Introduction In Tally, journal entries are made in the vouchers. For each type of journal entry, there is a specific voucher. It is the vouchers where the transactions are recorded along with all the relevant details. Hence, when we speak of journal entries in tally, it is the vouchers which we haveRead more
Introduction
In Tally, journal entries are made in the vouchers. For each type of journal entry, there is a specific voucher. It is the vouchers where the transactions are recorded along with all the relevant details. Hence, when we speak of journal entries in tally, it is the vouchers which we have to master.
In Tally, vouchers are of four types:
Accounting vouchers
Inventory vouchers
Order voucher
Payroll voucher
The vouchers under the above voucher types are as shown below:
To open the voucher creation menu follow these steps:
In Tally ERP 9: Gateway of Tally→ Accounting Vouchers→ Voucher creation menu will open
In Tally Prime: Gateway of Tally→ Vouchers→ Voucher creation menu will open
Out of the above vouchers, the vouchers which I would suggest you practice are as follows (along with their short-cut keys):
Contra Voucher – F4
Payment Voucher – F5
Receipt Voucher – F6
Journal Voucher – F7
Sales Voucher – F8
Purchase Voucher – F9
Credit note – Alt + F6
Debit note – Alt + F5
All of the above are accounting vouchers. You can simply press the short-cut keys to open the respective voucher while in the voucher creation menu
If you are new to tally, I would suggest you practice only the accounting vouchers.
Here, I have discussed only the accounting vouchers:
Payment Voucher – F5
A payment voucher is used to record payments of cash or by the bank. Payment can be to creditors or for expenses.
There are two modes to this voucher which you can change by clicking the ‘Change Mode’ option on the right-hand side menu or simply pressing Ctrl + H. This menu will open.
Select the ‘Double Entry’ mode for sake of simplicity. In this mode, the entry will be just like the conventional journal entry as in the double entry system of accounting.
You have to just select the account you want debit which can be an expense, creditor etc. and you can credit only the cash or bank accounts as it is a payment voucher. Below there is a narration field which you can fill too. After entering all the necessary details you have to accept the voucher.
Here, is a filled payment voucher in which I have recorded an expense payment entry.
The journal entries which you can practice on payment vouchers are as follows:
Payment of expenses like rent, electricity, wages, salaries, carriage, interest etc
Payment to trade creditors.
Purchase of Assets
Receipt Voucher – F6
A receipt voucher is used for the recorded receipt of cash in the business. Just like a payment voucher, I recommend you to use it in Double Entry mode. In Tally prime, it looks this:
The receipt voucher given above is already filled. I have passed a ‘collection from the debtor’ entry here.
The journal entries you can practice in the receipt voucher are as follows:
Receipt of cash from trade debtors.
Receipt of interest from the bank.
Commission received
Sale of Assets.
Purchase Voucher – F7
A purchase voucher is a voucher for exclusively recording purchase of goods entries. Purchase whether cash or credit should be recorded in the purchase voucher only as it allows recording of additional details related to purchase as well as tracking with purchase order and receipt note.
The purchase voucher looks like this:
Here, the purchase voucher is opened in ‘Item invoice’ mode. Item invoice is easier to understand hence I advise you to this mode to use the purchase voucher. You can change the mode by pressing Ctrl + H.
If you wish to record transactions like journal entries then you can choose the ‘As Voucher’ mode.
The details which you have to fill in are as follows:
Reference number or Bill number
Party A/c Name or the name of the creditor. (If the creditor is not created, press Alt + C to create)
Name of item purchased ( Press Alt + C to create the stock item if not created)
Enter the quantity and rate of the item and the total amount will be auto-populated.
The accounting details menu will open asking for the account to be debited for the purchase. Select the purchase account you want to debit or create a purchase account by pressing Alt + C if not created.
Enter a narration if you want and accept the voucher.
Below is a complete purchase voucher where a credit sale transaction is passed:
Sales Voucher – F8
A sales voucher is a voucher for exclusively recording sales of goods entries. Sales, whether cash or credit, should be recorded in the sales voucher only as it allows recording of additional details related to sales as well as tracking with Sales orders and Delivery notes.
Here also, I recommend you to use the sales voucher in Invoice mode
Filling up of details in sales voucher is same as in purchase voucher. The difference here is that in the ‘Accounting details’ section you have selected a sales account to be credited.
