3. Computerised A/c with GST

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IMPORTANT POINTS FOR OBJECTIVE QUESTIONS

 

Accounting Software is application software used to record accounting transactions.

A Computerized Accounting System is an Accounting Information System that processes the financial transactions as per GAAP (Generally Accepted Accounting Principles)

Computerized Accounting Systems are based on the concept of database. It stores the transaction data in well-organized database.

Database is implemented using database management systems (DBMS).

Automated accounting system is an approach to maintain up-to-date accounting records with the aid of Accounting Software.

Accounting software functions as an Accounting Information System.

Working of Accounting Software --   Input (Data) Masters  à Processing Entries à Output Reports

Different types of Output Reports – Profit & Loss A/c, Balance Sheet, Day Book, Trial Balance, GST summary

 

Accounting Software Process :

1. Creation of Company/Organization
2. Creation of Ledger giving appropriate groups
3. Selection of correct voucher
4. GST Calculation
5. Posting of transaction into the Accounting/inventory Voucher
6. Reports such as Balance Sheet, Income & Expenditure, Cash/Bank Flow statement etc. generated automatically.
7. Printing of Reports

 

Process of Computerised Accounting starts with creation of company or organization.

 

Creation of Company/Organization

Fields to be filled in Company Creation screen – Company Name, Address, Email, Mobile, Fax No., Tel No., Financial Year Begins from date, Books Beginning Date.

Ledgers

Financial entries are made using Ledgers or Account heads.

Ledger accounts are created to identify transactions.

In Computerised Accounting every Ledger account should be given proper group.

Groups used to classify and identify account heads according to their nature which helps in presenting summarized information.

Accounting group is a collection of Ledger accounts of same nature.

List of Groups

Capital Account

Reserves and Surplus

Current Assets 

Bank Accounts, Cash-in-hand, Deposits, Loan Advances, Stock-in-hand, Investments

Sundry Debtors – Any party to whom goods sales made

Current Liabilities

Bills payable, Bills drawn,

Duties and taxes --- CGST, SGST, IGST, CESS, Excise Duty, TDS payables, Income Tax

Provisions – Provisions for tax, expense, sinking fund, and all types of payables

Sundry Creditors – Any party from whom goods purchased or from whom any bill of expense received.

 

Fixed Assets – Land &  Building, Furniture, Machine, Plant and Machinery, Mobile, Computers,  etc..

Loans (Liability) – Secured loans, unsecured loans, Bank OD Accounts

Direct Income – Any income from main services like freight, delivery, transportation, consultancy charges, etc..

Indirect Income – Discount received, Interest on Investment

Indirect Expenses – Salary, Advertisement, Maintenance, Rent, Printing & Stationery, Penalty, Bank Charges, Insurance, , etc..

Direct Expenses – Labour, Power, Wages, Warehousing expenses, Electricity Expenses, Freight and Carriage,  Coal-gas & Water of Factory, Consumed material

Sales Accounts

Purchase Accounts

 

   

Vouchers

A voucher is a pre-numbered accounting document used for recording daily transactions.

Every voucher maintains its debit and credit record.

Selection of Vouchers depends upon nature of transaction.

List of pre-defined Accounting vouchers :

Receipt – Amounts received by way of cash

Payment – Payments made by cash.

Sales – Cash and Credit sale of goods and services.

Purchase – Cash and credit purchase of raw materials, semi-finished goods and finished goods and services.

Contra – Deposits or withdrawals of cash from bank or transfer of funds from one bank to another bank or to transfer of cash to Petty Cash.

Journal – Rectifying entries or transfer or adjustment entries purchase of fixed assets on credit.

Sales Return / Credit Note – Return of goods by a customer. It is issued when there is reduction in the price charged to a customer.

Purchase Return / Debit Note – Return of goods to a supplier. It is issued when there is reduction in the price given by a supplier.

 

Posting of transaction into Voucher

Posting a transaction through voucher is called voucher entry.

While recording a transaction, the ledger accounts to be debited and credited along with amount and narration is required.

Displaying Various Reports

In Computerized Accounting various financial and inventory reports can be generated aster finishing the recording.

Trial Balance – provides you a report with debit and credit balance of all Ledger Accounts

Profit and Loss Account – This report gives the final working result of the business with Net profit/Net Loss.

