GENERAL THEORY OF ACCOUNTING FOR REVENUE,
General theory of revenue, expenses and determination of business results in enterprises
1.1.1 Importance of accounting for revenue and business result in Enterprises
In today's global economy, businesses must select suitable strategies to address the varied market demands and improve performance Effective accounting for revenue, expenses, and overall business outcomes is essential for companies to sustain and grow their operations.
The accounting for revenue, expenses, and business results involves calculating and aggregating costs associated with business processes, as well as accurately determining actual revenue generated by enterprises This data serves as a foundation for assessing business performance Precise evaluation of business results provides valuable insights, enabling companies to analyze and establish reasonable costs for each expense and appropriate pricing for their products and services.
Revenues and other incomes represent increases in economic benefits stemming from the regular operations and events of a business within an accounting period These benefits manifest as inflows or enhancements of assets or reductions in liabilities, ultimately leading to an increase in equity, excluding contributions from equity participants.
Classification according to business activities of the enterprise:
- Sales of goods and services: the full amount of the business revenue are received from transactions such as selling products and offering services to customers
+Interest: deposit interest, loan interest, sales interest on deferred payment, installment payment
+ Profits from selling, transferring financial asset or investing on joint ventures, investing on subsidiaries
+Interest difference due to foreign currency trading, foreign currency exchange rate difference interest;
+Payment discount enjoyed by purchase of materials, goods, services, fixed assets;
+ Other income related to financial activities.
+ Income from sale or liquidation of fixed assets;
+ Income from liquidation of fixed assets, sale of fixed assets;
+ Collecting customer fines for breaching the contract;
+Incomes from gifts and gifts in cash and in kind from organizations and individuals donated to businesses;
Classification according to the method of payment for goods includes:
Revenue is recognised when all the following conditions have been satisfied:
(a) The entity has transferred the significant risks and rewards of ownership of the goods to the buyer.
(b) The entity does not retain control over the goods or managerial involvement with them to the degree usually associated with ownership.
(c) The amount of revenue can be measured reliably.
(d) It is probable that the economic benefits associated with the transaction will flow to the entity.
(e) The costs incurred or to be incurred by the seller in respect of the transaction can be measured reliably.
The outcome of a transaction can be estimated reliably when all the following conditions are satisfied:
(a) The amount of revenue can be measured reliably.
(b) It is probable that the economic benefits associated with the transaction will flow to the seller.
(c) The stage of completion of the transaction at the end of the reporting period can be measured reliably.
(d) The costs incurred to date for the transaction and the costs to complete the transaction can be measured reliably.
In transactions involving service provision across multiple accounting periods, the turnover for each period is typically assessed using the completion rate method This approach determines the revenue recognized in a given accounting period based on the proportion of work that has been completed.
The completed work is determined by one of the following three methods, depending on the nature of the service:
(b) Comparing the percentage (%) between the completed workload and the total workload to be completed;
(c) The ratio (%) of expenses incurred to the total estimated cost of completing the entire service delivery transaction.
The completed work does not depend on recurring payments or advances by customers.
- Revenue from interests, royalties, dividends and shared profits of an enterprise is recognized when both the following conditions are satisfied: (a) Be able to obtain economic benefits from the transaction;
(b) The revenue is determined reliably.
A trade discount is a financial incentive offered by sellers to customers who purchase goods and services in large quantities, as per an agreed-upon arrangement This discount reduces the overall cost for buyers, encouraging bulk purchases and fostering stronger business relationships.
Sales returns refer to the quantity of goods that customers return after purchase, often due to reasons such as breach of contract, incorrect quantity, or unsatisfactory quality and specifications.
Sales allowance is a reduction made when the goods are not the same specification as those mentioned in the economic contract.
Taxes: VAT in direct method, export duty
Expenses represent a reduction in economic benefits within an accounting period, manifested as outflows or depletions of assets or the incurrence of liabilities These decreases in equity do not include distributions to equity participants.
Classification of costs can be made on the basis of:
- Direct costs of a cost object are those that are related to a given cost object (product, department, etc.) and that can be traced to it in an economically feasible way.
- Indirect costs are related to the particular cost object but cannot be traced to it in an economically feasible way.
Behaviour pattern in relation to changes in the level of a cost driver
- Variable costs change in total in proportion to changes in the related level of total activity or volume.
- Fixed costs do not change in total for a given time period despite wide changes in the related level of total activity or volume.
- Capitalised costs are all costs of a product that are regarded as an asset when they are incurred and then become cost of goods sold when the product is sold.
- Revenue costs are all costs in the Profit and loss account other than cost of goods sold.
1.1.4 The basics of business results
At the end of each accounting period, determining the business results of activities is crucial, as financial statements must be prepared and submitted monthly Accountants assess the company's performance by evaluating the benefits provided to consumers through products or services, ensuring alignment with the company's economic goals and social standards Essentially, business results reflect the outcomes of selling products to consumers Accurate determination of these results is vital for appropriate profit distribution and a comprehensive review of the business process, highlighting the necessity for honesty and precision in reporting.
Accounting for revenue, expenses and business results in enterprises
1.2.1 The accounting principles governing accounting for revenue, expenses and business results in enterprises
( em xin phép bổ sung sau ạ)
1.2.2.1 Accounting for revenue from sales of goods and services
Payment table for consignment, agent
List of retail goods and services
Payment vouchers (receipts, transfer checks, payment checks, collection orders, Bank Credit Notes, Bank statements, )
Enterprises required to pay VAT using the deduction method must issue a "VAT Invoice" when selling goods and services This can be done using invoices provided by the Ministry of Finance, self-printed VAT invoices, or printed VAT invoice orders, except in cases where the payment price includes VAT.