Here is a completed sales voucher where I have recorded a credit sale transaction:
Contra Voucher – F4
A Contra voucher is used to record contra transactions. Contra transactions are those transactions which take place between:
A Bank account and cash account
Two different bank accounts
The journal entries which can be practised on contra voucher are as follows:
Withdrawal of cash from the bank.
Deposit from cash into the bank.
Transfer of amount from one bank to another.
Given below is a completed Contra voucher in which ‘cash deposited into bank’ transaction is recorded:
Journal Voucher – F7
There are many transactions which cannot be passed in any of the vouchers discussed above. The examples of such transactions or journal entries are as follows:
Depreciation of assets
Entries related to the provision
Prepaid Expenses
Outstanding expenses
Rectification of error entries
Accrued income entries
Any other entry which cannot be passed in any other voucher.
It is an important voucher in Tally as many crucial entries are recorded in it. The journal voucher looks like this:
It looks like a journal book and it does not have any different mode like voucher discussed above:
The journal entries to practice on journal vouchers are many. You can refer to the examples of transactions I have mentioned above.
Debit Note Voucher – Alt + F5
A debit note voucher is to record purchase return transactions in Tally. Hence, the only transaction you can record here is of purchase return. The debit note voucher looks like this:
Credit Note Voucher– Alt + F5
In credit note vouchers, the sale return transactions are recorded. The credit note voucher looks like this:
That’s all. These are vouchers I would recommend one to practice on Tally.
GST stand for Goods and Services Tax which is levied on almost all the good and services supplied in India. Generally, a business is required to charge GST on all the goods and services supplied by it if its turnover is over the limit as prescribed by respective GST laws. We can also do accounting fRead more
GST stand for Goods and Services Tax which is levied on almost all the good and services supplied in India. Generally, a business is required to charge GST on all the goods and services supplied by it if its turnover is over the limit as prescribed by respective GST laws.
We can also do accounting for GST in Tally by enabling it from the company features.
The steps to enable GST and perform GST accounting in Tally are as given below.
Enabling GST in Tally
GST can be enabled in Tally from the ‘Company features’ menu which opens just after the creation of a company. There is an option called ‘Enable Goods and Services Tax (GST)’. You have to enter ‘Yes’.
If the company is already created and the GST was not enabled earlier, then just press F11 and select the company for which you want to enable GST. The ‘company features’ menu will open again, from there you have to enter ‘Yes’ beside the ‘Enable Goods and Services Tax (GST)’ option.
In both cases, this menu will open:
Do have look at the details I have filled in. You have to:
Select the State in which your business is.
Registration type is Regular in most cases.
Keep the ‘Assessee of another territory’ option at ‘No’, if your business operated from one state only.
Enter your 19-digit GST number.
Periodicity can be set to ‘Monthly’ or ‘Quarterly’ as per the turnover of the business. ‘Quarterly’ preferred.
Keep the E-way bill option at ‘No’ if the E-way bill is not required.
Keep the ‘Set/Alter GST rate details’ option at ‘No’ if you want to charge different goods at different GST rates. If GST rates are set up from here, it will be uniform for all goods and services.
Keep the rest of the options as shown in the above image.
These settings are enough if you are to just practice GST in Tally.
Ledger is the book where the transaction related to a particular account is recorded. For example, the Sales ledger will only record the transactions related to sales. Ledgers in Tally also serve the same purpose. Posting in the ledger is automatically done when the transactions are entered in the vRead more
Ledger is the book where the transaction related to a particular account is recorded. For example, the Sales ledger will only record the transactions related to sales.
Ledgers in Tally also serve the same purpose. Posting in the ledger is automatically done when the transactions are entered in the vouchers.
Now, if you want to delete a ledger, you can easily do by following some simple steps.
I have shared the steps of deleting a ledger in Tally Prime and Tally ERP 9 both.
Deleting a ledger in Tally Prime
To delete a ledger in Tally Prime, the steps are as follows:
Gateway of Tally → Alter → Ledger → Click on the ledger you want to delete.
Upon clicking the ledger, the ledger alteration menu will open.
At the bottom, there is a ‘Delete’ option. Either click on it or simply press Alt + D and click on ‘Yes’. Your ledger will be deleted.
