Tally Erp9 Lesson 29 Debit And Credit Account

 Module 29.Debit and Credit Accounts: Explanation and Methods

In accounting, debits and credits are fundamental concepts used to record and track financial transactions. Tally ERP 9, a popular accounting software, utilizes these principles to maintain a company's ledger and ensure accurate financial records. Here's an in-depth guide to understanding debits and credits and how to use Tally ERP 9 to record transactions effectively.

1. Understanding Debit and Credit Accounts

Definition:

Debit: An entry made on the left side of an account, increasing an asset or expense account or decreasing a liability or equity account.

Credit: An entry made on the right side of an account, increasing a liability or equity account or decreasing an asset or expense account.

Double-Entry System:

Every transaction affects at least two accounts, where one account is debited, and another is credited. This ensures the accounting equation (Assets = Liabilities + Equity) stays balanced.

Account Types and Effects of Debit and Credit:

Account Type

Increases with

Decreases with

Assets

Debit

Credit

Liabilities

Credit

Debit

Equity/Capital

Credit

Debit

Revenue

Credit

Debit

Expenses

Debit

Credit

2. Practical Example of Debit and Credit Entries in Tally ERP 9

Scenario: Suppose a business purchases office supplies for $500 in cash.

Accounts Involved:

Office Supplies (Expense Account): Increases, so Debit.

Cash (Asset Account): Decreases, so Credit.

Journal Entry:

Debit Office Supplies $500

Credit Cash $500

3. Step-by-Step Instructions for Recording a Transaction in Tally ERP 9

Open Tally ERP 9 and select the relevant company for which you want to record the transaction.

Go to Gateway of Tally > Accounting Vouchers.

Select the Voucher Type:

Choose F7: Journal for general entries without involving cash or bank.

Choose F5: Payment if the transaction involves cash or bank payments.

Enter the Transaction Details:

In the Debit Field, select the account to be debited (e.g., Office Supplies).

Enter the amount to be debited.

In the Credit Field, select the account to be credited (e.g., Cash).

Enter the amount to be credited.

Save the Transaction:

Press Enter to save the voucher after ensuring the debits and credits balance.

4. Exercise 1: Recording a Sales Transaction in Tally ERP 9

Scenario: A customer purchases goods worth $1,000 on credit.

Steps:

Go to Gateway of Tally > Accounting Vouchers > F8: Sales.

Select the Customer's Account in the Credit Field and enter $1,000.

Select the Sales Account in the Debit Field and enter $1,000.

Save the voucher.

5. Exercise 2: Recording a Purchase Transaction in Tally ERP 9

Scenario: The business buys inventory worth $800 on credit from a supplier.

Steps:

Go to Gateway of Tally > Accounting Vouchers > F9: Purchase.

Select the Supplier’s Account in the Credit Field and enter $800.

Select the Purchase Account in the Debit Field and enter $800.

Save the voucher.

6. Exercise 3: Recording an Expense Payment in Tally ERP 9

Scenario: The business pays $300 for utilities in cash.

Steps:

Go to Gateway of Tally > Accounting Vouchers > F5: Payment.

In the Debit Field, select the Utilities Expense Account and enter $300.

In the Credit Field, select Cash Account and enter $300.

Save the voucher.

7. Exercise 4: Recording a Bank Deposit in Tally ERP 9

Scenario: The business deposits $2,000 cash into the bank.

Steps:

Go to Gateway of Tally > Accounting Vouchers > F4: Contra.

Select Bank Account in the Debit Field and enter $2,000.

Select Cash Account in the Credit Field and enter $2,000.

Save the voucher.

8. Tips for Using Tally ERP 9 Effectively

Use Ledger Classification: Create specific ledger accounts for expenses, assets, liabilities, etc., to maintain organized records.

Verify Transactions Regularly: Frequently review your ledger to catch any errors early.

Backup Data: Regularly back up Tally ERP 9 data to prevent data loss.

Utilize Reports: Use Tally's built-in reports for trial balance, balance sheets, and profit and loss statements to review financial health.

By practicing these exercises, you will become proficient in recording different types of financial transactions in Tally ERP 9 and gain a deeper understanding of how debits and credits impact your accounts.