- For enterprises subject to VAT payment under the direct method, when selling goods or services, use "Sale Invoice".
This account tracks the sales of goods and services for an enterprise during a specific accounting period, encompassing sales to both parent companies and subsidiaries within the same group.
Account 511 reflects the turnover of production and business activities from the following transactions and operations:
+ Sales: Selling items manufactured by company, selling of goods purchased real estates invested
Service provision involves executing contracted services over specified accounting periods, which may include transportation and travel services, leasing fixed assets through operating leases, and revenues generated from construction contracts.
- Payable indirect taxes (VAT, excise, export, environmental protection);
- Turnover from returned goods transferred at the end of period;
- Trade discounts transferred at the end of period;
- Transfer of net turnover to acc
- Revenues from sales of products, goods, real estates invested and service provision of enterprises performed in accounting period.
- The revenue subsidized grants, surcharges that the company gains.
Account 5Acc 511does not have ending balance and it comprises
- Acc 5112: Turnovers from finished goods.
- Acc5113: Turnovers from service provision.
- Acc 5114 "Revenue grants and subsidies"
(1) Revenue from sales and rendering service
(1b) Payable taxes when selling goods and providing services
Products, goods, and services that are subject to special consumption tax or export tax have their sales prices inclusive of these taxes This means that the total payment for selling goods and providing services reflects the complete cost, encompassing both the base price and any applicable special consumption or export taxes.
Agents handling goods consigned for sale at the right price will earn a sales commission from the sales of these goods and services, benefiting the enterprises involved.
When insurance is provided through deferred or installment payments, the enterprise must immediately recognize the revenue from the selling price Additionally, the interest on the deferred payment should be recorded as financial income, aligned with the timing of revenue recognition.
Sale deductions are amounts to be deducted from sales of goods and services provided in the period, including: Trade discounts, sales allowance and sales returned.
A trade discount is a financial incentive offered by businesses to customers who purchase goods and services in bulk This discount is granted based on an agreement between the seller and the buyer, encouraging larger volume purchases.
Sales returns refer to the quantity of goods that customers return after purchase, often due to breaches of contract, incorrect quantities, or issues with quality and specifications.
Sales allowance is a reduction made when the goods are not the same specification as those mentioned in the economic contract.
Taxes: VAT in direct method, export duty
- VAT invoice or sales invoice
-Accounting voucher of sales allowances
-VAT invoice or sales invoice
-Accounting voucher of sales returns
Acc 333 – Tax and statutory obligations
Diagram 2: Accounting entry for revenue deductions
The sales deduction must be recorded separately: in which the trade discounts, sales discount is defined as follows:
Enterprises must have management regulations and disclose publicly trade discounts, sales discounts.
The trade discounts or sales discounts of goods sold in the period ensure the profitability for the company.
Must be specified in the contract and sales invoices.
Financial incomes are all incomes gained in relation to financial activities of the company.
Revenue from financial activities includes:
Interests: loan interests, deposit interests, installment interests, deferred payment interests, interests on bonds, treasury bills, payment discounts due to purchases of goods/services, etc.;
Financial investment : Dividend, distributed profit, Profit from the investment transfer
+ Profit from exchange rate difference (business activities + construction process)
+ Profit from revaluating closing balance of foreign currency monetary items (business activities + construction process)
+ Allocate profit from exchange rate difference (construction before operation)
Content: to record revenues from interests, copyrights, dividends, distributed income, and other income from financial activities of enterprises.
- The payable VAT amount calculated by the direct method (if any);
- Transfer of net financial income to
- Revenue from financial activities arising in the period.
Account 515 has no closing balance.
Diagram 3: Accounting entry for financial incomes
Other incomes refer to earnings that do not stem from a business's primary operations These revenues are generated from activities outside the usual business activities of the enterprise.
- Proceed of disposal of fixed assets
- Gains from the revaluation materials, goods and fixed asset that used to contribute or invest into associates or other long-term investment
- Gains from contract compensation by the customers
- Tax refund from the State Budget
- Accounts unidentifiable as to whom they are payable
- Sales-related tips or awards (if any offered by suppliers which are not included in sales)
- Gifts or donations in cash or in kind by organizations and individuals
- Debit notes and Credit notes.
- Minutes of handling surplus and missing assets.
- Property liquidation and sale record.
Content: to record other income, revenues not from operating activity of business.
- The payable VAT amount (if any) for other incomes in the enterprise paying VAT by the direct method.
- Transferring other incomes arising in the period to Acc 911.
- Other income generated in the period.
Account 711 does not have closing balance.
Diagram 4 :Accounting entry for other incomes
Diagram 5 :Accounting entry for other incomes from the liquidation or sale of fixed assets
1.2.3.1 Accounting for cost of goods sold
Cost of goods sold is the total cost to form the number of products consumed during the period.
“Acc 632 - Cost of goods sold”
This account reflects the total cost of production of goods and services, investment properties, production costs of completed construction and installation services.
- In case business applies perpetual inventory method:
- Costs price of products, goods, services sold during period.
- Costs of raw materials, part of labor costs in excess of normal level, and fixed overhead cost unallocated and added to costs of goods during the period.
- Waste, loss of inventory after excluding compensation received from responsible individuals.
- Transferring cost of products, goods, services sold to acc 911
- Sales returns to be stored
- Trade discounts, sales allowance received after purchasing consumed goods.
Account 632 does not have closing balances.
- In case business applying periodical inventory method.
- Transferring actual cost of finished products in the first period.
- Transferring actual cost of finished products at the end of the period.
