Solve accounting equation problems.
Assignment 4: Classify accounts and record transactions.
Assignment 5: Create financial statements with hypothetical data.
Assignment 6: Record and post journal entries.
Assignment 7: Prepare trial balance and rectify errors.
Assignment 8: Install and set up Tally Prime.
Assignment 9: Create ledger accounts and record vouchers.
Assignment 10: Manage inventory and record transactions.
Assignment 11: Create employee records and process payroll.
Assignment 12: Enable GST and record GST transactions.
Assignment 13: Generate various reports in Tally Prime.

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Conclusion

These study notes provide a structured approach to learning accounting fundamentals and Tally Prime. Practice each assignment to reinforce your understanding and proficiency.