100 Best MCQs on Tally Prime

Question 1

Question 1: What is the primary purpose of Tally Prime?

A. To create and edit documents.B. To manage financial and business operations.C. To design websites.D. To analyze big data.

Answer

B. Tally Prime is a business management software primarily focused on accounting and financial operations.

Question 2

Question 2: Which of the following best describes the evolution of Tally software?

A. It has remained largely unchanged since its inception.B. It has evolved from a basic accounting tool to a comprehensive business management solution.C. It has shifted its focus from accounting to inventory management.D. It has become less user-friendly over time.

Answer

B. Tally software has evolved significantly, adding features beyond accounting to cater to broader business needs.

Question 3

Question 3: Which of the following is NOT an advantage of using Tally Prime?

A. Simplifies complex accounting tasksB. Generates real-time financial reportsC. Requires extensive coding knowledge to operateD. Enables effective inventory management

Answer

C. Tally Prime is designed for user-friendliness and does not require coding knowledge.

Question 4

Question 4: What is a key functionality of Tally Prime?

A. Graphic designB. Video editingC. Inventory trackingD. Website development

Answer

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

Question 5

Question 5: How would you describe the user interface of Tally Prime?

A. Complex and difficult to navigateB. Intuitive and user-friendlyC. Primarily text-based with no visual elementsD. Overly simplistic and lacking in features

Answer

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

Question 6

Question 6: Which of the following is NOT a function of Tally Prime?

A. Payroll ManagementB. Inventory ManagementC. Email MarketingD. Financial Reporting

Answer

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

Question 7

Question 7: What is the main advantage of Tally Prime’s real-time data processing?

A. It allows users to access historical data more easily.B. It enables quick decision-making based on up-to-date information.C. It reduces the need for manual data entry.D. It improves the software’s overall speed.

Answer

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

Question 8

Question 8: Which Tally Prime feature helps in ensuring data accuracy and preventing fraud?

A. Multi-user accessB. Customizable reportsC. Audit trailsD. Remote access

Answer

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

Question 9

Question 9: What type of businesses can benefit from using Tally Prime?

A. Only large corporationsB. Only small businessesC. Businesses of all sizes across various industriesD. Exclusively online businesses

Answer

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

Question 10

Question 10: How does Tally Prime support compliance with tax regulations?

A. It automatically calculates and files taxes.B. It provides tools for generating tax reports and returns.C. It offers legal advice on tax matters.D. It guarantees tax exemption for businesses.

Answer

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

Question 11

Question 11: What is the first step in starting to use Tally Prime for a new business?

A. Creating a companyB. Entering vouchersC. Generating reportsD. Configuring security settings

Answer

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

Question 12

Question 12: What information is typically required when creating a new company in Tally Prime?

A. Company name, financial year, and currencyB. Employee details and salary informationC. Bank account numbers and transaction historyD. Inventory item details and stock levels

Answer

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

Question 13

Question 13: How can you control access to sensitive data in Tally Prime?

A. By creating multiple companiesB. By setting up user roles and permissionsC. By regularly backing up dataD. By enabling multi-currency transactions

Answer

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

Question 14

Question 14: What is the purpose of configuring the financial year in Tally Prime?

A. To track employee attendanceB. To define the period for which financial reports will be generatedC. To set up automatic bank reconciliationsD. To enable multi-currency transactions

Answer

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

Question 15

Question 15: How can you customize Tally Prime to suit your business needs?

A. By modifying the source codeB. By creating new accounting standardsC. By enabling and configuring specific features and functionalitiesD. By installing third-party plugins

Answer

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

Question 16

Question 16: What is the benefit of setting up security controls in Tally Prime?

A. It enhances data accuracy.B. It speeds up report generation.C. It restricts unauthorized access to sensitive information.D. It simplifies voucher entry.

Answer

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

Question 17

Question 17: Which of the following is an example of customizing Tally Prime?

A. Changing the company nameB. Enabling the payroll featureC. Entering a sales voucherD. Generating a trial balance

Answer

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

Question 18

Question 18: What is the Chart of Accounts in Tally Prime?