Balance Sheet – It is a statement showing Assets and Liabilities of the business concern.

Day Book – Contains all vouchers for the day including inventory vouchers. It is used to show you a day’s transactions.

GST Reports – It shows the summary of the GST received and paid by you.

 

Various Tally Accounting Softwares :

Tally ERP 9 with GST

GNU Khata

LedgerSMB

GNUCash

Akaunting

 

To create Company --  Company Info à Create Company

To change Features --  Go to Featuresà Company Features à Accounting/Inventory Features

To create Ledger --  Masters à Account Info à Ledgers à Single Ledger à Create

To view the list of created ledger --  Accounts Info à Ledger à Single Ledger à Display

To view the list of voucher types --  Masters à Accounts Info à Voucher Types à Display

To enter transactions through vouchers --  Transactions à Accounting Vouchers

To view various Reports :

To view Trial Balance --  Display à Trial Balance à Detailed Trial Balance

To view Profit and Loss A/c --  Reports à Profit & Loss A/c

To view Balance Sheet à Reports à Balance Sheet à Detailed

To view Day Book --  Display à Day Book à Detailed

 

GST

GST stands for Goods and Service Tax. GST is an Indirect Tax which has replaced many Indirect taxes in India. The Act came into effect on 1^st July 2017. France was the first country to implement GST in 1954.

GST is one nation, one tax.

Goods – Means every kind of movable property other than money and securities.

Services – These are the activities provided by other people, who include doctors, lawn care workers, dentists, barbers, waiters, online servers, consultants, chartered accountants.

Tax – A compulsory contribution to state revenue, levied by the government.

There are three types of GST : CGST, SGST, IGST

 

GSTIN

Goods and Services Tax Identification Number is the registration number allotted to every registered dealer under GST Act.

The GSTIN is a 15 digit PAN based registration number.

Structure of GSTIN

State Code – first two digits, Permanent Account Number, Entity number, Z, Check sum digit

27 is the code for Maharashtra GSTIN.

 

Codes for classifying goods and services under GST used are HSN code for goods and SAC code for services

HSN Code

HSN stands for Harmonized System of Nomenclature is an internationally accepted coding system developed by World Customs Organisation (WCO). It is used for classifying goods all over the world in a systematic and logical manner.

 

SAC

SAC stands for Services Accounting Code, which is issued by CBEC (Central Board of Excise and Customs) to uniformly classify each service under GST.

 

Taxes under GST

Intra-State (within the state)   --   CGST (Central GST) collected by Central govt. and SGST (State GST) collected by State govt.

Inter-State (with other state)  --  Integrated GST (IGST) collected by Central Govt.

 

 

GST Rates

The govt. has proposed a 4-tier tax structure for all goods and services under the slabs – 5%, 12%, 18% and 28%.

0% tax imposed on items such as milk, sugar, salt, eggs, bread, butter milk, curd, natural honey, fresh fruits and vegetables, jute, fresh meat, fish, chicken, stamps, judicial papers, printed books, newspapers, bangles, handloom, etc.

Input Tax and Output Tax

GST on Inward supply of goods and services is known as Input Tax.

GST on Outward supply of goods and services is known as Output Tax.

 

Ledgers pertaining to GST for supply of goods

Sales Ledger, Purchases Ledger, Party Ledger, CGST Ledger, SGST Ledger, IGST Ledger

 

Ledgers pertaining to GST for supply of services

Sales of Service Ledger or Income Ledger, Purchase of Service Ledger or Expense Ledger, Party Ledger, CGST Ledger, SGST Ledger, IGST Ledger

 

Important Points for calculation GST and entries in accounting software

Company will be in accounts with inventory mode for GST calculation of goods

Company will be in Account only mode for GST calculation of services.

Creation of stock item with GST rates and units of measure with UQC is a must for GST accounting.

Service Ledgers must be created with the GST rates separately for local and interstate supply.

CGST, SGST and IGST Ledgers will be created under sub group Duties and Taxes and main group Current Liabilities.

Voucher entry for supply of goods should be in item invoice mode and for supply for services should be in accounting mode.

 

To display GST Reports

Display à Statutory Reports à GST à GSTR2