Ans. Accounting is the systematic process of recording, measuring, and communicating financial information about economic entities, such as businesses and organizations. It provides a clear picture of financial performance and position.

Ans. The basic accounting principles include:

• Revenue Recognition Principle: Revenue is recognized when earned, regardless of when cash is received.
• Matching Principle: Expenses should be matched with the revenues they help to generate.
• Cost Principle: Assets should be recorded at their historical cost.
• Full Disclosure Principle: All relevant financial information should be disclosed in financial statements.

Ans. The different types of financial statements include:

• Balance Sheet: Shows the financial position of a company at a specific point in time.
• Income Statement: Summarizes revenues and expenses over a period, resulting in net income or loss.
• Cash Flow Statement: Reports the cash inflows and outflows from operating, investing, and financing activities.
• Statement of Changes in Equity: Shows changes in equity accounts over a period.

Ans. Cash accounting recognizes revenues and expenses when cash is actually received or paid, while accrual accounting recognizes revenues and expenses when they are earned or incurred, regardless of cash flow.

Ans. The accounting equation is:

Assets = Liabilities + Equity

This equation represents the relationship between a company's resources (assets) and the claims against those resources (liabilities and equity).

Ans. In accounting:

• Assets: Resources owned by a business that have economic value (e.g., cash, inventory, property).
• Liabilities: Obligations or debts owed to external parties (e.g., loans, accounts payable).
• Equity: The residual interest in the assets of a business after deducting liabilities, representing the owner's claim (e.g., common stock, retained earnings).

Ans. Double-entry bookkeeping is a system where every transaction affects at least two accounts. It ensures the accounting equation (Assets = Liabilities + Equity) remains balanced. For every debit, there is a corresponding credit.

Ans. Depreciation is the process of allocating the cost of a tangible fixed asset over its useful life. It represents the reduction in value due to wear and tear, usage, or obsolescence.

Ans. Accounts Payable is the amount a company owes to suppliers or vendors, while Accounts Receivable is the amount owed to the company by customers for goods or services delivered.

Ans. A trial balance is a report that lists the balances of all general ledger accounts at a specific point in time. It is used to check the accuracy of the bookkeeping process and ensure that total debits equal total credits.

Ans. Accrual accounting is a method where revenues and expenses are recorded when they are earned or incurred, regardless of when the cash is received or paid. It provides a more accurate picture of a company’s financial position.

Ans. Adjusting entries are journal entries made at the end of an accounting period to allocate income and expenditures to the correct period. These entries ensure compliance with the matching and revenue recognition principles.

Ans. A general ledger is the master record of all the accounts in a business. It contains all debit and credit transactions and is used to prepare financial statements.

Ans. A journal entry is the first step in the accounting cycle. It records a financial transaction in the accounting system by specifying the accounts affected, the date, and the amounts debited and credited.

Ans. Working capital is the difference between current assets and current liabilities. It is a measure of a company’s short-term financial health and operational efficiency.

Ans. Goodwill is an intangible asset that arises when a business is acquired for more than the fair market value of its net assets. It represents the value of a company's brand, customer base, and other intangible benefits.

Ans. Contingent liabilities are potential liabilities that may occur depending on the outcome of a future event, such as lawsuits or product warranties. They are recorded only if the event is probable and the amount can be estimated.

Ans. Inventory valuation is the method used to assign a value to a company’s inventory. Common methods include FIFO (First-In, First-Out), LIFO (Last-In, First-Out), and Weighted Average Cost.

Ans. Gross Profit is revenue minus the cost of goods sold (COGS). Net Profit is gross profit minus all other expenses, including operating, interest, and taxes.

Ans. Bank reconciliation is the process of comparing a company’s bank statement with its accounting records to identify and resolve discrepancies such as outstanding checks or deposits in transit.

Ans. Bookkeeping is the process of recording daily financial transactions systematically. Accounting, on the other hand, includes bookkeeping but also involves analyzing, interpreting, and presenting financial data for decision-making.

Ans. A fiscal year is a 12-month period used by businesses for accounting and tax purposes. It may or may not align with the calendar year (January 1 – December 31).

Ans. A deferred expense is a payment made in advance for goods or services to be received in the future. It is recorded as an asset initially and expensed over time as the benefit is received.

Ans. An audit is an independent examination of financial records and statements to ensure accuracy and compliance with accounting standards and regulations. It builds trust with investors, stakeholders, and regulators.

Ans. A contra account is an account that reduces the value of a related account. Examples include Accumulated Depreciation (reduces Fixed Assets) and Allowance for Doubtful Accounts (reduces Accounts Receivable).

Ans. Capital expenditure (CapEx) is the money spent to acquire or upgrade long-term assets. Revenue expenditure (RevEx) refers to costs related to daily operations, such as rent and utilities.

