13 application of vas 14 – revenue and other incomes for revenue accounting at an phu minh sole member commercial limited company

ACADEMY OF FINANCE ---o0o---VU THI TUYEN CLASS: CQ56/21.05CLC THESIS THE SUBJECT: APPLICATION OF VAS 14 – REVENUE AND OTHER INCOMES FOR REVENUE ACCOUNTING AT AN PHU MINH SOLE MEMBER COMM

ACADEMY OF FINANCE

-o0o -VU THI TUYEN CLASS: CQ56/21.05CLC

THESIS THE SUBJECT:

APPLICATION OF VAS 14 – REVENUE AND OTHER INCOMES FOR REVENUE ACCOUNTING AT AN PHU MINH SOLE MEMBER COMMERCIAL LIMITED COMPANY

Major: Business accounting

Mentor: Ph.D Bui Thi Thu Huong

Mac Bui To Quyen

Ha Noi - 2022

I hereby declare that the thesis "Application of VAS 14 – revenue and otherincomes for revenue accounting at An Phu Minh sole member commerciallimited company " is my own scientific research work, the data and results inthe thesis are honest, based on on the actual situation of An Phu Minh Co.,Ltd., under the guidance and help of Ph.D Bui Thi Thu Huong and MAc Bui

To Quyen

If there is any mistake, I take full responsibility

Graduate thesis author

Vu Thi Tuyen

TABLE OF CONTENTS

LIST OF ABBREVIATIONS v

LIST OF FLOWCHARTS vi

LIST OF DIAGRAMS vii

LIST OF SCREENS viii

LIST OF TABLES ix

FOREWORD 1

1 Urgency of research topics 1

2 Objective of the research 2

3 Scope of the research 2

4 Data methodology: 3

5 The structure of the thesis: 4

CHAPTER 1: GENERAL THEORY ON ACCOUNTING FOR REVENUE AND VAS 14 - REVENUE AND OTHER INCOMES 5

1.1.Overview of accounting for revenue in a commercial company 5

1.1.1 Definition, characteristics, classification of revenue 5

1.1.2 Roles and tasks of revenue accounting 6

1.2.Overview of VAS 14 –Revenue and other incomes 9

1.2.1 Scopes 9

1.2.2 Sales revenue 10

1.2.3 Service revenue 12

1.2.4 Revenue from interest, royalties, dividends and distributed profits 13

1.2.5 Other incomes 14

1.2.6 Information disclosure on Financial Statements 14

1.3.Some regulations on account accounting related to revenue accounting in 1.3.1 Revenue from sale of goods and provision of services 17

1.3.2 Accounting for revenue deduction 22

1.3.3 Financial income 30

1.3.4 Other incomes 33

1.4.Accounting for revenue in application with accounting software 35

1.5.Information presentation on financial statement 38

CHAPTER 2: APPLICATION OF VAS 14 – REVENUE AND OTHER INCOMES IN AN PHU MINH SOLE MEMBER COMMERCIAL LIMITED COMPANY 42

2.1 Overview of An Phu Minh Sole Member Commercial Limited Company 42

2.1.1.Some general information about An Phu Minh Sole Member Commercial Limited Company 42

2.1.2 Establishment and development of An Phu Minh Sole Member Commercial Limited Company 42

2.1.3 Functions and duties of An Phu Minh Sole Member Commercial Limited Company 43

2.1.4 Organizations in An Phu Minh Sole Member Commercial Limited Company 44

2.1.5 Accounting organization An Phu Minh Sole Member Commercial Limited Company 47

2.1.6 Accounting in An Phu Minh Sole Member Commercial Limited Company in application with FAST software 51

2.1.7.Operation status of An Phu Minh Sole Member Commercial Limited Company 55 2.2 Actual situation of applying Accounting Standard No 14 – Revenue and

2.2.1 Revenue Accounting 58

2.2.2 The time of recording sales revenue at the company 61

CHAPTER 3: SOME SOLUTIONS CONTRIBUTE TO COMPLETING THE ACCOUNTING OF REVENUE ACCORDING TO STANDARD NO 14 - REVENUE AND OTHER INCOME AT AN PHU MINH CO., LTD 76