Deleting a ledger in Tally ERP 9
To delete a ledger in Tally ERP 9, the steps are as follows:
Gateway of Tally → Accounts Info → Ledger → Alter → Select the ledger you want to delete.
Steps are almost similar in both versions of Tally. Little difference is there due to the different interfaces of the two versions.
Just like Tally Prime, you can click on the ‘Delete’ option at the bottom or press Alt + D to delete the ledger.
Introduction & Definition Firstly, let's see what the term 'petty cash book' means. The word ‘petty’ means small. A petty cash book is identical to a cash book, maintained to record the small expenses of a business like stationery, postage, stamps, carriage, etc. The cash received by a petty casRead more
Introduction & Definition
Firstly, let’s see what the term ‘petty cash book’ means. The word ‘petty’ means small. A petty cash book is identical to a cash book, maintained to record the small expenses of a business like stationery, postage, stamps, carriage, etc. The cash received by a petty cashier is recorded on the debit/ receipt side whereas, the money he pays is recorded on the credit/ payment side. The difference between the sum of the debit and credit items represents the balance of the petty cash in hand.
The reason the petty cash book is maintained is that it records small expenses that are inconvenient or too small to be registered in the cash book. This is also called a simple petty cash book. Just like a cash book is maintained by the accountant, the petty cash book is maintained by a petty cashier.
When it comes to the format, there are two types of petty cash book formats. They are-
Simple Petty Cash Book
Analytical Petty Cash Book
We have been discussing the simple petty cash book so far. Thus,
Format of Simple Petty Cash Book
Analytical Petty Cash Book
The analytical petty cash book has numerous columns for the recording of monetary transactions. In the analytical petty cash book, there are pre-existing columns for the usual expenses that are recorded frequently in the business which makes it easier for a business that has daily expenses for food, stationery, postage, etc. They’ll be having individual columns. It has numerous columns in it for the recording of expenses in it.
The key advantages of an analytical petty cash book are-
One of the major key advantages is that the analytical petty cash book due to its format and structure saves time.
The other advantage is that it helps the business in easy comparisons.
Drawings of goods The drawings of the goods, in a business, take place when the owner/partner of a business withdraws goods for their personal use. It's hence called drawings as it reduces the capital invested by the owner(s). It's also called the withdrawal account. The drawings are generally madeRead more
Drawings of goods
The drawings of the goods, in a business, take place when the owner/partner of a business withdraws goods for their personal use. It’s hence called drawings as it reduces the capital invested by the owner(s). It’s also called the withdrawal account.
The drawings are generally made for cash or stock by the owner/partner and the relevant account is thus reduced causing the adjustment done on the owner/partner’s capital at the cost price.
Journal entry
The journal entry for the goods withdrawn for personal use will be as follows:
Explanation via rules
The drawings account is debited because it decreases the balance of the capital account. Whereas, the purchases account is credited as it causes a reduction in the purchases account.
As per the modern rules of accounting, we credit the decrease in assets, thus, the purchases account is credited. Whereas, the withdrawal account when increased is debited. Therefore, the drawing account is debited here.
As per the golden rules of accounting, “debit what comes in and credit what goes out.” Hence, the purchase account is credited. And, “if any expense or loss is incurred for the business, the expense or loss account shall be debited“. Thus, the drawing account is debited.
Subsidiary Books Introduction & Definition In large business organizations, it is practically impossible to keep a record of every single business affair, while neglecting them and not recording them wouldn't be an ideal choice, this is where subsidiary books come into the role. As we were introRead more
Subsidiary Books
Introduction & Definition
In large business organizations, it is practically impossible to keep a record of every single business affair, while neglecting them and not recording them wouldn’t be an ideal choice, this is where subsidiary books come into the role. As we were introduced to the basics of accounting in the 11th standard, we learned about different elements like journals, ledgers, trial balances, etc. It is practically impossible for a business to keep track of every single affair just through only those elements. Thus, the Subsidiary book is the next step here.
Subsidiary books are the books of original entry. They are a dedicated form of books that maintains an analysis of a specific account. It records financial transactions of a similar nature. They are sub-division of a journal.
