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GNDU Question Paper-2023

Bachelor of Commerce

(B.Com) 5

Semester

COMPUTER BASED ACCOUNTING

Time Allowed: Three Hours Max. Marks: 50

Note: Attempt Five questions in all, selecting at least One question from each section. The

Fifth question may be attempted from any section. All questions carry equal marks.

SECTION-A

1. What is Computerized Accounting? What are its advantages? Discuss the evolution of

computers in business.

2. What is system approach in Accounting? What is its importance? Discuss with

examples.

SECTION-B

3. What are the important aspects of computer Accounting? Discuss the various modules

of a computer Accounting package.

4. Discuss and differentiate between the different types of Accounting software.

SECTION-C

5. What is the difference between Tally Server of Single User and Multi-user? Discuss the

steps of activating Tally for both types of users.

6. What is process of installing and starting Tally? Briefly explain how Tally is run.

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SECTION-D

7. Explain in detail the various items on the Tally screen. What is Tally Gateway?

8. What are the various information required about the company to create a company in

Tally? Give a sample of the values under each type of information to create a company.

GNDU Answer Paper-2023

Bachelor of Commerce

(B.Com) 5

Semester

COMPUTER BASED ACCOUNTING

Time Allowed: Three Hours Max. Marks: 50

Note: Attempt Five questions in all, selecting at least One question from each section. The

Fifth question may be attempted from any section. All questions carry equal marks.

SECTION-A

1. What is Computerized Accounting? What are its advantages? Discuss the evolution of

computers in business.

Ans: A Journey Through Computerized Accounting and Business Evolution

Imagine a small shopkeeper, Mr. Sharma, sitting in his store twenty years ago. He has a big

Every evening, he spends hours going through bills, writing numbers, and cross-checking

totals. If he makes even a small mistake, the entire calculation collapses, and he has to start

all over again. This was the reality of accounting before computers entered the scene.

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Now, fast forward to today. Mr. Sharma’s son has taken over the shop. Instead of thick

registers, he has a laptop with accounting software. With just a few clicks, he can know his

profit, loss, outstanding bills, or even generate reports for tax purposes. Something that

earlier took hours, now takes just minutes. This transformation is the magic of

computerized accounting.

What is Computerized Accounting?

To put it simply, computerized accounting means using computers and accounting software

to record, store, and process financial transactions instead of doing everything manually

with pen and paper.

It is like replacing a bullock cart with a car. Both serve the purpose of transportation, but the

car is faster, more efficient, and more reliable. Similarly, computerized accounting uses the

power of computers to make financial work easier, accurate, and quick.

In computerized accounting, software such as Tally, QuickBooks, SAP, or Zoho handles tasks

like:

• Recording sales and purchases

• Preparing invoices

• Maintaining ledgers and journals

• Generating balance sheets and profit & loss accounts

• Calculating taxes automatically

So instead of writing long entries manually, an accountant just enters data once, and the

computer takes care of calculations, reports, and summaries.

Advantages of Computerized Accounting

Now, let’s imagine you are the examiner, and you want a clear, engaging list of why

computerized accounting is better. Let me explain each advantage as if it’s part of a simple

story.

1. Speed and Efficiency

Earlier, accountants spent hours doing manual calculations. With computers, these tasks are

finished in seconds. For example, calculating GST or preparing a trial balance is just one click

away.

2. Accuracy

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Humans make mistakes when adding or subtracting large numbers. Computers, however,

follow instructions perfectly. If the input is correct, the output will be error-free. This

ensures reliability in financial records.

3. Cost-Effective

Although software requires an initial investment, it reduces the need for a large staff. A

single accountant with software can do the work of many clerks who were earlier required

for manual bookkeeping.

4. Easy Storage and Backup

Earlier, businesses had to maintain shelves full of registers for years. Today, lakhs of entries

can be stored in a small hard drive. With cloud storage, data can be saved safely and

retrieved anytime, anywhere.

5. Quick Decision-Making

Business owners no longer have to wait for days to know their financial position. With

computerized reports, they can instantly see whether they are in profit or loss and take

timely decisions.

6. Security

Unlike paper registers that can be stolen or destroyed, computerized data can be password-

protected and encrypted. Only authorized people can access it, making it much safer.

7. Automatic Report Generation

Need a balance sheet, cash flow statement, or tax return? Earlier, accountants would spend

days preparing them. Today, software generates these reports automatically, saving time

and effort.

8. Integration with Business Processes

Modern accounting systems are not just about bookkeeping. They are integrated with

inventory, payroll, and customer management. This makes the entire business management

smoother.

Evolution of Computers in Business

Now let’s shift the story a little. Computers did not appear overnight as powerful machines.

Their journey into the business world is also like a story of growth and transformation.

1. The Early Days (1940s – 1960s)

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The first computers were giant machines that occupied entire rooms. They were mainly

used for military and scientific purposes, not for regular business. Businesses still relied on

manual accounting.

2. Introduction of Business Computers (1960s – 1970s)

Slowly, computers entered large corporations. They were used for payroll processing and

big calculations. But they were very expensive, so only huge companies could afford them.

3. The Arrival of Personal Computers (1980s)

This was the real turning point. With the invention of personal computers, small and

medium businesses could also use computers. Companies like IBM and Apple started

making computers affordable. Accounting software like Lotus 1-2-3 and early versions of

spreadsheets became popular.

4. The Age of Specialized Software (1990s)

By the 1990s, companies started developing dedicated accounting software. Tally in India,

QuickBooks in the USA, and SAP for large organizations became household names.