A. A list of all the transactions recorded in a companyB. A collection of financial reportsC. A systematic arrangement of all the accounts used in a companyD. A tool for managing inventory

Answer

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

Question 19

Question 19: How can you create a new ledger in Tally Prime?

A. By going to the “Gateway of Tally” and selecting “Create Ledger”B. By clicking on the “Inventory” button and choosing “New Item”C. By generating a Trial BalanceD. By enabling the payroll feature

Answer

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

Question 20

Question 20: What is the purpose of grouping ledgers in Tally Prime?

A. To simplify data entryB. To enhance report generationC. To improve data securityD. To enable multi-currency transactions

Answer

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

Question 21

Question 21: Which of the following is an example of an income ledger?

A. SalesB. PurchasesC. SalaryD. Rent

Answer

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

Question 22

Question 22: What is the difference between an asset and a liability ledger?

A. Assets represent what the company owns, while liabilities represent what it owes.B. Assets are used for generating income, while liabilities are used for expenses.C. Assets are recorded on the left side of the Balance Sheet, while liabilities are on the right.D. Assets are tangible, while liabilities are intangible.

Answer

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

Question 23

Question 23: Which voucher type would you use to record a cash sale in Tally Prime?

A. Sales voucherB. Receipt voucherC. Payment voucherD. Journal voucher

Answer

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

Question 24

Question 24: What information is typically included in a voucher entry?

A. Date, ledger accounts involved, and amountB. Employee name, designation, and salaryC. Bank account number and transaction detailsD. Inventory item code and quantity

Answer

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

Question 25

Question 25: How can you customize voucher numbering in Tally Prime?

A. By manually entering voucher numbers for each transactionB. By defining voucher numbering series for different voucher typesC. By using a random number generatorD. By enabling multi-currency transactions

Answer

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

Question 26

Question 26: What happens when you alter a voucher in Tally Prime?

A. The original voucher is deleted, and a new one is created.B. The changes are recorded in an audit trail.C. The voucher number is automatically changed.D. The financial statements are immediately updated.

Answer

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

Question 27

Question 27: In which scenario would you use a journal voucher in Tally Prime?

A. To record a cash saleB. To record a credit purchaseC. To adjust entriesD. To process payroll

Answer

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

Question 28

Question 28: Which type of voucher is used to record the purchase of goods on credit?

A. Purchase voucherB. Payment voucherC. Contra voucherD. Credit Note voucher

Answer

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

Question 29

Question 29: What is the significance of voucher numbering in Tally Prime?

A. It helps in organizing and tracking transactions.B. It determines the tax liability of a transactionC. It affects the calculation of inventory valuation.D. It has no particular significance.

Answer

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

Question 30

Question 30: Can you delete a voucher in Tally Prime after it has been recorded?

A. Yes, you can delete any voucher at any time.B. No, vouchers cannot be deleted once recorded.C. You can delete a voucher only if it has not been used in any reports.D. You can delete a voucher only if you have the necessary permissions.

Answer

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

Question 31

Question 31: How do you enable inventory management in Tally Prime?

A. By creating a new companyB. By configuring GST/VAT settingsC. By activating the inventory features in the company settingsD. By generating a Balance Sheet

Answer

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

Question 32

Question 32: What is a stock item in Tally Prime?

A. A record of a product or service that the company buys or sellsB. A group of similar products or servicesC. A method of valuing inventoryD. A financial report

Answer

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

Question 33

Question 33: How are stock groups used in Tally Prime?

A. To categorize stock items based on their characteristics or usageB. To track stock movementsC. To calculate inventory valuationD. To generate financial statements

Answer

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

Question 34

Question 34: Which voucher type would you use to record the return of goods to a supplier?

A. Purchase Return voucherB. Sales Return voucherC. Credit Note voucherD. Debit Note voucher

Answer

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

Question 35

Question 35: What is the purpose of inventory valuation in Tally Prime?

A. To determine the cost of goods soldB. To track employee attendanceC. To calculate tax liabilityD. To generate payslips

Answer

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

Question 36

Question 36: Which inventory valuation method assumes that the goods purchased or produced first are sold first?

