Why is Tally the best for basic Financial Management?
Tally.ERP 9 provides you the capability to generate various financial statements and Management
Information system reports, thereby facilitating better management, effective control and wellinformed
decisions. Following are the some of salient features, which makes Tally.ERP 9 best for
basic financial management.
Fund Flows
Receivables Turnover (Payment performance of debtors)
Branch Accounting
Flexible Period Accounting
Budgeting and Control
Cost centers / Profit centers with multiple Cost Categories
Ratio Analysis
Scenario Management.
26
Lesson 2:Why is Tally the best for basic Financial Management?
Tally.ERP 9 provides you the capability to generate various financial statements and Management
Information system reports, thereby facilitating better management, effective control and wellinformed
decisions. Following are the some of salient features, which makes Tally.ERP 9 best for
basic financial management.
Fund Flows
Receivables Turnover (Payment performance of debtors)
Branch Accounting
Flexible Period Accounting
Budgeting and Control
Cost centers / Profit centers with multiple Cost Categories
Ratio Analysis
Scenario Management
2.1 Fund Flows
A Fund Flow statement reflects the movement in sources and application of funds which impacts
the business's working capital and cash position. It includes operational funds, increase and
decrease in inventories, creditors/debtors. This statement reveals the sources of the Funds and
their applications. Tally.ERP 9 tracks automatically all transactions entered and readily provides a
Funds Flow Statement.
To view Fund Flow Statement,
Go to Gateway of Tally > Display > Cash / Funds Flow > Funds Flow
Select any month
Press Enter
2.2 Payment performance of Debtors (Receivables Turnover)
Tally.ERP 9 tracks the payment performance of all debtors and generates report containing information
in respect of average time taken by the debtors to pay back their debts. The payment performance
of debtors is calculated in two ways.
.. Using Receivables formula: Tally.ERP 9 calculates the payment performance of your
debtors using the following formula,
Payment performance by formula: (closing balance / total sales) * nos of days
.. Or calculates the performance of the debtors using the actual bill cleared date.
To view Receivables turnover,
Go to Gateway of Tally > Ratio Analysis
.. Select Recv. Turnover in days (payment performance of Debtors)
.. Press Alt+F1 for detailed view.
2.3 Branch Accounting
Tally.ERP 9 provides you a seamless way of handling branch accounts. Transactions between
branches or offices are accounted by debiting the receiving branches accounts and crediting the
branches providing the service/products. These accounting entries result in a nil effect on the
HO's account books when the branch accounts are consolidated. If there is a difference in the
account, it is reconciled through a process of branch reconciliation.
For example, create two branch ledgers, Branch A and Branch B. You may account the transfer
of funds from Branch A to Branch B in the books of accounts, by debiting Branch B which in
turn, credits Branch A in its books. There is no net effect on the combined books, when the
accounts of the two branches are consolidated.
2.4 Flexible Period Accounting
Tally.ERP 9 is one of the most flexible accounting packages available and this can be illustrated
by the fact that it can handle multiple periods in a single company. Once a company is created you
can specify any range of dates and obtain reports for that period. These date range can also be
across multiple financial years. i.e. you can get a report for monthly, quarterly, half-yearly or
annually or for 18 months or 24 months and so on.
Example:
Go to Gateway of Tally > Profit & Loss A/c.
.. Select F2: Period and specify the date range to view the report.
2.5 Budgeting and Control
Businesses need to control their expenses based on income levels and monitor variances.
Budgets in Tally.ERP 9 helps you compare the actual financial performance versus budgeted
figures and obtain variance reports. You can define multiple budgets (e.g. Optimistic Budget,
Realistic Budget) or even create budgets for different periods. The budget values can be defined
for each Group as well as for all Ledgers.
To configure for budgets,
Go to Gateway of Tally > F11: Features > F1: Accounting Features
Set parameter Maintain Budgets and Controls to Yes
To create budgets,
Go to Gateway of Tally > Accounts Info. > Budgets > Create
Specify a name for the budget
Specify a date range for the budget
Set Yes to Groups / Ledgers and assign budget to selected groups/ledgers
To view budget reports,
Select any report (Balance Sheet, Profit and Loss A/c, Trial Balance)
Select Alt + C (New Column)
Specify details for period, Currency and Method of Stock Valuation. (Default or as per
requirement)
Select the created budget name for Types of Value to show
Set Show Variance to No
Variance Analysis
Once you have created Budgets, you can view the Variance Analysis Report which provides information
on the difference between the actual versus the budgeted figures. This report helps management
to figure out variances and work to remedy the situation with the ability to drill down to
the voucher level the user is able to understand which particular transaction or group of transaction
brought about the variation.
