Tally ERP 9 Cost centre and referencing Presentations

1. KINDLY HAVE LAPTOP WITH YOU WITH TALLY.ERP 9 INSTALLED
(MAY BE EDUCATIONAL)
By:- Anchit Agrawal
04.01.2014

2. Do it yourself
Case Study 1:1.
A firm named M/s ABC Associates (Chartered Accountants), have recently switched over
to Tally. ERP 9. Firm approaches you to facilitate client’s billing in Tally. Firm is liable to
service tax (@ 12.36%).
2. On review by you, firm can faces some problem in future: While billing, staff may have problem in identifying against which bill, receipt should be
settled.
 Is there any way other than using Accounting Vouchers  Receipt and then feed all
details for receipts.
 Firm may want some way out to allocate its profits on the basis of number of audit done
or say no. of bills raised by its partners.
 Firms may ask us to divide profits in specified proportion every time between partners. (
A and B have to be divided into 3:1 ratio.)
 Firm may want to know is there any way by which no one except supervisor can alter
cost centre details.
 Firm may carried out an extensive growth plan and have divided its partners into
divisions i.e. Tax Audit, Vat Audit, Transfer Pricing and Company Matters. Now firm wants
to distribute expenses to individual partners and also want to know Profit/loss from each
division.
 Firm may now say that cost centre have been activated on our system. But, firm wants
profit/loss from respective Cost centre as P&L a/c we get from ledgers.
(I’ll tell later)

3. PRACTICAL SCENARIOS IN WHICH
COST CENTRE ARE USEFUL
 Case Study 2:A Concern engaged in crushing business have 6 site (or say units) and
accounting is done at Head office.
In how many ways accounting can be done???
Option 1:- Create separate tally for each unit and then consolidate
the same at year end.
Option 2:- Create separate ledgers for each item in B/S and P&L for
every unit in single tally.
Option 3:- Use cost centre and minimize ledgers creation and directly
allocate the revenue/ expenditure of each unit while passing
accounting entries.

4. PRACTICAL SCENARIOS IN WHICH
COST CENTRE ARE USEFUL
ABC Pvt Ltd
Finance
Sales Man A
•
•
•
Marketing
Sales Man B
Manufacturing
Sales Man C
Consider above Cost Centre structure:
Primary Cost Centres - Finance, Manufacturing, Marketing.
Under Marketing, classify the company's sales executives as Cost Centres. This
will help us to track a sales executive's performance, in terms of cost and
revenue generated.

5. So What is Cost Centre?
 A Cost Centre is any unit of an
organisation to which transactions
(generally, revenue) can be
allocated.
 When only costs or expenses are
allocated to these units, they are
referred to as Cost Centres.
 When profits are also allocated to
these units, they become Profit
Centres.
 We can now obtain a Profit and
Loss account of each such Profit
Centre by purchasing an add on.

6. Features we used in Cost Centre
More:
 Creating a Single Cost
Centre
 Altering a Cost Centre
 Creating Multiple Cost
Centres
 Altering Cost Centres in
Multiple Mode

7. Examples from our office ‘JP Associates’
1
• JP Associates – Using Cost Centre
to allocate Bills and Receipt to its
partners.
2
• Our Staff- Using Cost Centre to
account for challan receipts and
payments.
BrainStorming
• Any other way to use
Cost Centre??

8. COST CATEGORIES

9. Cost Categories
• The following example illustrates the use of
Cost Categories.
 Restructuring aforesaid example, a new Cost
Category Projects under which Cost Centres
such as Airport construction, Road
construction and Buildings have been created.
Cost
Categories
Departments
Marketing
Cost
Centres
Executives
Projects
Airport
Salesman A
Construction
Manufacturing Salesman B
Road
Construction
Finance
Buildings
Salesman C

10. COST CATEGORIES
 Specify a Cost Category to allow allocation of only revenue
items or items of both revenue and capital (Non-Revenue)
nature. Here in this instance, enable Revenue Items and NonRevenue Items to Yes for Departments and Projects
Categories and only Allow Revenue Items for Executives.
 By allocating expenses to parallel Cost Centres under
different categories, we are simply assigning the amounts to
them; the amount does not increase.
 Tally.ERP 9 performs an automatic reconciliation on real-time
basis, saving our effort of reconciling Ledgers and Cost
Centres.

11. COST CATEGORIES
 Cost Categories are useful for organisations that require
allocation of Revenue and Non-Revenue Items to parallel sets
of Cost Centres.
 Cost categories facilitate third dimensional reporting of
Expenditure and revenue.
 Some of the examples of Cost Categories can be Region wise
or geography wise, Grade wise, Department wise and so on.
 By using Cost Categories we may allocate, in parallel, a
transaction to more than one set of Cost Centres.

12. COST CATEGORIES
•
•
•
•
Creating a Single Cost Category
Altering a Cost Category
Creating Multiple Cost Categories
Altering Cost Categories in
multiple mode
• Creating Cost Centres under Cost
Categories
• Creating Multiple Cost Centres
under Cost Categories

13. Use of Cost Centre
 Cost Centre in Tally.ERP 9 allows an additional dimension to a
transaction where a Ledger account indicates the nature of the
transaction. It does not readily disclose, except in the narration
field, which part of the organisation was involved in the
transaction.
 With the help of Cost Centres, a transaction can be allocated to it,
which would then enable accumulation of the all transactions for
that particular Cost Centre. Tally.ERP 9 gives us the Cost Centre
break-up of each transaction as well as details of transactions for
each Cost Centre.

14.  We can classify Cost Centres, just as how we
classify Group/Ledger accounts. We can
have Primary Cost Centres and several
levels of Cost Centres under each Primary
Cost Centre.
 Like allocate expenditure incurred on sales
by the salesmen, as well as the sales
generated by them, directly to their Cost
Centres. The allocation is done at the time
of voucher entry. This prevents allocation
errors at the end of the period.

15. Today’s Overview
What is Cost Centre?
How it is used / can be used?
Working on Cost Centre in Tally
Activating Cost Centre
Using Cost Centre
Reports Generated
What is Cost Categories?
AND
Referencing

16. Thank You
Define your challenges
Technological as well as personal
Set realistic expectation
Mastery is not achieved overnight
Keep your eye on the goal