History of Tally / Evolution of Tally
Tally has evolved from a basic accounting software for the Disk Operating
System (DOS) to a sophisticated, integrated Enterprise Resource Planning
(ERP) solution.
Brief History of Tally
Tally was first developed in 1986 by Shyam Sunder Goenka and his son,
Bharat Goenka, in Bangalore, India. The initial product was a simple, yet
robust, accounting software designed primarily to manage financial books
efficiently. The company was originally known as Peutronics Financial
Accountant. It was revolutionary for its time, providing a user-friendly
interface for small and medium enterprises (SMEs) to digitize their
accounting processes. The company was officially renamed Tally Solutions
Pvt. Ltd. in 1999. Tally's fundamental principle has always been simplicity and
robustness in data management.
Evolution and Versions of Tally (4.5 to Tally Prime)
The evolution of Tally reflects the changing technological landscape and the
increasing complexity of business requirements, especially
taxation and compliance.
2. Features of Tally
a. Accounting, Financial Management, Taxation and Compliance,
Budgeting, Inventory Management, Outstanding Management, Point of Sale
(POS), Payroll, Reports and Analysis, Remote Access, Security, Integration,
Customization
2. Features of Tally
Tally is a comprehensive business management software. Its rich set of
features covers virtually all aspects of business operations, moving beyond
simple accounting.
• Accounting: Tally is built on the double-entry system of accounting. It
facilitates the recording of all financial transactions via various vouchers,
automates the preparation of ledgers, trial balance, and final accounts (Profit
& Loss Account and Balance Sheet).
• Financial Management: It provides tools for fund flow and cash flow
analysis, bank reconciliation, and management of receivables and payables
(outstanding management). It enables monitoring of key financial ratios for
better decision-making.
• Taxation and Compliance: A critical feature, Tally is continually updated to
meet statutory requirements like GST, TDS, and TCS. It generates tax
invoices, prepares necessary tax returns (e.g., GSTR-1, GSTR-3B), and aids in
auto-reconciliation, ensuring businesses remain compliant with government
regulations.
• Budgeting: Tally allows users to define budgets for various ledger accounts,
groups, and cost centres. It facilitates budget comparison with actual
expenses, enabling effective cost control and financial planning.
• Inventory Management: This feature tracks stock items, manages stock
groups, categories, godowns/locations, and units of measure. It generates
reports like Stock Summary and Stock Ageing Analysis, helping in optimum
inventory control.
• Outstanding Management: This feature, also known as Bill-wise details,
helps businesses track pending invoices. It categorizes outstanding amounts
into receivables (money owed by customers) and payables (money owed to
suppliers) based on the due date.
• Point of Sale (POS): Tally provides a robust POS system for retail
environments, enabling quick billing, tracking sales, and managing sales
returns, often integrated directly with inventory.
• Payroll: The payroll module manages all employee-related transactions. It
includes recording attendance, calculating salary (based on pay heads like
basic pay, HRA, deductions), generating payslips, and managing all statutory
payroll compliance (e.g., PF, ESI).
• Reports and Analysis: Tally generates a vast array of reports, including
Statutory Reports, Financial Statements (P&L, Balance Sheet), Exception
Reports, and Management Information System (MIS) reports. The real-time
data processing ensures that reports reflect the current business status
instantly.
• Remote Access: The software allows authorized users (like auditors or key
personnel) to access, view, and input data from a remote location, facilitating
multi-location management and auditing.
• Security: Tally provides robust security features, including TallyVault (data
encryption), user-level security, and access controls to restrict entry,
alteration, or deletion of data based on user roles.
• Integration: Tally can seamlessly integrate with other applications (like
custom ERPs, logistics systems, or e-commerce platforms) using various
mechanisms such as ODBC or APIs, allowing for a unified data flow across the
enterprise.
• Customization: Businesses can customize Tally using Tally Definition
Language (TDL) to tailor reports, voucher formats, data fields, and
functionality to meet their specific, unique business requirements.
3. Phases of implementation of Tally.
Phases of Implementation of Tally (as an ERP System)
Implementing Tally, especially its ERP versions, for a business follows a
structured project approach to ensure a smooth transition and successful
adoption of the system.
1. Define Scope and Objectives: Clearly define what the Tally system is
expected to achieve, including core business processes (accounting,
inventory, payroll) and setting measurable goals.
2. Phases of Implementation of Tally (as an ERP System)
3. Implementing Tally, especially its ERP versions, for a business follows a
structured project approach to ensure a smooth transition and
successful adoption of the system.
4. 1. Define Scope and Objectives: Clearly define what the Tally system is
expected to achieve, including core business processes (accounting,
inventory, payroll) and setting measurable goals.