- Transferring forward the actual cost value of sold goods sent beginning.
- Transferring the actual value of sold goods.
- Transferring the actual capital value of the goods sold at the end of the period.
- Transferring the actual value of sold goods to determine business results.
Account 632 does not have closing balances
Diagram 5: Accounting for COGS applying perpetual inventory method
Diagram 6:Accounting for COGS applying periodical inventory method.
- This account is used to reflect the cost of finished goods, goods and services.
The provision for inventory devaluation is incorporated into the cost of goods sold by assessing the total inventory amount and the difference when the net realizable value falls below the inventory cost.
- For the value of inventory loss, the accountant must immediately calculate it into the cost of goods sold (after deducting compensation, if any).
- Import taxes, excise taxes and environmental protection taxes, which are included in the value of goods purchased, shall be recorded as a decrease in cost of goods sold.
1.2.3.2 Accounting for business administration expenses
Selling expenses encompass all costs associated with the sale of goods and services This includes expenses related to product presentation, advertising, staff salaries, materials and packaging, tools and supplies, depreciation of fixed assets used in sales, and other related costs.
Overhead costs in a business encompass various expenses, including salaries and wages for administrative staff, social and medical insurance, labor union fees, and unemployment insurance Additional costs include office supplies, labor tools, depreciation of fixed assets, lease rent, and provisions for bad debts Outsourced services, such as utilities and asset warranties, along with other cash expenses like entertainment and customer conferences, also contribute to the overall overhead.
- Table of salary distribution and social insurance.
Other expenses are expenses incurred due to events or transactions that are separate from the normal operation of the business
Expenses incurred during the liquidation and sale of fixed assets, including associated liquidation activities, should be documented appropriately The proceeds from these sales will be recorded as a reduction of the liquidation or sale expenses related to the fixed assets.
- Remaining value of demolished fixed assets;
- Remaining value of fixed assets liquidated or sold by fixed assets (if any);
- Differences in losses due to revaluation of supplies, goods and fixed assets put into capital contribution to joint ventures, associates and other investments;
- Fines payable due to economic contracts, administrative violations;
Debit notes and credit notes
Minutes of handling surplus and missing assets
- Other expenses incurred - Transferring all other expenses incurred in the period into acc 911.
Acc 811 has no closing balance
Diagram 7: Accounting entry for other expenses
1.2.3.4 Accounting for corporate income tax expenses
Corporate income tax (CIT) is a direct tax, collected on the results of production and business activities of the enterprise.
Quarterly, accountants utilize corporate income tax returns to record temporarily paid enterprise income tax amounts as current corporate income tax expenses At the financial year's end, if the provisional corporate income tax payable is less than the actual payable amount, the accountant adds the difference to the corporate income tax expenditure Conversely, if the provisional amount exceeds the payable amount, the accountant reduces the current corporate income tax expense by the difference, reflecting that the temporarily paid enterprise income tax is greater than the amount due for the year.
In preparing financial statements, accountants must allocate the current corporate income tax expenses to the "Determination of Business Results" account to accurately calculate the after-tax profit for the accounting period.
- Content: Used to reflect the income tax expense arising in the year as a basis for determining the business results after CIT in the current fiscal year.
- Enterprise income tax expense incurred in the year;
- Enterprise income tax of previous years must be additionally paid.
- The payable enterprise income tax amount in a year is smaller than the temporarily deducted enterprise income tax amount;
- The payable enterprise income tax amount is reduced due to the discovery of non-material errors;
- Transfer of corporate income tax expense arising to acc 911.
Account 821 has no closing balance.
Diagram 8: Accounting entry for income tax expense
ORGANISATION OF BOOKKEEPING SYSTEMS FOR REVENURE,
1.3.1 General journal form of bookkeeping
All economic and financial transactions must be documented in the General Journal, organized chronologically and based on their accounting significance Subsequently, the information from the journals is used to update the Ledger for each transaction.
- Form of General Journal includes the following main types of books: General Journal, Special Diary, Ledger, Books, detailed accounting cards.
Revenue, expenses accounting and determination of sales results using the General Journal accounting form using the following accounting books: General Journal, Special Diary, Ledger Acc 511, Ledger Acc 632 , Ledger Acc
642,Ledger of Acc 821, Ledger of Acc155, Ledger of Acc 421, and related detailed books (Detailed sale book, Detailed book receivable from customers, Detailed book of Products,…).
- The direct basis for making general accounting books is a voucher General accounting entries include:
- Write chronologically on the Register Voucher
- Write according to the economic content on the Ledger
Revenue, expenses accounting and determination of sales results using accounting forms of Book entry use the following accounting books:
Ledger Acc 511, Ledger Acc 155, Ledger Acc 632, Ledger acc 821, Ledger Acc 421, and related detailed books (Sales Detail Book, Detailed
1.3.3 Journal - Ledger form of bookkeeping
Economic and financial transactions are systematically recorded in a single general accounting book known as the Journal-Ledger, following a chronological order and organized by economic content based on accounting accounts The foundation for these entries in the Journal-Ledger consists of accounting vouchers or comprehensive tables of similar accounting vouchers.
Forms of Journal – Ledger accounting includes the following types of accounting books: Diary - Ledger, detailed accounting books and cards
Effective revenue and expense accounting is crucial for determining sales results This process utilizes the Journal-Ledger accounting method, incorporating various accounting books such as the Journal and specific Ledger accounts including Acc 511, Acc 155, Acc 632, Acc 821, and Acc 421, along with their corresponding detailed records.