Businesses of all sizes adopted them for bookkeeping and financial management.

5. Internet and Cloud Era (2000s – Present)

With the rise of the internet, accounting software moved online. Today, we have cloud-

based accounting where data can be accessed from anywhere in the world. Businesses don’t

need heavy servers; everything is stored safely online. This also allows collaboration

between accountants, auditors, and business owners in real time.

6. The Future: Artificial Intelligence and Automation

Now, accounting is moving towards Artificial Intelligence (AI). Software can predict future

cash flows, detect fraud, and even give financial advice automatically. For example, AI-

powered tools can read invoices, record them automatically, and even remind clients for

payments.

Connecting the Dots

So, if we look back at Mr. Sharma’s story, we see a clear picture:

• His father struggled with manual registers.

• He shifted to computerized accounting, which saved time and reduced mistakes.

• His son may soon use AI-based accounting that requires even less human effort.

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This journey shows how businesses have evolved with computers. From manual registers to

giant machines, from personal computers to cloud-based systems, and now towards AI —

the role of computers in business has been nothing less than revolutionary.

Conclusion

To conclude this “story of numbers,” computerized accounting is not just a technical

advancement, it is a complete transformation of how businesses handle money. It saves

time, reduces errors, provides security, and supports decision-making. The evolution of

computers in business, from room-sized machines to AI-driven systems, proves that

technology and business always grow hand in hand.

If manual accounting was like walking on foot, computerized accounting is like flying in an

airplane — both will take you to your destination, but one is faster, safer, and more

efficient.

That is why today, no business, big or small, can imagine functioning without computerized

accounting. It has become the backbone of modern commerce, and its journey is still

continuing towards even smarter solutions.

2. What is system approach in Accounting? What is its importance? Discuss with

examples.

Ans: What is the System Approach in Accounting?

The system approach is a way of understanding and managing accounting by treating it as a

system — a set of interrelated parts working together to achieve a common goal: providing

accurate, timely, and useful financial information.

In this approach:

• Inputs are the raw data — invoices, receipts, payroll records, bank statements.

• Processes are the accounting procedures — recording, classifying, summarising,

analysing.

• Outputs are the results — financial statements, reports, budgets.

• Feedback is the review and analysis — using the reports to make decisions, which

may change how inputs are handled in the future.

It’s like a living organism:

• The heart pumps blood (processing transactions).

• The brain analyses signals (interpreting data).

• The body responds (management decisions).

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If one part fails, the whole system suffers.

Key Features of the System Approach in Accounting

1. Holistic View

o Looks at accounting as a whole, not just individual tasks.

o Recognises that sales, purchases, payroll, and inventory are all connected.

2. Interdependence

o Each part of the accounting process depends on the others.

o For example, accurate inventory records affect cost of goods sold, which

affects profit figures.

3. Defined Boundaries

o The system has clear limits — it deals with financial transactions of the

business, not personal expenses of the owner.

4. Flow of Information

o Data flows from one stage to another in a logical sequence.

o Example: A sales invoice (input) → entered in sales journal (process) →

appears in revenue in the income statement (output).

5. Feedback Mechanism

o Reports are analysed, and the insights are fed back to improve processes.

o Example: If expenses are rising, management may change purchasing

policies.

6. Goal-Oriented

o The ultimate aim is to provide reliable information for decision-making and

compliance.

Importance of the System Approach in Accounting

Why is this approach so valuable? Let’s break it down.

1. Improves Accuracy and Reliability

When accounting is treated as a system, each step is linked and checked against others.

• Example: Purchase entries are matched with supplier invoices and payment records.

This reduces errors and ensures data integrity.

2. Enhances Decision-Making

Management decisions depend on accurate, timely information.

• Example: If sales reports show a drop in a particular region, marketing can focus

efforts there. The system approach ensures that such reports are based on

complete, connected data.

3. Encourages Efficiency

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By viewing accounting as a system, businesses can streamline processes, remove

duplication, and automate repetitive tasks.

• Example: Linking sales and inventory modules so that stock updates automatically

when a sale is recorded.

4. Facilitates Control and Monitoring

The system approach makes it easier to set up internal controls.

• Example: Segregating duties — one person records transactions, another authorises

payments — reduces fraud risk.

5. Supports Compliance

Laws and regulations (like GST, income tax) require accurate records. A well-designed

accounting system ensures compliance by integrating statutory requirements into

processes.

6. Adaptability

When the environment changes — new tax laws, new technology — the system can be

adjusted without breaking the whole structure.

Examples of System Approach in Action

Example 1: Retail Store

A retail chain uses a computerised accounting system:

• Inputs: Sales data from POS machines, supplier invoices, payroll data.

• Processes: Automatic posting to ledgers, calculation of GST, updating inventory.

• Outputs: Daily sales reports, monthly profit & loss, GST returns.

• Feedback: Management notices high returns in one store → investigates product

quality → changes supplier.

Here, every part — sales, inventory, purchasing — is connected. A problem in one area is

quickly visible in the reports.

Example 2: Manufacturing Company

A manufacturer integrates accounting with production:

• Inputs: Raw material purchase orders, production schedules, labour hours.

• Processes: Cost accounting allocates material, labour, and overhead to products.

• Outputs: Product cost sheets, variance analysis, financial statements.

• Feedback: If actual costs exceed budget, production methods are reviewed.

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The system approach ensures that financial data reflects operational realities.

Example 3: Service Firm

A consultancy uses project-based accounting:

• Inputs: Timesheets, client contracts, expense claims.

