285. TOPIC “ACCOUNTING FOR SALES AND BUSINESS RESULT IN PHU THO EDUCATIONAL BOOK AND EQUIPMENT JOINT STOCK COMPANY”

TABLE OF CONTENT CHAPTER 1: GENERAL THEORETY OF SALES ACCOUNTING AND EVALUATION BUSINESS RESULTS IN COMMERCIAL ENTERPRISES1.1 Overview of sales process: 1.1.7 Accounting for sales deduc

MINISTRY OF FINANCE ACADEMY OF FINANCE

STUDENT: LE KIM THOA CLASS: CQ 54/21CL02

I hereby declare that this thesis is my own work and effort and that has not been submitted anywhere for any award Where other sources of

information have been used, they have been acknowledged

The data and results described in the thesis are derived from the actual situation of the practice company

Student

Le Kim Thoa

In order to survive and develop in a market economy, there is themanagement of the socialist-oriented state Any business, whether it isbusiness or commercial, must go through consumption and be effective as atop target To do that, managers must be aware of the role of accounting.Accounting is the source of information needed to effectively manage thecompany's economic performance

Commercial business objects are goods that are labor products purchased

by commercial enterprises to sell in order to meet the needs of consumerproduction and export Enterprises that want to have revenue must havegoods But the value and value of use can only be done through theconsumption process Sales are the final stage of the reproduction process.Good implementation of sales will facilitate the recovery of capital and offsetthe cost of production On the other hand, create conditions for businesses towell fulfill their obligations to the state budget for investment anddevelopment, improve workers' lives More than ever, perfect revenueaccounting, expenses and determine operational results Business dynamicsare often a problem for businesses Completion of revenue accounting, costand determination of business results will contribute to increasingcompetitiveness, improving the quality of business decisions, increasingfinancial information transparency

Currently accounting is an important tool for managing the economy bothmicro and macro Through the internship at Phu Tho educational book andequipment, JSC, I am particularly interested in the process of consuminggoods, identifying and distributing the business results of the company, so Ichoose the part “Accounting for sales and business result in Phu Thoeducational book and equipment, JSC ”for my graduation thesis

Although I tried to understand and receive the enthusiastic help of theBoard of Directors, the staffs the accounting department along with theteacher's instructions - Dr Tran Thi Ngoc Diep, I have grasped gain a part ofthe actual situation of accounting for sales and determine the business results

at Phu Tho educational book and equipment joint stock company

In addition to the introduction and conclusion, my topic has 3 chapters:

CHAPTER 1: GENERAL THEORETY OF SALES ACCOUNTING AND EVALUATION BUSINESS RESULTS IN COMMERCIAL ENTERPRISES

CHAPTER 2: THE ACTUAL ACCOUNTING FOR SALES AND

BUSINESS RESULT IN PHU THO EDUCATIONAL BOOK AND

EQUIPMENT JOINT STOCK COMPANY.

CHAPTER 3: SOLUTIONS TO COMPLETE SALES ACCOUNTING AND DETERMINING BUSINESS RESULT AT PHU THO

EDUCTIONAL BOOK AND EQUIPMENT JOINT STOCK COMPANY

However, due to the limited level of reasoning and practical access, my

topic is inevitable I look forward to receiving comments from the teachers, sothat my topic will be improved

TABLE OF CONTENT CHAPTER 1: GENERAL THEORETY OF SALES ACCOUNTING AND EVALUATION BUSINESS RESULTS IN COMMERCIAL ENTERPRISES

1.1 Overview of sales process:

1.1.7 Accounting for sales deduction

1.1.8 Accounting for Cost of goods sold

1.2 Evaluating business result

1.2.1 Accounting for selling expenses and administrative expenses

1.2.2 Accounting for financial expenses and financial incomes

1.2.3 Accounting for others expenses and other incomes

1.2.4 Accounting for corporate income tax expenses

1.2.5 Accounting for determining business results

1.2.6 Accounting for revenue and business results in terms of accountingsoftware application

CHAPTER 2: THE ACTUAL ACCOUNTING FOR SALES AND BUSINESS RESULT in PHU THO EDUCATIONAL BOOK AND EQUIPMENT JOINT STOCK COMPANY.