A. FIFO (First-In, First-Out)B. LIFO (Last-In, First-Out)C. Weighted AverageD. Standard Cost

Answer

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

Question 37

Question 37: What is the primary function of a bank ledger in Tally Prime?

A. To record customer informationB. To track inventory levelsC. To manage employee payrollD. To record transactions related to a specific bank account

Answer

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

Question 38

Question 38: Which of the following transactions would be recorded in a bank ledger?

A. Cash salesB. Credit purchasesC. Bank deposits and withdrawalsD. Salary payments

Answer

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

Question 39

Question 39: What is the purpose of bank reconciliation in Tally Prime?

A. To match the bank statement with the company’s recordsB. To generate financial statementsC. To calculate tax liabilityD. To manage inventory

Answer

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

Question 40

Question 40: How does Tally Prime assist in cheque management?

A. It automatically prints and mails cheques to vendors.B. It provides a record of issued cheques and their status.C. It calculates the interest earned on bank deposits.D. It generates reports on outstanding cheques.

Answer

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

Question 41

Question 41: What is the benefit of using bank ledgers in Tally Prime?

A. It simplifies inventory managementB. It automates payroll processingC. It streamlines the bank reconciliation processD. It generates tax returns

Answer

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

Question 42

Question 42: Which Tally Prime report helps in identifying uncleared cheques?

A. Bank Reconciliation StatementB. Cash Flow StatementC. Outstanding Cheques ReportD. Bank Book

Answer

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

Question 43

Question 43: Can you record bank charges directly in a bank ledger in Tally Prime?

A. Yes, you can create a separate ledger for bank charges and link it to the bank ledger.B. No, bank charges need to be recorded in a separate expense ledger.C. Bank charges are automatically deducted from the bank balance.D. You can only record bank charges in a journal voucher.

Answer

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

Question 44

Question 44: What is the first step in handling GST/VAT in Tally Prime?

A. Recording GST/VAT transactionsB. Generating GST/VAT returnsC. Configuring GST/VAT settings in the companyD. Creating separate ledgers for GST/VAT

Answer

C. Before recording transactions or generating returns, you need to configure the GST/VAT settings for your company.

Question 45

Question 45: How are GST/VAT transactions recorded in Tally Prime?

A. By creating separate vouchers for each tax componentB. By enabling the multi-currency featureC. By using specific ledgers for GST/VATD. By entering the tax details within the relevant sales or purchase vouchers

Answer

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

Question 46

Question 46: What is the purpose of generating GST/VAT returns in Tally Prime?

A. To track employee attendanceB. To calculate inventory valuationC. To file tax returns with the governmentD. To manage bank reconciliations

Answer

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

Question 47

Question 47: What is TDS in Tally Prime?

A. Tax Deducted at SourceB. Total Deductible SalesC. Tax Deferred SavingsD. Transaction Data Storage

Answer

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

Question 48

Question 48: How does Tally Prime handle TDS?

A. It automatically calculates and deducts TDS from relevant payments.B. It generates TDS certificates for recipients.C. It allows you to configure TDS rates and thresholds.D. All of the above

Answer

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

Question 49

Question 49: Which Tally Prime report shows the details of TDS deducted from payments?

A. Profit and Loss AccountB. Balance SheetC. TDS ChallanD. Audit Trail

Answer

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

Question 50

Question 50: Can you customize GST/VAT rates in Tally Prime?

A. Yes, you can define different GST/VAT rates for various goods and services.B. No, GST/VAT rates are fixed and cannot be changed.C. You can only customize GST/VAT rates if you have administrator privileges.D. GST/VAT rates are automatically updated by Tally Prime.

Answer

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

Question 51

Question 51: What is the first step in setting up payroll in Tally Prime?

A. Creating employee recordsB. Defining salary componentsC. Processing payrollD. Enabling payroll features in the company settings

Answer

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

Question 52

Question 52: What information is typically included in an employee record in Tally Prime?

A. Name, address, contact details, and bank account informationB. Sales and purchase transaction historyC. Inventory item details and stock levelsD. GST/VAT registration number

Answer

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

Question 53

Question 53: What are salary components in Tally Prime?