• Processes: Allocating costs and revenues to specific projects.

• Outputs: Project profitability reports, client invoices.

• Feedback: Identifies projects with low margins → adjusts pricing strategy.

Why the System Approach is Better than a Fragmented View

Imagine if each department kept its own records without coordination:

• Sales records don’t match accounts receivable.

• Inventory doesn’t match cost of goods sold.

• Payroll doesn’t match expense reports.

This leads to confusion, errors, and poor decisions. The system approach prevents this by

ensuring integration — all parts talk to each other.

Bringing It to Life — A Story

Think of a symphony orchestra:

• The violins, drums, flutes, and trumpets are like different accounting functions —

sales, purchases, payroll, inventory.

• If each plays without listening to the others, the result is noise.

• The conductor (the system approach) ensures they play in harmony, following the

same sheet music (accounting policies).

The result? A beautiful performance — or in business terms, accurate accounts and

informed decisions.

Conclusion

The system approach in accounting is about seeing the big picture — recognising that

accounting is not just a set of isolated tasks, but a coordinated process where every part

affects the whole. Its importance lies in:

• Improving accuracy

• Supporting decision-making

• Increasing efficiency

• Strengthening control

• Ensuring compliance

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By applying this approach, businesses can turn raw data into meaningful insights, spot

problems early, and adapt to change smoothly.

In short, it’s the difference between looking at a single tree and understanding the whole

forest — and in the world of accounting, that perspective can be the key to long-term

success.

SECTION-B

3. What are the important aspects of computer Accounting? Discuss the various modules

of a computer Accounting package.

Ans: Important Aspects of Computer Accounting and Its Modules

Imagine a small shopkeeper named Ramesh. For years, he maintained his accounts in big

registers, writing down sales, expenses, and profits with his pen. But as his business grew, so

did the number of entries. Mistakes crept in, calculations went wrong, and sometimes pages

got torn or misplaced. One day, a friend told him, “Why don’t you switch to computer

accounting? It will save your time, reduce errors, and give you instant reports.”

Curious, Ramesh installed a computer accounting software. Within a week, his work became

smoother. With just a few clicks, he could see how much stock he had, what profit he made,

and even which customers had pending payments. This real-life example is the very essence

of computer accounting—making the age-old practice of accounting faster, accurate, and

efficient with the help of computers.

Now, let’s explore this world in detail.

🌟 Important Aspects of Computer Accounting

When we talk about computer accounting, we are not just speaking about entering numbers

into a machine. It has several important aspects that make it unique:

1. Speed and Efficiency

A human accountant may take hours to prepare a balance sheet. A computer can do the

same in seconds. This speed allows businesses to save time and focus on decision-making

rather than manual calculations.

2. Accuracy

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Errors in addition or subtraction are very common in manual bookkeeping. But with

computers, once you feed the correct data, the system ensures accurate totals and

balances. Accuracy builds trust in financial records.

3. Automation of Repetitive Tasks

Imagine preparing monthly salary slips for 100 employees by hand—time-consuming and

tiring! Computer accounting automates such repetitive work. Once the formula or rule is

set, it generates results automatically.

4. Data Storage and Security

Earlier, companies needed huge cupboards to store registers. Today, years of accounting

data can be stored in a small hard drive or cloud storage. Even better, data can be protected

with passwords and backups, reducing the risk of loss.

5. Instant Reports and Analysis

Want to know your company’s profit this year compared to last year? In manual accounting,

you’d need to flip through pages. In computer accounting, a few clicks generate

comparative charts, graphs, and summaries instantly.

6. Scalability

Whether it’s a small shop or a multinational company, computer accounting can adapt. A

small business might just need simple invoicing, while a large company may need payroll,

taxation, and inventory modules. Software can be scaled to meet both.

7. Integration with Other Functions

Modern accounting software can integrate with banking systems, GST portals, and even e-

commerce websites. This integration reduces duplication of work and provides a complete

business picture.

8. Cost-Effectiveness

Though software requires some initial investment, it reduces the cost of labor, stationery,

and time wasted in corrections. In the long run, it proves to be economical.

🌟 Modules of a Computer Accounting Package

Think of computer accounting software as a big house, and each module is like a room with

its own function. Together, they form a complete system that supports every accounting

activity. Let’s step inside and explore these rooms one by one.

1. General Ledger Module

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This is the heart of accounting. Every financial transaction—whether it is sales, purchase,

payment, or receipt—finds its place here. It helps in preparing the Trial Balance, Profit &

Loss Account, and Balance Sheet. Without the general ledger, accounting would be

incomplete.

For example: If Ramesh sells goods worth ₹10,000, the software automatically records it in

sales, updates debtors, and shows the effect in profit.

2. Accounts Payable Module

This module deals with money the business has to pay others. It keeps track of suppliers,

vendors, and creditors. It ensures payments are made on time and avoids duplication of

bills.

For example: If Ramesh buys goods from a wholesaler, the payable module reminds him of

the due date for payment.

3. Accounts Receivable Module

This is the opposite of accounts payable. It tracks money receivable from customers. It

records invoices, monitors outstanding payments, and sends reminders.

For example: If a customer buys goods on credit, this module helps Ramesh keep track of

who owes him money.

4. Inventory Management Module

Businesses don’t just want to know how much they sold; they also want to know how much

stock is left. This module keeps track of stock-in, stock-out, re-order levels, and wastage.

For example: Ramesh can easily check whether a certain product is available before

promising delivery to a customer.

