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Computerized Accounting: Cloud Books, Wave & Tally

Study material and explanations for Unit 2

Computerized Accounting Software: Cloud Books, Wave, and Tally

1. What is Computerized Accounting?

Computerized Accounting is the practice of recording, classifying, summarizing, and reporting financial data using specialized electronic software and database systems rather than physical paper journals and handwritten ledger registers.

In a manual system, an accountant must:

  1. Write the journal entry by hand,
  2. Manually post it into multiple ledger pages,
  3. Calculate balances manually using a calculator,
  4. Compile the Trial Balance, and
  5. Manually write out the Trading Account, P&L Account, and Balance Sheet.

In a Computerized Accounting System (CAS), the user only performs one single task: Data Input (Voucher Entry)! Once a voucher is saved, the software’s internal database engine automatically updates the ledger accounts, recalculates trial balances in microseconds, generates instant financial statements, and prepares GST tax returns!

2. Advantages of Computerized Accounting over Manual Accounting

Feature Manual Accounting Computerized Accounting
1. Speed & Efficiency Extremely slow; calculations done manually on paper. Ultra-fast; statements and ratios generated in real time.
2. Calculation Accuracy High chance of human casting and subtraction errors. 100% mathematical precision; arithmetic errors are eliminated.
3. Automated Reports Takes weeks to draft end-of-year Balance Sheets. Instant 1-click generation of Balance Sheets, Cash Flows, and MIS reports.
4. Storage & Space Bulky physical paper registers occupying large office storage rooms. Entire multi-year financial databases stored securely on a small SSD or cloud server.
5. Data Security Physical books vulnerable to fire, water damage, theft, or insect damage. Password encryption, role-based access, and automated cloud backups.
6. Searchability Flipping through hundreds of ledger pages to find a 3-year-old invoice. Instant search by invoice number, date, customer name, or GSTIN in seconds.

3. Comparative Overview of Major Accounting Software

The DAVV BBA syllabus highlights three prominent accounting software platforms:

                  Modern Accounting Software Options
                                  |
         +------------------------+------------------------+
         |                        |                        |
     CloudBooks                 Wave                     Tally
  (Cloud Invoicing)      (Free Cloud Accounting)   (Industry Standard ERP)

A. CloudBooks

  • Nature: Modern cloud-based invoicing, time tracking, and accounting application designed primarily for small businesses, freelancers, and service agencies.
  • Key Features:
    • Automated recurring invoice generation and client payment reminders.
    • Project expense tracking and time logging.
    • Multi-device access via web browser, tablet, or smartphone without local software installation.
    • Client portal for tracking invoice payment statuses.

B. Wave Accounting

  • Nature: A globally popular, 100% free cloud-based accounting platform built specifically for sole proprietors, micro-enterprises, and startups.
  • Key Features:
    • Unlimited income and expense tracking with zero subscription fees.
    • Professional invoice creation with company branding.
    • Automated receipt scanning through mobile apps.
    • Built-in double-entry accounting engine generating real-time Profit & Loss and Balance Sheets.

C. Tally (Tally.ERP 9 / Tally Prime)

  • Nature: The undisputed market leader and industry standard for corporate accounting, inventory management, and statutory tax compliance (GST, TDS, TCS) in India.
  • Why Tally Dominates the Indian Market:
    • Perfectly tailored to Indian tax laws, GST e-invoicing, e-Way bills, and banking integration.
    • Complete integration of Accounting + Inventory (Stock tracking, Godown management, Batch-wise expiry, Bill of Materials).
    • Robust offline capability with high-speed keyboard shortcuts and negligible system hardware requirements.

4. Key Voucher Types in Tally Prime

In Tally, transactions are entered through specialized digital forms called Vouchers. Every voucher type has a dedicated keyboard shortcut:

Voucher Type Shortcut Key Purpose and Transactions Recorded
Contra Voucher F4 Purely internal bank-cash transactions: Depositing cash into bank, withdrawing cash from bank for office use, or transferring funds from one bank account to another.
Payment Voucher F5 All cash or bank disbursements (paying rent, salaries, paying creditors, or purchasing assets by cash/cheque).
Receipt Voucher F6 All cash or bank receipts (receiving cash from customers, interest received, owner introducing capital).
Journal Voucher F7 Non-cash and adjustment entries (depreciation, bad debts, credit purchase of fixed assets, opening/closing adjustments).
Sales Voucher F8 Recording sales of merchandise/goods to customers (cash sales or credit sales with GST).
Purchase Voucher F9 Recording purchases of raw materials/goods from suppliers (cash purchases or credit purchases with GST).