1.3.4 Journal – Vouchers form of bookkeeping
(em xin phép bổ sung sau ạ)
Accounting for revenue, expenses and business results in the application of
Computerized accounting is the process of applying information technology to an accounting information system in order to transform accounting data into accounting information to meet the requirements of users.
The organization of accounting work through computer applications must adhere to the principles and requirements established for manual accounting processes, while also recognizing that each aspect possesses unique characteristics that align with contemporary information technologies.
Original documents are uploaded to the machine through an input device and stored as detailed data files on a memory device These detailed files are then transferred to Ledger files to organize the business accounting for each management object Periodically, the Ledger is utilized to generate accounting reports The information processing sequence of the machine can be summarized as follows:
Understanding the general theory of sales accounting is essential for determining business results in a commercial enterprise This knowledge helps readers grasp the critical roles of revenue and expenses in assessing business performance To enhance their business situation, enterprises must establish a clear path and strategic plans that involve meticulous calculation of costs and income from their activities Consequently, organizing revenue and expense accounting, as well as determining business results, in a scientific and rational manner is vital for delivering timely and accurate economic information.
Chapter 1 outlines the whole theory of accounting for sales and determining business results, through which we can understand the concepts,content and calculation methods The practice of sales accounting,determining business results in Viet Thanh industrial trade and construction joint stock company will be presented in chapter 2.
CHAPTER 2: PRACTICAL SITUATION OF ACCOUNTING FOR REVENUE, EXPENSES AND DETERMINE BUSINESS RESULTS AT VIET THANH TRADING TECHNOLOGY AND CONSTRUCTION
2.1 Overview of Viet Thanh trading technology and construction joint stock company
• Name company: Viet Thanh trading technology and construction joint stock company
• Address: No7, lane 8, Dai Mo, Dai Mo precinct, Nam Tu Liem district, Ha Noi city
• Short Name: VIET THANH.,JSC
• Head office address: No7, lane 8, Dai Mo, Dai Mo precinct, Nam Tu Liem district, Ha Noi city.
Viet Thanh Trading Technology and Construction Joint Stock Company was established on April 26, 2011 The company specializes in the sale of various construction and household items, including air conditioners, PVC pipes, electrical wires, and ceramic tiles.
In its early stages, the company faced challenges due to the inexperience of its young management team in both business and management Despite these hurdles, the administration consistently sought to improve their skills and navigate the company towards success Prioritizing customer satisfaction, the Board of Directors allocated significant resources to enhance product quality and invest in customer service training This commitment to excellence has been a foundational principle of the company since its inception.
After 10 years, the Company has timely grasped the market demand, guidelines, and policies of the Party and the State and has boldly expanded its business Up to now, the Company is on the rise and constantly developing in all aspects, and all of efforts of employers and staffs help the company to confidence of customers and have a certain of market share.
In today's rapidly advancing technological landscape, businesses remain acutely aware of challenges and obstacles They continuously strive to provide innovative products and enhance their capabilities to effectively meet customer demands.
- Retail sale of household applicants such as air-condition, PVC water piper,
- Selling construction products such as wire, kinds of PVC piper, construction equipments for small buildings.
- Offering service about installing water – electricity system.
2.1.2.2 Characteristics of organizing management mechanism
Mr Tran Duc Trung serves as the legal representative and director of the company, overseeing all business operations and accountable for the company's performance He plays a crucial role in steering both short-term and long-term production and business objectives.
Directors have the right to sign economic contracts and transaction relations with other agencies.
The administrative department plays a crucial role in monitoring human resources, organizing recruitment, allocating labor to business activities, and training new employees This department assists management in understanding the technical capabilities of each employee, ensuring optimal workforce utilization and development.
+ Implement regulations to ensure benefits and obligations towards employees such as salary, bonus,…
The Accounting Department oversees all financial transactions within the company, managing revenues and expenditures related to salaries, bonuses, machinery, and materials This department is tasked with accurately recording and reflecting the company's financial status in a timely manner, processing payroll for staff, monitoring customer payment transfers through banks, and settling outstanding debts Additionally, the team maintains organized records and relevant documentation to support financial operations.
The Sales Department plays a crucial role in identifying potential customers and preparing detailed quotations for the director's review, ensuring optimal assessments for various products Additionally, it focuses on nurturing relationships with existing clients while actively pursuing new business opportunities.
2.1.2.3 Characteristics of organizing accounting system
Viet Thanh company's accounting system is structured around a centralized model, featuring a dedicated team of five individuals, each with specific responsibilities and tasks within the operational workflow.
The Chief Accountant is responsible for overseeing the accounting operations of an enterprise, making key decisions related to the department's financial activities This role involves analyzing business results to assist management in selecting effective business and investment strategies, ultimately aiming to achieve maximum efficiency.
A General Accountant plays a crucial role in financial management by synthesizing end-of-period data, generating reports, and ensuring accurate comparisons and balances They are responsible for determining profits or losses and preparing both quarterly and annual financial statements Additionally, the General Accountant oversees the control and maintenance of all documents and records within the accounting department.
+ Payment accountant: A person who monitors cash receipts, bank deposits, checking consumption processes, tracking debts and making related documents.
Practical situation of accounting for revenue, expenses and business results at
2.2.1 Practical situation of Accounting for Revenue at
2.2.1.1 Classification of revenue Revenue at Viet Thanh company includes:
- Revenue from sales and services activities
2.2.1.2 Accounting for revenue from sales of goods and services
Revenue is defined by the fair value of amounts collected or owed A company recognizes sales revenue upon the completion of delivery and when the customer either makes or accepts payment.
Because the company pays tax under the deduction method, the company's revenue from selling goods and services provision is the selling price without VAT.