To view a variance analysis report, you may set the option Show Variance to Yes, as explained above or follow the steps given below :
Go to Gateway of Tally > Display > Trial Balance/Account Books (Group Summary)
Select the Budget Variance (Alt + B) - Type of budget
2.6 Cost centers / Profit centers with multiple Cost Categories
In Tally.ERP 9 you can allocate transactions (especially those which are revenue in nature) to particular
Cost Centres, which will help you in extracting reports for that Cost Centre (Profit Centre).
Cost Centers could generally be a Unit / Division / Department / Function / Activity etc in the
organization or even Sales Executives, to which transactions (generally transactions which are
revenue in nature) are allocated.
You can also compare one cost centre with the other. Hence cost centers will provide the management
with information regarding their performance. With cost categories enabled, parallel allocation
of the same expense is possible between different cost centres.To view Cost Centre Break-Up,
Go to Gateway of Tally > Display > Statements of Accounts > Cost Centres > Cost Centre
Break-Up.
2.6.1 Cost Category
In many cases, you would like to allocate a transaction to more than one cost centres. Especially,
if you want to track revenue either based on location and person or brand and type of product,
Tally.ERP 9 provides you a facility called Cost Categories. This facility enables you to allocate
costs to parallel sets of cost centres i.e., the same amount can be allocated to more than one cost
centre.
For example., Create two categories, one by the name of Administration and another by the
name Accounts under Primary Cost Category. Create Employees or persons under the
respective cost categories and enter a payment transaction for a ledger account for which cost
centres are applicable.
Select the relevant Cost Category and Cost Centre during Voucher Entry
To view Cost Category summary,
Go to Gateway of Tally > Display > Statements of Accounts > Cost Centres > Category
Summary.
2.7 Ratio Analysis
Ratio Analysis is an indicator on the operating performance of your business and provides information
on critical ratios in a single report. You can analyze the ratios and the business performance
using this information, viz., operating cost percentage, return on working capital and so on,
to aid critical decisions making. Not only does the internal management find the information
useful, but also external agencies like banks, financial institutions etc.
To View Ratio Analysis Report,
Go to Gateway of Tally > Ratio Analysis.
2.8 Scenario Management
Scenario Management is the management tool provided in Tally.ERP 9 with the help of which you
can create multiple scenarios for the purpose of forecasting or to view provisional reports. This
can be done by selectively including certain types of vouchers, which will in no way affect the
regular books. The vouchers that are used in scenario management are
1.Optional Vouchers
2.Memorandum Vouchers
3.Reversing Journals
To configure for Scenarios,
Go to Gateway of Tally > F11: Features > F1: Accounting Features
Set Use Reversing Journals and Optional Vouchers to Yes
To create a Scenario:
Go to Gateway of Tally > Accounts Info. > Scenarios > Create
Specify the name of the scenario
Set parameter Include Actuals to Yes/No (as required)
Set parameters relating to Exclude forex gains/loss and Exclude inventory tracking to
Yes/No (as required)
Specify the voucher types to be included/excluded (Use Exclude option only for those
Voucher Types that have been included previously).
To view Scenarios,
Select any report (Balance Sheet, Profit and Loss A/c, Cost Centre and so on)
Select Alt + C (New Column)
Select the scenario
Set parameter Show Variance to Yes/No.
Reversing Journals and Optional vouchers are both non-accounting vouchers and hence will not
affect your books of accounts in any manner. The reversing Journal is a separate Voucher Type.
Why is Tally the best ?
37
This voucher is effective only when called for in reports as a part of the scenario management. In
case of Reversing Journals, you can specify the date till which it is applicable.
To enter a Reversal Journal,
Go to Gateway of Tally > Accounting Vouchers > F10: Rev Jrnl.
.. Complete the transaction and specify a date till which it is applicable
To select an optional voucher,
.. Go to Gateway of Tally > Accounting Vouchers >
.. Press Ctrl + L: Optional to mark the chosen voucher as optional
This voucher is used when you have to enter a transaction but have incomplete information or the
transaction is not yet completed. It can be regularized at any time, by going into the alteration
mode and clicking on Regular (Ctrl+L) option.