5. Syllabus Activity 2: Flowchart of Recording Transactions in Tally

Here is the exact step-by-step flowchart for recording business transactions in Tally Prime from scratch:

+-----------------------------------------------------------+
| Step 1: Company Creation                                  |
| Open Tally -> Alt+F3 -> Create Company                   |
| Enter Company Name, Address, Financial Year (1st April),   |
| State (Madhya Pradesh), Currency (INR ₹), and Enable GST. |
+-----------------------------+-----------------------------+
                              |
                              v
+-----------------------------------------------------------+
| Step 2: Master Ledger Creation                            |
| Gateway of Tally -> Masters -> Create -> Ledger           |
| Create Ledgers and assign standard Accounting Groups:     |
|   - SBI Bank A/c   --> Under "Bank Accounts"              |
|   - Mohan & Co.    --> Under "Sundry Debtors" (Customer)  |
|   - Sharma Traders --> Under "Sundry Creditors" (Supplier)|
|   - Sales A/c      --> Under "Sales Accounts"             |
|   - Purchases A/c  --> Under "Purchase Accounts"          |
+-----------------------------+-----------------------------+
                              |
                              v
+-----------------------------------------------------------+
| Step 3: Stock Item Creation (If Inventory Included)       |
| Gateway of Tally -> Create -> Stock Item                  |
| Enter Item Name (e.g., Laptops), Units (Nos/Pcs), GST Rate|
+-----------------------------+-----------------------------+
                              |
                              v
+-----------------------------------------------------------+
| Step 4: Voucher Entry (Recording Daily Transaction)       |
| Gateway of Tally -> Transactions -> Vouchers              |
| Select appropriate Voucher Type (F8 Sales / F9 Purchase)  |
| Enter Invoice No., Date, Party Account, Sales Ledger,     |
| Stock Items, Tax rate, and brief Narration -> Press ENTER |
+-----------------------------+-----------------------------+
                              |
                              v
+-----------------------------------------------------------+
| Step 5: Automatic Instant Output Generation               |
| Software instantly updates all backend tables:            |
|   - View Trial Balance : Gateway of Tally -> Display      |
|   - View Profit & Loss : Gateway of Tally -> P&L A/c      |
|   - View Balance Sheet : Gateway of Tally -> Balance Sheet|
+-----------------------------------------------------------+

6. Sample Transaction Walkthrough in Tally

Practical Example:

Transaction: On 15th October 2026, sold 5 units of Dell Laptops to Mohan & Co. on credit at ₹40,000 per unit (Total ₹2,00,000) under Invoice No. INV-1042.

Step-by-Step Execution in Tally:

  1. From Gateway of Tally, press V (Vouchers).
  2. Press F8 to open the Sales Voucher.
  3. Date: Press F2, set date to 15-Oct-2026.
  4. Supplier Invoice No.: Type INV-1042.
  5. Party A/c Name: Select Mohan & Co. from the list of Debtors.
  6. Sales Ledger: Select Sales Account.
  7. Name of Item: Select Dell Laptops, enter Quantity = 5 Nos, Rate = ₹40,000, Amount = ₹2,00,000.
  8. Narration: Type (Being 5 Dell laptops sold on credit to Mohan & Co. vide invoice 1042).
  9. Press Ctrl + A to accept and save the voucher.

What Tally Automatically Does in the Background:

  • Debits Mohan & Co.’s Ledger with ₹2,00,000.
  • Credits Sales Account with ₹2,00,000.
  • Deducts 5 units from Laptop Stock Inventory.
  • Instantly updates Gross Profit in Trading Account and increases Current Assets in Balance Sheet!

7. Summary & Quick Revision Checklist

  • Computerized Accounting automates ledger posting, trial balance creation, and financial statement generation from single voucher inputs.
  • Eliminates manual arithmetic errors, saves massive storage space, and provides instant data retrieval.
  • CloudBooks & Wave: Lightweight cloud solutions suitable for invoicing, freelancers, and small businesses.
  • Tally Prime: India’s dominant ERP software for accounting, stock inventory, and GST compliance.
  • Key Tally Shortcuts: F4 (Contra), F5 (Payment), F6 (Receipt), F7 (Journal), F8 (Sales), F9 (Purchase).