“Account 511: Sales of goods and service provision”
Reflecting the company's sales and service provision in a business cycle.Account 511 is detailed according to each type of revenue such as:
• And other related accounts (Account 111,112,131).
When customers wish to purchase items, the sales team must obtain approval from the Board of Directors (BOD) for the selling price Once approved, the sales manager prepares an economic contract and forwards it to the accounting department The customer then pays a deposit, either in cash or via bank transfer, to the accounting department Upon readiness for delivery, the sales staff notifies the customer, who then pays the remaining balance and any bank loan commitments The accounting department issues a VAT invoice in four copies, providing the second and third copies to the customer for goods registration, while retaining the first and fourth copies for company records Once the customer has paid the full amount of the economic contract, the sales department prepares the delivery record and hands it over to the customer.
Example: On 02/12/2020, Department of standards – measurement –quality bought ceramic tiles according to VAT invoice No 000330.
GIÁ TRỊ GIA TĂNG Ký hiệu: VP/11P
Liên 3: Giao khách hàng Số: 000330
Ngày 02 tháng 12 năm 2020 Đơn vị bán hàng: Công ty cổ phần xây dựng và thương mại Kỹ Nghệ Việt
Mã số thuế: 0105278203 Địa chỉ: Số 7 ngách 8 ngõ 470 Đại Mỗ - P Đại Mỗ - Quận Nam Từ Liêm-
Họ tên người mua hàng: Lê Thanh Thọ
Tên đơn vị: Cục Tiêu chuẩn-Đo lường-Chất lượng/BQP Địa chỉ: Số 11, Hoàng Sâm, Cầu Giấy, Hà Nội
T Tên hàng hoá dịch vụ Đơn vị tính
Số lượng Đơn giá Thành tiền
Thuế suất thuế GTGT: 10 % Tiền thuế GTGT 4 068 182
Tổng cộng tiền thanh toán 44 750 000
Bằng chữ: Bốn mươi bốn triệu bảy tram năm mươi nghìn đồng
Người mua hàng (Ký, họ tên)
Người bán hàng (Ký, họ tên)
(Ký,đóng dấu, họ tên)
Sales accountants should utilize VAT invoice No 000330 to input data into the FAST software To do this, they need to navigate the software interface by selecting "Kế toán bán hàng" followed by "Hóa đơn bán hàng kiêm phiếu xuất kho" to complete the data entry process.
- The accountant enter the necessary data:
+ Address: So 11 Hoang Sam, Cau Giay, Ha Noi
+ Interpretation: Ban gach op lat HD(000330)
+ Other data: goods code, unit, quantity, priceThen, putting on the button “Lưu”
Viet Thanh company do not implement payment discount policy
When a company issues a VAT invoice and the buyer receives the goods, any discovery of improper quality may necessitate a return of all or part of the items The two parties must agree on the quantity of goods being returned and document this agreement The buyer then issues a VAT invoice detailing the returned goods due to improper specifications and the applicable VAT amount Following this, the buyer returns the goods along with a delivery note The company will then adjust its sales volumes based on the VAT invoices received.
VAT amounts Based on the vouchers of returned goods, the accountants shall make the following entries:
Dr Acc 511: Returned goods are sold according to the sale prices of returned goods
Dr Acc 3331: VAT calculated on the value of returned goods
Cr Acc 111, 112,131: Total payment of returned shipments.
At the same time, upon receiving back the returned goods, the storekeeper shall check and make the good receipt note Based on the good receipt note, the accountant record:
Dr Acc 155: Value of returned goods
-The accountant will enter the General Journal and the detail book of Account 155 From the General Journal, the accountant will enter the Ledger of accounts 511.
Customers have a clear understanding of products due to their defined parameters, which fosters trust in the company Additionally, thorough quality checks are conducted before delivery to ensure the products meet specifications As a result, instances of price reductions or returns due to poor quality or incorrect specifications are uncommon.
In 2020, Viet Thanh company did not generate sales deductions
Content: Financial income of the company arises from interest on bank deposits
“Account 515- Revenue from financial activities”
Extracted from actual operations in enterprises
Example: On Januuary 25th , 2020, the bank to pay interest on the account balance in December 2020 is 8798 VND
The accounting entry is as follows:
The money accountant inputs data into the software based on the bank statements received They select cash, deposits, and loans for accounting, followed by choosing the bank's credit notes After the pre-accountant completes all necessary information, they perform the transfer operation at the end of the sales accounting period, prompting the software to automatically update related records, including the general journal and account ledgers for 515 and 1121.
- To view the General Journal from the main screen, we enter the module
"General accounting" and then on "Accounting books in the form of general diary"
To access the ledger and detailed accounts from the main screen, navigate to the general accounting module, select "Accounting books in the form of general journal," and then choose the ledger for Account 515.
Other incomes are the incomes generated from activities other than the normal business activities of the enterprise.
Use documents: Table of depreciation of fixed assets
+ Account 7111 – Other income: bonus and compensation
+ Account 7112 – Other income: liquidation, transfer of fixed assets
- The payable VAT amount (if any) for other incomes in the enterprise paying VAT by the direct method.
- Transferring other incomes arising in the period to Acc 911.
- Other income generated in the period.
Accountants diligently input original documents into the accounting software, where the cash and bank deposit modules automatically transfer data into the General Journal (S03a - DN) At the end of the accounting period, the sales module executes a transfer program, enabling users to view and print the ledger for account 711 (S03b - DN) and its related accounts.
