Accounting Terms of Tally Prime

Common Accounting Terms in Tally Prime

1. Ledger

   • Definition: A ledger is a record that contains all financial transactions related to a specific account. In Tally, ledgers are used to record all entries related to accounts like sales, purchases, cash, bank, expenses, etc.
   • Example: Sales Ledger, Purchase Ledger, Cash Ledger.

2. Voucher

   • Definition: A voucher is a document that records a business transaction. In Tally, vouchers are used to enter transactions into the system.
   • Types: Payment Voucher, Receipt Voucher, Contra Voucher, Journal Voucher, Sales Voucher, Purchase Voucher.

3. Group

   • Definition: Groups are used to classify ledgers of similar nature. In Tally, ledgers are classified into groups for better organization and reporting.
   • Example: Sundry Debtors, Sundry Creditors, Bank Accounts, Direct Expenses.

4. Stock Item

   • Definition: Stock items are individual items of inventory that a business deals with. In Tally, stock items are created to manage inventory.
   • Example: Product A, Product B, Raw Materials.

5. Cost Centre

   • Definition: A cost centre is a department or a section of an organization to which costs can be allocated. In Tally, cost centres are used for tracking expenses and incomes related to different departments.
   • Example: Marketing Department, Production Department.

6. Cost Category

   • Definition: Cost categories allow the allocation of expenses and incomes to multiple cost centres. It helps in detailed reporting and analysis.
   • Example: Project-based Costing, Departmental Costing.

7. Godown

   • Definition: Godowns are storage locations where inventory is stored. In Tally, godowns are used to manage and track stock movement.
   • Example: Main Warehouse, Branch Warehouse.

8. Bill of Materials (BOM)

   • Definition: BOM is a list of components required to manufacture a product. In Tally, BOM is used in the manufacturing process to define the raw materials needed for production.
   • Example: Ingredients for a recipe, Parts for an assembly.

9. Debtors

   • Definition: Debtors are individuals or entities that owe money to the business. In Tally, they are recorded under the Sundry Debtors group.
   • Example: Customers who have purchased goods on credit.

10. Creditors

    • Definition: Creditors are individuals or entities to whom the business owes money. In Tally, they are recorded under the Sundry Creditors group.
    • Example: Suppliers who have provided goods on credit.

11. Trial Balance

    • Definition: A trial balance is a statement that lists all ledger accounts and their balances at a specific point in time. It ensures that total debits equal total credits.
    • Purpose: To verify the accuracy of ledger balances before preparing financial statements.

12. Profit and Loss Account

    • Definition: A financial statement that summarizes revenues, costs, and expenses incurred during a specific period. It shows the net profit or loss for the period.
    • Components: Sales, Direct Expenses, Indirect Expenses, Gross Profit, Net Profit.

13. Balance Sheet

    • Definition: A financial statement that presents the financial position of a business at a specific point in time. It shows assets, liabilities, and equity.
    • Components: Fixed Assets, Current Assets, Current Liabilities, Long-term Liabilities, Capital.

14. Journal

    • Definition: A journal is a book of original entry where transactions are recorded in chronological order. In Tally, journal entries are used for adjustments and corrections.
    • Example: Adjusting Entries, Correction Entries.

15. Contra Entry

    • Definition: A contra entry involves a transaction that affects both cash and bank accounts. In Tally, contra entries are used for cash deposits, withdrawals, and transfers.
    • Example: Cash deposit into the bank, cash withdrawal from the bank.

16. Sales Order

    • Definition: A sales order is a document generated by a business confirming a customer’s purchase order. In Tally, sales orders are used to track customer orders.
    • Purpose: To manage and fulfill customer orders efficiently.

17. Purchase Order

    • Definition: A purchase order is a document issued by a buyer to a seller, indicating the products or services they wish to purchase. In Tally, purchase orders are used to track orders placed with suppliers.
    • Purpose: To manage procurement and inventory levels.

18. Receipt Note

    • Definition: A receipt note is a document that acknowledges the receipt of goods. In Tally, receipt notes are used to record goods received from suppliers.
    • Purpose: To update inventory and verify received goods against purchase orders.

19. Delivery Note

    • Definition: A delivery note is a document that accompanies goods being delivered to a customer. In Tally, delivery notes are used to record goods dispatched to customers.
    • Purpose: To update inventory and track goods delivery.

20. Reconciliation

    • Definition: Reconciliation is the process of ensuring that two sets of records (usually the balances of two accounts) are in agreement. In Tally, bank reconciliation is commonly performed to match bank statements with ledger accounts.
    • Purpose: To identify and rectify discrepancies between records.