A. Different elements that make up an employee’s salary, such as basic pay, allowances, and deductionsB. Bank accounts used for salary paymentsC. Tax rates applicable to employee salariesD. Reports generated after payroll processing

Answer

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

Question 54

Question 54: How does Tally Prime calculate net salary?

A. By adding all salary componentsB. By subtracting deductions from gross salaryC. By multiplying basic pay with attendance percentageD. By applying tax rates to gross salary

Answer

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

Question 55

Question 55: What is the output of payroll processing in Tally Prime?

A. Payslips for each employeeB. Bank Reconciliation StatementC. Trial BalanceD. Inventory valuation report

Answer

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

Question 56

Question 56: Can you customize payslip formats in Tally Prime?

A. Yes, you can design and modify payslip layouts.B. No, payslip formats are fixed and cannot be changedC. You can only customize payslips if you have administrator privilegesD. Payslip formats are automatically updated by Tally Prime

Answer

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

Question 57

Question 57: What is a Trial Balance in Tally Prime?

A. A list of all ledger accounts with their closing balancesB. A summary of income and expensesC. A statement of assets, liabilities, and equityD. A report showing key financial ratios

Answer

A. The Trial Balance lists all ledgers and their balances to ensure debits and credits match.

Question 58

Question 58: What is the purpose of generating a Trial Balance?

A. To check the accuracy of accounting entriesB. To calculate net profit or lossC. To assess the company’s financial positionD. To manage inventory

Answer

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

Question 59

Question 59: How can you rectify errors detected in a Trial Balance?

A. By deleting the Trial Balance and generating a new oneB. By manually adjusting the balances in the Trial BalanceC. By identifying and correcting the underlying voucher entriesD. By ignoring the errors and proceeding with other reports

Answer

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

Question 60

Question 60: What does it mean if the Trial Balance doesn’t tally (balance)?

A. There are no errors in the accounting records.B. The company is profitable.C. There is a discrepancy between debits and credits, indicating an error.D. The financial year has ended.

Answer

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

Question 61

Question 61: What does the Profit and Loss Account show?

A. The company’s assets and liabilitiesB. The company’s income and expenses over a specific periodC. The company’s cash inflows and outflowsD. The company’s key financial ratios

Answer

B. The Profit and Loss Account summarizes revenues and expenses to determine profit or loss. (100 Best MCQs on Tally Prime)

Question 62

Question 62: How is net profit calculated in the Profit and Loss Account?

A. By adding all income and expensesB. By subtracting total expenses from total incomeC. By dividing total assets by total liabilitiesD. By multiplying sales revenue by profit margin

Answer

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

Question 63

Question 63: Which of the following would be classified as an expense in the Profit and Loss Account?

A. Sales revenueB. Interest incomeC. Rent paidD. Owner’s capital

Answer

C. Rent paid is an expense incurred by the business and is thus shown in the Profit and Loss Account. (100 Best MCQs on Tally Prime)

Question 64

Question 64: What can you infer from a Profit and Loss Account showing a net loss?

A. The company’s expenses exceeded its income during the period.B. The company has more assets than liabilities.C. The company’s financial position is strong.D. The company has a high inventory turnover ratio.

Answer

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

Accepted Answer

B. The Balance Sheet provides a snapshot of the company’s assets, liabilities, and equity at a given date. (100 Best MCQs on Tally Prime)

Accepted Answer

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

Accepted Answer

C. Inventory represents goods held for sale and is considered an asset of the company. (100 Best MCQs on Tally Prime)

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B. The Balance Sheet helps assess the company’s ability to meet its short-term and long-term obligations. (100 Best MCQs on Tally Prime)

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A. Ratio analysis involves calculating and interpreting financial ratios to gain insights into the company’s performance. (100 Best MCQs on Tally Prime)

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A. The Current Ratio compares current assets to current liabilities to assess short-term liquidity. (100 Best MCQs on Tally Prime)

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

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C. Strong passwords and user permissions restrict access to authorized personnel only. (100 Best MCQs on Tally Prime)