5. Payroll Module

For organizations with employees, salary management is crucial. This module calculates

wages, deductions, bonuses, provident fund, and income tax automatically.

For example: Instead of calculating each employee’s salary manually, Ramesh can process all

salaries with just one click.

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6. Fixed Assets Module

Businesses often have assets like furniture, machinery, and vehicles. This module helps in

tracking their value, depreciation, and disposal.

For example: If Ramesh buys a delivery van, the system records its purchase, calculates

yearly depreciation, and adjusts its book value.

7. Taxation Module

Tax laws like GST or Income Tax can be complex. This module ensures correct calculation

and compliance with government regulations. It also helps in filing returns smoothly.

For example: Ramesh can generate his GST report instantly rather than preparing it

manually.

8. Reporting and MIS (Management Information System) Module

This module is like the “dashboard” of a car. It shows the performance of the business in a

summarized way through graphs, charts, and analytical reports.

For example: Ramesh can see which product is selling the most or which customer gives him

maximum business.

9. Banking Module

Modern accounting software also connects directly with banks. It records deposits,

withdrawals, reconciles bank statements, and tracks loans.

For example: Ramesh can check whether a cheque has cleared without visiting the bank.

10. Budgeting Module

This module helps in planning future income and expenses. It compares actual performance

with budgeted targets.

For example: If Ramesh planned to spend ₹50,000 on advertising but ended up spending

₹70,000, the system highlights the difference.

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🌟 Conclusion

Computer accounting is like giving superpowers to traditional accounting. It makes financial

management fast, accurate, and intelligent. Its important aspects—such as accuracy,

efficiency, automation, and integration—make it a backbone of modern business.

The various modules—general ledger, accounts payable, receivable, payroll, inventory,

taxation, and MIS—together create a complete ecosystem for financial management.

Whether it is a small shopkeeper like Ramesh or a global company, computer accounting

packages simplify complex tasks and allow businesses to focus on growth.

In simple words, computer accounting is no longer a luxury; it has become a necessity in

today’s fast-moving world.

4. Discuss and differentiate between the different types of Accounting software.

Ans: Part 1: Important Aspects of Computer Accounting

Think of computer accounting as a well-oiled machine. Each aspect is like a gear — if one is

missing or faulty, the whole system suffers. Here are the key aspects:

1. Integration of Accounting Principles with Technology

• Computer accounting isn’t a new set of rules — it’s the same double-entry system,

trial balance, and financial statements, but executed through software.

• The software is designed to follow accounting standards and statutory requirements

automatically.

Example: When you record a sale, the system updates the sales ledger, reduces inventory,

and adjusts GST records — all in one go.

2. Automation of Routine Tasks

• Recurring entries like rent, salaries, or depreciation can be automated.

• Tax calculations, interest computations, and bank reconciliations happen with

minimal manual effort.

Impact: Saves time and reduces human error.

3. Real-Time Processing

• Transactions are updated instantly across all relevant accounts.

• Managers can see up-to-date financial positions at any moment.

Example: The moment a payment is received, cash flow reports reflect it.

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4. Accuracy and Error Reduction

• Built-in validation checks prevent common mistakes like unbalanced entries.

• Calculations are handled by the system, reducing arithmetic errors.

5. Data Security and Access Control

• User IDs and passwords restrict access to authorised personnel.

• Audit trails record who made each entry and when.

Benefit: Protects sensitive financial data and supports accountability.

6. Scalability

• Can handle increasing transaction volumes as the business grows.

• Suitable for small shops and large corporations alike.

7. Compliance and Reporting

• Many packages are updated with the latest tax laws (GST, TDS, etc.).

• Generate statutory reports in prescribed formats.

8. Multi-User and Remote Access

• Multiple users can work on the same data simultaneously.

• Cloud-based systems allow access from anywhere.

9. Integration with Other Business Functions

• Links with inventory, payroll, CRM, and banking systems.

• Eliminates duplicate data entry.

10. Backup and Recovery

• Regular backups prevent data loss.

• Cloud storage adds an extra layer of safety.

In short: The important aspects of computer accounting revolve around speed, accuracy,

integration, security, and compliance — all while keeping the core principles of accounting

intact.

Part 2: Modules of a Computer Accounting Package

A good accounting package is like a department store — different sections (modules)

handle different needs, but they’re all connected at the checkout counter (the general

ledger). Let’s walk through the main modules.

1. General Ledger Module

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• Purpose: The heart of the accounting system — records all financial transactions.

• Features:

o Chart of accounts creation.

o Posting from sub-ledgers (sales, purchases, cash, etc.).

o Trial balance, profit & loss, and balance sheet generation.

• Advantage: Centralises all financial data for easy reporting.

2. Accounts Payable (AP) Module

• Purpose: Manages money the business owes to suppliers.

• Features:

o Recording supplier invoices.

o Tracking due dates and payment terms.

o Generating payment vouchers and cheques.

• Advantage: Avoids late payment penalties and maintains good supplier

relationships.

Example: You receive a raw material invoice — AP records it, schedules payment, and

updates the ledger.

3. Accounts Receivable (AR) Module

• Purpose: Tracks money owed to the business by customers.

• Features:

o Recording customer invoices.

o Monitoring outstanding balances.

o Sending payment reminders.

• Advantage: Improves cash flow by ensuring timely collections.

Example: When you issue an invoice, AR logs it, updates the customer’s account, and tracks

payment status.

4. Inventory Management Module

• Purpose: Controls stock levels and valuation.

