100 Best MCQs on Tally Prime

Correct Answer: C. Inventory tracking is one of the core functionalities offered by Tally Prime.

Correct Answer: B. Tally Prime’s user interface is designed to be easy to use and understand.

Correct Answer: C. Email marketing is not a feature offered within Tally Prime.

Correct Answer: B. Real-time data processing provides immediate insights, facilitating timely business decisions.

Correct Answer: C. Audit trails track changes made to data, ensuring transparency and accountability.

Correct Answer: C. Tally Prime is adaptable and can be used by businesses of different scales and sectors.

Correct Answer: B. Tally Prime assists in tax compliance by facilitating the creation of necessary tax documents.

Correct Answer: A. Creating a company is the initial step to set up your business information in Tally Prime.

Correct Answer: A. Basic company information like name, financial year, and currency are essential when creating a new company.

Correct Answer: B. User roles and permissions allow you to define who can access and modify specific data.

Correct Answer: B. The financial year determines the timeframe for accounting and reporting purposes.

Correct Answer: C. Tally Prime offers various options to enable and configure features according to your requirements.

Correct Answer: C. Security controls protect your financial data from unauthorized access and potential misuse.

Correct Answer: B. Enabling specific features like payroll is a way to tailor Tally Prime to your business needs.

Correct Answer: C. The Chart of Accounts organizes all the accounts (ledgers) used for recording transactions.

Correct Answer: A. The “Gateway of Tally” provides access to various functions, including ledger creation.

Correct Answer: B. Grouping ledgers helps in organizing financial data and creating more meaningful reports.

Correct Answer: A. Sales represent revenue earned by the business, hence classified as an income ledger.

Correct Answer: A. This is the fundamental distinction between asset and liability ledgers.

Correct Answer: B. A receipt voucher is used to record cash inflows, including cash sales.

Correct Answer: A. These are the basic components of any voucher entry in Tally Prime.

Correct Answer: B. Tally Prime allows you to set up specific numbering patterns for various voucher types.

Correct Answer: B. Any modifications to vouchers are tracked in the audit trail for transparency.

Correct Answer: C. Journal vouchers are used for making adjustments or entries that don’t fit into standard voucher types.

Correct Answer: A. Purchase vouchers are specifically designed for recording purchases, including credit purchases.

Correct Answer: A. Voucher numbers provide a unique identifier for each transaction, aiding in record-keeping.

Correct Answer: D. Voucher deletion is usually restricted and may require specific user rights.

Correct Answer: C. You need to specifically enable inventory features to start using inventory management in Tally Prime.

Correct Answer: A. Each individual product or service that you trade is represented as a stock item.

Correct Answer: A. Stock groups help in classifying and organizing your inventory items.

Correct Answer: A. Purchase Return vouchers are used when returning goods purchased from a supplier.

Correct Answer: A. Inventory valuation methods help in calculating the cost of goods sold during a period.

Correct Answer: A. FIFO method operates on the principle that older inventory is sold before newer inventory.

Correct Answer: D. Bank ledgers are used to maintain records of all transactions associated with a particular bank account.

Correct Answer: C. Bank ledgers specifically track transactions involving the bank account, like deposits and withdrawals.

Correct Answer: A. Bank reconciliation helps identify and resolve discrepancies between the bank’s and company’s records.

Correct Answer: B. Tally Prime allows you to track issued cheques and their clearance status.

Correct Answer: C. Bank ledgers provide a structured way to record bank transactions, making reconciliation easier.

Correct Answer: C. The Outstanding Cheques Report lists cheques that have been issued but not yet cleared by the bank.

Correct Answer: A. You can create a specific ledger for bank charges and associate it with the relevant bank ledger.

Correct Answer: D. Tally Prime allows you to include GST/VAT details directly within the sales or purchase vouchers.

Correct Answer: C. The generated GST/VAT returns are used for filing tax returns with the relevant tax authorities.

Correct Answer: A. TDS stands for Tax Deducted at Source, which is a tax deducted from payments made to certain entities.

Correct Answer: D. Tally Prime provides comprehensive TDS management features, including calculation, deduction, and certificate generation.

Correct Answer: C. The TDS Challan report provides a summary of TDS deducted and payable to the government.

Correct Answer: A. Tally Prime allows you to set up multiple GST/VAT rates based on the nature of your transactions.