5. 2. Select the Right ERP System: Confirm the specific Tally version (e.g.,
TallyPrime) and necessary customizations/add-ons required to meet
the defined scope.
6. 3. Create an Implementation Plan: Develop a detailed project
roadmap, outlining all tasks, resources, milestones, and timelines.
7. 4. Define Phases of Implementation: Break the overall project into
manageable stages: System Study, Setup and Configuration, Data
Migration, Training, Testing, and Go-Live.
8. 5. Make an Urgent Doable Schedule: Create a realistic yet committed
timeline that balances urgency for timely completion with a practical
pace to ensure quality.
9. 6. Make a Communication Plan: Establish a formal plan for how and to
whom project progress, issues, and decisions will be communicated
(e.g., weekly status meetings).
10.7. Arrange Mid-Way Approvals: Identify key decision points where
stakeholders must review progress and provide formal sign-off (e.g.,
approval of chart of accounts) before proceeding.
11.8. Plan Your Testing: Design a comprehensive testing strategy including
Unit Testing (individual modules) and User Acceptance Testing (UAT)
by end-users using real-life scenarios.
12.9. Migrate Business Data: Transfer existing financial and inventory data
(Ledgers, Opening Balances, Stock details) from the old system (or
manual records) into the new Tally system.
13.10. Prepare for the Change (Change Management): Implement
activities to help employees adapt to the new system and work
processes, including documentation and user manuals.
14.11. Plan Your Go-Live: The formal switch to the new Tally system,
involving the decision of a cut-off date (e.g., start of a new financial
month) and final data deployment.
15.12. Support and Maintenance: Establish a plan for ongoing support,
addressing initial user issues, fixing configuration errors, system
upgrades, and annual maintenance contracts.
Define scope and objectives, Select the right ERP system, Create an
implementation plan, Define phases of implementation, Make an urgent
doable schedule, Make a communication plan, Arrange mid-way approvals,
Plan your testing, Migrate business data, Prepare for the change, Plan your go-
live, Support and maintenance.
Select the Right ERP System: Confirm the specific Tally version (e.g.,
TallyPrime) and necessary customizations/add-ons required to meet the
defined scope.Create an Implementation Plan: Develop a detailed project
roadmap, outlining all tasks, resources, milestones, and timelines.
4. What are the Aids of implementation of Tally.
a. Determine your requirements, Install Tally, Create company, Define
chart of accounts, Enter opening balances, Set up inventory, Set up taxation,
Configure vouchers, Enter transactions, Generate reports, Reconcile
accounts, Backup data.
The "Aids" refer to the essential pre-setup and configuration steps required
within the Tally software to make it operational for a business. These are the
functional steps taken post-installation.
1. Determine Your Requirements: Finalize the specific functional needs
(Inventory, Payroll, GST) and hardware/software needs before installation.
2. Install Tally: Install the Tally software and activate the license.
3. Create Company: Set up the basic identity of the business within Tally,
including the company name, address, financial year details, and security
controls.
4. Define Chart of Accounts: Structure the entire accounting framework by
creating, modifying, or deleting Groups and Ledgers.
5. Enter Opening Balances: Input the balances of all Ledger accounts (Assets,
Liabilities, Capital, and P&L balances) as of the first day of the company's
financial year in Tally.
6. Set up Inventory: Define all necessary inventory masters: Stock Groups,
Stock Categories, Units of Measure, Godowns/Locations, and individual Stock
Items.
7. Set up Taxation: Configure all statutory features, primarily GST details
(GSTIN, Tax rates), TDS, and TCS, and link them to the relevant ledgers.
8. Configure Vouchers: Customize and configure the predefined voucher
types (e.g., Sales, Purchase, Payment) by enabling or disabling required
features, numbering, and printing options.
9. Enter Transactions: Begin the daily recording of all business transactions
(sales, purchases, receipts, payments, etc.) using the appropriate vouchers.
10. Generate Reports: Access various reports (Trial Balance, Day Book, Final
Accounts) to monitor the business and verify data accuracy.
11. Reconcile Accounts: Perform bank reconciliation to match the company's
books with the bank statement. Also, reconcile statutory reports (e.g., GSTR-
2A/2B).
12. Backup Data: Implement a regular data backup schedule to ensure the
security and recoverability of the critical financial data.
5. Steps to Create Company in Tally
Creating a company in Tally is the foundational step for any business to start
recording its transactions.
1. Start Tally Software: Launch the Tally application (e.g., TallyPrime).
2. Navigate to Create Company: From the main welcome screen, select
'Create Company' or press Alt + K (Company Menu) and then select 'Create'.
3. Fill in Basic Details:
• Enter the full legal Company Name.
• Enter the Mailing Name and the full Address.
4. Set Statutory Details: Select the State and Country. This is crucial for
activating the correct taxation features (like GST).