Ans. A ledger is a complete record of all financial transactions for individual accounts. It is organized by account and includes debits, credits, and balances, forming the foundation of the double-entry system.

Ans. A trial balance error occurs when total debits don’t equal total credits. It can be fixed by reviewing journal entries, checking for transposition or omission errors, and verifying account balances.

Ans. Provisions are estimated liabilities for future expenses or losses whose amount or timing is uncertain, such as provision for bad debts or warranties. They are recorded as liabilities in the balance sheet.

Ans. Accounting standards are a set of rules and guidelines used to prepare and present financial statements. Examples include GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards).

Ans. Tally is an accounting software used for recording financial transactions, inventory management, payroll, GST compliance, and generating financial reports.

Ans. Tally has various versions like Tally 7.2, Tally 9, Tally ERP 9, and the latest TallyPrime, each with enhanced features and usability improvements.

Ans. TallyPrime is an upgraded version of Tally ERP 9 with a more intuitive user interface, simplified navigation, multitasking capabilities, and enhanced reporting features.

Ans. A ledger in Tally is an account used to classify and record financial transactions, such as sales, purchases, and expenses.

Ans. A voucher in Tally is a document used to record a financial transaction. Examples include payment voucher, receipt voucher, sales voucher, and journal voucher.

Ans. A group in Tally is a classification of ledgers with similar nature, such as expenses, income, assets, or liabilities. Tally provides predefined groups and allows creation of custom groups.

Ans. To create a company in Tally, go to the Company Info menu > Create Company, then enter details like name, address, financial year, and base currency.

Ans. F11 is used for Features configuration (like accounting, inventory, tax settings), while F12 is for Configuration settings, affecting the way data is displayed and entered.

Ans. Tally supports GST by allowing users to enable GST, create GST ledgers, configure GST rates, and generate GST returns automatically.

Ans. Inventory management in Tally involves tracking stock items, stock groups, units of measure, and godowns. It helps in maintaining accurate stock records and reports.

Ans. Go to Accounting Vouchers, select Journal Voucher (F7), then enter the debit and credit entries with appropriate ledgers and amounts.

Ans. A cost center in Tally is used to track income and expenses by department, project, or any other segment, helping with detailed financial analysis.

Ans. To enable payroll, go to F11 > Features > Enable Payroll, and then configure salary details, employee master, and payroll vouchers.

Ans. A godown is a storage location used in inventory management to track stock quantities at different locations in Tally.

Ans. Go to Gateway of Tally > Balance Sheet to view the financial position of a company with details of assets and liabilities.

Ans. TDS (Tax Deducted at Source) is a feature in Tally used to calculate and record tax deducted on certain transactions as per government rules.

Ans. To backup data, go to Company Info > Backup, select source and destination paths. To restore, choose Restore and select the backup file.

Ans. Reconciliation in Tally, such as bank reconciliation, helps match the company’s ledger entries with bank statements to identify and correct discrepancies.

Ans. A stock item represents the goods or products a company buys, sells, or manufactures. Each item is tracked individually in inventory records.

Ans. The shortcut key to create a ledger in Tally is Alt + C from any ledger selection field.

Ans. A compound journal entry involves more than two accounts, such as multiple debits and a single credit, or vice versa, recorded in a single journal voucher in Tally.

Ans. Security Control in Tally allows administrators to restrict user access by defining roles and permissions to protect company data and operations.

Ans. Tally provides 28 predefined groups such as Capital Account, Sales, Purchases, Direct Expenses, and Current Assets to categorize ledgers and organize financial statements.

Ans. Enable GST in F11 > Statutory & Taxation and then configure GST details like GSTIN, tax rates, and tax ledgers under the company and ledger settings.

Ans. Gateway of Tally is the main screen from where all Tally operations can be accessed including accounts, inventory, reports, and configurations.

Ans. Go to F11 > Accounting Features > Enable multi-currency, then define currency master and assign exchange rates as needed.

Ans. RCM in Tally allows users to record transactions where the buyer is liable to pay tax instead of the seller, by configuring GST settings accordingly.

Ans. Payroll reports in Tally include salary sheets, payslips, attendance registers, gratuity reports, and PF/ESI returns, helping HR and finance teams manage employee compensation.

Ans. Cost categories in Tally allow parallel allocation of costs to different categories, enabling detailed tracking of expenses across multiple dimensions like branches or departments.

Ans. Go to Gateway of Tally > Inventory Info > Stock Groups > Create, and then enter the name, under group, and behavior details.

Ans. The audit feature helps users identify altered or backdated transactions, track user activity, and ensure compliance by providing audit trails.