- To view the General Journal from the main screen, we enter the module "General accounting" and then on "Accounting books in the form of general diary"
- To view the ledger, detailed books of other accounts from the main screen, we also choose to enter the general accounting module and then go to
"Accounting books in the form of general journal" and then select the ledger of Account 711
Because during the year the company did not incur any transactions related to other income, I asked for permission not to present
2.2.2 Practical situation of Accounting for expenses at…
2.2.2.1 Accounting for cost of goods sold
The cost of goods sold (COGS) is determined using the weighted average method, which calculates the average price per unit based on the inventory value at the beginning and throughout the period This average cost is then multiplied by the quantity of goods sold to derive the total value of goods sold.
Account used: Acc 632 – Cost of goods sold
Accounting books used: General Ledger, ledger Acc 632 and Ledger, detailed book of related accounts on accounting software.
Cost of goods sold determination process:
The company utilizes accounting software that automates the calculation of the cost of goods sold and cost-price entries With pre-set configurations, the software eliminates the need for manual recording of these accounting entries The accountant simply places a single order, and the software efficiently calculates the price automatically.
At the main interface, choose kế toán hàng tồn kho”
Select "tính giá trung bình" to automatically calculate the monthly cost of capital
The window of Warehouse price calculator appears, the accountant enters the start and end date and wants to calculate the cost price and select accept.
The machine will automatically synthesize and calculate the average price for each item Once the synthesis is complete, it will update the calculated average price in the COGS column of Account Ledger 632.
2.2.2.2 Accounting for business administration expenses
selling expenses in the Company include the following expenses:
- Expenses for fuel used to transport goods for sale
- Depreciation cost of fixed assets: depreciation of houses, warehouses, vehicles, loading and unloading
- Services purchased from outside: hire repair fixed assets, hire transportation, loading and unloading
- Other monetary costs: reception costs, transactions, advertising costs, travel expenses
administrative expenses in the Company include the following expenses:
- Depreciation cost of fixed assets used for management
- Table of salary distribution and social insurance.
Account 642 The Company opens details for Account 642 as follows: Account 6421- selling expenses
Example: on 25 th December 2020, the company pay reception expenses according to payment vourcher 141
First, from the screen interface of “ FAST software”
-> then put information according to these following steps: “Kế toán tiền” -> “ phiếu chi tiền mặt”
->The accountant enter the necessary data:
Payment reason: tiep khach HD(4031,4048)
Other data: debt incurred, interpretation,…
Financial expenses mainly arise from interest payments on bank loans, exchange rate difference losses
Each day, cash accounting inputs data into the software using original documents, such as the bank's debit note Once all data is entered, the software automatically updates the General Journal (S03a -DN), the TK635 ledger, and the associated TK ledgers.
Other expenses of the company usually arise from expenses for liquidation, sale of fixed assets, tax penalties, tax arrears
- Debit notes and credit notes
- Minutes of handling surplus and missing assets
Account 811- Other expenses+ Account 8111 – Other expenses: Compensation, fines and other expenses
+ Account 8112 – Other expenses: Liquidation, transfer of fixed assets
+ Account 8113 – Cost of fines – taxes
- Other expenses incurred - Transferring all other expenses incurred in the period into acc 911.
Acc 811 has no closing balance
2.2.2.6 Accounting for corporate income tax expenses
Corporate income tax expense: is the cost of income tax calculated on the basis of income tax rate and accounting profit before tax.
- Account 821 – Corporate income tax expense
- Other related accounts: Account 3334 – Corporate income tax, and Account 911 – Income summary.
The accountant makes a report on provisional corporate income tax payable according to the following formula:
CIT payable = Profit before tax x CIT rate
Profit before tax is calculated:
= Revenue from sales + Financial income - Cost of goods sold - financial expenses - Administration expense - Financial expenses
The company uses the tax declaration software of the General Department of Taxation.
2.2.3 Practical situation of Accounting for determining business results at the company
+ Account 421 - Undistributed after-tax profits
Formula for determining business results:
Accounting profit before tax = (Net revenue from sales and provision of services - Cost of goods sold) + (Financial income - Financial expenses) - Selling expenses - Administration expenses business + (Other income - Other expenses)
Profit after tax = Profit before tax - Corporate income tax expense
At the end of the period, to determine the business results, the accountant must carry out carryover entries:
• Net revenue from sales and service provision
• Transferring cost of goods sold:
• Transferring Revenue from financial activities
At the end of the month, the accountant will carry out carryover and close book entries to determine the business results of that month.
At the main interface of the software
select "Closing entries", a window listing the closing entries will appear and the accountant chooses one by one the closing entries to be performed
After choosing the closing entry entry, the accountant accepts to select the tick button on the toolbar or press F10
select the close date and Accept.
THE INTERFACE TO TRANSFER REVENUE AND DETERMINE BUSINESS
After the FAST software determines the results, the accountant will carry over the transfer from Account 911 to Account 4212 according to the following entry:
After making automatic transfer entries at the end of the quarter, the data will be transferred to general ledger of Account 911.
Chapter 2 of the thesis has briefly reflected the characteristics and business situation of the company and focused on reflecting the actual situation of revenue, expenses accounting and determining the company's business results Through the actual situation of accounting department at VietThanh trading technology and construction joint stock company, readers can understand about the accounting system and system of accounts used of this company.
SOLUTIONS TO IMPROVE ACCOUNTING FOR REVENUE,
Development orientation of the company
(Em xin phép bổ sung sau ạ)
Requirements for improving accounting for revenue, expenses and business
3.2.1: Requirements for improving accounting for revenue, expenses and business results
In the new economic management mechanism, to meet the requirements under the current conditions, perfecting the sales accounting and determining business results must ensure the following requirements:
The policies and measures proposed by the enterprise must be consistent with the characteristics of the business activities as well as the financial capacity of the company.