In big business organizations, it’s very hard for a bookkeeper or accountant to record all the transactions in one journal and post them into various accounts. This is where special purpose books or subsidiary books may be required for more efficient bookkeeping. They are a subdivision of journals and for every type of transaction, there is a separate book.
Types of Subsidiary Books
There are eight types of subsidiary books that are required for recording transactions. The list of various subsidiary books is as follows:
Cash Book
Purchase Book
Sales Book
Purchase Return Book
Sales Return Book
Journal Proper
Bills Receivable Book
Bills Payable Book
Types of Subsidiary Books
Now, we’ll be taking a closer look at each and every subsidiary book.
Cash Book
The cash book is the most important subsidiary book, it’s a book of a prime entry recording all the cash spent or received by the business, either in cash form or from the bank. In simple words, recording all the transactions made by the business.
It is of three types i.e single-column cash book, double-column cash book, and triple-column cash book. As the name indicates, the column of cash, bank, and discount increases/decreases as per the column of the cash book stated.
Format
Note: this is a triple-column cash book format, for the double-column cash book format, we remove the discount column from both sides, and for the single column, we may remove the bank column as well.
Purchase Book
A purchase book is a subsidiary book that records all the transactions related to the credit purchase in a business. Thereby, the normal purchasing of assets is never recorded in the purchase book.
The credit purchases are directly recorded in the purchase book from the journals or the source documents. The source document indicates bills payable, invoices, etc.
Format
Sales Book
A sales book, similar to a purchase book, is a special book where all the credit sales are recorded. The sales book doesn’t record the transactions related to the normal sale of assets and hence, is a special type of book, just like the purchase book.
Format
Purchase Return Book
The purchase return book, also known as the return outwards book, is that book that records the goods that were returned by us to the supplier. Thereby, called purchase return book.
When the goods are returned, a debit note is issued against every return and hence, recorded in the purchase return book.
Format
Sales Return Book
The sales return book, also known as the return inwards book, refers to that subsidiary book that records the goods which were returned to us by the customer.
For every good returned to us, a credit note is issued to the customer. And thus, it is recorded in the sales return book.
Format
Journal Proper
Just like we recently learned in class 11th about what a journal entry is and how it is made, it’s a little different from the journal proper. Journal proper is a subsidiary book that records all the transactions which are not recorded in other subsidiary books.
A journal is an original book of entries that records all the business transactions, while a journal proper is a subsidiary book in which all types of miscellaneous credit business transactions are recorded that do not fit anywhere in the other subsidiary books. Its format is the same as the journal entries’ format. Therefore, it’s also known as a miscellaneous journal.
Format
Bills Receivable Book
The bills receivable book is the book that draws the bills favorable to the business i.e when the goods or services are provided to any customer on credit, they become a debtor, and bills receivable is a written note received from the customer indicating that they formally agree to pay the sum of money owed.
Therefore, it helps in recording these types of transactions. The sum total of the bills receivable book is posted to the bills receivable account.
Format
Bills Payable Book
The bills payable book is the subsidiary book that records all the bills that are drawn on the company. The bills payable is drawn on the company when we buy a good/service on credit and agrees to pay the amount to the supplier by signing a written note with the date we agree to pay.
It’s a liability of the business and the total of the bills payable book is posted on the credit side of the bills payable account.
Tally ERP does not have a voucher for recording closing stock journal entries. It automatically calculates closing stock and reports it in the Profit and Loss account and Balance sheet. However, Tally do have vouchers through which you can adjust the closing stock to be shown at the end of the year.Read more
Tally ERP does not have a voucher for recording closing stock journal entries. It automatically calculates closing stock and reports it in the Profit and Loss account and Balance sheet.
However, Tally do have vouchers through which you can adjust the closing stock to be shown at the end of the year.
Explanation
Tally, as we know is an ERP which can automate many aspects of accounting like calculation of ledger balance, creation of trial balance, financial statements and other reports. Only the data entry in vouchers is done manually.
Tally also calculates closing stock automatically because it already has the required data to do so.
Using the above formula, Tally automatically calculates the closing stock.
But it may happen that the closing stock as per Tally and closing stock as per physical verification of stock do not match.
This may be due to damaged caused to some items of inventory or even theft of inventory items which is usually discovered when stock is physically checked and counted at the end of the financial year.
