1 sales accounting and determination of businesss at xphar pharmaceutical company limited

CHAPTER 1: GENERAL THEORY ABOUT SALES ACCOUNTING AND DETERMINATION OF BUSINESS RESULTS IN COMMERCIALENTERPRISES 1.1 Basics of sales accounting and determining business results 1.1.1 The

FACULTY OF ACCOUNTING 

GRADUATION THESIS

TOPIC

SALES ACCOUNTING AND DETERMINATION OF BUSINESSS

AT XPHAR PHARMACEUTICAL COMPANY LIMITED

MENTOR: Assoc Prof Ph.D Mai Ngoc Anh

Hanoi 2022

I hereby certify that this is my independent research, the diagram and results stated

in the graduation thesis are honestly derived from the actual situation of Xpar Pharmaceutical Co., Ltd

Graduate thesis author

Student

NGUYEN THUY DUONG

TABLE OF CONTENTS

INTRODUCTION 1

1 The urgency of the subject: 1

2 The purpose of the study 2

3 Research object and research scope 2

4 Research methods 3

5 Thesis structure 4

CHAPTER 1: GENERAL THEORY ABOUT SALES ACCOUNTING AND DETERMINATION OF BUSINESS RESULTS IN COMMERCIAL ENTERPRISES 5

1.1 Basics of sales accounting and determining business results 5

1.1.1 The basic concepts 5

1.1.2 Outline the basic characteristics and meaning of the sales process 6

1.1.3 Roles and responsibilities of sales accountants and determining business results 7

1.1.4 Sales methods 9

1.1.5 Payment methods 11

1.2 Content of sales accounting and determination of business results 12

1.2.1 Cost of sales accounting 12

1.2.2 Accounting for sales revenue and sales deductions 19

1.2.2.1 Sales accounting 19

1.2.2.2 Accounting for revenue deductions 22

1.2.3 Accounting for selling and administrative expenses 28

1.2.3.1 Cost of sales accounting 28

1.2.3.2 Administrative expenses 28

1.2.4 Cost and revenue accounting for financial activities 31

1.2.4.1 Financial cost accounting 31

1.2.4.2 Revenue accounting for financial activities 32

1.2.5 Accounting for other expenses and other income 34

1.2.5.1 Other cost accounting 34

1.2.5.2 Other income accounting 36

1.2.6 Accounting identified business results 38

1.2.7 Sales accounting and determination of business results in terms of using accounting software 41

1.2.8 Presentation of sales information and business result on financial statement 42

CONCLUSION CHAPTER 1 46

CHAPTER 2: STATUS OF SALES ACCOUNTING WORK AND DETERMINING BUSINESS RESULTS AT LIMITED LIABILITY COMPANY 47

2.1 Characteristics of production and business organization, production and business management 47

2.1.1 The process of formation and development of Xphar Pharmaceutical Co., Ltd 47

2.1.2 Characteristics of the organizational structure and production and business activities of the company 47

2.1.2.1 The company's goals 47

2.1.2.2 Business organization characteristics of the Company 47

2.1.2.3 Main consumption market 48

2.1.2.4 Sales methods 48

2.1.2.5 Organizational characteristics of the company 49

2.1.4 Organizational characteristics of accounting work: 51

2.1.4.2 Accounting policies and methods applied at the company: 54

2.1.4.3 Accounting software used in the company 54

2.1.4.4 Accounting process at the company 55

2.2 Actual situation of sales accounting and determination of business results in Xphar Pharmaceutical Co., Ltd 57

2.2.1 Cost of sales accounting 57

2.2.2 Accounting for sales revenue and sales deductions 62

2.2.3 Business management cost accounting 67

2.2.3.1 Cost of sales accounting 67

2.2.3.2 Management accounting business costs 70

2.2.4 Financial cost accounting and financial revenue 73

2.2.5 Accounting for other expenses and other income 74

2.2.6 Accounting identified business results 77

2.2.7 Sales accounting and determination of business results in terms of using accounting software 81

2.3 Comments on sales accounting and determining business results at Xphar Pharmaceutical Co., Ltd 81

2.3.1 Advantages 81

2.3.2 Limit 84

2.3.2 Strengths 85

2.3.2 Weakness 86

CONCLUSION CHAPTER 2 88

CHAPTER 3: SOME SUGGESTIONS TO ENHANCE THE SALES ACCOUNTING IN LIMITED LIABILITY COMPANY 89

3.1 Company orientation until 2026 89

3.2 Completion requirements 90

3.3 Directions to improve sales accounting and sales results at Xpar

Pharmaceutical Co., Ltd., on sales management 92

3.4 Completing detailed accounting 98

3.4.1 About the used accounting account 98

3.4.2 About making provision for bad debts 99

3.4.3 Some other issues need attention 100

3.4.4 Recommendations on management accounting 100

3.5 Conditions for implementing the solution 104

3.4.1 On the side of the state 104

3.4.2 To the company 104

CONCLUSION OF CHAPTER 3 106

CONCLUDE 107

1 The urgency of the subject:

In the current market economy, businesses that want to survive and developmust have an economically efficient business plan To stand firm and develop inthe following conditions: there is fierce competition, enterprises must grasp andmeet the psychology and needs of consumers with products of high quality, lowprice, stylish designs rich and diverse To do so, businesses must monitor allprocesses from purchasing to selling goods to ensure the preservation and speed up

of capital turnover, maintain credibility with customers, and fully implementobligations to the State, improving the material and spiritual life of officials andemployees, enterprises ensure profits to accumulate, expand production andbusiness development

Moreover, consumer demand in the market today requires Enterprises togenerate profitable revenue To do so, enterprises must produce what the marketneeds, not what they have, and ask themselves the questions: "What to produce, forwhom to produce, how to produce and how much to produce how much?

In order to achieve the profit target: To achieve high and safe profits inproduction and business activities, the company must carry out synchronousmanagement measures, in which accounting is an important and indispensable tool.lack to conduct management of economic activities, inspect the use andmanagement of assets and goods in order to ensure dynamism, creativity andautonomy in production and business, calculate and determine efficiency of eachproduction and business activity as the basis for formulating business strategies

After learning about the current situation of production and businessactivities as well as the management apparatus of Xphar Pharmaceutical CompanyLimited, I realized that general accounting and sales accounting and determiningthe company's sales results in particular is an important part in the management ofproduction and business activities of the company, so it is always required to beperfected Therefore, I decided to study the company's accounting in depth with thetopic "Sales accounting and determining sales results at Xphar PharmaceuticalCompany Limited" to write my report

2 The purpose of the study

Analyzing, systematizing, and clarifying the basic theoretical issues of salesaccounting and determining business results in Xphar Pharmaceutical CompanyLimited

Research, survey and evaluate the current accounting situation of sales anddetermine business results in the Xphar Pharmaceutical Co., Ltd At the same time,The topic also points out the advantages and disadvantages of the business, fromwhich proposing solutions to improve sales accounting and determine businessresults at the company

3 Research object and research scope

* Research object: Research on theory and reality of sales accounting anddetermine business results at Xphar Pharmaceutical Co., Ltd

* Research scope:

- Research place: At the accounting department of Xphar Pharmaceutical Co., Ltd

- Research duration: Diagram are collected in 2021

- Research content: Research topics from the perspective of financial accounting

- Collecting secondary documents: Conduct research on theoretical issues throughreference to textbooks, reference books, articles, journals, theses,theses written on the next topic maths Collecting secondary documents aboutthe current situation by observing, studying documents, accounting books,financial statements of Xphar Pharmaceutical Co., Ltd in 2021 and information

on the media mass media, other documents

- Collecting primary documents: Directly asking and consulting accountants andother employees at Xphar Pharmaceutical Co., Ltd In addition, learn aboutresearch issues through consulting instructors and experts in the field ofaccounting

- Synthesize and process collected documents as evidence for research results:Using descriptive statistics, qualitative analysis and comparison between theactual situation and the theoretical basis to deduce, inductive and presentresearch results

5 Thesis structure

 Chapter 1: General theory about sales accounting and determine business

results in commercial enterprises

 Chapter 2: Status of sales accounting work and determining business results

at Limited Liability Company

 Chapter 3: Some suggestions to enhance the sales accounting in Limited

Liability Company

From the theoretical knowledge learned at the Academy of Finance and the actualinternship at Xphar Pharmaceutical Co., Ltd with the enthusiastic guidance ofAssoc Prof Ph.D Mai Ngoc Anh and the accounting staff of the Company, I havecompleted my graduation thesis Due to the limited ability and the limited practicetime, my dissertation cannot avoid errors So I hope to receive the evaluation,comments and suggestions of Mr Mai Ngoc Anh, teachers and accounting staff tocomplete my thesis

Thank you sincerely!

