Tally Accounting
Posted by Asok K Nadhani on

Sales & Purchase Voucher Entry in Tally

Sale & Purchase Voucher entry in Tally

Basic Accounting Vouchers (Contra, Receipt, Payment), have been discussed earlier. However, for merchant Traders, Sales & Purchase constitutes the major transactions. As most of the trade transactions are done on credit (payment is made after sales or purchase transactions), Accounts Receivables & Payables are major concerns and Important task of Accounting and financial control.

Sales & Purchase Accounting without Inventory records

Many smaller organisations, having small counters, can not maintain complete records of detailed Inventory transactions, as they are managed by one or two persons. However, they would like to maintain the value of transactions (Rupee figures) and Party Accounts (Debtors & Creditors) and Accounts Receivables & Payables for control and business operations. 

In this part, we discuss about Sales & Purchase transactions for an organisation without Inventory (Inventory Module not activated). So, we discuss about entry of vouchers with Accounting Transactions only (only Ledger Accounts, no Stock Item), like :

  • Sale / Purchase of Pure Services  : Consultancy, Labour Services etc, where materials are not normally involved, but Sales Purchase Voucher / Invoice is created.
  • Sale / Purchase of Materials cum Services  : Repairs, Contract Services, etc., where Composite charges are billed in respect of Labour Charges and Materials consumed. In such case, though materials are purchased and their cost are included in the Invoice, no stock records (Stock Item Ledgers) are maintained. So the vouchers do not contain transaction of Stock Items, but the materials cost are merged/ compounded in the Vouchers / Invoice
  • Sale / Purchase Voucher of Accounts Part only : Accounts details of Sale / Purchase are only entered ( but Stock details are not recorded when Inventory System is not activated). This is common for small retailers where Invoices are created manually (at the small & busy sales counters) and only amounts are recorded in Computers System from the Invoices, to maintain Accounts.

Sales & Purchase Vouchers

It is recommended that all sorts of Sales / Purchase (Cash / Credit) should be entered through Sales / Purchase Voucher only (as explained in this chapter), so that Sales Purchase register shows complete records of all Sales / Purchases.

Sale / Purchase transactions for trade only are recorded through Sale / Purchase voucher, Sale / Purchase of Non Trading goods (e.g., Furniture, Motor Car etc for own use) should be entered through Journal Voucher.

Sales Purchase Voucher General Configuration in Tally

Sales Purchase Accounts Voucher Configuration in Tally

To set Sales & Purchase Accounting Voucher Configuration, At Voucher Entry general configuration screen (GoT> F12:Configure>Voucher entry), set default values for options, applicable in general, for all trade related vouchers. 

  • Pre Allocation of Bills : When money is received from, or paid to Parties against open Bills (Outstanding Bills), To make the allocation easier and automatic, set Yes  at Pre Allocate Bills for Payment / Receipt / Journals , to allocate the amount Received (in Receipt Voucher / Paid (in Payment Voucher) / Adjusted (in Journal Voucher), as per Bill Due Date (and treat the extra amount if any, as On Account) in the Bill Allocation screen, through an automated process. Otherwise set No (the Bill Allocation is to be done manually by the user, in Bill Allocation screen.

Many  organisations, such as service utility providers, like electricity, water bills, Government Tax revenues, generally adjusts in this automated manner.

  • Fixed Assets Purchase : Normally, you should enter Purchases of goods for Trade only, through Purchase Voucher. So, during Purchase Voucher entry, at Purchase Accounts, you can select only ledger accounts under Purchase Group. 

To allow entry of Purchase of Fixed Assets / expenses also through Purchase voucher, set Yes at Allow Expenses / Fixed Assets in Purchase Voucher. Consequently, at Purchase Account, you may select the applicable Fixed Assets / Expenses also.

  • Income Account in Sales: Normally, you should enter Sales of goods / Services for Trade only, through Sale Voucher. So, during Sale Voucher entry, at Sale Accounts, you can select only ledger accounts under Sale Group. 