In that case, we can use the Physical Stock voucher to correct our closing stock in Tally.
Physical Stock Voucher
A physical Stock voucher is an inventory voucher which is used to adjust the amount of closing stock as per the physical stock verified at the end of the year.
Suppose, if the closing stock for Bricks is 500pcs. Like in my stock summary, the item ‘Bricks’ is shown in the image below:
But after physical verification, it was found that there around there are only 450pcs of whole bricks are there. The rest of the bricks were broken.
To rectify this, we will open a Physical Stock voucher.
The steps to open a Physical stock voucher are as follows:
In Tally ERP 9 : Gateway of Tally → Accounting Vouchers → Press Alt + F10
In the physical stock voucher, we will select the stock item and enter the correct quantity, which is 450pcs.
After entering the details above, accept the voucher and open the stock summary again from Gateway of Tally. It will show the Bricks at 450pcs.
Hence, this is how we can adjust our closing stock in Tally.
Can you share journal entries for tally practice?
Introduction In Tally, journal entries are made in the vouchers. For each type of journal entry, there is a specific voucher. It is the vouchers where the transactions are recorded along with all the relevant details. Hence, when we speak of journal entries in tally, it is the vouchers which we haveRead more
Introduction
In Tally, journal entries are made in the vouchers. For each type of journal entry, there is a specific voucher. It is the vouchers where the transactions are recorded along with all the relevant details. Hence, when we speak of journal entries in tally, it is the vouchers which we have to master.
In Tally, vouchers are of four types:
The vouchers under the above voucher types are as shown below:
To open the voucher creation menu follow these steps:
In Tally ERP 9: Gateway of Tally→ Accounting Vouchers→ Voucher creation menu will open
In Tally Prime: Gateway of Tally→ Vouchers→ Voucher creation menu will open
Out of the above vouchers, the vouchers which I would suggest you practice are as follows (along with their short-cut keys):
All of the above are accounting vouchers. You can simply press the short-cut keys to open the respective voucher while in the voucher creation menu
If you are new to tally, I would suggest you practice only the accounting vouchers.
Here, I have discussed only the accounting vouchers:
Payment Voucher – F5
A payment voucher is used to record payments of cash or by the bank. Payment can be to creditors or for expenses.
There are two modes to this voucher which you can change by clicking the ‘Change Mode’ option on the right-hand side menu or simply pressing Ctrl + H. This menu will open.
Select the ‘Double Entry’ mode for sake of simplicity. In this mode, the entry will be just like the conventional journal entry as in the double entry system of accounting.
You have to just select the account you want debit which can be an expense, creditor etc. and you can credit only the cash or bank accounts as it is a payment voucher. Below there is a narration field which you can fill too. After entering all the necessary details you have to accept the voucher.
Here, is a filled payment voucher in which I have recorded an expense payment entry.
The journal entries which you can practice on payment vouchers are as follows:
Receipt Voucher – F6
A receipt voucher is used for the recorded receipt of cash in the business. Just like a payment voucher, I recommend you to use it in Double Entry mode. In Tally prime, it looks this:
The receipt voucher given above is already filled. I have passed a ‘collection from the debtor’ entry here.
The journal entries you can practice in the receipt voucher are as follows:
Purchase Voucher – F7
A purchase voucher is a voucher for exclusively recording purchase of goods entries. Purchase whether cash or credit should be recorded in the purchase voucher only as it allows recording of additional details related to purchase as well as tracking with purchase order and receipt note.
The purchase voucher looks like this:
Here, the purchase voucher is opened in ‘Item invoice’ mode. Item invoice is easier to understand hence I advise you to this mode to use the purchase voucher. You can change the mode by pressing Ctrl + H.
If you wish to record transactions like journal entries then you can choose the ‘As Voucher’ mode.
The details which you have to fill in are as follows:
Below is a complete purchase voucher where a credit sale transaction is passed:
Sales Voucher – F8
A sales voucher is a voucher for exclusively recording sales of goods entries. Sales, whether cash or credit, should be recorded in the sales voucher only as it allows recording of additional details related to sales as well as tracking with Sales orders and Delivery notes.
Here also, I recommend you to use the sales voucher in Invoice mode
Filling up of details in sales voucher is same as in purchase voucher. The difference here is that in the ‘Accounting details’ section you have selected a sales account to be credited.