CHAPTER 1: GENERAL THEORY ABOUT SALES ACCOUNTING AND DETERMINATION OF BUSINESS RESULTS IN COMMERCIAL

ENTERPRISES 1.1 Basics of sales accounting and determining business results

1.1.1 The basic concepts

Sale is the transfer of ownership of goods to a customer, the enterprisecollects money or is entitled to collect money or obtain another type of goods ofequivalent value and forms insurance revenue

Sales must satisfy the following conditions:

- Goods must go through the process of buying, selling and paying by acertain method

- Goods must be transferred from the seller to the customer, the customer haspaid or accepted payment to the seller

- Goods sold must belong to the business plan of the enterprise

 The concept of determining business results

Business results are the final results of production and business activities,financial investment activities and other activities in a certain period; expression ofbusiness results is the amount of profit or loss

Formula to determine business results of enterprises:

Business results

of enterprises

= Business results

+ Financial results

+ Other operating results

Determining business results is the comparison between expenses incurred

in the period that an enterprise has spent with the revenue that the enterprise hasreceived in the following period minus taxes paid to the state The final amountthat enterprises receive after determining business results is the profit after CIT

The determination of business results is usually carried out at the end of anaccounting period (which can be a month, quarter, or year), depending on eachbusiness characteristics and management requirements of each enterprise.

1.1.2 Outline the basic characteristics and meaning of the sales process

 Meaningful:

Sales is vital to the existence and development of the business Sales notonly help businesses recover capital quickly, but also speed up the guaranteedcapital turnover in the process of continuous business operations, creatingcorporate profits, contributing to improving the lives of employees and fulfill taxpayment obligations to the State Thereby, the business can also plan anappropriate business strategy to increase business efficiency in the next period

Sales is not only important for businesses but also for the entire nationaleconomy Each business that performs well in its sales activities will create thebasis for the harmonization between production and consumption, between money

and goods, between supply and demand, ensuring a smooth balance in eachindustry, between industries sectors and regions throughout the economy.

1.1.3 Roles and responsibilities of sales accountants and determining

business results

 Role:

Sales accounting and determining business results play an indispensable rolenot only for businesses but also for the entire national economy Its role is tocollect, process, and then provide necessary information about sales activities such

as revenue, costs and business results to those who need to use the information tomake make appropriate plans, strategies and decisions

For each business itself, only if they can sell goods, they will have income tocover their expenses If they sell goods, they will have conditions to expandbusiness activities and improve people's lives labor, creating an accumulationsource for the national economy Sales accounting and determination of businessresults will help businesses evaluate the implementation of the plan, determine theeffectiveness of their operations after performing their obligations to the State such

as paying taxes, fees and charges into the state budget, thereby recognizing theweaknesses and errors in the business operation process to take appropriatemeasures to overcome, set out plans, directions and strategies appropriate businessstrategy, determine a reasonable cost structure and effectively use the earnedprofits, and at the same time deal with economic benefits in a harmonious manner.For the state, from the data provided by the sales accountant and determiningbusiness results, it is possible to grasp the business situation and financial situation

of enterprises From there, perform the function of management and macro control

of the economy, inspect the observance of the economy and finance, and fulfillobligations to the State

For investors, the sales accounting diagram and business results provided byenterprises will help them make investment decisions, determine whether tocontinue the investment or not, the size of the capital How to invest, lend capital

- Reflect and record fully, promptly and accurately the revenues, revenuedeductions and expenses of each type of activity in the enterprise, and at the sametime monitor and urge the receivables from customers row

- Accurately reflect and calculate the results of each activity, monitor theperformance of obligations to the State and the distribution of operational results

- Provide accounting information for preparing financial statements andperiodically analyzing economic activities related to the sales process, determiningand distributing results

Performing the above basic tasks, the information of the sales accountant andthe determination of business results will help business administrators understandthe business situation as well as the changes in goods of the business, from Thatestablishes a close relationship between production and consumption, finds andchooses the most effective sales plan, thereby orienting business strategies forbusinesses in the future However, in order to maximize the operational efficiency

of sales accounting and determine business results, it is required that theaccounting work itself must also be performed in a scientific manner maintain

This is a sales method that has a direct and decisive influence on determiningthe time of sales, forming sales revenue and business results of enterprises.