3.1 Assessing the revenue accounting and the implementation of Accounting Standard No 14 in revenue accounting at An Phu Minh Co., Ltd 76

3.1.1 General overview 76

3.1.2 Assessment of the status of revenue accounting and the application of Accounting Standards No 14 77

3.2.Solutions for revenue accounting and effective application of Accounting Standard No 14 at An Phu Minh Co., Ltd 83

3.2.1 Solutions for vouchers and movement of documents: 83

3.2.2 Solutions for accounting account 84

3.2.3 Accounting solutions 86

3.2.4 About accounting software 86

3.2.5 Application of Standard No 14 87

PART III: CONCLUSIONS AND RECOMMENDATIONS 88

3.1.Conclusion 88

3.2.Suggestions 88

3.2.1 On the side of An Phu Minh Co., Ltd 88

3.2.2 On the state side 90

CONCLUSION 91

LIST OF REFERENCES 92

LIST OF FLOWCHARTS

Flowchart 1.1 – Accounting entry for direct sales (for company applying

deductible/subtraction VAT method) 21

Flowchart 1.2 – Accounting entry for direct sales (for company applying direct VAT method) 22

Flowchart 1.3 – Accounting entry for cost of goods sold under perpetual inventory method 23

Flowchart 1.4 – Accounting entry for cost of goods sold under periodic inventory method 23

Flowchart 1.5 – Accounting entry for Revenue deduction 30

Flowchart 1.6 – Sequence of recording financial income 33

Flowchart 1.7 – Sequence of recording other income 35

LIST OF DIAGRAMS

Diagram 2.1 - Organization of the management apparatus at An Phu Minh Co 43 Diagram 2.2 - Organization of the Accounting apparatus at An Phu Minh Co 45 Diagram 2.3 – Sequence of accounting entries 50

LIST OF TABLES

Table 2.1 List of some of the company's products 54

Table 2.2 List of some of the company's customers 55

Table 2.3 Production and business situation at An Phu Minh Sole Member

Commercial Limited Company over the past two years 2019 – 2020 55

1 Urgency of research topics

Economic units operating on the market mechanism always have acompetition to survive and stand firmly in the market In particular, in thecurrent difficult economic context due to the long-term effects of the COVID-

19 epidemic, more and more businesses need to come up with effectivebusiness strategies, appropriate and timely management and take measures touse human resources in a reasonable way for the best operation of thebusiness.The development of a business depends on many factors, in whichthe accounting apparatus plays a very important role, it helps managers andadministrators of the business have an overview of the business situation andoperations of the business itself and then propose options to promote growth

or propose measures to Limit and prevent weaknesses that still exist in thebusiness And one of the things to mention is revenue accounting In thebusiness activities of a business, the owner as well as the investors are veryinterested in the profit target obtained after each business period, to achievethat goal, the revenue must be greater than the cost, the greater this differencewill prove the development of that business Thus, we see that revenue andprofit are proportional to each other, and revenue is a prerequisite

The internship An Phu Minh sole member commercial limited company

is an opportunity for me to approach the actual accounting work at thecompany, especially the accounting for revenue Along with theenthusiastic guidance from the officers and the Chief Accountant Bui ThuThuy at the company's accounting department at An Phu Minh sole membercommercial limited company and dedicated guidance of the mentor Ph.DBui Thi Thu Huong and MAc Bui To Quyen , I have gained a certainunderstanding about the company and accounting work at the company Inaddition, the accounting of revenue has been stipulated in Vietnam's

accounting standards, but the accompanying Circulars and Decisions areissued amended and changed many times to suit the economy that regularlyhas fluctuations as today This change has more or less caused difficultiesand affected the accounting work in businesses, either the enterprise did notcomply with the new regulations or there were many problems in theprocess of change, which in turn led to many unwanted errors.Being aware

of the importance of the problem above at the company, I decided to choose

a research topic to write my graduation thesis: “Application of VAS 14 – revenue and other incomes for revenue accounting at An Phu Minh sole member commercial limited company”

