1. Introduction to Tally 7.2: The Foundation of Digital Accounting

If you want to understand how real-world businesses manage their money, you need to understand Tally. Tally 7.2 is one of the most reliable and widely used classic accounting software versions. While newer versions exist today, the fundamental rules of accounting, keyboard shortcuts, and voucher systems remain exactly the same as they were in 7.2.

Whether you are tracking daily office expenses, managing monthly employee salaries, or generating complex B2B invoices for a manufacturing plant, Tally handles it all without requiring you to do the complex math.

Why Learn Tally 7.2?

  • Speed and Keyboard Mastery: Tally is designed to be used entirely with a keyboard. Once you master the shortcuts, data entry becomes incredibly fast.
  • Automated Reporting: You just enter the daily transactions. Tally automatically builds your Balance Sheet and Profit & Loss statement in the background.
  • Error-Free Accounting: It follows the double-entry accounting system strictly, meaning your accounts will always balance correctly.

The Golden Rules of Accounting

Before touching the software, every accountant must memorize the three golden rules:

  1. Real Accounts (Assets): Debit what comes in, Credit what goes out. (e.g., Cash, Machinery).
  2. Personal Accounts (People & Companies): Debit the receiver, Credit the giver. (e.g., A client's company or a bank).
  3. Nominal Accounts (Income & Expenses): Debit all expenses and losses, Credit all incomes and gains. (e.g., Rent, Salary, Sales).

2. Step-by-Step: How to Create, Alter, and Shut a Company in Tally

You cannot record a single transaction in Tally until you create a "Company." Think of a Company in Tally as a digital file folder that holds all the financial records for one specific business.

How to Create a New Company

When you open Tally 7.2, you will see the Gateway of Tally screen. Follow these steps:

  1. Press Alt + F3 to open the Company Info menu.
  2. Select Create Company and press Enter.
  3. Name & Address: Enter the legal name of your business and the full registered address.
  4. Financial Year: In India, the financial year always starts on 1st April.
  5. Base Currency: Ensure the currency symbol is set to Rs (Rupees).
  6. Press Enter continuously until a box pops up asking "Accept? Yes or No". Press Y to save.

How to Alter (Edit) Company Details

  • Go to the Gateway of Tally and press Alt + F3.
  • Select Alter and choose your company from the list.
  • Make your changes and press Ctrl + A (the shortcut to save any screen instantly).
Pro Tip: "Shutting" a company in Tally does NOT delete it. It just closes the folder. Press Alt + F1 on the Gateway of Tally to shut the current company.

3. Understanding Ledgers and Groups (The Backbone of Accounts)

If you want to record that you paid Rs. 5000 for electricity, you cannot just type "Electricity" in a voucher. You first need to create an account for it. In Tally, these individual accounts are called Ledgers.

Every Ledger must belong to a Group. A Group tells Tally what kind of account it is (income, expense, asset, or liability).

Important Default Groups You Must Know

  • Sundry Debtors: Your customers. Anyone who owes you money.
  • Sundry Creditors: Your suppliers. Anyone you owe money to.
  • Indirect Expenses: Everyday business running costs like Salary, Rent, and Internet Bills.
  • Direct Expenses: Costs related to manufacturing or purchasing goods, like Factory Power or Freight.
  • Bank Accounts: Your current and savings bank accounts.

How to Create a Ledger

  1. From the Gateway of Tally, go to Accounts Info > Ledgers > Create.
  2. Name: Type the name of the ledger.
  3. Under: Select the correct group from the list.
  4. Press Ctrl + A to save.

4. The 4 Main Vouchers Explained: Receipt, Payment, Contra, and Journal

In manual accounting, you write transactions in a physical journal book. In Tally, you record them using Vouchers. To access vouchers, go to the Gateway of Tally and select Accounting Vouchers.