Wholesale method is divided into 2 types: Wholesale through warehouse andWholesale with direct shipping

- Wholesale through the warehouse: is the wholesale of goods that are

exported from the warehouse of the enterprise Includes 2 types:

 Wholesale through the warehouse in the form of direct delivery: The

buyer appoints a representative to the warehouse of the commercialenterprise to receive the goods Enterprises export goods from thewarehouse, deliver them directly to the buyer After the buyer'srepresentative signs the sales invoice and receives the goods along withthe payment or acceptance of payment, the enterprise is recognized asrevenue

 Wholesale via warehouse in the form of consignment: Based on signed

contracts or orders, enterprises export goods, use their own means oftransport or outsource, and deliver goods to the buyer's warehouse or anyother place specified in the contract Goods transferred for sale are stillunder the ownership of the enterprise, only when the buyer confirms,

pays or accepts payment, these goods will be accepted as sales andrecognized as revenue of the enterprise.

- Wholesale and direct shipping: is a form of sales that enterprises, after

purchasing goods from suppliers, do not bring them to the warehouse, buttransfer them directly to their buyers Includes 2 types:

 Wholesale and direct shipping with participation in payment:

Enterprises sign contracts with suppliers to purchase goods, and at thesame time sign contracts with customers to sell goods Enterprises willpay for goods to suppliers and collect money from customers Salesrevenue is recognized when the customer has received the goods, paid oraccepted the payment This form again includes 2 forms: direct deliverymethod and delivery method

 Wholesale and direct shipping does not participate in payment:

Enterprises only act as a broker, introduce the purchase and sale of goodsbetween suppliers and customers and enjoy the brokerage commission ofthe parties under the contract it has come to an agreement Thiscommission is calculated as revenue

 Retail

Retail is selling goods directly to consumers At this stage, goods ends thecirculation process and realizes all value and use value Retailers usually sell insmall volumes with stable prices Consists of:

- Direct cash-on-sale: At retail counters, sales staff are both the person who

directly collects money from customers and also delivers goods tocustomers At the end of the shift, the salesperson submits the sales report tothe accounting department and the proceeds to the cashier

- Centralized cash-collecting sales: At the sales counter, there is a separate

receive goods at the delivery staff's counter At the end of the shift, thecashier pays the money collected for the goods to the cashier, and thedelivery man makes a sales report and submits it to the accountant.

- Sales in the form of customer's choice: Customers choose the goods to buy

and bring them to the counter/desk to pay for the purchase Cashiers checkgoods, calculate money, make sales invoices and collect money fromcustomers This form of sale is usually done in supermarkets, the calculation

of insurance revenue is usually done at the end of the day through computersthat update each invoice

 Selling through agents:

Selling through agents is a sales method in which the goods owner (thedelivery agent) delivers the goods to the agent receiving party for sale The agentreceiving party will receive agency remuneration in the form of commission orprice difference If the agent sells at the right price according to the principal'sregulations, the insurance revenue of the agency receiving agent is the commission

to be enjoyed under the contract

 Sales by method of deferred payment, installment payment:

Sales by method of deferred payment, installment payment is when theenterprise delivers the goods to the customer, the goods are considered sold.Customers have to pay a part of the first time right after receiving the goods, theremaining amount is paid in installments and subject to interest rates as prescribed

In addition to the sale amount, the business also enjoys an additional interest fromcustomers for late payment According to this method, sales revenue is calculatedaccording to the immediate selling price

1.1.5 Payment methods

- Direct payment method: Customers will make payment immediately to the

seller right after receiving the purchased goods (can be in cash or moneytransfer)

- Late payment method: The customer has received the purchased goods but

has not yet paid the seller immediately Payment can be made later on creditterms previously agreed between seller and buyer If customers pay latecompared to the agreed terms, they may be subject to a certain credit interestrate

- Payment in cash: The customer will proceed to pay the seller in cash (which

can be either local currency or foreign currency)

- Payment via bank: Customers will pay through the bank in a number of

ways such as payment by check, collection order, letter of credit (L/C),payment card, etc

1.2 Content of sales accounting and determination of business results

1.2.1 Cost of sales accounting

Concept:

Cost of goods sold is all expenses related to the production and sale process,including the cost of goods sold for sale, insurance costs, and administrative costsallocated to each goods sold in the period The accurate determination of the cost

of goods sold is the basis for calculating the sales results and determining thebusiness results of the enterprise

 Time to record cost of goods sold:

- For enterprises accounting for inventory according to the regular declaration method: The time of recording cost is the time of sales When

recording a revenue, the accountant also records the cost of goods

- For enterprises accounting for inventory by periodic inventory method:

During the period, when selling goods, the accountant does not record thecost of goods, but at the end of the accounting period calculates the cost ofgoods sold in the period and records the price capital, then transferred toAccount 911 – Determination of business results

 Documents used: VAT invoice, sales invoice, self-printed invoice, special

voucher, retail statement, debit note, payment slip

 Accounting accounts used:

 Acc 632 – Cost of goods sold

 Acc 156 – Goods

 Acc 157 – Goods consigned for sale

 Acc 151 – Purchased goods are on the way

 Acc 1381 – Shortage of assets pending settlement

Net purchase price of goods +

Cost of purchasing goods

+

Purchase taxes are non- refundable

-Purchase discounts are

enjoyed (trade discounts, sales discounts, sales returns)

Cost of goods purchased includes: Costs for the purchase process such as:

transportation costs, loading and unloading, insurance costs, storage money, losswithin the norm, travel expenses of the purchasing department …

In accounting, the net purchase price of goods is calculated and accountedfor separately, while purchasing costs are aggregated, not allocated to each item,and only allocated to the remaining goods and sold goods at the end of the period

(2) If the goods are unloaded

Cost of goods sold is calculated through the following 3 steps:

 Step 1: Calculate the ex-warehousing value of the goods for sale.

There are 3 methods of calculating the unit price of goods sold for sale asfollows:

- Average method for the whole period of reserves:

In this method, goods out of stock have not yet been recorded At the end ofthe month, based on the inventory at the beginning of the period and the number

of inventories in the period to calculate the average unit price of goods

Average

purchase price =

Purchase value of goods in stock at the beginning of the period

+ Purchase value of imported goods in the period

This method applies to enterprises with few types of goods and many times ofimport and export of each type of goods.

- Continuity averaging method:

Basically, this method is similar to the average inventory method, however,the average unit price is determined on the basis of the actual price of inventory atthe beginning of the period and the unit price of each time goods are importedduring the period After each import of goods, the average actual value isrecalculated after each import

Unit price for

ex-warehousing for

the i time =

Purchase value of beginning inventory before the i import +

Purchase value of goods imported in the previous

period i Beginning inventory

before the i import +

Quantity of goods imported in the period before the i time

This method applies to businesses that have few types of goods and the number

of times of import and export of each type of goods is not much

- First-in-first-out (FIFO) method:

This method is based on the assumption that the goods that are in stock firstwill be released first Therefore, the price of goods sold is the price of the goodsimported first, and the price of the ending inventory is the price of the goodsimported later

This method is suitable for businesses with few types of goods, the number

of times of warehousing of each type of goods is not much; In addition, it is alsosuitable in case the price is stable and tends to decrease

- The actual method by name:

According to this method, goods that are imported into the warehouse at anyprice will be shipped out at that price, regardless of the time of import and export.This method usually applies to high-value goods that are stored separately for eachconsignment for each entry

- Retail price method:

This method is often used in the retail industry (such as supermarketbusinesses, gasoline, retail oil) where a large number of items change quickly andhave similar profit margins that cannot be used with other methods other costcalculation method

The original cost of inventory is determined by subtracting the selling price

of inventory (-) profit margin by a reasonable percentage The rate used takes intoaccount that items are discounted to less than their original price Typically, eachretail division will use its own average percentage

 Step 2: Calculate purchasing cost allocated to goods sold in the period.

Because purchasing costs are related to many types of goods, related to boththe volume of goods purchased during the period and the goods at the beginning ofthe period, it is necessary to allocate purchasing costs between goods sold duringthe period and ending inventory

Purchase cost

allocated to

goods out of

= Purchase cost amortized to beginning

inventory

+

Purchase costs incurred during the period

x Purchase value of exported

stock goods

Purchase value of inventory at the beginning of the period

+

Purchase value of imported goods in the period

 Step 3: Calculate the cost of goods sold.

COGS = Value of goods sold + Purchasing expenses

allocated to goods for

sale

For commercial enterprises:

 In case goods are purchased and sold immediately without going through thewarehouse (third-hand delivery), the cost of goods sold is the actualpurchase value and the actual purchase cost

 In case goods are sold over time, the cost value of goods includes: Actualpurchase value of sold goods and purchase costs allocated to sold goods