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B. Encryption converts data into a coded format, protecting it from unauthorized access. (100 Best MCQs on Tally Prime)

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C. Strong passwords and user access controls are crucial in preventing unauthorized data access. (100 Best MCQs on Tally Prime)

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C. While important for software functionality, automatic updates are not directly related to data security within Tally Prime. (100 Best MCQs on Tally Prime)

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B. Backups safeguard your data in case of unforeseen events that may lead to data loss. (100 Best MCQs on Tally Prime)

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A. The “Gateway of Tally” provides access to the backup functionality. (100 Best MCQs on Tally Prime)

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C. The “Restore” function allows you to recover your data from a previously created backup. (100 Best MCQs on Tally Prime)

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C. The backup frequency should be based on how often your data changes and its criticality to your business. (100 Best MCQs on Tally Prime)

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C. Tally Audit is a tool for conducting internal audits and ensuring data integrity. (100 Best MCQs on Tally Prime)

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B. Access to Tally Audit is typically restricted to specific users with the necessary rights. (100 Best MCQs on Tally Prime)

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D. Tally Audit can generate various reports to aid in the auditing process. (100 Best MCQs on Tally Prime)

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B. Tally Audit helps auditors scrutinize data to detect potential irregularities or fraudulent activities. (100 Best MCQs on Tally Prime)

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C. Tally Audit strengthens internal financial controls, promoting transparency and accuracy. (100 Best MCQs on Tally Prime)

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A. Tally Audit allows for some level of customization to tailor the audit process. (100 Best MCQs on Tally Prime)

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D. While Tally Audit assists in tax compliance, it does not directly file tax returns. (100 Best MCQs on Tally Prime)

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A. Tally Audit promotes transparency and accountability, which are key aspects of good corporate governance. (100 Best MCQs on Tally Prime)

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

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A. Budgets are created by defining expected income and expenditure amounts for different accounts. (100 Best MCQs on Tally Prime)

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A. Comparing actual results with budgeted figures allows for variance analysis and corrective action. (100 Best MCQs on Tally Prime)

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A. Variances represent the deviations between planned (budgeted) and actual financial outcomes. (100 Best MCQs on Tally Prime)

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

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C. While budgeting can indirectly contribute to efficiency, it doesn’t directly impact employee productivity. (100 Best MCQs on Tally Prime)

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C. You need to enable the multi-currency option to start recording transactions in different currencies. (100 Best MCQs on Tally Prime)

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C. Exchange rates are used to translate transactions in foreign currencies into the base currency. (100 Best MCQs on Tally Prime)

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C. You record the transaction in the original currency and provide the exchange rate for conversion. (100 Best MCQs on Tally Prime)

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B. Fluctuations in exchange rates can create unrealized gains or losses until the transactions are settled. (100 Best MCQs on Tally Prime)

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C. The Multi-Currency Statement provides a summary of transactions in different currencies. (100 Best MCQs on Tally Prime)

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B. The base currency is a fundamental setting and usually cannot be altered after company creation. (100 Best MCQs on Tally Prime)

Accepted Answer

C. Multi-currency capabilities enable seamless handling of transactions involving different currencies. (100 Best MCQs on Tally Prime)

100 Best MCQs on Tally Prime

I. Introduction to Tally Prime – 100 Best MCQs on Tally Prime

Basic Concepts

Company Creation and Configuration

II. Accounting Fundamentals in Tally Prime – 100 Best MCQs on Tally Prime

Chart of Accounts

Voucher Entry

Inventory Management

III. Advanced Accounting Features – 100 Best MCQs on Tally Prime

Banking and Reconciliation

Taxation

Payroll

IV. Financial Statements and Reporting – 100 Best MCQs on Tally Prime

Trial Balance

Profit and Loss Account

Balance Sheet

Ratio Analysis

V. Data Security and Backup – 100 Best MCQs on Tally Prime

Data Security

Backup and Restore

VI. Miscellaneous Topics – 100 Best MCQs on Tally Prime

Tally Audit

Budgeting and Control

Multi-Currency Transactions

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