38
Tally.ERP 9 provides you the capability to generate various financial statements and Management
Information system reports, thereby facilitating better management, effective control and wellinformed
decisions. Following are the some of salient features, which makes Tally.ERP 9 best for
basic financial management.
Fund Flows
Receivables Turnover (Payment performance of debtors)
Branch Accounting
Flexible Period Accounting
Budgeting and Control
Cost centers / Profit centers with multiple Cost Categories
Ratio Analysis
Scenario Management.
26
Lesson 2:Why is Tally the best for basic Financial Management?
Tally.ERP 9 provides you the capability to generate various financial statements and Management
Information system reports, thereby facilitating better management, effective control and wellinformed
decisions. Following are the some of salient features, which makes Tally.ERP 9 best for
basic financial management.
Fund Flows
Receivables Turnover (Payment performance of debtors)
Branch Accounting
Flexible Period Accounting
Budgeting and Control
Cost centers / Profit centers with multiple Cost Categories
Ratio Analysis
Scenario Management
2.1 Fund Flows
A Fund Flow statement reflects the movement in sources and application of funds which impacts
the business's working capital and cash position. It includes operational funds, increase and
decrease in inventories, creditors/debtors. This statement reveals the sources of the Funds and
their applications. Tally.ERP 9 tracks automatically all transactions entered and readily provides a
Funds Flow Statement.
To view Fund Flow Statement,
Go to Gateway of Tally > Display > Cash / Funds Flow > Funds Flow
Select any month
Press Enter
2.2 Payment performance of Debtors (Receivables Turnover)
Tally.ERP 9 tracks the payment performance of all debtors and generates report containing information
in respect of average time taken by the debtors to pay back their debts. The payment performance
of debtors is calculated in two ways.
.. Using Receivables formula: Tally.ERP 9 calculates the payment performance of your
debtors using the following formula,
Payment performance by formula: (closing balance / total sales) * nos of days
.. Or calculates the performance of the debtors using the actual bill cleared date.
To view Receivables turnover,
Go to Gateway of Tally > Ratio Analysis
.. Select Recv. Turnover in days (payment performance of Debtors)
.. Press Alt+F1 for detailed view.
2.3 Branch Accounting
Tally.ERP 9 provides you a seamless way of handling branch accounts. Transactions between
branches or offices are accounted by debiting the receiving branches accounts and crediting the
branches providing the service/products. These accounting entries result in a nil effect on the
HO's account books when the branch accounts are consolidated. If there is a difference in the
account, it is reconciled through a process of branch reconciliation.
For example, create two branch ledgers, Branch A and Branch B. You may account the transfer
of funds from Branch A to Branch B in the books of accounts, by debiting Branch B which in
turn, credits Branch A in its books. There is no net effect on the combined books, when the
accounts of the two branches are consolidated.
2.4 Flexible Period Accounting
Tally.ERP 9 is one of the most flexible accounting packages available and this can be illustrated
by the fact that it can handle multiple periods in a single company. Once a company is created you
can specify any range of dates and obtain reports for that period. These date range can also be
across multiple financial years. i.e. you can get a report for monthly, quarterly, half-yearly or
annually or for 18 months or 24 months and so on.
Example:
Go to Gateway of Tally > Profit & Loss A/c.
.. Select F2: Period and specify the date range to view the report.
2.5 Budgeting and Control
Businesses need to control their expenses based on income levels and monitor variances.
Budgets in Tally.ERP 9 helps you compare the actual financial performance versus budgeted
figures and obtain variance reports. You can define multiple budgets (e.g. Optimistic Budget,
Realistic Budget) or even create budgets for different periods. The budget values can be defined
for each Group as well as for all Ledgers.
To configure for budgets,
Go to Gateway of Tally > F11: Features > F1: Accounting Features
Set parameter Maintain Budgets and Controls to Yes
To create budgets,
Go to Gateway of Tally > Accounts Info. > Budgets > Create
Specify a name for the budget
Specify a date range for the budget
Set Yes to Groups / Ledgers and assign budget to selected groups/ledgers
To view budget reports,
Select any report (Balance Sheet, Profit and Loss A/c, Trial Balance)
Select Alt + C (New Column)
Specify details for period, Currency and Method of Stock Valuation. (Default or as per
requirement)
Select the created budget name for Types of Value to show
Set Show Variance to No
Variance Analysis
Once you have created Budgets, you can view the Variance Analysis Report which provides information
on the difference between the actual versus the budgeted figures. This report helps management
to figure out variances and work to remedy the situation with the ability to drill down to
the voucher level the user is able to understand which particular transaction or group of transaction
brought about the variation.