To allow entry of other Income also through Sales voucher, set Yes at Allow Income in Sales Voucher. Consequently, at Sales Account, you may select the applicable Income also.

  • Selection from outstanding Bills : To select the bill adjusted from among the outstanding Bills, set Yes at Show Table of Bill details for selection, to show the list of outstanding Bills to select from. Set No to type the Bill Ref to be adjusted against (No list of Bills is shown).

This option is useful to adjust against any Bill (e.g. to adjust against squared up Bills).

  • Bill Final Balances : Having set Yes at Show Table of Bill details for selection, you may further set Yes at Show Bill Final Balances to show the outstanding Balance of each Bill listed, else set No (Balances are not shown)
  • Bill wise Details : To get Billwise details shown in main voucher screen, set Yes at Show Billwise Details, else set No.The Bill details are not shown in main screen
  • Bill Details in Multiple Lines : Having set Yes at Show Billwise Details, you may further set Yes at Expand into multiple lines to show Bill Due Date & Credit Days also, else set No, to show only Bill Ref in one line.

Sales Purchase Voucher Entry Mode set up in Tally

Sales / Purchase Voucher may be entered in two modes.  Here we discuss about Sales  & Purchase transactions entry mode set up.

  • Voucher Mode : Voucher Mode is mostly useful for Individuals and small organisations, who do not normally print Sales Invoice. It is also useful where Invoices are manually created first and then only Accounting Entries only in computer, to maintain accounts (common for small traders who can not keep computer in their small and busy counter)
  • Accounting Invoice : Accounting Invoice mode is useful for Consultants and professionals (who do not use Inventory Module as they do not sell materials), to enter and print Invoices (Service Bills), instead of using Voucher Mode. In Invoice mode, they can enter additional particulars relating to Invoice and can print them in better formatted manner.

Sales Purchase Voucher Mode set up in Tally

Click F11:Features> Accounting Features to get Accounting Features screen.

Sale Purchase Voucher Mode set up in Tally

Sales Voucher Mode Set Up in Tally

Accounting Features screen, at Invoicing section, set No at Allow Invoicing  to enter the Sales / Purchase Accounting Transaction in Voucher Mode only, else set Yes  to  enter Sales Accounting Transaction in Invoicing Mode also (in that case, you may enter either in Voucher Mode or in Invoice Mode)

Purchase Voucher Mode set Up in Tally

Having set Yes at Allow Invoicing  to enter Invoicing Mode for Sales Voucher, you may further set Yes at Enter Purchases in Invoice format. to  enter the Purchase Accounting Transaction in Invoicing Mode also.

Voucher Entry Mode selection in Tally

Consequently, at voucher entry screen, you get toggle buttons to toggle between the voucher entry modes.

V: As Voucher / As Invoice  is a toggle button (same button switches to either of the modes).

The button shown indicates that you are currently in complimentary mode (other mode), and will take you to the mode shown in the button, as explained below:

  • Accounting Voucher : When you see this button, you are currently  in Invoice mode, click V: As Voucher button to get Voucher Mode,  to enter the  accounts transaction in Accounting Voucher Mode. In this mode, you select all the Ledger Accounts at Particulars columns and enter the Ledger Amount at Debit / Credit columns as per rules.
  • Accounting Invoice : When you see this button, you are currently in Voucher Mode. Click V: As Invoice  to get Invoice Mode to enter the sales / purchase transaction in Accounting Invoice Mode.  

When you have activated Accounts Only (not Activated Inventory), it is recommended to use Voucher Mode only. This is simple to enter as it is similar to dual mode, in traditional way

Accounting Invoice Entry in Tally

For Accounting  Voucher entry in Invoice  Mode, click V: As Invoice button at Voucher Entry screen. Enter Party Ledger in Header,  other ledger accounts are entered in line area.