  • F4 - Contra Voucher: Used ONLY for internal cash-to-bank or bank-to-cash movements. (e.g., withdrawing cash for office petty cash).
  • F5 - Payment Voucher: Used whenever money goes OUT of your business. (Paying electricity bills, supplier payments, or salaries).
  • F6 - Receipt Voucher: Used whenever money comes IN. (A client pays a pending invoice, or you make a cash sale).
  • F7 - Journal Voucher: The "adjustment" voucher. Used for transactions where no direct cash/bank movement happens immediately (like fixed asset depreciation).

5. How to Record Daily Business Expenses and Salary Management

Properly recording daily expenses ensures your Profit & Loss statement shows accurate business health.

Example: Paying Office Rent and Employee Salaries

Suppose you need to pay Rs. 15,000 for office rent and Rs. 40,000 for staff salaries via Bank Transfer.

  1. Open Tally and go to Accounting Vouchers.
  2. Press F5 to open the Payment Voucher.
  3. Debit (Dr): Select the Office Rent A/c ledger and type 15,000.
  4. Debit (Dr): Press 'D' to add another Debit row. Select the Salary A/c ledger and type 40,000.
  5. Credit (Cr): Select your Bank Account ledger. Tally will automatically total it to 55,000.
  6. Write a short narration and press Enter to save.

6. Creating Professional B2B Sales and Purchase Entries

For a business involved in manufacturing or trading, recording Purchases (buying raw materials) and Sales (billing clients) is a daily task.

How to Pass a Purchase Entry (F9)

  • Press F9 for the Purchase Voucher.
  • Enter the Supplier's Invoice Number and Date.
  • Party A/c Name: Select the supplier's ledger (Sundry Creditors).
  • Purchase Ledger: Select your Purchase A/c.
  • Select the items bought, enter quantity and rate, and save.

How to Pass a Sales Entry (F8)

  • Press F8 for the Sales Voucher.
  • Party A/c Name: Select the client's ledger (Sundry Debtors).
  • Sales Ledger: Select your Sales A/c.
  • Select the item sold, enter quantity, apply taxes, and press Ctrl+A to save.

7. Managing Inventory: Stock Items, Units, and Godowns

If your business sells physical products, you must track inventory. Tally does this brilliantly through the Inventory Info menu.

The 3 Pillars of Inventory in Tally

  1. Units of Measure: Go to Inventory Info > Units of Measure. Create units like "Bags", "Kgs", or "Metric Tonnes".
  2. Stock Groups: Categorize your inventory (e.g., "Hardware" or "Raw Materials").
  3. Stock Items: This is the actual product. Go to Inventory Info > Stock Items > Create. Name it, put it under the correct group, and select the Unit of Measure.

Once set up, every time you make an F8 Sales entry, Tally automatically deducts that exact quantity from your warehouse stock!

8. How to Read Your Profit & Loss Account and Balance Sheet

The biggest advantage of Tally is that you never have to manually calculate final accounts. Reports update instantly upon saving a voucher.

The Profit & Loss (P&L) Statement

Press P on the Gateway of Tally. It is divided into two halves:

  • Top Half (Trading Account): Shows direct purchases, direct expenses, and sales. The result is your Gross Profit.
  • Bottom Half (P&L): Shows indirect expenses subtracted from the Gross Profit to give you your Net Profit.

The Balance Sheet

Press B on the Gateway of Tally. The left side shows Liabilities (money you owe). The right side shows Assets (cash, bank balance, stock, money owed to you). Both sides must always match perfectly.

9. Exporting Tally Reports to MS Excel for Data Analysis

While Tally is fantastic for basic reports, it is not built for complex visual data analysis. You often need to move data to Excel.

How to Export Data

  1. Open any report in Tally (e.g., Sales Register).
  2. Press Alt + E on your keyboard (the Export shortcut).
  3. In the export screen, backspace to the Format option and select Excel (Spreadsheet).
  4. Enter a file name and press Enter to accept.

Tally will automatically generate the file and open it in Microsoft Excel, where you can apply formatting and build charts!