• Features:

o Item-wise stock tracking.

o Batch numbers, expiry dates, and location management.

o Automatic stock updates from sales and purchase entries.

• Advantage: Prevents stockouts and overstocking, reduces holding costs.

5. Payroll Module

• Purpose: Manages employee salaries and statutory deductions.

• Features:

o Salary structure setup.

o PF, ESI, TDS calculations.

o Payslip generation.

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• Advantage: Saves time and ensures compliance with labour laws.

6. Fixed Assets Module

• Purpose: Tracks company assets and depreciation.

• Features:

o Asset register with purchase details.

o Depreciation calculation as per accounting standards.

o Disposal and sale tracking.

• Advantage: Accurate asset valuation and compliance with reporting norms.

7. Banking Module

• Purpose: Integrates bank transactions with accounting.

• Features:

o Bank reconciliation.

o Direct import of bank statements.

o Online payment initiation.

• Advantage: Saves time and reduces reconciliation errors.

8. Taxation Module

• Purpose: Handles all tax-related calculations and filings.

• Features:

o GST, TDS, TCS computation.

o Return preparation in prescribed formats.

o E-invoicing and e-way bill generation.

• Advantage: Ensures timely compliance and avoids penalties.

9. Reporting and Analysis Module

• Purpose: Turns raw data into actionable insights.

• Features:

o Financial statements.

o Ratio analysis, cash flow statements.

o Customisable MIS reports.

• Advantage: Supports strategic decision-making.

10. Security and User Management Module

• Purpose: Controls who can access what.

• Features:

o Role-based permissions.

o Audit trails.

• Advantage: Protects sensitive data and ensures accountability.

A Day in the Life — How the Modules Work Together

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Imagine a single transaction:

• You sell goods worth ₹50,000 to a customer.

o AR Module: Records the invoice and updates the customer’s balance.

o Inventory Module: Reduces stock by the sold quantity.

o General Ledger: Updates sales revenue and cost of goods sold.

o Taxation Module: Calculates GST and adds it to the invoice.

o Reporting Module: Reflects the sale in daily sales reports.

All this happens instantly and seamlessly — that’s the beauty of an integrated accounting

package.

Why Understanding Modules Matters

For an accountant or business owner:

• Knowing the modules helps you use the software to its full potential.

• You can customise workflows to match your business needs.

• You can spot errors faster by knowing where data originates.

Conclusion

The important aspects of computer accounting — integration, automation, accuracy,

security, compliance — make it a game-changer for modern businesses. The various

modules of an accounting package — from general ledger to taxation — are like specialised

departments in a company, each handling its own tasks but working together to keep the

financial engine running smoothly.

When you understand both the aspects and the modules, you don’t just use the software —

you master it. And in today’s fast-paced business world, that mastery can be the difference

between just keeping records and truly driving growth.

SECTION-C

5. What is the difference between Tally Server of Single User and Multi-user? Discuss the

steps of activating Tally for both types of users.

Ans: Difference Between Tally Single-User and Multi-User (Tally Server)

Here’s the “shop counter” analogy turned into real Tally terms:

Feature

Single-User (Silver Licence)

Multi-User (Gold Licence)

Number of

Users

Only one computer can use the

licence at a time.

Multiple computers (users) can access

Tally simultaneously over a LAN.

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Licence Scope

Installed and activated on one

system only.

Installed on a server and shared with

multiple client systems.

Data Access

Only the licensed computer can

open and work on company

data.

All connected users can open and

work on the same company data at

the same time.

Best For

Small businesses or individuals

with a single accountant.

Medium to large businesses with an

accounts team.

Cost

Lower cost.

Higher cost due to multi-user

capability.

Performance

Optimised for single-machine

use.

Designed for concurrent access

without data conflicts.

Example

Scenario

A shop owner doing accounts

alone on one PC.

A company with 5 accountants

entering sales, purchases, and payroll

at the same time.

How Tally Server Fits In

When we say “Tally Server” in the context of multi-user, we mean:

• One server machine holds the Tally licence and company data.

• Multiple client machines connect to it over a local network.

• All can work on the same data in real time.

In single-user mode, there’s no need for a server setup — the licence and data live on the

same PC.

Steps to Activate Tally for Single-User (Silver Licence)

Let’s imagine you’ve just bought Tally for your small business. You have one computer in

your office for accounts.

Step 1: Open TallyPrime

• Launch TallyPrime on your computer.

• You’ll see the “Welcome to TallyPrime” screen.

Step 2: Choose to Activate Licence

• Select A: Activate License from the menu.

Step 3: Enter Licence Details

• Input:

o Serial Number (from your purchase invoice or email)

o Activation Key (provided with the licence)

o Administrator Email ID (your Tally.NET ID — this becomes your account

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Step 4: Receive Unlock Key

• Tally will send an Unlock Key to your registered email.

• Enter this key in the “Unlock License” screen.

Step 5: Complete Activation

• Press Enter to confirm.

• Your single-user licence is now active.

• You can create your company and start recording transactions.

Tip: Keep your Tally.NET ID and password safe — you’ll need them for renewals or

reactivation.

Steps to Activate Tally for Multi-User (Gold Licence)

Now imagine you run a company with an accounts team of 6 people. You want them all to

work in Tally at the same time.

Step 1: Choose a Server System

• Pick one computer to act as the Licence Server.

• This machine should be on and connected to the network whenever others need

Tally.

