Meaning of Interest in Tally Accounting
What are the interest . And what is the interest in tally accounting. the interest is that amount, then it is given by a debtor to the moneylender in exchange for money. When a person borrows any loan or money from any place, then interest has to be paid on the principal amount of the borrower and the interest paid on the principal is called interest. The interest can be monthly as well as yearly. It depends on how the money or item is taken from where it gets interest from you. The interest in tally depends on whether you are getting interest or you are giving interest to someone. If you have taken a loan from any person or company, then interest is your liability, then you will have to pay it from time to time. And you have to show this interest in the indirect expenses account of profit and loss. And if you are getting interest from any other person then this is indirect income for you.
What is interest explain in tally.
Understanding Interest in tally. If interest is the amount received by the lender from the borrower in exchange for any item or money. In simple language, interest means that every person needs many things to run his livelihood, in this it is not necessary that all the people can buy the goods or services they need from their capital. In such a situation, a person can buy that item by taking money from someone on interest or go to the same thing he is buying and get it financed. The finance company has its own interest rate, which the company receives from the indebted person. Suppose you purchase a car whose cost is Rs.800,000/- in cash. If you do not have full money, if you finance that car from any company, then that company takes 1000,000/- rupees from you after mixing its interest. These Rs.1000,000/- company takes in a time period which can be monthly, quarterly, also. The cost of the car was Rs.800,000/- but when you financed the car from the company, you had to pay more than Rs.200,000/- lakh and this payment is called interest.
Types of interest in tally accounting
What are the types of interest? Because interest in tally is not always indirect income or indirect expenses. There are two types of interest.
1. Simple interest
2. compound interest
1. What is called simple interest?. Suppose you borrowed Rs. 10000/- for one year from a person whose rate of interest is 10% (p.a.). So for this, how much interest will be made on simple interest on 10000 / -? So for this we will calculate it with the formula of simple interest.
Formula of simple interest := I =P×R×T/100
interest = 1000/-
2. compound interest:= what is compound interest. And how to calculate compound interest. In this interest, any person gets interest on interest. When a person deposited Rs 10000/- in a bank. So in 1 year 1000/- of Rs 10000/- becomes interest. And the bank also adds this to the principal amount. And next year when you will get interest then you will get interest on Rs 11000/-. On simple interest, you will get interest only on the principal amount. But in compound interest, you get interest on interest.
What is an Interest Rate
I will tell you what is interest rate. And how much interest do you get on your money in the bank. According to 2021, when you make FD (fixed deposit) in any bank, whether it is a private bank or government, under DICGS, you get insurance up to 5 lakhs. If for any reason the bank cheats you, then you get up to 5 lakhs under DICGS. Now you will get saving interest rate from 6% to 4% in IDFC bank. Whatever interest is given to you by the bank on money or on FD. The interest rate is different for every bank. Which keeps happening more or less with time.
What is interest and example in tally
interest is the amount then the indebted person has to pay to the lender. Interest is given on the amount that the person borrows money from another person for himself. Interest can also be paid by the person monthly and also yearly. In Tally, when a person is given a loan by you, then that person has the liability to return the money taken. If interest is income for a person, then expenses for someone. Let me explain by giving some examples of interest below.
1. interest on loan
2. interest on fixed deposit
3. Interest on interest
Is interest good or bad
It depends on whom you are giving interest to. It is not necessary that interest is always bad. Every person needs money to start his business. And when a person does not have enough money, he takes a loan from someone to start his business. These are generally common. But he has borrowed this money to earn profit, so the interest given on this loan will not be bad. But if the person has taken a loan for some such work, which may cause him loss in future, then this loan will be bad loan.