2 Objective of the research

Firstly, the thesis systematizes the theories of accounting work for revenueand Accounting standard No.14 – Revenue and Other incomes (VAS 14)

of the company

Secondly, it clarifies the current situation of applying accounting standardNo.14 – Revenue and Other incomes at An Phu Minh sole membercommercial limited company

Thirdly, this thesis proposes some solutions to improve accounting workfor Revenue at An Phu Minh sole member commercial limited company.Purpose of research: Deep understanding of accounting for revenue andapplying VAS 14 – Revenue and Other incomes , giving an overview ofthe achievements and limitations in the accounting work of accounting forrevenue at An Phu Minh sole member commercial limited company, fromthere give solutions to improve the accounting for revenue at An Phu Minhsole member commercial limited company

3 Scope of the research

limited company

- Place:An Phu Minh sole member commercial limited company

- Time: + The topic focuses on research into accounting for revenue at

An Phu Minh Co.,Ltd in 2020

+ Accounting data and vouchers are collected from January

1, 2020 to December 31, 2020

4 Data methodology:

Method of studying the literature:

This method is used to synthesize information about regulations,decisions, circulars, related to accounting and mainly in accountingRevenue, especially Vietnam Accounting Standards to be the foundation forthe implementation of the Theoretical Basis section - part of the Thesis Forinstance : VAS Standard 01 - General Standard, 02 - Inventory, 14 - Revenueand other incomes, …,Circular 133/2016 / BTC

Actual observation method:

During my internship at An Phu Minh sole member commerciallimited company , I was greatly supported by the accounting department staffand mainly provided the necessary information

The comparison method:

Based on processed data to make comparisons between years, therebyassessing the achieved and unsatisfactory results Make a comparison betweentheory and practice applied in the enterprise something different and similar,thereby drawing advantages and disadvantages, or points that have not yetbeen promoted and then proposing appropriate measures to complete therevenue accounting here.At the same time, do comparison with peer firms tomake conclusions

Data analytics aggregation method:

After analyzing or based on the information collected, I made a

comparison between the theory and the reality of application in the business

is different and similar, thereby drawing advantages and disadvantages, orpoints that have not been promoted and then proposing appropriate measures

to improve the accounting of revenue here

5 The structure of the thesis:

Besides the preface, conclusion, and references, the thesis consists

of three main chapters:

Chapter 1: General theory on accounting for revenue and VAS 14 – Revenue and Other incomes.

Chapter 2: Accounting of VAS 14 – Revenue and Other incomes in An Phu Minh sole member commercial limited company.

Chapter 3 : Some solutions contribute to completing the accounting of revenue according to standard No 14 - Revenue and Other incomes at

An Phu Minh Co., Ltd.

During the implementation of the thesis, I have received theenthusiastic help of teachers and colleagues in the company who helped mecomplete this graduation thesis However, due to limited time, ability andpersonal experience along with not much practical understanding, this thesiscannot avoid shortcomings Therefore, I hope and sincerely thank thecomments and guidance of the teachers and the company to make my thesismore complete

Thank you sincerely!

Hanoi, on 10 February 2022 Performed by students: Vu Thi Tuyen

CHAPTER 1:

GENERAL THEORY ON ACCOUNTING FOR REVENUE AND

VAS 14 - REVENUE AND OTHER INCOMES.

1.1 Overview of accounting for revenue in a commercial company

1.1.1 Definition, characteristics, classification of revenue.

❖ Revenue means the total value of economic benefits gained by anenterprise in an accounting period, which arise from the enterprise'snormal production and business operations, contributing to increasingthe owner's capital (According to accounting standards No 14-Revenue and other incomes)

In addition, one item that is easily confused with that Revenue isOther Income According to accounting standards No 14: Otherincomes prescribed in this standard include revenues from irregular-activities other than turnover-generating activities, including:

- Revenues from the asset liquidation and sale;

- Fines paid by customers for their contract breaches;

- Collected insurance compensation;

- Collected debts which had been written off and included in thepreceding period's expenses;