Debit / Credit sign  : In Accounting Invoice mode, you select the Party Ledger Accounts at Header without specifying Dr / Cr and  without specifying Amount.  All other ledger accounts are selected in Particulars column and the Ledger amount is entered (in Negative figure if the amount is Deducted in Invoice) without specifying Debit Credit.

In Voucher Mode, All Ledger Accounts are entered in respective Debit or Credit column.

Invoice entry screen components in Tally

  • Header Part : In Invoice mode, no separate Debit / Credit column appears. Voucher Date, Voucher Number, Supplier Invoice Number & Date (in case of Purchase Invoice) / Reference Number (in case of Sales), Party Accounts Name (select Customer for sales / Supplier for Purchase), Supplementary details, where opted (in separate subscreen), are all entered at Header part
  • Other Ledgers Part : At Table area, Ledger Account is entered at Particulars column, Ledger Amount at Amount column (in positive number for amount to be added/ as negative number for amount to be deducted)
  • Voucher Narration : Voucher Narration at Narration field, where applicable

Invoice Entry Configuration in Tally

To set Configuration options for Sales / Purchase Invoice entry, select GoT>F12:Configure>Invoice / Orders Entry to get Invoice Configuration screen.

Invoice Entry Configuration in Tally

The Invoice entry screen appears as per configuration set. Some of the common configuration options as explained for Voucher entry are also shown in Invoice entry configuration screen. We now explain the additional configuration options for Invoice entry.

However, during Invoice entry, you may click F12:Configure to get current Invoice entry configuration screen, to alter options for the current Invoice entry.

  • Supplementary Details entry in Invoice option set up in Tally

To record various other details like Despatch, Receipt, Order or other Important related reference in Invoice entry, at Invoice Configuration screen, set Yes at Accept Supplementary Details, to get the Supplementary Details screen to enter the various details related to the transaction.  Else set No to suppress the supplementary Details screen(the supplementary details screen is not activated in Voucher Mode).

Though this option is useful and relevant only when Inventory is activated, you may record in Accounting only Module (without Inventory)  mode also, if needed

  • Consignee Details in Invoice option set up in Tally

Sometimes, good are shipped to different Party (called Consignee) as per advise of the Buyer. At the option, Allow Separate Buyer & Consignee Name, set Yes to specify the details of consignee (else set No, when there is no separate Consignee specified by Buyer

Though this option is useful and relevant only when Inventory is activated, you may record in Accounting only Module (without Inventory)  mode also, if needed

  • Party Turnover display option set up in Invoice Entry in Tally

 To see Turnover (Total of Net Bill Value till date) with the Party during voucher entry (excluding the current invoice being entered), at Invoice Configuration, set Yes at Show Turnover achieved with Customer.

Consequently, during Invoice Entry, you will get the cumulative turnover till date at the field Turnover . Such info help you to evaluate the current performance to decide further transaction with the Party.

  • Provisional Purchase A/c selection option in Tally

To select Ledger Accounts under the Groups Provision also, set Yes at Allow Ledgers under Provision (only in current Purchase Invoice configuration)

Current Invoice entry configuration in Tally

Having set the general Invoice entry configuration, you may set up current Invoice entry configuration.

Click F12:Configure at current voucher entry screen to get Current Invoice Entry Configuration screen, containing almost similar options as explained in General Invoice entry configuration. Set the options as required.

Many of the options are related to Inventory and other modules. You may ignore options related to Inventory and other modules not activated.

Advanced current Invoice entry configuration in Tally

To further set additional and advanced configuration, press <F12 key> (no mouse click), to get Advanced Invoice configuration screen for the respective voucher Type. These options would be applicable to the current invoice and do not change the options set at General Configuration options.

Current Purchase Invoice Configuration

Current Purchase Invoice General Configuration in Tally

Current Purchase Invoice Advanced Configuration in Tally

Current Sales Invoice Configuration in Tally

Current Sales Invoice entry Configuration in Tally

Current Sales Invoice entry Advanced Configuration in Tally

Purchase transaction entry in Tally

When goods are purchased by buyer from the vendor, the buyer receives the goods from the vendor. Sometimes, the byer makes the payment to the vendor immediately (Called Cash Purchase). Often, the buyer pays later on, in due course of time, as agreed (Called Credit Purchase).