2.1 The foundation and development process of company

2.1.1 Overview of the company

2.1.2 Foundation and development

2.1.3 Characteristics of business operation

2.1.4 The corporate management organization

2.1.5 The organization of accounting works in the company

2.2 The actual accounting for sales and business results in Phu Tho educational book and equipment joint stock company.

2.2.1 Actual situation of methods of sales and payment at the company 2.2.2 Accounting for sales revenue and revenue deductions

2.2.3 Accounting for costs of goods sold

2.2.4 Accounting for selling and administrative expenses

2.2.5 Accounting for financial expenses and financial incomes

2.2.6 Accounting for other incomes and other expenses

2.2.7 Accounting for determining business results

2.3.General comments on sales finance accounting and determining business results at Phu Tho educational book and equipment, JSC.

3.2 Some suggestions to improve sales accounting and determining business results at Phu Tho educational book and equipment, JSC.

Flowchart 1.3 : Accounting entry for sales through agents

Flowchart 1.4 : Accounting entry for sales in case of deferred or instalment payment

Flowchart 1.5 Accounting entry for revenue deductions

Flowchart 1.6 : Accounting for COGS applying perpetual inventory methodFlowchart 1.7 : Accounting for COGS applying periodical inventory method.Flowchart 1.8 : Accounting entry for selling expenses

Flowchart 1.9 : Accounting entry for selling and administrative expenses

Flowchart 1.10 : Accounting entry for financial expenses

Flowchart 1.11 – Accounting entry for other incomes

Flowchart 1.12: Accounting entry for other expenses

Flowchart 1.13 – Accounting entry for other incomes

Flowchart 1.14 – Accounting entry for other incomes from the liquidation or sale of fixed assets

Flowchart 1.15 : Accounting entry for income tax expense

Flowchart 1.16 : Accounting entry for business result

Flowchart 2.1:Management apparatus

Flowchart 2.2: Accounting apparatus

IMAGE CATALOG

Figure 2.1: Display screen of “Quản lý kế hoạch- phát hành”

Figure 2.2: Display screen of “ Kế toán 2019”

Figure 2.3: Examples of list of textbook

Figure 2.4: VAT invoice

Figure 2.5: Inventory list

Figure 2.6: Delivery invoice on “ Quản lí kế hoạch- phát hành”

Figure 2.7: The interface of entering sales invoice on “ Kế toán 2019”

Figure 2.8: General ledger of Account 511

Figure 2.9: Table trade discount rate

Figure 2.10: VAT invoice No 002611

Figure 2.11: Inventory list

Figure 2.12:General ledger of account 521

Figure 2.13:General ledger of account 632

Figure 2 14 Payment order

Figure 2.15: General ledger of account 641

Figure 2.16: Water bill

Figure 2.17: The interface of entering payment voucher

Figure 2.18: Electricity bill

Figure 2.19: The interface of entering electricity invoice on “ Kế toán 2019”

Figure 2.20: Payment order

Figure 2.21:Table of salary distribution and social insurance

Figure 2.22: Depreciation table of fixed assets

Figure 2.23 General ledger of Account 635 – Financial expenses

Figure 2.24: General ledger of Account 515 – Financial incomes

Figure 2.25: The interface to transfer revenue and determine business results

on “ Kế toán 2019”

Figure 2.26: General ledger of Account 911Figure 2.27: General ledger of Account 4212

CHAPTER 1: GENERAL THEORETY OF SALES ACCOUNTING AND EVALUATION BUSINESS RESULTS IN COMMERCIAL

ENTERPRISES 1.1 Overview of sales process:

1.1.1 Definition

Sales is the transfer of ownership of a product or goods associated with most

of the benefits, or risks to customers, and the customers make payment oraccept payment