- Payable debts now recorded as revenue increase as their owners nolonger exist;

- Collected tax amounts which now are reduced and reimbursed;

- Other revenues

❖ Revenue is usually classified into the following categories:

● Sales of goods : Is the revenue and net revenue of the amount

of goods determined to be sold in the accounting period of the

● Revenue from sale of finished products: is the revenue and netrevenue of the volume of products (finished products, semi-finished products) determined to have been sold in theaccounting period of the enterprise

● Subsidy revenues: Are revenues from state subsidies whenenterprises perform the tasks of providing goods and services

at the request of the State

● Investment real estate business revenue: Investment real estaterental revenue and revenue, liquidation of investment realestate

● In addition, revenue is distinguished by where it arises:Internal revenue, External sales revenue

● Financial income: is the income generated by financialinvestment or capital business Financial income includesinterest (loan interest, sales interest on deferred payment,installment payment, interest on investment in bonds, bills ofexchange, interest on securities transfer, profit from sellingforeign currencies), income from property rental, dividendsreceived, profits distributed from joint ventures, capitaltransfer profits, foreign currency exchange rate difference andother revenues (revenue from real estate sales, land rentalprices)

● Other income: is the income contributing to increase owner'sequity from activities other than revenue-generating activities

Revenue accounting is related to other accounting sections such as costaccounting, Determining production and business results, so Revenue plays avery important role In order to meet the revenue management requirements,

it is necessary to perform the following tasks well:

- Record and reflect fully, timely and accurately the current situationand the transformation of each type of goods product according tothe quantity, quality of type and value

- To record and reflect fully, promptly and accurately the revenues,revenue deductions, must distinguish the types of revenues foraccurate accounting

- Provide accounting information for the preparation of financialstatements, periodically analyze business activities related to thesales process, determine business results, give advice tomanagement to promptly make financial decisions for thedevelopment of the business

- The most important task of revenue accounting is to provide anaccurate, complete and timely manner to managers and those whoare interested in the operation of the business in terms of information

on business results and profits achieved by the business From there,managers can analyze, evaluate and make the right businessdecisions for the business

1.1.2.2 The meaning of revenue accounting

- No matter what business it is, profitability is always the goal that

businesses pursue Therefore, every business that wants to survive anddevelop must operate on the principle: "Get revenue to cover expenses andmake a profit", profit is an important aggregate quality indicator of thebusiness, it represents the ability to business and operational quality

Therefore, every business that wants to survive and develop must completethe accounting of revenue and costs and determine business results andalways find ways to save costs, increase revenue but not affect the quality

of products

- The issue that businesses in the market today are interested in is how tooperate the business most effectively To determine the profitability of abusiness, we must base it on the following factors: revenue, income andexpenses The organization of revenue accounting and the determination ofbusiness results play an important role, determining the survival of eachbusiness in which the revenue factor is a prerequisite

- For enterprises: The collection, processing and provision of information

on revenues and costs and determining the results of production andbusiness of enterprises helps business managers grasp the situation of eachtype of operation in the enterprise, assess the production and businesssituation to make decisions, Development direction to improve businessefficiency In addition, based on the determination of business results forenterprises to fulfill their tax payment obligations to the State, this is anactivity to create a budget for the State, once the State develops steadily, theenterprise will also have a good environment and good conditions tocontinue its production and business activities, This is a mutually beneficialrelationship

- For investors: Through the indicators of revenue, expenses, determiningthe business results of the business on the financial statements, investorswill analyze and evaluate the operation of the business to make the rightinvestment decision

reasonable payment method to avoid the highest risk.