Here is a completed sales voucher where I have recorded a credit sale transaction:
Contra Voucher – F4
A Contra voucher is used to record contra transactions. Contra transactions are those transactions which take place between:
The journal entries which can be practised on contra voucher are as follows:
Given below is a completed Contra voucher in which ‘cash deposited into bank’ transaction is recorded:
Journal Voucher – F7
There are many transactions which cannot be passed in any of the vouchers discussed above. The examples of such transactions or journal entries are as follows:
It is an important voucher in Tally as many crucial entries are recorded in it.
The journal voucher looks like this:
It looks like a journal book and it does not have any different mode like voucher discussed above:
The journal entries to practice on journal vouchers are many. You can refer to the examples of transactions I have mentioned above.
Debit Note Voucher – Alt + F5
A debit note voucher is to record purchase return transactions in Tally. Hence, the only transaction you can record here is of purchase return. The debit note voucher looks like this:
Credit Note Voucher– Alt + F5
In credit note vouchers, the sale return transactions are recorded. The credit note voucher looks like this:
That’s all. These are vouchers I would recommend one to practice on Tally.
See lessHow to enable GST in tally?
GST stand for Goods and Services Tax which is levied on almost all the good and services supplied in India. Generally, a business is required to charge GST on all the goods and services supplied by it if its turnover is over the limit as prescribed by respective GST laws. We can also do accounting fRead more
GST stand for Goods and Services Tax which is levied on almost all the good and services supplied in India. Generally, a business is required to charge GST on all the goods and services supplied by it if its turnover is over the limit as prescribed by respective GST laws.
We can also do accounting for GST in Tally by enabling it from the company features.
The steps to enable GST and perform GST accounting in Tally are as given below.
Enabling GST in Tally
GST can be enabled in Tally from the ‘Company features’ menu which opens just after the creation of a company. There is an option called ‘Enable Goods and Services Tax (GST)’. You have to enter ‘Yes’.
If the company is already created and the GST was not enabled earlier, then just press F11 and select the company for which you want to enable GST. The ‘company features’ menu will open again, from there you have to enter ‘Yes’ beside the ‘Enable Goods and Services Tax (GST)’ option.
In both cases, this menu will open:
Do have look at the details I have filled in. You have to:
These settings are enough if you are to just practice GST in Tally.
See lessHow to delete ledger in tally?
Ledger is the book where the transaction related to a particular account is recorded. For example, the Sales ledger will only record the transactions related to sales. Ledgers in Tally also serve the same purpose. Posting in the ledger is automatically done when the transactions are entered in the vRead more
Ledger is the book where the transaction related to a particular account is recorded. For example, the Sales ledger will only record the transactions related to sales.
Ledgers in Tally also serve the same purpose. Posting in the ledger is automatically done when the transactions are entered in the vouchers.
Now, if you want to delete a ledger, you can easily do by following some simple steps.
I have shared the steps of deleting a ledger in Tally Prime and Tally ERP 9 both.
Deleting a ledger in Tally Prime
To delete a ledger in Tally Prime, the steps are as follows:
Gateway of Tally → Alter → Ledger → Click on the ledger you want to delete.
Upon clicking the ledger, the ledger alteration menu will open.
At the bottom, there is a ‘Delete’ option. Either click on it or simply press Alt + D and click on ‘Yes’. Your ledger will be deleted.
Deleting a ledger in Tally ERP 9
To delete a ledger in Tally ERP 9, the steps are as follows:
Gateway of Tally → Accounts Info → Ledger → Alter → Select the ledger you want to delete.
Steps are almost similar in both versions of Tally. Little difference is there due to the different interfaces of the two versions.
Just like Tally Prime, you can click on the ‘Delete’ option at the bottom or press Alt + D to delete the ledger.
See lessCan someone share petty cash book format?
Introduction & Definition Firstly, let's see what the term 'petty cash book' means. The word ‘petty’ means small. A petty cash book is identical to a cash book, maintained to record the small expenses of a business like stationery, postage, stamps, carriage, etc. The cash received by a petty casRead more
Introduction & Definition
Firstly, let’s see what the term ‘petty cash book’ means. The word ‘petty’ means small. A petty cash book is identical to a cash book, maintained to record the small expenses of a business like stationery, postage, stamps, carriage, etc. The cash received by a petty cashier is recorded on the debit/ receipt side whereas, the money he pays is recorded on the credit/ payment side. The difference between the sum of the debit and credit items represents the balance of the petty cash in hand.