All Purchases (Credit & Cash) are entered in Purchase Voucher.

At GoT>Accounts Voucher entry screen, click F9:Purchase button to get Purchase Entry screen,

  • Click V:As Voucher button to get Purchase Entry screen in Voucher Mode
  • Click V:As Invoice button to get Purchase Entry screen in Invoice Mode

Accounting Effect of Purchase Entry in Tally

  • Credit Purchase : Credit Vendor Account, Debit Purchase Account
  • Cash  Purchase : Credit Cash / Bank  Account, Debit Purchase Account

Apart from the Purchase Accounts, there may be further accounts (like Taxes, Delivery Charges etc). These are often added in Purchase Account.

Purchase Entry in Voucher Mode in Tally

To enter purchase transaction in Accounting voucher mode, Click V:As Voucher button

  • First entry should always be a Credit involving any Creditor  (in case of Credit Purchase), or Cash, Bank or Bank OCC Account (in case of Cash Purchase)
  • Second entry should be a Debit to a Ledger placed under Purchase Account group.
  • Rest of the Accounts may be any Revenue Account (except Sales) or any Account under the Group Current Liabilities (other than Sundry Creditors). Thus you can include Duties & Taxes or other billing terms from 3rd entry onwards.

Purchase voucher Entry in Voucher Mode in Tally

Purchase Entry in Invoice Mode in Tally

For purchase entyr in Accounting Invoice mode, Click V:As Invoice button). At Purchase Entry screen in Accounting Invoice Mode. at Header, select Sundry Creditor Ledger (in case of Credit Purchase) or Cash / Bank Account (in case of Cash Purchase).

At ledger Account areas, select other ledger accounts  and the corresponding amount (amount deducted are entered in negative).

Purchase Entry in Accounting Invoice Mode in Tally

Sales entry set up Voucher Mode in Tally

When goods are sold by the vendor to the buyer, the vendor delivers the goods to the buyer. Sometimes, the vendor gets the payment from the buyer immediately (Called Cash Sales). Often, the vendor gets payment later on, in due course of time, as agreed (Called Credit Sales).

All Trade Sales (in Cash or Credit) should be entered through Sales voucher.

For Sales entry in Voucher mode, select GoT>Accounts Voucher. At Voucher entry screen, click F8:Sales button to get Sales Voucher Entry screen,

  • Click V:As Voucher button to get Sales Entry in Voucher Mode
  • Click V:As Invoice button to get Sales Entry in Invoice Mode

Accounting effect of Sales Entry

Credit sales : Debit Buyer A/c, Credit Sales Account

Cash sales : Debit Cash / Bank  A/c, Credit Sales Account

Apart from the Sales Accounts, there may be further accounts (like Taxes, Delivery Charges etc).

Sales Entry in Voucher Mode in Tally

For Sales entry in Voucher mode, select GoT>Accounts Voucher. At Voucher entry screen, click F8:Sales button to get Sales Entry in Voucher Mode screen,

Click V:As Voucher button to get Sales Entry screen in Voucher Mode.

  • First entry must be a Debit involving any Debtor (the Buyer, in case of Credit Sales), or a Cash, Bank or Bank OCC Account (in case of Cash Sales).
  • Second entry should be Credit to a ledger placed under Sales Account group.
  • Rest of the accounts may be any Revenue Account (except Purchase) or Accounts under the Group Current Liabilities (other than Sundry Creditors). Thus you can include Duties & Taxes or other billing terms from 3rd entry onwards.

Sales Entry in Voucher Mode in Tally

Sales Entry in Accounting Invoice Mode

For Sales entry in Accounting Invoice mode, select GoT>Accounts Voucher. At Voucher entry screen, click F8:Sales button to get Sales Entry screen. Click V:As Invoice button to get Sales Entry screen in Invoice Mode.