1.1.2 Characteristics of sales process:

Sales process is the process of exchanging ownership, between buyers andsellers in the operating market Goods sold to individuals and organizationsoutside the enterprise are called external sales, while goods supplied to unitswithin the same company or corporation are referred to as internal sales Sale

is the final stage in the business operation of a commercial enterprise

 Wholesale in stock:

Under this method, purchased goods are put into warehouse, then sold atwarehouse The method of selling goods in stock has two forms:

- Direct form: enterprises deliver goods directly to customers at warehouses

or goods preservation places of enterprises The goods are recorded as soldwhen the buyer has received them and sign the confirmation on the salesinvoice

- Delivery form: the seller will transfer the goods to the buyer’s warehouse or

to a location specified by the purchaser Goods is considered to be sold whenthe buyer has received the goods and paid or accepted to pay for the goodsreceived

 Wholesale by shipping directly:

Commercial enterprises after purchasing and receiving goods do not bringthem

back to their warehouse, but sell them directly to the buyer With this form,businesses also have two forms: direct delivery or indirect delivery

- Direct delivery: The enterprise received goods from the seller and deliverdirectly to its customer Goods is considered to be sold when the buyerreceived all the goods and signed on sale invoice

- Indirect delivery: The enterprise received goods from the seller and transferthese goods to its customer Goods is considered to be sold when thecustomer check and paid or accepted to pay for the goods received

and receives the invoice to receive the goods at the delivery counter.

 Sales in the form of customers’ choice: customers choose items

purchased in supermarkets and pay at the cashier counters

 Sending agents, consignment agents: selling businesses sign contractswith agents, deliver them goods to sell and pay them commissions

1.1.4 Payment methods

Payment method is a method of performing property obligations Paymentmay be made by cash, check, bank payment, letter of credit, commodityExchange or agreement of the parties

The method may be paid in one time, more times or periodically ordepending on agreement by the parties

Normally, it is done in two forms: direct payment and deferred or installmentpayment

 Direct payment method: customers pay immediately for enterprisesafter

receiving goods, without sending it through a third party

 Deferred payment method: enterprises only collect part of

money that customers have to pay, customers will gradually pay the rest and a

certain amount of interest Deferred payment arrangements are often used in

results is the basis for determining the operational efficiency of enterprisesthrough the payment of taxes, fees and charges into the state budget;determining the reasonable costing structure and highly effective using of theprofits earned to harmonize economic benefits.

Accounting for sales and determining business result is an important task

of the enterprise in order to determine the quantity and value of sold goods aswell as the turnover and business results of the enterprise However, in order

to bring into full play the role of well performing the tasks, it is necessary toorganize accounting work in a scientific way, and at the same time,accountants must firmly grasp the contents of sales accounting anddetermination of business results in enterprises

1.1.5.2 The missions of accounting for sales, determining business results With an aim to managing sales and evaluating business result, accounting

for sales and determining business results has some missions as below:

- Fully, timely, accurately reflecting and recording occurred transactions andmovements of each type of goods and products under quantity, quality, modeland value

- Fully, timely, accurately reflecting and recording sales, sales deductions andexpenses of each business activity, as well as following and supervisingcustomer receivables

- Accurately calculating and reporting results of each transaction

- Monitoring the implementation of state obligations and division process ofbusiness result

- Interpreting accounting reports to information users Accountinginformation

must be reliable, easy-to-read and useful

Accounting for sales and determining business result must follow theaccounting

standards and able to adapt to the status of the company’s accounting system

1.1.6 Accounting for sales revenue:

 Definition:

The concept of revenue according to VAS standard 14 “Turnover and otherincome are the total value of economic benefits of the enterprise earned in theaccounting period, arising from normal production and business activities andother activities of the enterprise, contributing to increasing equity, excludingcapital of shareholders or owners ”

 Revenue recognition principles:

- Sales of goods are recognized when all of the following five conditions aresimultaneously met:

(a) The enterprise has transferred substantially all risks and benefits ofownership of the product or goods to the buyer;

(b) The Company retains neither continuing managerial involvement to thedegree usually associated with ownership nor effective control over the goodssold;

(c) The revenue is determined reliably;

(d) The enterprise has gained or will gain economic benefits from the sale;(e) Determine the costs associated with the sale

- The service revenue of a transaction is recognized when the outcome of thattransaction can be reliably determined Where a transaction involving therendering of services is attributable to several periods, revenue is recognized

in each period by reference to the percentage of completion of the transaction

on the date of making balance sheet The outcome of a transaction can bemeasured reliably when all four (4) following conditions are satisfied:

(a) The revenue is determined reliably;

(b) Be able to derive economic benefits from the provision of that service;(c) Determine the amount of work completed on the balance sheet date;

(d) Determine the costs incurred for the transaction and the cost to completethe transaction to provide that service

In cases where a service provision transaction is conducted in manyaccounting periods, the determination of the turnover of a service in eachperiod is usually made according to the completion rate method By thismethod, the revenue recognized in the accounting period is determined by theproportion of the completed work

The completed work is determined by one of the following three methods,depending on the nature of the service:

(a) Assess completed work;

(b) Comparing the percentage (%) between the completed workload and thetotal workload to be completed;

(c) The ratio (%) of expenses incurred to the total estimated cost ofcompleting the entire service delivery transaction

The completed work does not depend on recurring payments or advances bycustomers

- Revenue from interests, royalties, dividends and shared profits of anenterprise is recognized when both (2) of the following conditions aresatisfied:

(a) Be able to obtain economic benefits from the transaction;

(b) The revenue is determined reliably

 Accounting vouchers:

- VAT invoice

- Payment voucher of goods on consignment

in the accounting period.

This account reflects the turnover of production and business activitiesfrom the following transactions and operations:

+ Sales: Selling products manufactured by enterprises, selling goodspurchased and investment real estate;

+ Service provision: Performing the agreed work under a contract, ormultiple accounting periods, such as provision of transportation, tourism,fixed asset

+ Other revenues

- Structure:

Acc 511

- Payable indirect taxes (VAT,

excise, export, environmental

protection);

- Turnover from returned goods

transferred at the end of period;

- 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

Account 511 does not have closing balance and it comprises 4 sub – accounts:

+ Account 5111: Turnover from sales

+ Account 5112: Turnovers from finished goods

+ Account 5113: Turnovers from service provision

+ Account 5118: Other turnovers

- Account 3331: Payable VAT

 Accounting entries

Flowchart 1.1: Accounting entry for direct sales (applying

deductible VAT method).

Flowchart 1.2 : Accounting entry for direct sales for company applying

direct VAT method

Flowchart 1.3 : Accounting entry for sales through agents

Flowchart 1.4 : Accounting entry for sales in case of deferred or

- Trade discount is the amount of money that enterprise credited or paid

to customers who bought goods and services in large volume in accordance with the agreement that the seller will give trade discount to the buyer

- Sales return is the amount of goods sold which have subsequently been returned due to the following reasons: breaching the commitment or the economic contract, or in a wrong quantity, quality or specifications

- Sales allowance is a reduction made when the goods are not the same

specification as those mentioned in the economic contract

Accountants must monitor in detail trade discounts, cash discounts, andsales returns for each customer and each type of goods sold, such as: sales (products, goods), service provisions At the end of period, transferring all to account 511 - "Revenue from sales of goods and services" to determine the net revenue of products, goods and services earned in the reporting period.