- For the State:

+ Based on data on the financial statements of enterprises in which revenuetargets are important targets, tax agencies shall determine the tax to becollected and ensure the State budget

+ Through the business situation of the enterprise that can have the basis topropose solutions to develop the economy, creating conditions forbusinesses to operate through policies to encourage businesses such asceiling price policy, floor price policy, taxes and subsidies, othersubsidies,

1.2 Overview of VAS 14 –Revenue and other incomes.

1.2.1 Scopes.

-Revenue is determined according to the reasonable value of

received or receivable amounts

- Revenue arising from transactions is determined under the agreementbetween the enterprise and the buyer or the asset user It is determined asthe reasonable value of received or receivable amounts minus (-) tradediscount, payment discount, reductions in the price of goods sold and value

of returns of goods sold

- For cash amounts or cash equivalents not yet immediately received,revenue shall be determined by converting the nominal value of amountsreceivable in future into the actual value at the time of revenue recognition

at the current interest rates The actual value at the time of revenuerecognition may be smaller than the nominal value receivable in future

- When goods or services are exchanged for goods or services of similar

nature and value, such exchange shall not be regarded as a

revenue-generating transaction.

When goods or services are exchanged for goods or services of dissimilarnature and value, such exchange shall be regarded as a revenue-generatingtransaction In this case, revenue shall be determined as reasonable value ofthe received goods or services after adjusting cash amounts or cashequivalents additionally paid or received Where it is impossible todetermine the reasonable value of the received goods or services, revenueshall be determined as equal to the reasonable value of the exchangedgoods or services, after adjusting cash amounts or cash equivalentsadditionally paid or received

- If the business is only subject to a portion of the risk associated with theownership of the goods, the sale is determined and the revenue isrecorded

in normal warranty provisions.

● When the payment for the sale of goods remainsuncertain as it depends on the buyer of such goods;

● When the delivered goods are to be installed and suchinstallation is an important part of the contract which theenterprise has not yet completed;

● When the buyer is entitled to cancel the goods purchase forsome reason already stated in the purchase and sale contractand the enterprise is not sure whether or not the goods shall

be returned

(c) The revenue is determined reliably;

(d) The enterprise has gained or will gain economic benefits from the sale;

- Where the economic benefits from the goods sale transactions stilldepend on uncertain factors, revenue therefrom shall be recognized onlyafter these uncertain factors have been dealt with

- If revenue has been recognized in cases where money has not yet beencollected, once such debt is determined irrecoverable, it must beaccounted into the production and business expense in the period but notrecorded as a decrease in revenue

(e) Determine the costs associated with the sale

Revenue and cost related to the same transaction must be simultaneouslyrecognized according to the matching principle

** In case of receiving money in advance from the customer, it must benoted that the amount is a debt payable After fulfilling the revenuerecognition conditions, the amount is recorded as revenue and at the sametime write down the debt payable to that amount.

1.2.3 Service revenue.

- The service revenue of a transaction is recognized when the outcome

of that transaction can be reliably determined Where a transactioninvolving the rendering of services is attributable to several periods,revenue is recognized in each period by reference to the percentage ofcompletion of the transaction on the date of making balance sheet Theoutcome of a transaction can be measured 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;

- If a recognized revenue cannot be recovered, it must beaccounted as expense but not recorded as decrease in revenue

- When it is uncertain to recover an amount which was alreadyrecorded into revenue (bad debts), such amount must not be recorded asdecrease in revenue and a bad debt reserve must be set up therefor

- When a bad debt is actually determined as irrecoverable, it shall

be offset with the bad debt reserve source

(c) Determine the amount of work completed on the balance sheet date;

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

the total workload to be completed;

(3) 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 oradvances by customers

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

- In the initial phase of a service-providing transaction, when itsresult cannot be determined with certainty, the revenue therefrom shall

be recognized as equal to the recognized and recoverable costs

- If costs related to such service are surely irrecoverable, therevenue therefrom shall not be recognized, and the costs alreadyincurred shall be accounted as expense so as to determine the businessresults in the period

- Where there are reliable evidences that the incurred costs arerecoverable, the revenue therefrom shall be recognized according tothe provisions in paragraph 16 (Accounting Standard No 14)

1.2.4 Revenue from interest, royalties, dividends and distributed profits.

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

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

(2) The revenue is determined reliably

❖ Revenue from interests, royalties, distributed dividends and profits ofthe enterprises shall be recognized on the basis of:

a/ Interests recognized on the basis of the actual time and interest rates ineach period;

b/ Royalties recognized on the basis of accruement in compliance with thecontracts.

