Meaning of Commission in Tally
What is the commission of Tally? Commission means that as compensation to a person, there is money given by a company for selling its service or item. The commission can also be in percentage. And may also be on the quantity of goods or services. In simple words, commission is the money that the company or organization gives to a person in the form of percentage for selling its goods or pays commission on the order. If there is an employee in a company and if any item is sold by him, then the employee gets commission in addition to salary.
How to Maintain Commission in Tally
But when the commission is entered in the tally, the accountant has a problem that which head should be put in the commission. Commission in Tally can also be indirect income for a company and can also be indirect expenses. It depends whether commission is coming in business or commission is being given from business. If commission is being given from business, then commission will be put in the head of indirect expenses and anti payment of commission will be done in voucher. And if commission is coming in business, then commission will be put in the head of income and its entry is done in receipt voucher. But if a company or organization does only the work of commission, then the commission will be direct income or direct expenses for it.
Understanding Commission in Tally Accounting
Commission is the amount that is given to a person by the company in exchange for selling the goods or services of a company to the organization. Commission plays a role in running any business. Big companies often resort to commission to sell their goods or services and to sell their goods and services to two brokers, they pay commission in percentage on the sale of the goods. Let me explain you with the example of a production company.
Suppose a company does the work of making computers. And if he told any person that if he gets his 100 computers sold then he will be given a commission of Rs. 10000/-. In this situation the commission will be indirect expenses for the company. And when the balance sheet of the company is finalized, it will be shown as indirect expenses. Usually the amount of commission is decided with the consent of both the parties. The amount of commission can also be in percentage or can be decided on quantity only.
Types of Commission in Tally Accounting
1. Straight commission: – In this type of commission, the commission is paid in percentage. If a company is giving you 10% commission for selling its product, then it comes under direct commission. Big companies keep such employees. These employees work on commission, they do not get salary and they have no time. This type of work can also be called a target job.
2. Salary plus commission: – If a school teacher is told by the school that if you have any admission in the school, then you will be given commission on every student. In this, the person is given a commission in addition to the salary. In this situation many people get more commission than salary.
3. Graduated commission: – This is the commission that is given to the person before the services or goods are sold. When companies come to the market from the beginning, they have to sell their goods. Due to lack of promotion of the company, it already pays commission to the people so that they can promote the company well in the market and get their product sold. In simple language, the commission given before the work is done is called graduated commission.
How to commission entry in tally accounting
When commission is entered by the accountant in tally, then he has to keep in mind whether commission is coming in business or commission is going from business. If a commission of 10,000/ – is being given by the company to any person, then it will be entered in the payment voucher. In this, we will debit the commission with Rs. 10,000/- and credit it to cash or bank.
But if commission is coming in the business, then the accountant will have to enter the commission in the receipt voucher, in which he will debit the cash or bank and credit the commission. For companies that work only on commission, commission is always direct income or direct expenses.