UNIT 5 ACCOUNTING PACKAGES

1Q) ACCOUNTING PACKAGE IN TALLY

 Every computerized accounting system is implemented to perform accounting activities (recording and storing accounting data) and generate reports as per the user's requirements. From this perspective, the accounting packages are classified into the following categories 

(1) Ready to use

(2) Customized

(3) Tailored

1 Ready-to-use Software:

Ready-to-use accounting software is suited to organizations running small businesses where the frequency or volume of accounting transactions is shallow. This is because the installation cost is generally low and several users is limited. Ready-to-use software is relatively easier to learn. The Accountant can adopt and use it very easily This also implies that the level of secrecy is relatively low and the software is prone to data fraud The training needs are simple and sometimes the vendor (supplier of software) offers the training on the software free However, these software offer little scope of linking to other information systems.

2 Customized Software:

Accounting software may be customized to meet the special requirements of the user. Standardized accounting software available in the market may not suit or fulfill the user requirements For example, standardized accounting software may contain the sales voucher and inventory status as separate options. However, when the user requires that inventory status be updated immediately upon entry of sales voucher and reports be printed, the software needs to be customized. The difference in business also makes it necessary to have a customized package

Customized software is to suit large and medium businesses as can be linked to other information systems The cost of installation and maintenance is relatively high because the high cost is to be paid to the vendor for customization The customization includes modification and addition to the software contents, provision for the specified number of users and their authentication, etc. Secrecy of data and software can be better maintained in customized software. Since the need to train the software users is important, the training costs are therefore high.

Tailored Software:

Generally, the accounting software is tailored to large business organizations with multi-users and geographically scattered locations. This software requires specialized training for the users. The tailored software is designed to meet the specific requirements of the users and form an important part of the organizational Management Information System (MIS). The secrecy and authenticity checks are robust in such software and they offer high flexibility in terms of the number of users.

 However, the choice of accounting software would depend upon the suitability of the organization especially in terms of accounting needs.

2Q) ADVANTAGES IN THE USE OF TALLY

The following advantages can be derived by organizations by using Tally.

1. Easy Changes in manual accounting, once the transactions are recorded, we can not change except by striking off the figures and making a new entry or ledger in its place. But in computer accounting. we can alter or modify the accounting data easily without striking off figures or data.

2. Accounts of Multiple organizations at a time We can open any number of companies and any number of accounting years in computer accounting whereas in manual accounting we have to maintain different books for different companies and we can do accounting for one year at one time.

3. Easy preparation of charts and Graphs easy: It is very easy to convert the accounting information into charts and graphs in computerized accounting. However, in manual accounting no such facility exists and we have to prepare these things. 

4. Easy Accounting of Vouchers: Computer Accounting itself gives different numbers for vouchers whereas in manual accounting we have to write numbers manually on each voucher.

5. Effective Inventory Control System: In computerized Accounting, we have full full-fledged system of inventory control, godowns, budgets, etc.. whereas in manual accounting there is no such system. The full pledged inventory control system provides for effective control of inventory in various ways.

6. Doubts clearance easy: If we have any doubts regarding any options or accounting concepts, we can get answers instantly by opening the 'help' option in computerized accounting and typing the relevant information. There is however no such facility in manual accounting

7. Automatic calculations: There is no need to use calculators for counting in computerized accounting as the tally itself calculates the accounts. Even the interest or discount calculations are also automatic. In manual accounting, the use of calculators becomes a must.

3Q) EXPLAIN THE FEATURES OF TALLY PACKAGE:

Tally is an excellent accounting package, particularly for the Indian environment. It contains all the options for entering, classifying, recording, and finalizing the accounts. It gives small guidelines but provides fantastic results. This technology is what ensures the blazing speed, power, scalability, and world-class reliability that Tally 9 promises. Now Tally 9 is enhanced with major new capabilities like Payroll. POS Invoicing, Service Tax, VAT, etc.

The first world's concurrent multilingual accounting software was developed by Tally through its Tally 9. When Tally 9 is installed many Indian languages including Telugu will be installed in the system. Tally 9 also provides payroll information for the organization.

 Features of Tally:

The following are the important features of Tally.

1. Easy to Learn:

Tally is easy to learn. It can be learned by any person even without the knowledge of Accounting Principles. The persons who know the accounting principles can learn the Tally within a short time and the persons who do not have knowledge of accounting principles will however take some more days.

2. Customization according to Needs:

Tally is simple and flexible. Tally is flexible in the sense that the accounting statements, vouchers, and ledgers can be customized according to the needs of the people. For example, Dr/Cr in vouchers instead of To / By can be changed easily. Own groups also can be created against the predefined groups in Tally. These flexibilities in Tally help the users in the customization of their accounts according to the changing conditions.

3. Instant Preparation of Final Accounts and Reports:

Tally produces instant results. It is possible to know how much profit we made even for a short period in Tally. In manual Accounting, we have to wait until the year ends to get the results. But in Tally, we can get the readymade profit and loss account and balance sheet for any period ranging from one day to one year. Further, any type of reports on ledgers, vouchers, inventory, cash/bank balance, Receivables, payables, etc., can be readily obtained.

4. No need of Codes:

Like other types of software, Codes are not compulsory in Tally. We can work on the system with vouchers and ledgers easily. Therefore, we are saved from the task of providing and remembering the codes for different accounts.