At Sales  Entry screen in Accounting Invoice Mode. At Header, select Sundry Creditor Ledger (in case of Credit Purchase) or Cash / Bank Account (in case of Cash Purchase).

At ledger Account areas, select other ledger accounts  and the corresponding amount (amount deducted are entered in negative).

Sales Entry in Accounting Invoice Mode in Tally

In Voucher Mode, under Pariculars column, second ledger entry must be a ledger under respective Sales / Purchase Group. In Invoice mode, under Pariculars column, you may enter any revenue account. In Invoice mode,  Amount deducted in Invoice is to be betered as negative amount.

Credit Limit Warning during Sales Voucher Entry

If you have set Credit Limit (NOT Zero), at Party Ledger , when you attempt to create a new Sales Voucher (not any other voucher type), if the current voucher causes to exceed the outstanding dues cross the specified credit limit, a warning message ‘Eh? Credit Limit of ….Exceeded (Current …)’ showing the allowable limit and current balance will be prompted and you will not be allowed to enter the Voucher (in that case you have to exit from the voucher, change Credit Limit and again come back to voucher entry)

This ensures that Credit Limit set by you for the Party can not be by-passed.         

Sales Voucher entry- Credit Limit exceeding Warning in Tally

Debit & Credit Notes entry in Tally

Debit & Credit Notes are issued  by Customer to Supplier, or by Supplier to Customers for Accounting Adjustments due to return of goods, Supplementary Charges / discount / rebates offered / rate difference or any another adjustments with customer / supplier, in relation to Sales / Purchase transactions. One party’s Debit Note corresponds to the other Party’s Credit Note to bring the accounts of both parties in sync.

Accounting Entry in the books of Party issuing the Debit & Credit Notes

The Party (Buyer / Seller) issuing the Debit / Credit Note, makes the entry of Debit & Credit Note as follows:

For Goods Retuned

  • Debit Note : The Party returning the goods (original Buyer), issues a Debit Note on the Party to whom the goods are returned
  • Credit Note : The Party receiving back the returned goods (original seller), issues a Credit Note on the Party who returned the goods.

For other Adjustments

Debit Note :

  • The supplier issues to Buyer for supplementary (additional) charges (like additional rate difference, expenses incurred by supplier on behalf of Buyer)
  • The Buyer issues to Supplier for Rebate allowed by Supplier on goods purchased from the supplier

Credit Note

  • The Buyer issues to Supplier for supplementary (additional) charges (like additional rate difference, expenses incurred by supplier on behalf of Buyer)
  • The Supplier issues to Buyer for Rebate allowed by Supplier on goods purchased from the supplier

Accounting Entry in the books of Party receiving the Debit & Credit Notes

The Party (Buyer / Seller) on whom the Debit / Credit Note is issued (Party receiving the Debit / Credit Note), makes the entry of Debit & Credit Note as reverse document.

The Debit Note Issued by Buyer on Seller corresponds to Credit Note issued  by Seller  to Buyer. Similarly, the Credit Note Issued by Buyer to Seller corresponds to  Debit Note issued by Seller on Buyer. 

Debit / Credit Note Activation in Tally

Debit / Credit Note activation

To activate Debit & Credit Note  for the Company, at Gateway of Tally, Click F11: Features, select Accounting Features and set Yes at Use Debit/Credit Notes.