5. Define Financial Year Details:
• Enter the date from which the Financial Year Begins From (e.g., 01-04-
2025).
• Enter the date from which Books Beginning From (the transaction start
date).
6. Set Security Controls (Optional): Enable and set a TallyVault Password for
data encryption or set up User Access Control to restrict access based on user
roles.
7. Save and Configure Features: Press Ctrl + A or Enter to accept and save the
Company Creation screen. Subsequently, configure the necessary business
features like Inventory, GST, and Payroll via the F11 (Features) menu.
6. Predefine Masters.
Masters are the entities in Tally that hold the static information required for
transactional processing. They are the backbone of the system. Tally provides
several predefined or standard masters to simplify the initial setup.
The two main categories of masters are Accounting Masters and Inventory
Masters.
A. Accounting Masters
These are fundamental to financial recording:
1. Groups: Predefined hierarchical structure to classify ledgers (28 Groups).
2. Ledgers: Individual accounts used in transactions. Tally predefines two
ledgers:
• Cash: Under the group 'Cash-in-Hand'.
• Profit & Loss Account: Under the group 'Primary'.
3. Voucher Types: Predefined templates for recording transactions (e.g.,
Payment, Receipt, Sales).
4. Currencies: The base currency of the company is a default master.
7. Predefined Groups (24 Groups)
Tally follows a hierarchical structure for organizing Ledgers, which is done
through Groups. Tally automatically provides 28 Predefined Groups to
streamline the Chart of Accounts, which accurately reflect financial
statements. These 28 Groups are categorized into 15 Primary Groups and 13
Sub-Groups.
Primary Groups (15)
These are the main heads and determine where the group will appear in the
financial statements (Balance Sheet or P&L).
8. Predefined Vouchers (22 Vouchers) / Recording Transactions using
Tally.
Tally follows a hierarchical structure for organizing Ledgers, which is done
through Groups. Tally automatically provides 28 Predefined Groups to
streamline the Chart of Accounts, which accurately reflect financial
statements. These 28 Groups are categorized into 15 Primary Groups and 13
Sub-Groups.
Primary Groups (15)
These are the main heads and determine where the group will appear in the
financial statements (Balance Sheet or P&L).
9. Define various Reports in Tally.
In Tally (TallyPrime or Tally.ERP 9), reports are essential tools for analyzing
and understanding the financial and operational health of a business. Tally
provides a wide range of reports that help users make informed decisions,
manage compliance, and track performance.
Here’s a detailed overview of the various types of reports in Tally:
1. Accounting Reports
These reports show the financial position and performance of the business.
Report Description
Displays the company’s financial position — assets,
Balance Sheet
liabilities, and capital as of a specific date.
Profit & Loss Shows the net profit or loss during a period, with income
Report Description
Account and expenses categorized.
Lists all ledger balances to ensure that total debits equal
Trial Balance
total credits.
Cash/Bank Book Details all cash and bank transactions.
Day Book Summarizes all vouchers entered on a specific day.
Displays detailed transactions for any particular ledger
Ledger Report
account.
Shows the total of ledgers grouped under a specific account
Group Summary
group.
2. Inventory Reports
Used to manage and analyze stock and inventory movements.
Report Description
Shows quantity and value of stock items available, along
Stock Summary
with opening, inward, outward, and closing balances.
Stock Item Monthly Displays month-wise movement of a particular stock
Summary item.
Helps analyze movement of stock items — inward,
Movement Analysis
outward, and closing balance.
Reorder Status Identifies items that need reordering based on minimum
Report stock levels.
Stock Valuation Shows stock valuation under different methods (FIFO,
Report LIFO, Average Cost, etc.).
Displays stock position at different storage locations
Godown Summary
(godowns).
3. Statutory Reports
Used for compliance with government and tax regulations.
Report Description
Includes GSTR-1, GSTR-2, GSTR-3B, and summary
GST Reports
reports for filing GST returns.
Shows tax deducted at source details for vendors and
TDS Reports
payments.
TCS Reports Displays tax collected at source from customers.
Report Description
Payroll Statutory Contains PF, ESI, and professional tax details for
Reports employee compliance.
4. Payroll Reports
Used to manage employee salaries and attendance.
Report Description
Pay Slip Individual employee salary statement.
Payroll Statement Summarizes salaries, deductions, and net pay.
List of employees with details like department,
Employee Register
designation, etc.
Attendance
Displays employee attendance and leave details.
Register
5. Management Information System (MIS) Rports
Used for performance analysis and decision-making.
Report Description
Cash Flow / Fund Flow
Analyzes sources and uses of funds.
Statement
Shows profitability, liquidity, and solvency
Ratio Analysis
ratios.
Compares actual performance with budgeted
Budget & Variance Report
figures.