Step 2: Activate on the Server

• On the server system:

o Open TallyPrime.

o Select A: Activate License.

o Enter your Serial Number, Activation Key, and Administrator Email ID.

o Enter the Unlock Key received via email.

Step 3: Configure Client Systems

• On each client computer:

o Open TallyPrime.

o Press F1 (Help) → Settings → Manage License.

o Choose Use License from Network.

o Enter the Server Name/IP and Port Number of the server system.

Step 4: Test the Connection

• Once configured, all client systems can use Tally simultaneously, sharing the same

company data.

Tip: The server system must remain available for clients to access the licence.

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Key Points to Remember for Both Types

• Internet Connection: Required during activation to communicate with Tally’s

servers.

• Run as Administrator: When activating, right-click the TallyPrime icon and choose

“Run as Administrator” to avoid permission issues.

• Data Backup: Always back up your company data before making major changes.

• Security: Use strong passwords for TallyVault and user logins to protect sensitive

data.

A Story to Tie It Together

Ravi, a shop owner, buys a Single-User licence. He activates it on his office PC and does all

his billing and accounts there. It’s simple, cost-effective, and perfect for his needs.

Meera, who runs a chain of boutiques, buys a Multi-User licence. She activates it on her

head office server and connects all branch accountants to it. Now, sales from each branch

update in real time, and her finance team can work together without waiting for files to be

emailed.

Both are using Tally — but their activation and usage match their business size and

workflow.

Conclusion

The difference between Tally Single-User and Multi-User is all about how many people can

work at the same time and how the licence is shared.

• Single-User = one computer, one user at a time.

• Multi-User = multiple computers, multiple users, all connected to the same data.

Activating either is straightforward — the main difference is that multi-user requires a

server-client setup, while single-user is activated directly on the working machine.

When you choose the right type and activate it properly, Tally becomes the smooth, reliable

accounting partner your business needs — whether you’re a one-person show or a

full-fledged finance team.

6. What is process of installing and starting Tally? Briefly explain how Tally is run.

Ans: The Journey of Installing and Running Tally

Imagine a young commerce student named Riya. She has just started her B.Com classes, and

in her syllabus, there is a subject called Accounting with Tally. At first, when she hears the

word “Tally,” it feels a bit intimidating—like a big mountain she has to climb. But soon, she

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realizes that Tally is not a mountain at all; it is more like a friendly companion who helps

keep accounts, make reports, and run businesses smoothly.

Now, Riya wants to install Tally on her computer. Let’s walk with her step by step, as if we

too are learning with her.

Step 1: Preparing for the Installation

Before installing any software, you need to check whether your system is ready. Riya looks

at her laptop and thinks:

• Do I have enough space on my computer? (Tally does not need a lot, but still, free

storage is important.)

• Do I have a stable internet connection? (Because the setup file needs to be

downloaded.)

• Do I know which version I want? (Tally.ERP 9 or the latest TallyPrime.)

This is like preparing the kitchen before cooking a meal. You cannot cook unless you have

utensils, ingredients, and a stove ready.

Step 2: Downloading the Setup File

Riya goes to the official Tally website. This is important because downloading software

from random websites may cause problems or even viruses. She sees two options:

1. Educational Mode (Free) – useful for students like her, where she can practice

without paying.

2. Licensed Version (Paid) – for businesses, which comes with full features.

She downloads the setup file. The file is small compared to other heavy software, so within

minutes, it’s saved on her laptop.

Step 3: Installing Tally

Now comes the actual installation. This step is like inviting a guest into your home—you

open the door and make space.

Riya double-clicks the setup file. A window appears on the screen. It asks:

• Where should Tally be installed? (By default, it suggests the C drive.)

• Do you want shortcuts on your desktop? (She clicks Yes because she wants quick

access.)

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She clicks Install, and within seconds, the process is complete. Unlike many other

complicated software, Tally does not take long hours to install. It’s quick and neat, like

setting up a small tent instead of building a huge house.

Step 4: Starting Tally for the First Time

Now that Tally is installed, Riya is excited to open it. She double-clicks on the Tally icon that

appeared on her desktop.

When Tally opens, she sees the Gateway of Tally screen. For the first time, it feels like

opening the door to a new world.

Here, Tally asks her a simple question:

• Do you want to continue in Educational Mode or License Mode?

Since Riya is a student, she chooses Educational Mode. Businesses would activate a license

here to unlock the full power of Tally.

Step 5: Creating a Company

Tally always starts with a company. Even if you are just a student, you need to create a

company because accounting is always linked to an organization.

So, Riya clicks on Create Company. Tally asks her for details:

• Company Name: “Riya Traders”

• Address: Her home address

• Financial Year Beginning: 1st April

• Books Beginning: Same as Financial Year

Once she fills these details, Tally creates her first company. It feels like planting a seed in a

small garden—now she can grow her accounts in it.

Step 6: Navigating Through Tally

The Gateway of Tally is like the main entrance of a building with many doors. From here,

Riya can:

• Create Ledgers (like Cash, Bank, Purchases, Sales)

• Pass Vouchers (like Sales Voucher, Purchase Voucher, Payment, Receipt)

• Generate Reports (like Balance Sheet, Profit & Loss, Trial Balance)

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At first, the many options look a little scary, but Tally is designed in such a way that once you

practice a few times, it becomes very natural.

Step 7: Running Tally – Day-to-Day Use

To understand how Tally is run, imagine Riya’s uncle owns a small stationery shop. He sells

notebooks and pens every day, buys items from wholesalers, and sometimes receives

money from customers or pays his suppliers.

