Accounting for shares and investments-Practical money education

Before Internet began in India, I had the pleasure of being associated with somebody who used to conduct workshops of stress management. He would always say that to resolve inter-personal conflict, one has to look for correct and relevant information on the concerned topic and convey the info in a conducive mood. Had the internet(correct and relevant info) not been introduced, all that he said would have been more of a theoretical discourse.

I have already discussed how the newsletter cum software of technicaltrends enabled me to learn far more in three weeks about technical analysis than I had learnt in previous six months.

Basically, one needs a practical enabler for theory to fructify. I had read many articles in Outlook money(previously intelligent investor) on how to impart money education to children and young people with non finance background. This is true because I know business friends who say , “ Never reveal your business points to your CA” and things like that though of course all CAs are not alike. I remember reading in management consultant Pramod Batra’s(earlier an Escorts Management) book on how a very efficient Escorts dealer had a heart attack in their office because his accountant had been fleecing him due to his lack of knowledge of accounts.

I would like to mention a practical enabler in this respect. I started the financial accounting package Tally in April’2004. It has proved ideal for financial accounting cum inventory of shares as I had to throw out two other packages for inaccuracy in inventory four years back. If you are a reasonably active investor, you can easily maintain an inventory by using the Tally purchase and sales features which are normally meant for business i.e for trading in this context. One can debit the investment in shares account and credit purchases account or credit investment in shares account and debit sales at year end. This nullifies the profit and loss accounts and ensures the right accounting treatment.
Similarly profits can be credited to profit on sale of shares and debited to investment in shares accounts and vice-versa from losses. The total profit/loss figure can easily be obtained from their item wise profitability report.

Though I have not tried it so far, I think one can also calculate the capital gains tax which has become simpler with the short term capital gains also being taxed at 10% They have a batch system for pharmaceuticals which can also be used for stocks. Other interesting reports-cash flow, funds flow, movement analysis, stock summary etc.

Tally is deemed the best Indian FA software and has several other informative reports. One can get multiple balance sheets, profit and loss accounts and inventory of one’s family members as well and consolidated accounts/inventory. If one knows how to do proper data entry, one can also enter in a way that income tax details of dividend/ interest recd can be exported to excel and printed( You can enter the dividend in the narration field with commas and use the data convert option in excel). Tally also has a full time call centre service which is very efficient.

The whole of Tally enterprise(Purchase, sale, accounts, inventory) offered at a mere Rs 5,000 is an excellent buy considering that it can prove a good practical accounting education for the future generation as well. Being a CA’ son and an MBA(Finance) who has experience of three other packages , I know what I am talking about. The above is article has been written in the context of “ Accounts is the language of business”:-

As the profits or losses mount
Irrespective of amount,
One cannot not know the balance sheet /profit and loss account
One has to know the count
Otherwise one shall face problems that will be difficult to surmount
For learning practical money management, learning accounts is paramount
For doing the same, running packages like Tally is tantamount
At Rs 5000/- such a package is offering a handsome discount

( An ERP package of this kind would minimum cost around Rs 2-2.5 lakhs)

I have been trying to prevail upon Tally to also incorporate market rates so one can know one’s valuation too at any given time.

It would be a pleasure if someone could mention any other software; I have heard a lot about wings2000. The software from the Tata consultancy (Ex) is good for portfolio management but not equally good for financial accounts.