- Minutes of sales allowances

- Sales allowances invoice

- Accounting voucher of sales allowances

Sales returns:

- Minutes of goods return

- VAT invoice or sales invoice

- Goods receipt

- Accounting voucher of sales returns

 Accounting used

Account 521: Revenue deduction

- Number of commercial discounts accepted to pay customers;

- Number of sales discounts approved for the buyer;

- Sales of returned goods, money returned to the buyer or deducted from customer receivables for sold products and goods

- At the end of the accounting period, carry over all trade discounts, sales rebates, sales of returned goods to account 511 "Sales of goods and rendering

of services" to determine net revenue of reporting period

Account 521 does not have closing balances

Revenue deduction are those amounts that are adjusted to reduce the turnover

of the sale of goods, products and services provided by the enterprise in the accounting period Includes: Sales discounts, Sales returns and Sales

allowances

- Trade discounts: are the amount discounts for the buyer who buy

merchandises with large volume

- Sales returns: are the revenue of products, goods, and services returned by the buyers because of poor quality

- Sales allowances: are the sales allowances for the purchaser because

products, goods, services provided have poor quality which does not meet the quality conditions specified in the contract signed between two parties

 Accounting entry:

Flowchart 1.5 Accounting entry for revenue deductions

1.1.8 Accounting for Cost of goods sold

1.1.8.1 Definition

The cost of goods sold at the manufacturing enterprise is the actual

production cost of goods sold or the actual production cost of the finished product For commercial enterprise, the cost of goods sold is the actual value

of goods sold and the purchase costs allocated to the number of goods sold According to VAS 02, cost of goods sold shall be calculated by the following methods:

- Specific identification method: this method tracks the actual physical flow of the goods Each item of inventory is marked, tagged or coded with its

“specific” unit cost This method is possible when a business has a limited variety of high-unit-cost items that can be clearly identified.

- Average cost method ( AVCO) : The average price of all the goods in stock, regardless of purchase date, is used to value the goods sold Taking the

average product cost over a time period has a smoothing effect that prevents COGS from being highly impacted by extreme costs of one or more

(Number of inventory atthe beginning of the period

+

Number of goods purchased during the period)

+ AVCO Perpetual: After each purchase, redefining the real value of

inventory and the average unit cost

Number of goods purchasedbefore the ith sale)

- First-in, First-out method ( FIFO): The earliest goods to be purchased or manufactured are sold first Since prices tend to go up over time, a company

that uses the FIFO method will sell its least expensive products first, which translates to a lower COGS than the COGS recorded under LIFO Hence, the net income using the FIFO method increases over time.

COGS during

the period =

Cost of goods left at the opening of theperiod

+

Cost of goods increased during the period

-Cost of goods left at the closing of the period

1.1.8.2 Accounting for Cost of goods sold ( COGS)

Account 632 “Cost of goods sold”

- Content: This account is used to record cost of goods, products, services, investment property, costs of production of construction products, etc

- Costs of raw materials, part of labor costs in excess of normal level,

- Transferring cost of products, goods, services sold to acc 911

- Sales returns to be stored

- Trade discounts, sales

unallocated and added to costs of goods during theperiod.

- Waste, loss of inventory

after excluding compensation received from responsible

individuals

after purchasing consumed goods

Account 632 does not have closing balances.

In case business applying periodical inventory method.

Acc 632

- Transferring actual cost

of finished products in the first period

- Transferring forward the

actual cost value of sold goods sent beginning

- Transferring the actual

value of sold goods

- Transferring actual cost

of finished products at the end of the period

- Transferring the actual capital value of the goods sold at the end ofthe period

- Transferring the actual value of sold goods to determine business results

Account 632 does not have closing balances

 Accounting entries:

Flowchart 1.6 : Accounting for COGS applying perpetual

inventory method

Flowchart 1.7 : Accounting for COGS applying periodical inventory

method.