c/ Distributed dividends and profits shall be recognized when shareholdersare entitled to receive dividends or the capital-contributing parties areentitled to receive profits from the capital contribution

❖ Revenue shall be recognized when there is assurance that the enterprisesshall receive economic benefits from the transactions When an amountwhich has been recorded as revenue becomes irrecoverable, suchirrecoverable or uncertainly recoverable amount must be accounted asexpense incurred in the period, but not recorded as revenue decrease

1.2.5 Other incomes.

Other incomes prescribed in this standard include revenues fromirregular- activities other than revenue-generating activities, including:

● Revenues from the asset liquidation and sale;

● Fines paid by customers for their contract breaches;

● Collected insurance compensation;

● Collected debts which had been written off and included in thepreceding period's expenses;

● Payable debts now recorded as revenue increase as their owners

no longer exist;

● Collected tax amounts which now are reduced and reimbursed;

● Other revenues

1.2.6 Information disclosure on Financial Statements.

In the financial statements, the enterprises must present:

providing transactions;

b/ Turnover of each type of transaction and events:

● Sale turnover;

● Service provision turnover;

● Interests, royalties, distributed dividends and profits

c/ Turnover from the exchange of goods or services according to eachtype of activity mentioned above

d/ Other incomes, irregular incomes presented in detail

1.3 Some regulations on account accounting related to revenue

accounting in a commercial company.

Principles for accounting of sales revenue under Circular 133/2016 / TT-BTC

of August 26, 2016

❖ Principle of revenue accounting

- Revenue is recognized only when it satisfies the conditions recognizedfor revenue

- The revenues and expenses associated with the same transaction must berecognized simultaneously according to the principle consistent and withinthe fiscal year

- Where the equivalent trade is essentially not recorded sales revenue

To determine the net revenue of each type of revenue, for service ofproviding accounting information for management and for making financialstatements

❖ Determine the revenue

- Where an economic contract involves a variety of transactions, thebusiness must recognize transactions in order to recognize revenue

- Revenues in some cases are determined as follows:

+ The revenue of goods and services not including the payable indirecttaxes, such as VAT (including the direct method of paying VAT),export tax, environmental protection tax.

+ Exporting goods for promotion and advertisement but customers areonly entitled to receive promotional goods along with conditions, theaccountants have to allocate the proceeds to calculate revenue for thesale of all goods, and the value of the sale goods shall be calculated intothe cost of goods sold

+ Enterprises with the revenue of goods sold and service provided inforeign currency for which an advance transaction is generated, therevenue corresponding to the amount of advance received is recorded atthe actual exchange rate at the time of advance receipt, and theproportion of revenue corresponding to the amount remaining isrecorded at the actual exchange rate at the time of recording revenue

- The revenue from sale of the enterprise property as investors mustcomply with the principle:

+ For projects and projects where the business is the investor (includingprojects, the enterprise works category which is both the investor and the self-construction), the enterprise is not allowed to record real estate sales and notreceive revenue for its customers' up-front proceeds as measured by progress.+ For goods that receive the agent's sale, consignment on the right pricebasis of commission, the revenue is the commission of sales that the business

is entitled to

+ For import and export entrusted service activities, the revenue is theauthorized unit fee

+ For the unit receiving the processing of supplies, goods, the revenue is the actual amount of processing enjoyed, excluding the material value or goods receiving the processing.

+ Selling with the deferred, installment, revenue method determined at theimmediate sale price;

- The principle of recognition and determination of revenue of

construction contracts:

+ Record the revenue of a construction contract as follows: When the build contract performance is reliably defined and confirmed by the customer,the revenue and costs associated with the contract are recorded corresponding

to the portion of the work completed as confirmed by the customer in the statement reflected on the receipt

+ When the result of contracting performance is not reliably estimated, therevenue recorded is equivalent to the cost of the contract incurred by which the repayment is relatively certain; The cost of the contract is only recognized

as an expense during the period when these costs have arisen

- Do not record sales revenue, service provision for:

+ The values of goods and supplies sold as goods and goods delivered to the outside for processing; The value of goods sent for sale in the mode of selling agents or consignment (which has not yet been determined to be sold);+ Proceeds from the sale of the trial product;

+ Revenues from financial activities;

services in an accounting period of business activities from transactions,sales and services provision.