Ans. Tally allows data import via XML format using the Import Data option in the Gateway of Tally under Utilities or Company Info.

Ans. Statutory compliance in Tally ensures that financial transactions comply with tax regulations like GST, TDS, PF, and ESI by auto-calculating and filing returns.

Ans. User-defined classes in Tally automate voucher entries by predefining accounting allocations for recurring transactions.

Ans. Interest calculation in Tally enables automatic computation of interest on outstanding receivables or payables based on the rate, method, and period specified.

Ans. To activate e-way bill, enable GST features, set e-way bill details in invoice settings, and ensure transport details are entered while generating GST invoices.

Ans. Multiple price levels allow setting different pricing for different customer groups or salespersons, which can be configured in inventory features.

Ans. The audit trail in TallyPrime tracks changes made to transactions including the user, date, and time of modification, supporting transparency and accountability.

Ans. Scenarios are user-defined views of accounts and reports excluding certain vouchers like optional or reversing journals, useful for projecting financial statements.

Ans. The budget feature in Tally helps create budgetary controls by setting limits on expenses or income and comparing them with actuals in reports.

Ans. Go to Accounting Vouchers > Press Ctrl + F8 (Credit Note), enter customer and transaction details, and save the voucher.

Ans. From the Company Info screen, select Alter > press Alt + D to delete the company after confirming the prompt.

Ans. TallyVault is a security feature that encrypts company data with a password, providing high-level data protection from unauthorized access.

Ans. An optional voucher is a non-posted voucher used for planning or testing. It does not affect accounts unless made regular.

Ans. Stock movement can be tracked using Stock Summary, Movement Analysis, and Godown Summary reports under Inventory Reports.

Ans. The split company feature divides company data into multiple financial years, helping in data management and performance improvement.

Ans. Go to Balance Sheet > press Enter on Closing Stock > press F12 and enable manual entry, then input closing stock value.

Ans. A debit note is issued when goods are returned to a supplier or to rectify an undercharged invoice. It is recorded using Ctrl + F9 in Tally.

Ans. Go to Display > Account Books > Group Summary > select the group > press Enter to view individual ledger-wise breakup.

Ans. To enable barcode, activate the feature in inventory settings, then define barcodes under stock item master for barcode-based billing and tracking.

Ans. "Accounts Only" is used when only financial accounting is required without stock management, while "Accounts with Inventory" includes both accounting and inventory tracking.

Ans. Enable inventory features, then in the stock item creation screen, set the reorder level and minimum order quantity for each item.

Ans. A group company combines multiple companies to view consolidated reports, useful for multi-branch businesses or group financials.

Ans. Go to Banking > Bank Reconciliation, select the bank ledger, and match Tally transactions with bank statement entries by entering clearing dates.

Ans. Vouchers are used to record different types of transactions like Sales, Purchase, Payment, Receipt, Journal, Debit Note, Credit Note, etc.

Ans. Go to Gateway of Tally > Display More Reports > Profit & Loss Account to view revenue and expense statements.

Ans. TDS (Tax Deducted at Source) in Tally allows deduction and accounting of tax on applicable transactions and generates necessary returns.

Ans. A memorandum voucher is a non-accounting voucher used for provisional entries that do not affect accounts unless converted into a regular voucher.

Ans. Use a Payment voucher and mention it as an advance by selecting the party and specifying the nature in the narration or bill-wise details.

Ans. Tally.NET ID is an email-based user login that enables remote access, synchronization, and online services in Tally such as e-invoicing and data sharing.

Ans. Scenario management allows users to create hypothetical reports by including or excluding optional/reversing vouchers for forecasting and analysis.

Ans. Go to F11 > Accounting Features > Enable Cost Centres and Cost Categories, then create and assign them to ledger entries.

Ans. Go to Display More Reports > Day Book to view a daily log of all vouchers entered in Tally.

Ans. Tally supports "Item Invoice Mode" (for goods) and "Accounting Invoice Mode" (for services). You can toggle between them using F12 configuration settings.

Ans. Enable Maintain Budgets and Controls, then set credit limits in the ledger master under 'Credit Period' and 'Credit Limit' fields.

Ans. Post-dated cheques are used for recording cheque transactions with future dates. They don’t affect accounts until the specified date.

Ans. Go to Display More Reports > Statement of Accounts > Outstandings > Receivables or Payables to view party-wise aging reports.

Ans. Remote access enables users to access Tally data from any location via internet using a registered Tally.NET ID.

Ans. Godown management allows tracking of inventory location-wise by creating and assigning godowns in stock items and transactions.

Ans. Go to Gateway of Tally > Alt + F3 > Backup to select the source and destination folder. Use Restore to recover data from a backup file.