To view a variance analysis report, you may set the option Show Variance to Yes, as explained above or follow the steps given below :
Go to Gateway of Tally > Display > Trial Balance/Account Books (Group Summary)
Select the Budget Variance (Alt + B) - Type of budget
2.6 Cost centers / Profit centers with multiple Cost Categories
In Tally.ERP 9 you can allocate transactions (especially those which are revenue in nature) to particular
Cost Centres, which will help you in extracting reports for that Cost Centre (Profit Centre).
Cost Centers could generally be a Unit / Division / Department / Function / Activity etc in the
organization or even Sales Executives, to which transactions (generally transactions which are
revenue in nature) are allocated.
You can also compare one cost centre with the other. Hence cost centers will provide the management
with information regarding their performance. With cost categories enabled, parallel allocation
of the same expense is possible between different cost centres.To view Cost Centre Break-Up,
Go to Gateway of Tally > Display > Statements of Accounts > Cost Centres > Cost Centre
Break-Up.
2.6.1 Cost Category
In many cases, you would like to allocate a transaction to more than one cost centres. Especially,
if you want to track revenue either based on location and person or brand and type of product,
Tally.ERP 9 provides you a facility called Cost Categories. This facility enables you to allocate
costs to parallel sets of cost centres i.e., the same amount can be allocated to more than one cost
centre.
For example., Create two categories, one by the name of Administration and another by the
name Accounts under Primary Cost Category. Create Employees or persons under the
respective cost categories and enter a payment transaction for a ledger account for which cost
centres are applicable.
Select the relevant Cost Category and Cost Centre during Voucher Entry
To view Cost Category summary,
Go to Gateway of Tally > Display > Statements of Accounts > Cost Centres > Category
Summary.
2.7 Ratio Analysis
Ratio Analysis is an indicator on the operating performance of your business and provides information
on critical ratios in a single report. You can analyze the ratios and the business performance
using this information, viz., operating cost percentage, return on working capital and so on,
to aid critical decisions making. Not only does the internal management find the information
useful, but also external agencies like banks, financial institutions etc.
To View Ratio Analysis Report,
Go to Gateway of Tally > Ratio Analysis.
2.8 Scenario Management
Scenario Management is the management tool provided in Tally.ERP 9 with the help of which you
can create multiple scenarios for the purpose of forecasting or to view provisional reports. This
can be done by selectively including certain types of vouchers, which will in no way affect the
regular books. The vouchers that are used in scenario management are
1.Optional Vouchers
2.Memorandum Vouchers
3.Reversing Journals
To configure for Scenarios,
Go to Gateway of Tally > F11: Features > F1: Accounting Features
Set Use Reversing Journals and Optional Vouchers to Yes
To create a Scenario:
Go to Gateway of Tally > Accounts Info. > Scenarios > Create
Specify the name of the scenario
Set parameter Include Actuals to Yes/No (as required)
Set parameters relating to Exclude forex gains/loss and Exclude inventory tracking to
Yes/No (as required)
Specify the voucher types to be included/excluded (Use Exclude option only for those
Voucher Types that have been included previously).
To view Scenarios,
Select any report (Balance Sheet, Profit and Loss A/c, Cost Centre and so on)
Select Alt + C (New Column)
Select the scenario
Set parameter Show Variance to Yes/No.
Reversing Journals and Optional vouchers are both non-accounting vouchers and hence will not
affect your books of accounts in any manner. The reversing Journal is a separate Voucher Type.
Why is Tally the best ?
37
This voucher is effective only when called for in reports as a part of the scenario management. In
case of Reversing Journals, you can specify the date till which it is applicable.
To enter a Reversal Journal,
Go to Gateway of Tally > Accounting Vouchers > F10: Rev Jrnl.
.. Complete the transaction and specify a date till which it is applicable
To select an optional voucher,
.. Go to Gateway of Tally > Accounting Vouchers >
.. Press Ctrl + L: Optional to mark the chosen voucher as optional
This voucher is used when you have to enter a transaction but have incomplete information or the
transaction is not yet completed. It can be regularized at any time, by going into the alteration
mode and clicking on Regular (Ctrl+L) option.
38