In real life, he would write all this in a notebook. But in Tally, he enters these details as

Vouchers. For example:

• A sale of ₹500 is entered in a Sales Voucher.

• Buying goods worth ₹300 is entered in a Purchase Voucher.

• Paying ₹200 in cash is entered in a Payment Voucher.

As Riya enters these transactions, Tally automatically prepares reports. At the end of the

day, her uncle can see his Profit and Loss Account and even his Balance Sheet without

doing long manual calculations.

This is the real magic of Tally—it reduces human effort and increases accuracy.

Step 8: Why Tally is Easy to Run

Running Tally is not about clicking too many buttons. Instead, it is about following a simple

routine:

1. Open the Company

2. Select the Correct Voucher Type

3. Enter the Details of the Transaction

4. Check the Reports Whenever Needed

Just like a diary where you note your daily expenses and later check your monthly savings,

Tally works as a digital diary for businesses, but with more intelligence and automation.

Step 9: Shutting Down and Restarting

When Riya finishes her work, she closes Tally. The next day, when she starts it again, she

does not need to create the company from scratch. She just Selects Company, and

everything is already there. It feels like entering the same room every day where her books

are already kept on the shelf.

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Step 10: The Larger Picture

Through this journey, Riya realizes that:

• Installing Tally is quick and simple.

• Starting Tally is like opening a door to a world of accounting.

• Running Tally is smooth because it handles transactions, ledgers, and reports

automatically.

In short, Tally is not a burden—it is a friend of accountants, students, and businesses.

Conclusion

So, the process of installing and starting Tally is like welcoming a new guest into your life.

You first prepare your system, then download and install the software, create your

company, and finally start recording transactions. Running Tally is simply about entering

vouchers, checking reports, and keeping your company’s financial health visible at all times.

What seemed like a difficult technical task turned into a simple, step-by-step journey. By

explaining it this way, even students who have never used accounting software can imagine

themselves running Tally confidently.

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7. Explain in detail the various items on the Tally screen. What is Tally Gateway?

Ans: You are stepping into a huge office where every corner has something useful – one side

has files neatly arranged, another has a notice board, another side shows you shortcuts, and

at the center sits a big desk where you can control everything.

Now, replace this office with Tally, the accounting software. The Tally screen is just like that

office. It’s not cluttered, but it has everything arranged in such a way that you can do your

work smoothly – whether it’s entering vouchers, checking reports, or creating accounts. To

make sense of it all, let’s take a guided tour of the Tally screen as if we are walking inside it.

1. The Title Bar – The Nameplate of the Office

The very first thing you see on the Tally screen is the Title Bar, just like the nameplate

outside an office. It tells you the version of Tally you are using (for example, Tally.ERP 9 or

Tally Prime) and also shows the company name currently opened.

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Why is it important? Imagine you are handling accounts of multiple companies. Without the

title bar, you might easily get confused. With this, you always know whose records you are

working on and in which version of Tally.

2. The Menu Bar – The Office Directory

Below the title bar lies the Menu Bar. Think of it as the office directory that guides you to

different departments. Here, you’ll find menus like:

• Company (to create, select, or alter a company)

• Gateway of Tally (your main entrance to everything inside)

• Utilities (extra features)

• Quit (to exit the software)

Just like in a restaurant where the menu lists out everything you can order, the menu bar

tells you all the paths you can take inside Tally.

3. The Button Bar – The Shortcut Panel

On the right side of the screen, you’ll notice a vertical set of buttons called the Button Bar.

Imagine you are in that office and you see a quick-access drawer. Instead of running to

different departments, you can just press a button and get there instantly.

Some common buttons include:

• F1: Select Company

• F2: Date (change the working date quickly)

• F3: Company Info

• F11: Features (enable or disable features like GST, inventory, etc.)

• F12: Configuration

These shortcuts save time. Rather than going through multiple menus, you can jump directly

to what you want.

4. The Gateway of Tally – The Main Doorway

Now comes the most important part: the Gateway of Tally. As the name suggests, it is the

main entrance or the control center. Just like the reception desk in an office where

everything is managed, the Gateway of Tally is the place from where you can access all

modules.

Here you’ll find:

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• Masters (like Ledgers, Groups, Stock Items, Cost Centres)

• Transactions (like Vouchers for sales, purchase, payments, etc.)

• Utilities (such as import/export of data)

• Reports (Balance Sheet, Profit & Loss, Stock Summary, etc.)

You can imagine this as the heart of Tally – if the screen is a body, the Gateway of Tally is its

beating heart that connects every other part.

5. The Info Panel – The Notice Board

On the right-hand side below the button bar, there’s something called the Info Panel. It’s

like the notice board in an office that keeps everyone updated.

The Info Panel displays:

• Current date

• Current company

• Working period (financial year range)

• List of active features

So, even if you get lost while working, the Info Panel gently reminds you of where you are

and what settings are active.

6. The Calculator Panel – The Pocket Calculator on Your Desk

Accounting means numbers, and numbers mean calculations. That’s why Tally has a

Calculator Panel at the bottom of the screen. Think of it as the pocket calculator lying on

your desk.

Instead of leaving Tally to do small math (like 2456 + 875 or 15% of 1200), you can quickly

type it in this panel. It supports simple arithmetic and even advanced financial calculations,

saving you from distractions.

7. The Status Bar – The Office Clock and Indicator

At the very bottom, you’ll see the Status Bar. Just like in an office you keep checking the

clock or system status, this bar tells you:

• The current financial year

• Current period

• Current date

• Whether CAPS LOCK or NUM LOCK is on

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It silently works in the background, ensuring you always know the basic working conditions.

