Tally Erp9 Lesson 10 Tally Reports Accounting

  Module 10: Tally ERP9 Reports - Accounting

In this module, you will dive deep into the most essential accounting reports in Tally ERP9. We will cover the generation, understanding, and practical use of Profit & Loss Statement, Balance Sheet, Trial Balance, and Ledger Reports. This module will also provide examples and practical exercises to reinforce your understanding of these financial reports.

1. Profit & Loss Statement

Overview:

The Profit & Loss (P&L) Statement is a key financial report that summarizes the revenue, expenses, and profit or loss over a specific period. It helps businesses track their financial performance.

Generating a P&L Report in Tally ERP9:

Gateway of Tally > Reports > Profit & Loss A/c

Select the desired period (monthly, quarterly, annually).

The report will display total revenue, total expenses, and the resultant profit or loss.

Components of the P&L Report:

Revenue: All sales and income generated during the period.

Expenses: Costs such as rent, salaries, utilities, etc.

Gross Profit: Calculated by subtracting direct costs (Cost of Goods Sold) from revenue.

Net Profit/Loss: Final figure after deducting all expenses from revenue.

Example:

Imagine a business has sales revenue of $100,000 and total expenses of $70,000 (including cost of goods, rent, and salaries). The P&L report will show:

Revenue: $100,000

Expenses: $70,000

Net Profit: $30,000

Practical Exercise:

Input sample data in Tally: Record sales entries, purchase entries, and expense vouchers.

Generate the P&L statement and interpret the results.

Analyze how changing certain expense amounts (e.g., increasing rent by 10%) affects net profit.

2. Balance Sheet

Overview:

The Balance Sheet provides a snapshot of a company’s financial position at a specific date. It outlines Assets, Liabilities, and Equity.

Preparing a Balance Sheet in Tally ERP9:

Gateway of Tally > Reports > Balance Sheet

Select the desired date (typically the end of a fiscal year or quarter).

Tally automatically populates the balance sheet based on transactions entered.

Components of the Balance Sheet:

Assets: Includes current assets (cash, accounts receivable) and fixed assets (property, equipment).

Liabilities: Includes current liabilities (accounts payable, short-term loans) and long-term liabilities (mortgage, long-term loans).

Equity: Represents owner’s equity or retained earnings.

Example:

A company has $200,000 in assets (cash, inventory, equipment), $80,000 in liabilities (loans, accounts payable), and $120,000 in equity. The balance sheet will display:

Assets: $200,000

Liabilities: $80,000

Equity: $120,000

Practical Exercise:

Enter asset and liability data for a hypothetical company.

Generate the balance sheet and analyze the financial position.

Adjust entries (e.g., reduce liabilities by paying off loans) and observe how it affects the balance sheet.

3. Trial Balance

Overview:

The Trial Balance is a report that lists all general ledger accounts and their balances. It is used to ensure that total debits equal total credits, which confirms that the books are balanced.

Generating a Trial Balance in Tally ERP9:

Gateway of Tally > Display > Trial Balance

Select the date range for which you want to generate the report.

Tally will display all the ledger accounts with their debit or credit balances.

Ensuring Data Accuracy:

The total of all debits should equal the total of all credits. If not, there might be accounting errors, such as incorrect entries or omission of transactions.

Example:

If the total debits in the trial balance are $50,000 and total credits are $50,000, the books are balanced. If the totals do not match, investigate discrepancies such as missing entries or incorrect classification of accounts.

Practical Exercise:

Enter various debit and credit entries (sales, expenses, payments) into Tally.

Generate the Trial Balance to ensure all transactions are balanced.

Modify a few entries deliberately to create an imbalance, then fix the errors to understand the process of balancing the trial balance.

4. Ledger Reports

Overview:

Ledger Reports in Tally provide a detailed view of individual account transactions. It helps in analyzing specific account performance, like sales, expenses, or customer/vendor accounts.

Generating Ledger Reports in Tally ERP9:

Gateway of Tally > Display > Account Books > Ledger

Select a specific ledger account (e.g., sales, purchase, rent) and the date range.

The report will display all transactions related to that account, including opening balance, debits, credits, and closing balance.

Example:

If you select the Rent Expenses ledger, the report will show all payments made toward rent for the selected period. This helps in identifying the monthly rent expenses and tracking any overdue payments.

Practical Exercise:

Create ledger entries for different accounts (e.g., purchases, salaries, rent).

Generate ledger reports for each account and analyze transaction history.

Use ledger reports to reconcile account balances at the end of the month.

Methods and Detailed Explanations:

Entering Data in Tally ERP9:

To generate accurate reports, ensure that all accounting data (sales, purchases, expenses, payments) is properly recorded in Tally ERP9.

Use voucher entries to input transactions. For example, use Sales Voucher for sales transactions and Payment Voucher for expenses.

Interpreting Financial Reports:

Profit & Loss Statement helps in determining business profitability. Monitor how revenue and expenses fluctuate month to month to identify trends.

Balance Sheet provides insights into financial stability. Keep track of whether your assets are growing or whether your liabilities are increasing.

Trial Balance ensures your books are balanced, which is critical for maintaining accurate financial records.

Ledger Reports help track individual account performance, which is useful for budgeting and expense management.

Practical Exercises:

Exercise 1: Simulating Monthly Business Operations

Enter 1 month’s worth of hypothetical sales, purchase, and expense data into Tally.

Generate the P&L statement, balance sheet, trial balance, and key ledger reports.

Analyze the health of the business by reviewing these reports.

Exercise 2: Adjusting and Correcting Entries

Modify a few entries (e.g., increase rent, change purchase amount) and regenerate the reports.

See how these changes impact the financial reports and overall business performance.

Exploring Report Customization:

Use filters and formats in Tally to customize how the reports are displayed (e.g., generate P&L for a specific branch or department).

Export reports to Excel or PDF for further analysis or presentation to stakeholders.

Conclusion

This chapter of the course has provided a detailed overview of Tally ERP9's key financial reports. Understanding how to generate, interpret, and analyze these reports is crucial for maintaining a business's financial health. The practical exercises included in this module are designed to give hands-on experience in working with real-world accounting data, ensuring that you can confidently manage financial reporting in any business scenario.