1.2 Evaluating business result

1.2.1 Accounting for selling expenses and administrative expenses

- Administration expenses: are all overhead costs of business including salary expenses of business‘ administrative staffs (salary, wages, subsidies, ); social insurance, medical insurance, labor union expenses, unemployment insurance of administrative staff, expenses of office materials, labor

instruments, depreciation of fixed assets used for administration, lease rent, provision for bad debts, outsourced services (electricity, water, telephone, fax,assets warranty, fire and explosive accidents, ), other cash expenses

(expenses of entertainment, customer conference )

 Accounting vouchers:

- Table of salary distribution and social insurance

- Table of materials allocation

- Depreciation table

- VAT invoice, sales invoice

- Payment voucher, debit note

 Accounts used

- Account 641: Selling expenses

+ Content: reflect expenses actually incurred in process of sellingproducts, goods, providing services, including publicityexpenses,demonstration expenses, advertising expenses…

+ Structure:

Acc 641

- Cost incurred relating to

process of selling products,

goods, rendering services

Account 641 has no closing balance

Flowchart 1.8 :Accounting entry for selling expenses

- Account 642 : Administration expenses

+ Content: record overhead costs of business including salary

expenses of administrative staffs, social insurance, medical insurance, labor union expenses, lease rent, outsourced services ( electricity, water,

telephone, fax,…), other cash expenses…

+ Structure:

Acc 642

- Administrative expenses arising

in the period;

- The amount of provision for

bad debts and payables

- Amounts recorded to reduce

administrative expenses;

- Refunding provision for bad

debts and payables;

- Transferring administrative

expenses into acc 911

Account 642 has no closing balance

Accounting entries:

Flowchart 1.9 :Accounting entry for administrative expenses

1.2.2 Accounting for financial expenses and financial incomes:

1.2.2.1 Accounting for financial expenses

 Definition

Financial expenses are all expenses incurred in relation to financial activities of the company, such as borrowings…

Contents of financial expenses:

- Costs of manufacturing products, rendering services

- Operating costs of real estate

- Capital investment expenses

- Expenses covered by other source of fund

- Other financial expenses

Accounting vouchers:

- Invoices

- Documents and notices of the joint venture party

- Payment and receipt voucher

- Debit note and credit note

 Accounts used:

Account 635: Financial expenses

- Content: to record financial operating cost including expenses or losses

relating to financial investment activity, expenses of lending and borrowing, costs of capital contributed to joint venture, to associates, etc

- Structure:

Acc 635

- Financial expenses arising

in the period

- Deductions for setting up

additional reserves for trading securities price decrease and provision for loss of investment in other units

- Refunding provision for devaluation of trading securities, provision for loss

of investment in other units

- Amounts recorded to reduce financial expenses

- Transferring all financial expenses incurred in the period to acc 911

Account 635 has no closing balance

 Accounting entries

Flowchart 1.10 – Accounting entry for financial expenses

1.2.2.2 Accounting for financial incomes

 Definition:

Financial incomes are all incomes gained in relation to financial

activities of the company, such as borrowings…

Revenue from financial activities includes:

- Interest income such as: loan interest, deposit interest…

- Capital gain from disposing financial investments

- Distributed dividend and profit

- Gain from foreign exchange difference

- Payment discount

- Other financial incomes

 Accounting vouchers:

- Receipt voucher, payment voucher

- Debit note, Credit note

- Other related documents

 Account used:

Account 515: Financial incomes

 Content: to record revenues from interests, copyrights, dividends,distributed income, and other income from financial activities of

enterprises

Acc 515

- The payable VAT amount

calculated by the direct method (if

Account 515 has no closing balance

 Accounting entries

Flowchart 1.11 – Accounting entry for financial incomes

1.2.3 Accounting for others expenses and other incomes

1.2.3.1 Accounting for others expenses

- Expenses from disposal and liquidation of fixed assets and their net book value

- Losses from revaluation of materials, goods and fixed assets which are

contributed in joint ventures, associates…

- Compensation for breaches of contracts

- Tax penalty

- Other expenses

 Accounting vouchers.

- VAT invoice, sales invoice

- Receipts and vouchers

- Debit notes and credit notes

- Minutes of handling surplus and missing assets

- Property liquidation record

- Tax receipts

 Account used:

Account 811: Others expenses

- Content: to record expenses incurred from events or operations separated from normal operation of business