COGS returned ACC 151

Goods bought on the way

Consolidation of COGS at the end of the period ACC 157

Goods consigned for sale, delivered

to agents ACC 156, 138

ACC 2294

Provision for devaluation of

devaluation of inventory ACC

111,112,131,331

ACC 133

Goods sold without going through

the warehouse GTGT đầu vào

Diagram 1.1: Accounting sequence Cost of goods sold by regular declaration

method

ACC 632

ACC 611

c

ACC 911 Transfer of COGS sold Consolidation of COGS at theend of the period

Case 2: Enterprise accounting for inventory using the periodic inventory method

The periodic inventory method only tracks the inventory entry entries, not the outgoing inventory entries We have to carry out the transfer of the beginning inventory, and the ending of the period inventory

For goods out of stock:

Cost = Value of inventory at the beginning of the period + Value of imports during the period – Value of inventory at the end of the period

Diagram 1.2: Accounting procedure Cost of goods sold by periodic inventory

Revenue arising from a transaction is determined by an agreement between the enterprise and the buyer or user of the asset Revenue is determined by the fair value of the amounts already received or to be obtained after deducting trade checks, payment discounts, sales discounts, and sales returns.

Depending on the type of business, revenue includes:

 Sales area

 Service provider

 Revenue from financial activities

 Revenue from real estate business

 Other income

 Conditions for revenue recognition:

According to Accounting Standard No 14 (VAS 14), sales revenue is determined when all five of the following conditions are simultaneously satisfied:

- The enterprise has transferred substantially all the risks and rewards of ownership of the product or goods to the buyer

- The enterprise no longer holds the right to manage the goods (like the owner

of the goods) or control the goods

- The revenue can be measured reliably

- The enterprise has received or will receive economic benefits from the sale transaction

- Determine the costs related to the sales transaction

The clear regulation of the time of recording sales revenue helps enterprises

to accurately determine the insurance premiums incurred in the accounting period so that they can properly perform their rights and obligations to the

- For enterprises that pay VAT by the credit method: Revenue from goods sale and provision of services is the selling price exclusive of VAT.

- For enterprises that pay VAT by the direct method or are not subject to VAT: The revenue from selling goods and providing services is the total payment price

- For goods and services subject to excise tax and export tax: the main

revenue is the total payment price (including excise tax and export tax)

 Revenue accounting principles:

 Revenue is recognized only when the recognition conditions for revenue are satisfied as specified in Standard No 14 “Revenue and other income”

 Revenue and expenses related to the same transaction should be recognized simultaneously on the matching principle and in the same financial year

 In case the exchange goods are similar in nature, the insured amount is not recorded

 Must monitor in detail each type of revenue, each deduction of revenue to determine the net revenue of each type of revenue, serving to provide

accounting information for corporate governance and preparation of

financial statements

 In case the enterprise has insurance reserves in a foreign currency, it must beconverted into Vietnam Dong at the actual exchange rate arising or the average exchange rate on the interbank foreign currency market announced

by the State Bank of Vietnam at the time of payment Point of origin of economic activity

 Proof of use:

 VAT invoice

 General Sales Invoice

 Delivery note cum internal shipping

 Dealer and consignment payment table

 Counter Cards

 Other documents: Receipt slip, wire transfer check, payment check,

collection order, Credit note, etc

 Accounting accounts used:

 Acc 511 – Insurance and service provision

 Acc 3331 – VAT payable

 Acc 3387 – Unrealized revenue

 Other related accounts (Acc 111, 112, 131, )

1.2.2.2 Accounting for revenue deductions

 Content, Concept:

Sales deductions are the basis for calculating net sales and business results in the accounting period Sales deductions must be recorded and tracked in detail

in the appropriate accounting accounts, in order to provide the necessary

accounting information for the preparation of the financial statements

Sales deductions include: Trade discounts, Sales discounts, Sales returns, VAT payable under the direct method, Special Consumption Tax and Export Tax

Detail

- Trade discount: Is the amount an enterprise sells at a listed discount to

customers buying in large quantities according to the agreement on Trade discount stated in the economic purchase and sale contract or commitment to buy and sell goods

- Sales discount: is the amount of money that the enterprise deducts for the

purchaser in special cases because the goods sold are of poor quality, not in

accordance with the specifications, deadlines, etc stated in the contract

- Sales of returned goods: is the revenue from the number of goods that have

been determined to be consumed but are returned by the customer because the main reason is due to the fault of the enterprise in the delivery of goods not

according to the agreement in the contract

According to the provisions of Circular No 129/2008/TT-BTC dated

December 26, 2008:

 In case the seller has shipped the goods and issued an invoice, the buyer has not received the goods but discovers that the goods are not in accordance withthe specifications and quality, he must return the whole goods, or a part of thegoods, when returning the goods to the other party The buyer and the seller must make a record clearly stating the goods type, quantity, value exclusive ofVAT, the reason for paying VAT according to the sales invoice (number, symbol, date of the invoice) and at the same time together with an invoice to send back to the seller so that the seller can re-issue a VAT invoice for the quantity of goods received and serve as a basis for the seller to adjust the salesvolume and output VAT

 A business establishment purchases goods, the seller has issued an invoice, the buyer has received the goods, but then the buyer discovers that the goods are not conforming to specifications and quality, they must return all or part

of the goods, when When goods are returned to the seller, the establishment must issue an invoice, clearly stating the goods returned to the seller due to improper specifications, quality, and VAT This invoice is the basis for the seller to adjust the sales volume and output VAT amount; the buyer adjusts the purchase volume and input VAT amount

In case the buyer is an entity without an invoice, when returning the goods, the buyer and the seller must make a record or agree in writing clearly stating

the type of goods, quantity and value of returned goods at zero cost There is VAT, VAT amount according to the sales invoice (sign number, date, month

of the invoice), the reason for the return of the goods enclosed with the

invoice sent to the seller This record is kept together with the sales invoice to serve as a basis for adjusting the seller’s declaration of sales and VAT

- VAT paid by the direct method: is a tax calculated on the added value of

goods and services arising in the process from production, circulation to consumption

Each business usually calculates VAT by the deduction method or will calculate it by the direct method However, only the VAT calculated by the direct method can be considered as a revenue deduction According to the direct method, VAT payable by enterprises will be calculated as follows:

Amount of VAT payable = VAT of taxable goods and services ×VAT rate

- Special consumption tax: A tax levied on the revenue of enterprises

producing a number of special goods and services on the list of which theState discourages production, and needs to limit consumption because itdoes not practical for social life such as wine, beer, tobacco, votive paper, …

 For domestically produced goods:

Special consumption

tax payable =

Price for calculating excise

(%) (1 + % excise tax rate)



Special consumption

tax payable =

(Import tax calculation price

+ Import Tax) x

Excise tax rate (%)

- Export tax: A tax levied on goods exported in international trade relations.The payable export tax is calculated by the Customs on the basis of the sellingprice at the border gate stated in the contract of the exported goods (usually theFOB price) (excluding insurance and international transportation fees) and taxes.Export tax rates of exported goods are converted to Vietnam Dong at the averageexchange rate on the interbank foreign currency market announced by the StateBank of Vietnam at the time of export

Export tax

to be paid =

Quantity of imported and exported goods

x

Taxable value per unit of goods

x Export tax rate for each item

 Documents used: VAT invoice, retail list of goods, invoice for freight,

invoice for renting warehouse, wharf, leasing and unloading goods, record ofreturn decision, adjustment invoice (if applicable) adjusted directly on the invoice),warehouse receipt cum internal transportation, payment voucher, etc

 Accounting accounts used:

Currently, according to Circular 133, there is no account for revenuedeductions, which businesses applying under this circular will record to the Debitside of Acc 511 – Sales revenue if they incur revenue deductions goods andprovide services

The deduction from revenue

 Order of revenue accounting and specific revenue deductions according

to each sales method:

Diagram 1.3 Accounting procedures sales and sales deductions by wholesale

method and retail method

ACC 111, 112,

131 Hàng mua đang đi đường đã bán ACC 511

ACC 6421 ACC 131

Hàng mua đang đi đường đã bán

ACC 511 ACC 111, 112, 131

The deduction from revenue

ACC 111, 112

ACC 131 Payment

Unpaid

Received ACC 3331

revenue by selling price

at sight

Output VAT

ACC 3387 ACC 911

Periodically, customers pay interest on

The difference between the deferred price and the spot price

ACC 911

Consolidation of

sales revenue

Diagram 1.1: Accounting order Revenue and Sales deductions according

to the method of selling goods through age/nts (selling at the right price)

Diagram 1.2: Accounting order of Revenue and Sales deductions by the method of sales by deferred payment and installment payment

1.2.3 Accounting for selling and administrative expenses

1.2.3.1 Cost of sales accounting

 Content:

Selling expenses are all expenses incurred in the process of consuming

products, goods and providing services, including service costs for preservation, storage, marketing, sales and product warranty

Currently, according to regulations, selling expenses of enterprises include:

 Sales staff expenses: Salaries, payable allowances and deductions for social insurance, health insurance, unemployment insurance, and labor insurance according to current regulations for employees of the sales department