5. Security of Data:

Tally has good security features against data tampering. The manual books can be opened by anybody in the office. In Tally the Accounts can be seen, opened, and changed by only those people who are authorized to open As passwords are given to different levels of people, they only can see and change the data in Tally. Hence, without authorization changing accounts is not possible and even when changed with prior permission, it can be found out very easily.

6. Easy Transmitting of the Data:

In Tally, we can send the data and information to any other computer in the world having an internet connection. For example, A branch office can send sales reports and other information to the Head Office through e-mail Tally also permits the user to publish its statements and reports on the World Wide Web (www). It also provides for the incorporation of transmitted data very easily.

4Q) EXPLAIN THE PROCESS OF ACCOUNTING USING TALLY

1. Creation of a Company:

The first step to be followed in the computerization of accounts is the creation of the name of the company, whose books are being prepared. In addition to the company name, Tally provides the facility to enter the Mailing name field when the country is selected from the list of countries, it brings upstate, Pincode, telephone, e-mail address, currency, etc.

Then Tally displays the type of company with two options

(1) Accounts only, and

(2) Accounts with Inventory.

Selection depends upon the nature of the company. However, at a later date also one can choose to alter the information as Accounts with Inventory, if Accounts only is selected initially, then "Financial year' is to be finalized. Tally vault is an enhanced financial system and it allows for 'encryption" of the company data. Encryption if one opts for security control, Tally offers a comprehensive password-based access control to different features of Tally based on authority lists created by the Administrator.

Use of Tally Audit features:

A Tally audit allows the administrator or an auditor profile user to make changes in accounting information. It provides for the import of the latest statutory masters.

2. Gateway of Tally

Gateway of Tally is the screen that appears on selecting a company. It is the Index of all transactions in Tally. The important steps in the selection of items on the Gateway of Tally screen are

1. To create groups and ledgers

2. To record vouchers

3. To view the Final Accounts

4. Display all other books like Trial balance, cash, and Bank books. Sales and Purchase Registers and Statements of Accounts.

Now we have to start with Accounting Info. It consists of groups, ledgers, and vouchers.

3. Accounting Information in Tally

The Accounting Info Menu lists the masters through which we can see the details of the company's accounts. Now we have to create three types of accounting information.

1. Groups: These are the main account heads which are created by Tally itself. Tally provides all the major account heads in the Profit and Loss Account and Balance Sheet.

2. Ledgers: Ledgers have to be created and placed under the above particular group.

3. Vouchers: Transactions are recorded in Vouchers through Ledgers in Tally, Hence ledger accounts participate in voucher creation. There is, however, no direct relationship between vouchers and groups.

4. Creation of Groups:

Accounts Information contains the masters. Each master has to create, alter, and display functions. Single Group option is useful when we wish to work on the Group at a time. The multiple-group option is very useful when we are working on many sub-groups at a time and saves a lot of time. Once a sub-group is created, it behaves exactly like a Group.

Tally follows the modern way of managing accounts called the single Ledger concept of accounting. This is in direct contrast to Subsidiary Ledger Accounting. All financial entries are made using ledgers or account heads. Ledger accounts are created to identify transactions. The single ledger concept avoids the need for sub-ledgers and corresponding control in the General Ledger. Tally allows us to group ledger information to generate meaningful reports that are compliant with laws. Groups in Tally classify and identify account heads according to their nature. This helps in presenting summarized information.

5 Classification of Account Heads:

Usually, grouping of accounts is done only when reports are needed. This may result in delays in preparing the reports. Tally allows us to set up a chart of accounts.

We can group the ledger accounts while creating them. This will enable our reports and statements to reflect the desired classification at any point. In Tally, we can also re-group the ledgers if re-classification is necessary. Re-grouping becomes necessary whenever there is a change in information. However, re-grouping can be done only by users who have authorized rights.

At the highest level of grouping, accounts are classified into capital or revenue specifically into assets, liabilities, income, and expenditure. Based on mercantile accounting principles. Tally provides a set of reserved groups and allows us to modify their names or create sub-groups. The following figure unable us to explain about groups.

Based on groups, Tally will decide which item is Revstu Capital and which item is Asset or Liability. Then it will take the items-based groups to the debit side or credit side of the profit and loss account. Similarly, it will take the remaining items on the Liabilities side and also some items on the Assets side in the Balance Sheet. That is why we need not prepare profit and loss accounts and balance sheets and also accounting statements in Tally as Tally automatically prepares profit and Loss accounts and balance sheets based on groups and ledgers. As we are providing groups and ledgers for transactions at the time of creation, Tally provides instant results at any time during the year.

Groups have a hierarchical structure. The main group of accounts that define the entire accounting and their presentation are the asset, liability, income, or expenditure. These main groups ascertain whether a ledger affects the Profit & Loss Account as a revenue item or if it affects the Balance Sheet. 

6 Creation of New Groups:

If pre-defined groups given Tally are not adequate some more new groups may be created if the need arises. To create a new group, for example, for loans and advances under primary or current assets, the following steps are to be followed.

1. Computerize the name of the group, for example in this case computerize Loans and Advances.

 2. Compüterize the group under which the item of "Loans and Advances" comes and select primary under the column. 

3. Computerize the nature of group "Loans and advances. In this case, select "Assets" and click continuously to accept information.

7 Creation of Sub-Group:

A group may sometimes have subgroups. In classifying the items, some items may again need further classification. For example, the item "Salaries' may need further sub-groups as under.

Here, we have to create again a sub-group for the Production Department. Salaries under the sub group of Salaries and it is under the main group Indirect expenses.