This Account includes:

Acc 5111 - Revenue from sales of merchandises

Acc 5112 – Revenue from sales of finished goods

Acc 5113 – Revenue from services rendered

Acc 5118 – Other revenue

-Acc 3331 – VAT

-Acc 3387 – Unearned revenue

-Related Account such as Acc 111, Acc 112, Acc 131,

-Account structure:

Acc 511

- Indirect taxes payable Revenue from the sale of products,

goods, investment properties and service provision of the enterprise in the accounting period

- The deduction from revenue

- Transfer net sales to 911

- Payment documents such as: Receipt invoice, money transfer check,

payment check, Authorization of collection, Notice of Credit,

- Detailed book of Acc 5111, the Ledger of Acc 511

1.3.1.3 Accounting method

The accounting process when the revenue is recorded:

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

Total price with VAT

Flowchart 1.3 : Accounting entry for sales through agents

Dr acc 136- Internal Receivable

Cr acc 511- Sales revenue and service provision

Cr acc 333- Taxes and other payables to the State

At the end of the accounting period, transfer the revenue reductions

incurred in the subtraction period to the actual revenue in the period to

determine net revenue

Dr acc 511 – Sales revenue and service provision

Cr acc 911 – Determination of business results

1.3.2 Accounting for revenue deduction

Revenue deductions such as trade discounts, sales rebates, sales returned,VAT payable under the direct method and excise tax, export tax Revenuedeductions are the basis for calculating net revenue and business results in theaccounting period Revenue deductions must be reflected, monitored in detailand separately on the appropriate accounts to provide information for theaccountant to prepare the financial statements

+ Trade discounts: applied when customers buy goods inbulk but have not been reflected on invoices when selling

goods and services in the period

+ Sales return: Returned goods are the number ofproducts, goods and services consumed but returned by

customers due to the following causes: violations of economic

contracts, poor quality goods, not the right type and

specification

+ Sales allowance: Sale allowance is the amount ofmoney accepted by the seller specifically on the agreed price

for a number of reasons, such as goods of poor quality or

improper specifications as prescribed in economic contracts

Some taxes such as: VAT according to the direct method, Special

Consumption Tax, Export Tax,

- Receipt voucher, payment voucher

- Other related documents1.3.2.3 Accounting method

Reflecting the number of discount on actual sales incurred during

the period:

 For trade discount:

Based on the sales invoice issued for the commercial discount specified in Circular 39/2014/TT-BTC, we will have a method of accounting for specific cases

Case 1: Buy 1 get a discount – Trade discount is made at that time of

purchase

+ When making an invoice: Invoice does not show discount, the price stated

on the Invoice is the discounted price

+ When accounting: Both the seller and the buyer do not have to keep track ofthe trade discount

Sales revenue is stated at cost less tradediscounts (net sales).

(Accounting according to the amount received on the invoice)

Example 1: Buy 10 tables with the list price of 200,000/piece, you will

receive a 10% commercial discount on the invoiced price of 180,000/pieceSeller:

Dr acc 131: 1,980,000

Cr acc 511: 180,000*10= 1,800,000

Cr acc 3331: 180,000

Case 2: Buy many times to get the discount – Trade discount amount is

recorded on the invoice at the last purchase

+ When invoicing: Invoices both show the item number of the last purchase and can show the trade discount

+ When accounting: Both the seller and the buyer do not have to keep track ofthe trade discount

Seller:

- Sales revenue is stated at cost less trade discounts (net sales).(Accounting according to the amount received on the invoice)

Dr acc 131:

Cr acc 511: Net sales (discounted amount)

Cr acc 3331: = Cr acc 511 * Tax rate of that item

Case 3: Buy many times to get the discount – Credit check is made separately

on 1 invoice

 For reasons:

*The amount of trade discount the buyer is entitled to is greater than the sales amount shown on the last invoice This situation may arise from many times when the purchaser reaches the discounted purchase quantity, and the trade discount is determined only in the final purchase;