The reason the petty cash book is maintained is that it records small expenses that are inconvenient or too small to be registered in the cash book. This is also called a simple petty cash book. Just like a cash book is maintained by the accountant, the petty cash book is maintained by a petty cashier.
When it comes to the format, there are two types of petty cash book formats. They are-
We have been discussing the simple petty cash book so far. Thus,
Format of Simple Petty Cash Book
Analytical Petty Cash Book
The analytical petty cash book has numerous columns for the recording of monetary transactions. In the analytical petty cash book, there are pre-existing columns for the usual expenses that are recorded frequently in the business which makes it easier for a business that has daily expenses for food, stationery, postage, etc. They’ll be having individual columns. It has numerous columns in it for the recording of expenses in it.
The key advantages of an analytical petty cash book are-
Format of Analytical Petty Cash Book
See lessWhat is the journal entry for goods taken for personal use?
Drawings of goods The drawings of the goods, in a business, take place when the owner/partner of a business withdraws goods for their personal use. It's hence called drawings as it reduces the capital invested by the owner(s). It's also called the withdrawal account. The drawings are generally madeRead more
Drawings of goods
The drawings of the goods, in a business, take place when the owner/partner of a business withdraws goods for their personal use. It’s hence called drawings as it reduces the capital invested by the owner(s). It’s also called the withdrawal account.
The drawings are generally made for cash or stock by the owner/partner and the relevant account is thus reduced causing the adjustment done on the owner/partner’s capital at the cost price.
Journal entry
The journal entry for the goods withdrawn for personal use will be as follows:
Explanation via rules
The drawings account is debited because it decreases the balance of the capital account. Whereas, the purchases account is credited as it causes a reduction in the purchases account.
As per the modern rules of accounting, we credit the decrease in assets, thus, the purchases account is credited. Whereas, the withdrawal account when increased is debited. Therefore, the drawing account is debited here.
As per the golden rules of accounting, “debit what comes in and credit what goes out.” Hence, the purchase account is credited. And, “if any expense or loss is incurred for the business, the expense or loss account shall be debited“. Thus, the drawing account is debited.
See lessWhat are subsidiary books as per 11th?
Subsidiary Books Introduction & Definition In large business organizations, it is practically impossible to keep a record of every single business affair, while neglecting them and not recording them wouldn't be an ideal choice, this is where subsidiary books come into the role. As we were introRead more
Subsidiary Books
Introduction & Definition
In large business organizations, it is practically impossible to keep a record of every single business affair, while neglecting them and not recording them wouldn’t be an ideal choice, this is where subsidiary books come into the role. As we were introduced to the basics of accounting in the 11th standard, we learned about different elements like journals, ledgers, trial balances, etc. It is practically impossible for a business to keep track of every single affair just through only those elements. Thus, the Subsidiary book is the next step here.
Subsidiary books are the books of original entry. They are a dedicated form of books that maintains an analysis of a specific account. It records financial transactions of a similar nature. They are sub-division of a journal.
In big business organizations, it’s very hard for a bookkeeper or accountant to record all the transactions in one journal and post them into various accounts. This is where special purpose books or subsidiary books may be required for more efficient bookkeeping. They are a subdivision of journals and for every type of transaction, there is a separate book.
Types of Subsidiary Books
There are eight types of subsidiary books that are required for recording transactions. The list of various subsidiary books is as follows:
Types of Subsidiary Books
Now, we’ll be taking a closer look at each and every subsidiary book.
Cash Book
The cash book is the most important subsidiary book, it’s a book of a prime entry recording all the cash spent or received by the business, either in cash form or from the bank. In simple words, recording all the transactions made by the business.
It is of three types i.e single-column cash book, double-column cash book, and triple-column cash book. As the name indicates, the column of cash, bank, and discount increases/decreases as per the column of the cash book stated.
Format
Note: this is a triple-column cash book format, for the double-column cash book format, we remove the discount column from both sides, and for the single column, we may remove the bank column as well.