8. The Workspace – Your Main Working Desk

In the center of all these panels and bars lies the Workspace – the main area where you

actually do your work. Whenever you open reports, create ledgers, or enter vouchers, this is

the area that gets filled with forms, tables, and data.

Think of it as your big office desk where all files land, and you do your main accounting job.

What is Tally Gateway?

Now that we’ve toured the whole Tally screen, let’s focus again on its most important part:

the Gateway of Tally.

As the name suggests, the Gateway of Tally is the entry point to all the functions in Tally.

Without it, you cannot move anywhere. It’s like standing at the main reception of a big

building – from here you can go to accounts, inventory, reports, or administration.

The Gateway of Tally allows you to:

1. Create and manage masters – Ledgers, groups, stock items.

2. Record transactions – Sales, purchases, receipts, payments.

3. View reports – Balance sheet, trial balance, profit & loss, stock summary.

4. Enable utilities – Import/export, backup, restore.

5. Switch between companies – If you are handling more than one.

In short, Gateway of Tally = The control room of Tally.

Why Understanding the Tally Screen Matters?

Many students often think Tally is just about entering vouchers. But the reality is, if you

don’t understand the screen properly, you will keep getting lost, just like someone entering

a big office without knowing which department is where.

• The Title Bar prevents confusion about the company.

• The Menu Bar and Button Bar save time.

• The Gateway of Tally ensures smooth navigation.

• The Info Panel, Calculator, and Status Bar provide support and clarity.

• And the Workspace is where your real accounting life happens.

Together, these make Tally not just software but a complete digital office for accountants.

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Conclusion

So, if we narrate it like a story: Tally is like an office building. The Title Bar is the

nameplate, the Menu Bar is the directory, the Button Bar is the quick-access drawer, the

Gateway of Tally is the reception, the Info Panel is the notice board, the Calculator Panel is

the pocket calculator, the Status Bar is the clock, and the Workspace is your main desk.

By understanding each of these items, a student doesn’t just learn to “use” Tally – they

learn to master it like a professional accountant. And that is why the Gateway of Tally is

considered the most important part, because just like no one can enter an office without

passing through its reception, no one can use Tally without passing through its Gateway.

8. What are the various information required about the company to create a company in

Tally? Give a sample of the values under each type of information to create a company.

Ans: 1. Directory (Data Storage Location)

What it is: The folder path where Tally will store your company’s data files.

Why it matters: This is like the “locker” for your business records. You can keep it on your

local drive or a network location.

Sample Value: D:\TallyData

2. Name of the Company

What it is: The official name of your business as you want it to appear inside Tally.

Sample Value: Bright Future Electronics Pvt. Ltd.

3. Mailing Name

What it is: The name that will appear on invoices, letters, and reports. It can be the same as

the company name or a shorter/branding version.

Sample Value: Bright Future Electronics

4. Address

What it is: Your complete business address for correspondence and printing on documents.

Sample Value: 21, Mall Road, Amritsar, Punjab

5. Country

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What it is: Select from the list — determines statutory features.

Sample Value: India

6. State

What it is: Your state of operation — important for GST place-of-supply rules.

Sample Value: Punjab

7. Pin Code

What it is: Your postal code.

Sample Value: 143001

8. Contact Details

• Phone Number: 0183-123456

• Mobile Number: 9876543210

• Fax Number: (optional) 0183-654321

• Email: accounts@brightfuture.com

• Website: www.brightfuture.com

Why it matters: These appear on invoices and help customers reach you.

9. Financial Year Beginning From

What it is: The start date of your financial year.

Sample Value: 01-04-2025 (In India, it’s usually 1st April)

10. Books Beginning From

What it is: The date from which you want to start recording transactions in Tally. It can be

the same as the financial year start or later if you’re starting mid-year.

Sample Value: 01-04-2025

11. Security Settings

• TallyVault Password: (optional) — encrypts your company data. Sample:

BFE@Secure2025

• User Name: (optional) — for login control. Sample: Admin

• Password: (optional) — for login security. Sample: Admin@123

Why it matters: Protects sensitive financial data from unauthorised access.

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12. Base Currency Information

• Base Currency Symbol: ₹

• Formal Name: Indian Rupee

• Suffix Symbol to Amounts: Yes

• Add Space Between Amount and Symbol: Yes

• Show Amounts in Millions: No

• Number of Decimal Places: 2

• Word Representation: Rupees

Why it matters: Ensures all reports and invoices display amounts correctly.

13. Statutory & Taxation Details

If you’ve selected India, you’ll see options like:

• Enable Goods & Services Tax (GST): Yes

• State: Punjab (auto-filled)

• GSTIN/UIN: 03ABCDE1234F1Z5

• PAN/Income Tax Number: ABCDE1234F

• Enable TDS/TCS: Yes or No depending on your business.

Why it matters: These settings ensure Tally calculates taxes correctly and generates

compliant returns.

14. Other Features (Optional at Creation)

You can enable or disable these now or later via F11: Features:

• Maintain Accounts only / Accounts with Inventory.

• Enable Cost Centres.

• Enable Interest Calculation.

• Enable Payroll.

Sample Choices for a Trading Firm:

• Maintain Accounts with Inventory: Yes

• Enable Cost Centres: Yes

• Enable Payroll: No (if not needed)

Putting It All Together — Sample Company Creation Form

Here’s how it might look when you fill it in:

Field

Sample Value