Cost Centre / Cost Category Tracks income and expenses by department,
Report project, or division.
6. Other Specialized Reports
Report Description
Lists all purchase and sales transactions during a
Purchase & Sales Register
period.
Shows outstanding invoices from customers and
Bills Receivable / Payable
to suppliers.
Bank Reconciliation
Reconciles company books with bank statements.
Statement (BRS)
Report Description
Displays overdue receivables or payables based
Ageing Analysis
on age (e.g., 30, 60, 90 days).
Summary
Category Examples of Reports
Accounting Reports Balance Sheet, P&L, Trial Balance
Inventory Reports Stock Summary, Movement Analysis
Statutory Reports GST, TDS, TCS
Payroll Reports Pay Slip, Payroll Statement
MIS Reports Cash Flow, Ratio Analysis, Budget Variance
Others Purchase/Sales Register, BRS, Ageing Analysis
Would you like me to make this into a short exam-style answer (2–3 marks /
5 marks) or a detailed descriptive note (10–15 marks) version?
10. Steps of Preparation and Compilation of complete balance sheet in
Tally.
Preparing a Balance Sheet in Tally (TallyPrime or Tally.ERP 9) involves a
series of steps that begin with company creation and end with report generation.
A Balance Sheet in Tally is automatically generated once all accounts and
transactions are properly entered.
Step 1: Create a Company
Open Tally → Create Company.
Enter details such as:
o Company Name
o Address
o Financial Year Beginning Date
o Books Beginning Date
Save the company.
Step 2: Create Necessary Ledger Accounts
Go to: Gateway of Tally → Accounts Info → Ledgers → Create
Create ledgers under appropriate groups such as:
o Capital A/c (under Capital Account)
o Cash A/c, Bank A/c (under Current Assets)
o Debtors, Creditors (under Sundry Debtors/Creditors)
o Purchases, Sales, Expenses, Incomes, etc.
💡 Grouping correctly is essential — Tally prepares the Balance Sheet based on
these groups.
Step 3: Create Groups (if needed)
Go to: Accounts Info → Groups → Create
Create new groups if the default ones are not sufficient (e.g., “Loan from
Partners” under Loans (Liability)).
Step 4: Record All Transactions
Go to: Accounting Vouchers
o F4: Contra – for cash and bank transfers
o F5: Payment – for payments made
o F6: Receipt – for money received
o F7: Journal – for adjustments and closing entries
o F8: Sales – for sales transactions
o F9: Purchase – for purchase transactions
Ensure that every transaction during the financial year is entered
accurately.
Step 5: Record Opening Balances
Go to: Gateway of Tally → Accounts Info → Ledgers → Alter →
[Select Ledger]
Enter Opening Balances for:
o Assets (e.g., Cash, Debtors, Stock)
o Liabilities (e.g., Creditors, Loans, Capital)
💡 Opening balances are required only in the first year of entry or when
migrating from manual books.
Step 6: Verify All Entries
Use the following reports to verify:
o Trial Balance → Gateway of Tally → Display → Trial Balance
o Profit & Loss A/c → Gateway of Tally → Display → Profit &
Loss A/c
o Ensure that:
All vouchers are correctly posted
No ledger shows incorrect grouping
Debit and credit totals match
Step 7: Adjust Closing Stock (if inventory is not maintained)
Go to: Accounts Info → Ledgers → Create
o Ledger Name: Closing Stock
o Under: Current Assets
o Enter closing stock value (from physical stock verification).
If inventory is maintained in Tally, the closing stock is automatically updated.
Step 8: View the Balance Sheet
Go to: Gateway of Tally → Display → Balance Sheet
The Balance Sheet will show:
o Liabilities on the left
o Assets on the right
Verify that both sides are equal (balanced).
Step 9: Configure and Customize
Press F12 (Configure) to:
o Change display format (horizontal/vertical)
o Show or hide schedules
o Include/exclude closing stock
o Show detailed or summarized view
Step 10: Print or Export the Balance Sheet
Press Alt + P → Print, or
Press Alt + E → Export (to PDF, Excel, or HTML)
✅ Summary of Steps
Step No. Action Menu Path in Tally
1 Create Company Tally Main Menu → Create Company
Gateway → Accounts Info → Ledgers →
2 Create Ledgers
Create
3 Create Groups Gateway → Accounts Info → Groups →
Step No. Action Menu Path in Tally
Create
4 Record Transactions Accounting Vouchers (F4–F9)
Enter Opening
5 Ledgers → Alter
Balances
6 Verify Entries Trial Balance, P&L
7 Enter Closing Stock Ledger: Closing Stock
8 View Balance Sheet Display → Balance Sheet
9 Configure Format F12 → Configure
10 Print or Export Alt+P / Alt+E