- Requirements for accuracy and timeliness:
Accurate and timely accounting data is crucial for authorities, including tax agencies, banks, and company management, as it enables them to make informed decisions and develop effective strategies for upcoming business periods.
+ Data must ensure clarity, transparency and publicity This is a special concern of both businesses and partners contributing capital.
Ensuring savings and effective practicality to achieve the best business results Any business has a desire to minimize costs and maximize profits for the company to thrive.
To enhance the effectiveness of the accounting apparatus within the company, it is essential to consistently integrate and implement innovative proposals regarding both content and methods While this requirement may not be uniformly upheld across all operations, it is crucial that any changes introduced are both reasonable and acceptable to ensure smooth transitions and maintain operational integrity.
3.2.2 Principles for perfecting the accounting of revenue, expenses and determining business results
In the context of the new economic management mechanism, it is essential to refine revenue and expense accounting processes while accurately determining business results to meet current demands.
The policies and measures proposed by the enterprise must be suitable with the characteristics of the business activities as well as the financial capacity of the enterprises.
- Requirements for accuracy and timeliness:
Accurate and timely accounting data is crucial for authorities like tax agencies, banks, and company management, as it enables them to formulate specific strategies and plans for upcoming business periods.
+ Data must ensure clarity, transparency and publicity This is a special concern of both businesses and partners contributing capital.
Ensuring savings and effective practicality to achieve the best business results Any business has a desire to minimize costs and maximize profits for the company to thrive.
To effectively enhance the accounting processes within the company, it is essential to consistently integrate and apply new proposals in both content and methods While this practice may not be uniformly upheld across all operations, any changes introduced must be reasonable and widely accepted to ensure smooth implementation.
Evaluation of accounting for revenue, expenses and business results at Viet
at Viet Thanh trading technology and construction joint stock company
Over 12 year experience, especially after applying accounting software since the first year of operation, the accountant department has always met the demand of manager about accounting management There are some achievements as follows:
Firstly, about the document system at the company
The company adheres to the Ministry of Finance regulations by utilizing comprehensive documentation, ensuring that all accounting vouchers contain essential information that upholds their legality and validity This practice streamlines the recording process in the accounting books, making it straightforward to check, inspect, and verify the vouchers.
The document rotation process adheres to regulations, maintaining strict oversight of business activities Monthly vouchers are collected and archived by the accounting department after use Additionally, accountants compile and analyze original documents at the end of each month for thorough checking and comparison, enhancing the overall accuracy of financial records.
Second, the method of calculating ex-warehouse price
The company used the weighted average method which is a simple method and easy to accounting work.
Third, about the account system
During my internship, I assessed the accounting system of Viet Thanh Trading Technology and Construction Joint Stock Company, finding it well-structured and appropriate for a small business The accountants demonstrated exceptional responsibility and reliability, ensuring that all accounting tasks were completed accurately and on time.
Fourth, about organizing and applying accounting books
The company utilizes a general journal entry form, which is an efficient and straightforward accounting method well-suited for its size This choice has significantly reduced the accounting workload, enabling quick, accurate, and easily traceable information recording.
Since its inception, Viet Thanh company has utilized FAST software for its bookkeeping processes This technological integration significantly alleviates the manual workload for accountants, enabling faster provision of financial information to address the increasing demands of a growing workload.
In software accounting, utilizing a General Journal effectively addresses the information needs of various departments The computerized accounting system ensures that data is stored accurately, minimizing confusion compared to manual methods This approach facilitates easy data verification and promotes consistency in accounting practices across the organization.
3.3.2 Limitations and effects of limitations
There are some weekness point in revenue, expenses accounting and determining business results at Viet Thanh trading technology and construction joint stock company:
Viet Thanh Company engages in the trading of diverse products, including household appliances and construction equipment, while also providing construction services The consumption patterns and business outcomes for each product category vary over time However, the company utilizes a single account (account 632) to record the overall cost of goods sold without maintaining detailed accounts for individual products As a result, the operational costs across different periods appear relatively uniform, and the company lacks the ability to differentiate the financial performance of its various trading items.
The limitation in data provision regarding consumption and business activities for each product group creates challenges for managers in tracking sales performance As a result, the company remains unaware of which product categories are performing well and which are struggling to sell Furthermore, without the ability to assess the business outcomes of each commodity group during periods of loss, the overall performance results can be misleading, as individual product results may offset one another, leading to an inaccurate evaluation of the company's financial health.
The company has yet to establish payment discount policies aimed at incentivizing early payments and effectively recovering debts Additionally, there are no discounts for bulk purchases, which could attract potential customers and enhance sales opportunities.
Limitations on payment incentives can discourage customers from paying early, leading them to wait until the due date to optimize their capital allocation, even if it results in late payments This behavior increases the risk of bad debts and negatively affects the company's financial health Furthermore, the absence of payment discount policies may alienate bulk-buying customers, restricting opportunities for growth and productivity enhancement.
Thirst , limitation about accounting software
The integration of software into accounting tasks offers numerous benefits; however, the implementation process faces certain limitations Additionally, the company's accounting software has not been upgraded to the latest version.
Effects of limitations: This leads to occasional errors in comparing data with the publisher or the customer
Viet Thanh company is using the paper invoice for selling activities and offering service while the government allow to use e-invoice.
The limitations of the current invoice form create challenges for both customers and the accounting department during the VAT invoice issuance process Manually writing invoices is time-consuming and prone to errors, which can lead to inaccurate information and delays.
3.3.3: The cause of the weakness
+ The accountants are not really professional, highly specialized, do not really understand thoroughly about the company's products, so they have not divided the different items clearly.