* Only at the end of the period will manufacturers determine the quantity of goods that distributors (such as supermarkets) have consumed and from there will have a basis to determine the amount of trade discount to be paid based

on sales or quantity of product sold

+ When making invoices: The seller makes a separate CKTM invoice for the buyer

+ When accounting: must keep track of the commercial discount paid by the enterprise

Cr acc 131/111/112: Total amount

to be paid to the buyer

 For returned merchandise

Dr acc 632: B

Cr acc 154/155/156 (according to the method of calculating the ex-warehousing price for inventories applied by the enterprise)

- When returning goods:

Seller

Seller: Receive invoice for returned goods:

-Reduce Sales of returned goods

Dr acc 511: A – Sales of returned goods

Dr acc 3331 (If any)

Cr acc 111/112/131

- Record return on cost of goods sold

Dr acc154/155/156 = Quantity of returned goods * Ex-stock price of soldgoods

Cr acc 632: B

If there is a return fee:

Seller: Record increase in selling expenses

Dr acc 6421

Dr acc 1331 ( If any)

Cr acc 111/ 112/ 331

 Sale discount:

Case 1: Reduce the price of goods sold immediately upon sale

That is, the Seller and the Buyer have agreed to reduce the price of defective

or poor quality goods before delivering the goods

When selling defective or poor quality goods: the Seller issues a sales invoice,

Therefore, on the Sales Invoice, the value of discounted goods is not

reflected, so the Buyer and the Seller account as normal sales (Do not have to track and record the sale discount separately)

Case 2: Discount after selling goods:

That is, the Seller has invoiced and delivered the goods to the Buyer, then the Buyer has discovered that the goods are defective and of poor quality as agreed (in the Sales Contract)

The Seller decides to reduce the selling price so that the Buyer can continue topick up the goods

At this time, the Seller issues an Invoice to reduce the selling price (due to defective goods, poor quality)

Based on the adjusted invoice, the two parties shall account:

Seller

Seller: Invoice reduction adjustment-Reduce Sales of discounted goods

Dr acc 511: sales discount

Dr acc 3331 (If any)

Cr acc 111/112/ 131: Total amount of rebate payable to buyer

 Revenue deduction on income statement according to Circular 133

- When making the income statement, the target "Revenue from goods sold and providing services" and the item "Deductions from revenue" both do not include the amount of indirect tax payable in the period due to By their very nature, indirect taxes are not considered part of revenue

+ Indirect taxes such as VAT (either by the deduction method or by the direct method), excise tax, export tax, environmental protection tax and other

indirect taxes are essentially third party payments Therefore, indirect taxes are excluded from gross revenue figures in the Financial Statements or other reports

- Content and method of setting targets Revenue deductions (Entry 02) in the income statement

+ This entry reflects the sum of amounts deducted from total sales and serviceprovision in the year, including: Trade discounts, sales discounts, sales returns

in the period report The data to be recorded in this entry is the total arising from the Debit side of Acc 511 and the Credit side of Acc 111, 112, 131, during the reporting period

+ This entry does not include indirect rents and fees that the enterprise is not entitled to pay to the state budget (recorded as a decrease in revenue in the accounting book of Acc 511) because these amounts are, in essence, incomes

on behalf of the enterprise The state, which is not part of the revenue, is not considered a revenue deduction

from the enterprise's interests, royalties, dividends and distributed profits isrecognized only when both (2) the following conditions are satisfiedsimultaneously:

- It is possible to benefit from that transaction

- The revenue is determined relatively certain

Use Acc 515 - “Financial income” to reflect revenue arising fromactivities such as interest collection, royalties, dividends,distributed profits and other financial income of the enterprise isconsidered to be made during the period, irrespective of whetherthe revenue was actually collected or will be collected

1.3.3.1 Account used

- Account 515 - Financial income

- Related accounts such as: Acc111, Acc 112, Acc 3387, Acc 121, Acc 221

Account structure:

Acc515

- VAT payable according

to the deduction method