Correct Answer: D. You need to activate the payroll functionality before you can start managing employee payroll.

Correct Answer: A. Employee records store personal and financial information required for payroll processing.

Correct Answer: A. Salary components define the various parts of an employee’s compensation package.

Correct Answer: B. Net salary is arrived at by deducting applicable deductions from the gross salary.

Correct Answer: A. Payroll processing generates payslips that provide a detailed breakdown of each employee’s salary.

Correct Answer: A. Tally Prime offers flexibility in customizing payslip designs to suit your company’s preferences.

Correct Answer: A. The primary goal of a Trial Balance is to identify any errors in the accounting records.

Correct Answer: C. Errors in the Trial Balance stem from incorrect voucher entries, which need to be rectified.

Correct Answer: C. A mismatch in the Trial Balance signifies an error that needs to be investigated and corrected.

Correct Answer: B. The Profit and Loss Account summarizes revenues and expenses to determine profit or loss.

Correct Answer: B. Net profit is the result of deducting all expenses from the total income earned.

Correct Answer: C. Rent paid is an expense incurred by the business and is thus shown in the Profit and Loss Account.

Correct Answer: A. A net loss indicates that the business spent more than it earned during that period.

Correct Answer: B. The Balance Sheet provides a snapshot of the company’s assets, liabilities, and equity at a given date.

Correct Answer: A. This equation forms the basis of the Balance Sheet, ensuring it always balances.

Correct Answer: C. Inventory represents goods held for sale and is considered an asset of the company.

Correct Answer: B. The Balance Sheet helps assess the company’s ability to meet its short-term and long-term obligations.

Correct Answer: A. Ratio analysis involves calculating and interpreting financial ratios to gain insights into the company’s performance.

Correct Answer: A. The Current Ratio compares current assets to current liabilities to assess short-term liquidity.

Correct Answer: C. A high Debt-to-Equity Ratio indicates a greater proportion of debt in the company’s capital structure.

Correct Answer: C. Strong passwords and user permissions restrict access to authorized personnel only.

Correct Answer: B. Encryption converts data into a coded format, protecting it from unauthorized access.

Correct Answer: C. While important for software functionality, automatic updates are not directly related to data security within Tally Prime.

Correct Answer: B. Backups safeguard your data in case of unforeseen events that may lead to data loss.

Correct Answer: A. The “Gateway of Tally” provides access to the backup functionality.

Correct Answer: C. The “Restore” function allows you to recover your data from a previously created backup.

Correct Answer: C. The backup frequency should be based on how often your data changes and its criticality to your business.

Correct Answer: C. Tally Audit is a tool for conducting internal audits and ensuring data integrity.

Correct Answer: B. Access to Tally Audit is typically restricted to specific users with the necessary rights.

Correct Answer: D. Tally Audit can generate various reports to aid in the auditing process.

Correct Answer: B. Tally Audit helps auditors scrutinize data to detect potential irregularities or fraudulent activities.

Correct Answer: C. Tally Audit strengthens internal financial controls, promoting transparency and accuracy.

Correct Answer: A. Tally Audit allows for some level of customization to tailor the audit process.

Correct Answer: D. While Tally Audit assists in tax compliance, it does not directly file tax returns.

Correct Answer: A. Tally Audit promotes transparency and accountability, which are key aspects of good corporate governance.

Correct Answer: C. Budgeting helps businesses set financial targets and monitor their performance against those targets.

Correct Answer: A. Comparing actual results with budgeted figures allows for variance analysis and corrective action.

Correct Answer: A. Variances represent the deviations between planned (budgeted) and actual financial outcomes.

Correct Answer: B. Analyzing variances helps understand the causes of deviations and take corrective measures.

Correct Answer: C. While budgeting can indirectly contribute to efficiency, it doesn’t directly impact employee productivity.

Correct Answer: C. Exchange rates are used to translate transactions in foreign currencies into the base currency.

Correct Answer: C. You record the transaction in the original currency and provide the exchange rate for conversion.

Correct Answer: B. Fluctuations in exchange rates can create unrealized gains or losses until the transactions are settled.

Correct Answer: C. The Multi-Currency Statement provides a summary of transactions in different currencies.

Correct Answer: B. The base currency is a fundamental setting and usually cannot be altered after company creation.

Correct Answer: C. Multi-currency capabilities enable seamless handling of transactions involving different currencies.