WHAT IS DOUBLE ENTRY SYSTEM ?
Double entry system is a well – organized and professional system. This system is free from errors. And comprehensive and ideal system too. The transactions are broached in recording both the aspects. They are debit and credit aspects.
Every transaction has dual aspect in double entry system. When there is a debit aspect in transaction , must be always corresponding credit aspect of equal amount.
ANCILLARY RULES OF DEBIT AND CREDIT
| S.NO | NATURE OF ACCOUNT | DEBIT | CREDIT |
|---|---|---|---|
| 1 | Assets | Increases | Decreases |
| 2 | Liabilities | Decreases | Increases |
| 3 | Incomes | Decreases | Increases |
| 4 | Expenses | Increases | Decreases |
| 5 | Purchase | Increases | Decreases |
| 6 | Sale | Decreases | Increases |
SETTINGS TO ENTER VOUCHERS IN DOUBLE ENTRY MODE IN
TALLY PRIME
- Gateway of Tally –> Vouchers
- For Payment, Receipt and Contra vouchers, Press CTRL + H to change mode and select “Double Entry Mode” in it, press enter
- For Purchase , Sales, Debit note and credit vouchers, Press CTRL + H to change mode and select “Voucher Mode” in it, press enter
- Press F12 configuration,
Use Cr / Dr instead of To / By during voucher entry : Yes / No (Choose as per your requirement) - Journal voucher is always in double entry mode by default and no need to apply settings.
ASSIGNMENT ON DOUBLE ENTRY MODE
- Tarak started Ultimate solutions by bringing cash of Rs. 10,00,000/-
Solution:
Cash A/c – Dr 10,00,000 (Asset increased)
Capital A/c of Tarak – Cr 10,00,000 (Liability increased)
- Voucher : F6 (receipt)
- Cash is default ledger and no need to create
- Capital A/c of Tarak is under group Capital Account
- Tarak paid Rs.1,00,000/- in cash to purchase a computer with pre-loaded tally prime version.
Solution:
Computer A/c – Dr 1,00,000 (Asset increased)
Cash A/c – Cr 1,00,000 (Asset decreased)
- Voucher : F9 (Purchase)
- Computer is under Current Assets Group
- Tarak rented an office space for Rs. 3,000 per month on 01-08-2021. He paid the security deposited of Rs. 40,000/- by cheque of HDFC Bank
Solution:
Security Deposit – Rent – A/c – 40,000 (Asset Increased)
HDFC Bank A/c – 40,000 (Asset decreased)
- Voucher : F5 (Payment)
- Security deposit – Rent is under Deposits (Assets) Group
- HDFC Bank is under Bank Accounts
- Tarak issued cheques of HDFC Bank and purchase the following fixed assets
- Wireless Projector – Rs. 20,000
- Furniture for Stores Dept – Rs. 30,000
- Electrical Fittings – Rs. 10,000
Solution:
Wireless Projector A/c – Dr 20,000 (Asset increased)
Furniture For Stores department A/c – Dr – Rs. 30,000 (Asset increased)
Electrical Fittings A/c – Dr – 10,000 (Asset increased)
HDFC Bank A/c – Cr 60,000 (Asset decreased)
- Voucher : F9 Purchase
- Ledgers Wireless Projector, Furniture , and electrical fittings are under Fixed Assets Group
- Tarak obtained internet subscription from Airtel tele communication ltd by paying a deposit of Rs. 1,000/- by HDFC Bank
Solution:
Security Deposit – Interent A/c – Dr – 1,000 (Asset Increased)
HDFC Bank A/c – Cr 1,000 (Asset Decreased)
- Voucher : F5 (Payment)
- Security deposit – internet ledger is under deposits (Assets) Group
- Tarak signed a contract with Ramesh services to provide consultancy services at an agreed price of Rs. 75.000/. He received an advance of Rs. 25,000/- by cheque of HDFC Bank.
Solution:
HDFC Bank A/c – Dr 25,000 (Asset increased)
Advance Consultancy Revenue – Cr 25,000 (Liability increased)
- Voucher : F6 Receipt
- Advance Consultancy Revenue is under Current Liabilities group
- Tarak received an invoice for ₹ 6,000 from Ink and Paper Publications for printing and stationary
Solution:
Printing and Stationary A/c – Dr 6,000 (expenses increased)
Ink and Paper publications A/c – Cr 6,000 (Liabilities increased)
- Voucher : F7 for Journal
- Printing and Stationary is under Group Indirect Expenses
- Ink and Paper Publications is under Group Sundry Creditors
- Tarak withdrew for Rs. 10,000 cash for personal use.
Capital A/c – Tarak Dr 10,000 (Liability decreased)
Cash A/c – Cr 10,000 (Asset increased)
- Voucher : F5 for payment