Purchase Book
A purchase book is a subsidiary book that records all the transactions related to the credit purchase in a business. Thereby, the normal purchasing of assets is never recorded in the purchase book.
The credit purchases are directly recorded in the purchase book from the journals or the source documents. The source document indicates bills payable, invoices, etc.
Format
Sales Book
A sales book, similar to a purchase book, is a special book where all the credit sales are recorded. The sales book doesn’t record the transactions related to the normal sale of assets and hence, is a special type of book, just like the purchase book.
Format
Purchase Return Book
The purchase return book, also known as the return outwards book, is that book that records the goods that were returned by us to the supplier. Thereby, called purchase return book.
When the goods are returned, a debit note is issued against every return and hence, recorded in the purchase return book.
Format
Sales Return Book
The sales return book, also known as the return inwards book, refers to that subsidiary book that records the goods which were returned to us by the customer.
For every good returned to us, a credit note is issued to the customer. And thus, it is recorded in the sales return book.
Format
Journal Proper
Just like we recently learned in class 11th about what a journal entry is and how it is made, it’s a little different from the journal proper. Journal proper is a subsidiary book that records all the transactions which are not recorded in other subsidiary books.
A journal is an original book of entries that records all the business transactions, while a journal proper is a subsidiary book in which all types of miscellaneous credit business transactions are recorded that do not fit anywhere in the other subsidiary books. Its format is the same as the journal entries’ format. Therefore, it’s also known as a miscellaneous journal.
Format
Bills Receivable Book
The bills receivable book is the book that draws the bills favorable to the business i.e when the goods or services are provided to any customer on credit, they become a debtor, and bills receivable is a written note received from the customer indicating that they formally agree to pay the sum of money owed.
Therefore, it helps in recording these types of transactions. The sum total of the bills receivable book is posted to the bills receivable account.
Format
Bills Payable Book
The bills payable book is the subsidiary book that records all the bills that are drawn on the company. The bills payable is drawn on the company when we buy a good/service on credit and agrees to pay the amount to the supplier by signing a written note with the date we agree to pay.
It’s a liability of the business and the total of the bills payable book is posted on the credit side of the bills payable account.
Format
See lessHow to do closing stock journal entry in Tally?
Tally ERP does not have a voucher for recording closing stock journal entries. It automatically calculates closing stock and reports it in the Profit and Loss account and Balance sheet. However, Tally do have vouchers through which you can adjust the closing stock to be shown at the end of the year.Read more
Tally ERP does not have a voucher for recording closing stock journal entries. It automatically calculates closing stock and reports it in the Profit and Loss account and Balance sheet.
However, Tally do have vouchers through which you can adjust the closing stock to be shown at the end of the year.
Explanation
Tally, as we know is an ERP which can automate many aspects of accounting like calculation of ledger balance, creation of trial balance, financial statements and other reports. Only the data entry in vouchers is done manually.
Tally also calculates closing stock automatically because it already has the required data to do so.
Closing stock = Opening stock + Purchase – Cost of goods sold.
Using the above formula, Tally automatically calculates the closing stock.
But it may happen that the closing stock as per Tally and closing stock as per physical verification of stock do not match.
This may be due to damaged caused to some items of inventory or even theft of inventory items which is usually discovered when stock is physically checked and counted at the end of the financial year.
In that case, we can use the Physical Stock voucher to correct our closing stock in Tally.
Physical Stock Voucher
A physical Stock voucher is an inventory voucher which is used to adjust the amount of closing stock as per the physical stock verified at the end of the year.
Suppose, if the closing stock for Bricks is 500pcs. Like in my stock summary, the item ‘Bricks’ is shown in the image below:
But after physical verification, it was found that there around there are only 450pcs of whole bricks are there. The rest of the bricks were broken.
To rectify this, we will open a Physical Stock voucher.
The steps to open a Physical stock voucher are as follows:
In Tally ERP 9 : Gateway of Tally → Accounting Vouchers → Press Alt + F10
In the physical stock voucher, we will select the stock item and enter the correct quantity, which is 450pcs.
After entering the details above, accept the voucher and open the stock summary again from Gateway of Tally. It will show the Bricks at 450pcs.
Hence, this is how we can adjust our closing stock in Tally.
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