On activation of Debit / Credit Notes, during Voucher Entry, the buttons F8: Credit Note & F9: Debit Note  would be available at the vertical button bar at the right, to create respective vouchers

Debit Note / Credit Note entry Format

  • Credit Note Format : Having set Yes at Use Debit/Credit Notes, at the option Use Invoice Mode for Credit Note, set No to enter Credit Note in Accounting Voucher format, else set Yes to enter Credit Note also in Accounting Invoice format
  • Debit Note Format : Having set Yes at Use Debit/Credit Notes, at the option Use Invoice Mode for Debit Note, set No to enter Debit Note in Accounting Voucher format, else set Yes to enter Debit Note also in Accounting Invoice format

Debit Note / Credit Note entry buttons

At Debit / Credit Note Voucher entry screen, Click V:As Voucher  button to get the Debit / Credit Note entry screen  in Voucher Mode. Click V:As Invoice  button to get the Debit / Credit Note entry screen  in Accounting Invoice Mode

Debit Note Entry in Voucher Mode in Tally

At Voucher entry screen, click F9: Debit Note, and then click V: As Voucher button to get Debit Note entry Voucher mode.

The entry of Debit Credit Note in Voucher mode is similar to Sales Purchase entry in voucher mode. We explain the ledger accounts entry for respective voucher type.

Ledger Account entry at Particulars column in Debit Note

  • The 1st entry must be Debit involving any Party (or Branch / Division, Cash or Bank Account)
  • The 2nd entry should be a credit to any Nominal ledger Account.
  • The 3rd entry onward, you can debit or Credit any Account.

Debit Note entry (Voucher Mode)  for Return of Purchase Goods to Suppliers

Debit Note entry in Voucher Mode in Tally

Ledger Account entry at Particulars column in Credit Note

  • The 1st entry must be Credit involving any Party (or Branch & Division, Cash or Bank Account)
  • The 2nd entry should be a Debit to any Nominal Ledger Account.
  • The 3rd entry onward, you can Debit or Credit any Account.

Credit Note Entry in Voucher Mode for goods returned by Customers to Suppliers

Credit Note Entry in Voucher Mode in Tally

Credit Note Entry in Accounting Invoice Mode

At Voucher entry screen, click  F8: Credit Note , and then click V: As Invoice button to get Credit  Note entry in Accounting Invoice mode.

  • Party Ledger Account : At the header, select the Party Ledger Account (or Cash/ Bank Account). This account is credited
  • Other Ledger Accounts : At Particular column, select the Revenue Account and enter the amount debited (enter the amount in negative if it is to be reduced from Credit note. The account with negative figure is credited)

Credit Note entry (Invoice Mode)  for Return of sold Goods by customers

Credit Note entry in Invoice Mode in Tally

Debit Note entry in Invoice Mode

At Voucher entry screen, click  F9: Debit Note , and then click As Voucher button. Click V: As Voucher button to get Debit  Note entry in Voucher mode.

The  entry screen of  Debit Note & Credit Notes in Invoice Mode are similar to Sales & Purchase Accounting Invoice entry.

We explain the ledger accounts entry for respective voucher type.

Debit Note entry (Invoice Mode)  for Return of Purchase Goods to supplier

Debit Note Entry

  • Party Ledger Account : At the header, select the Party Ledger Account (or Cash/ Bank Account). This account is debited
  • Other Ledger Accounts : At Particular column, select the Revenue Account and enter the amount credited (enter the amount in negative if it is to be reduced from Debit note. The account with negative figure is debited)

Debit / Credit Note Voucher Entry Configuration

The  Debit Note  & Credit Notes Configuration options in Voucher Mode are similar to Sales & Purchase Accounting Voucher Configuration screen.

Debit / Credit Note Entry Configuration in Voucher Mode

In Voucher Mode (i.e when you select V:As Voucher Button ), click F12:Configure to get the respective configuration screen  for Voucher mode entry.

The voucher entry configuration options are similar for both Debit & Credit Notes.

In Credit Note, additional options for printing of Cheque in payment of Credit Notes are also available

Debit Note Configuration (Voucher Mode) in Tally

Credit Note Configuration (Voucher Mode) in Tally

Debit / Credit Note Entry Configuration in Invoice Mode

In Invoice Mode (i.e when you select V:As Invoice Button ), click F12:Configure to get the respective configuration screen  for Invoice mode entry.

Debit Note Configuration (Invoice Mode)

 Credit Note Configuration (Invoice Mode)

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