+ The company lacks personnel in promoting goods to consumers.
+ The company has not developed an effective sales policy and marketing plan for its products, as not known how to apply social media advertising tools
+ The company lacks a professional accountant, the work of the accountant is sometimes not clear, the assignment is not scientific.
Solutions to improve accounting for revenue, expenses and business results at
In light of the current circumstances at Viet Thanh Company, I propose implementing strategic measures to address the existing challenges in accounting for revenue and expenses, as well as accurately determining business results.
There are some solutions as follows:
3.4.1: Open detailed accounts, detailed books to manage accounting for cost of goods sold
To effectively monitor the consumption patterns and business performance of each product category, the company should maintain comprehensive accounts and detailed records of the cost of goods sold for every group of goods.
Open a detailed account of the cost of goods sold for each group of goods as follows:
Acc 6321: Cost of construction equiments,…
Acc 6322: Cost of household applicants,….
Implementing an effective payment discount policy can incentivize customers to settle their accounts promptly, thereby enhancing capital recovery Additionally, this strategy can attract new potential customers, particularly those interested in bulk purchases.
To encourage prompt payments, companies should implement flexible discount rates tailored to specific intervals This strategy is essential, especially as businesses often rely on bank loans and incur interest costs to sustain operations By developing payment discount rates that consider these financial factors, companies can effectively incentivize timely payments while managing their cash flow.
- The amount of interest the company must pay to the bank monthly.
- The solvency of customers with stable sales.
- Expenses for managing bad debts.
To effectively set discounts, it is essential to ensure that the offered reductions at least offset the decrease in bank loan interest, thereby minimizing the costs associated with managing bad debts For customers with overdue debts, the company should adjust interest rates in line with the bank's overdue interest rates to maintain financial stability.
Viet Thanh Company strategically calculates its discount rate to optimize profits and boost competitiveness against rivals This approach not only increases the number of business contracts but also facilitates future business expansion.
3.4.3: Enhancing the FAST software system
Updating to the latest version of FAST accounting software is essential for improving the efficiency and effectiveness of the accounting department This upgrade will empower the Board of Directors and enhance overall management capabilities By leveraging advanced technology, the company can significantly boost operational efficiency, leading to long-term benefits and a more streamlined accounting process.
3.4.4: Using e-voice in selling activities and offering service activities
Implementing e-invoices can significantly streamline the accounting process for businesses, particularly in issuing VAT invoices to customers By transitioning from paper to electronic invoicing, companies can save valuable time and reduce costs, as the traditional paper invoicing method often requires up to a week for registration and printing.
However, with the type of invoice, all procedures will be shortened.
In today's digital age, many businesses are adopting e-invoicing due to its numerous advantages Therefore, Viet Thanh Company should promptly embrace this technological shift to enhance its operations and remain competitive.
Conditions for implementing solutions
To effectively finalize sales accounting and assess business performance at Viet Thanh Trading Technology and Construction Joint Stock Company, it is essential to implement specific measures addressing existing limitations.
In order to gain success in implementing such effective solutions, enterprises need to meet fully the following conditions:
Accounting professionals must possess a deep understanding of Accounting Standards, regimes, and legal documents, while also dedicating time to stay updated on daily market news, state economic policies, and new regulatory documents This knowledge equips them to respond effectively to emerging events and operational changes, ensuring the proper and appropriate application of new policies within corporate accounting.
Secondly, the Directors needs to strengthen the direction, check and supervise closely the work of accountants, avoiding mistakes or inconsistencies with the business of the enterprise.
Thirdly, disseminate to all members of the enterprise to be albe to well aware of the important role in sales as well as accounting of sales operations.
On that basis, everyone will try their best to facilitate sales accounting throughout the enterprise.
Fourth, the company need to create a comfortable working environment to avoid stress for employees so that employees can complete the assigned tasks in the most effective way.
The thesis outlines the essential requirements for enhancing sales accounting practices to accurately assess revenue and expenses, ultimately determining business results It identifies the strengths and weaknesses of the company to optimize performance and provide strategic direction Additionally, the research offers solutions aimed at perfecting the sales accounting process within the organization.
In a competitive market economy, businesses must effectively harness their internal capabilities and seize opportunities within their industry to thrive A vital tool for achieving this is accounting, particularly in managing revenue, expenses, and determining business results Accurate accounting enables administrators to swiftly assess the enterprise's financial status, facilitating informed decision-making This dissertation highlights the critical importance of accounting practices, especially in revenue and expense management Based on my internship experience at a sales company, and with the support of dedicated accounting professionals and guidance from Ph.D Dinh Thi Thu Ha, I present insights aimed at enhancing accounting processes related to revenue, expenses, and business result determination.
The thesis has raised the following issues:
This thesis systematically addresses the theoretical aspects of sales accounting organization and the evaluation of business results in commercial enterprises By conducting an internship at Vietnam Megaway International Trading Services Joint Stock Company, the research highlights the current state of sales accounting and business result determination within the company It further identifies both the strengths and weaknesses in the sales accounting processes and the assessment of business performance at the organization.
This thesis offers several recommendations aimed at enhancing the sales accounting processes and evaluating the business outcomes of Viet Thanh Trading Technology and Construction Joint Stock Company Despite my best efforts, the limitations of a brief internship and limited research experience may have resulted in certain shortcomings within the thesis I welcome feedback from teachers and the staff at Viet Thanh to improve the work further I extend my heartfelt gratitude to my mentor, Nguyen Ba Linh, and the accounting team at Viet Thanh for their invaluable support in completing this thesis.