 Cost of tools

 Depreciation cost of fixed assets

 Warranty costs

 Cost of services purchased from outside

 Expenses in other currency

 Proof of use:

 Payroll

 Table of salary distribution and social insurance

 VAT Invoice, Sales Invoice

 Depreciation Allocation Table

 Payment slip, Debit note…

 Accounting accounts used:

According to Circular 133, to account for selling expenses, accountants use Acc

6421 – Selling expenses Acc 6421 has no ending balance

1.2.3.2 Administrative expenses

Administrative expenses is the total cost for business management,

administrative management and other general services related to the operation of the whole enterprise

Administration expenses include:

 Management staff expenses: Salaries, payable allowances and deductions forsocial insurance, health insurance, unemployment insurance, and labor unionfor the management board

 Cost of management materials

 Cost of office supplies

 Depreciation cost of fixed assets

 Taxes, fees and charges: Real estate tax, license tax, and fees, traffic fees,

 Provision expenses: Provisions for bad debts

 Expenses for services purchased from outside: Electricity, water, rental and repair of fixed assets, etc for the whole enterprise

 Other monetary expenses: Conference expenses, reception expenses,

business trip expenses, staff training expenses, etc

 Proof of use:

 Payroll table, salary distribution table and social insurance

 VAT invoice, sales invoice

 Depreciation Allocation Table

 Tax returns (licenses), fees…

 Payment slips, Debit Notes,

 Accounting account used: According to Circular 133/2016/TT-BTC dated

August 26, 2016 of the Ministry of Finance, to account for business

management expenses, the accountant uses Acc 6422 – Business management stock Karma Acc 6421 has no ending balance

Refund the cost of goods warranty

License tax, land rent, fees and charges

payable

Provision for bad receivable debts Refund of provision forACC 2293

bad receivable debts

Transfer Reductions

ACC 352

Provisions for payables

ACC 336

Amount payable to superiors to form a fund

for upper management ACC 111, 112, 331,…

Cost of services purchased from outside and

other monetary expenses

ACC 352 Refund of provision

for payables

Diagram 1.3: The order of accounting for selling and administrative

expenses

1.2.4 Cost and revenue accounting for financial activities

1.2.4.1 Financial cost accounting

 Content:

Financial expenses are expenses related to capital activities, financial investmentactivities and operations of a financial nature, including:

 Cost or loss in financial investment activities

 Loan and borrowing costs

 Cost of capital contribution to joint ventures and associates

 Loss of short-term securities transfer

 Securities sales transaction costs

 Provision for devaluation of trading securities

 Provision for investment loss in other entities

 Loss incurred when selling foreign currency

 Exchange rate loss…

 Proof of use:

 Invoices

Documents and notices of the joint-venture organization

 Payment slip, Receipt slip

 Debit note, Credit note, etc

 Used accounting account: Acc 635 – Financial expenses

ACC 121, 228,…

ACC 413

ACC 335, 242

ACC 911

Payment discount for customers

Loss on sales of investments

Loss due to revaluation of currency denominated in foreign currency

Provision for devaluation of securities and

provision for loss of investments in other

entities

Transfer financial expenses

ACC 111, 112, 331

ACC 635

ACC 2291, 2292

ACC 2291, 2292 Reversal of difference

in provision for devaluation of securities investment and loss of investment in other entities

ACC 111, 112, 331

Loan interest

Exchange rate loss when buying goods

ACC 111, 112, 331

Buy goods and services in foreign currency

Diagram 1.8: Financial cost accounting sequence

1.2.4.2 Revenue accounting for financial activities

 Content:

Revenue from financial activities is the total value of economic benefits

obtained by an enterprise from financial activities or capital business in an accounting period, including:

Interest: interest on loans, interest on bank deposits, sales interest on deferred payment, interest on investment in bonds, bills of exchange, payment discountsenjoyed for buying goods, services, etc

Dividends, profits are divided by the period after the investment date

 Income from investment activities, buying and selling short-term and term securities: profit from capital transfer when liquidating capital

long-contributions to joint ventures, investments in affiliates, investments in subsidiaries, and invest in other capital

 Income from other investment activities

 Exchange rate gains, including gains from selling foreign currencies

 Revenues from other financial activities

 Proof of use:

 Invoices

Documents and notices of the joint-venture organization

 Payment slip, Receipt slip

 Debit note, Credit note, …

 Used accounting account: Acc 515 – Revenue from financial activities.