ACCOUNTING FOR EXPENSES, REVENUE, INCOME AND DETERMINATION OF BUSINESS RESULTS AT ASIA BUSINESS CONSULTING CO., LTD

Enterprises operating in the market mechanism are strongly competing to survive and stand out on the market. Especially, at this time, the economy is facing many difficulties and challenges; in order to survive and develop, enterprises need to have a flexible production and business method; proper and timely management; reasonable use of human resources.To do this, businesses have to determine their right investment, production scale, needs and their ability in terms of production and business conditions which help them make the right decision. Therefore, the organization and management of accounting records serving the needs of capturing, collecting and processing information to evaluate business results are an indispensable requirement. They show size and business method as well as the ability to grow or regress of an enterprise, and helps make right decisions in the future.Facing that situation, Asia Business Consulting Co., Ltd. understands that, besides finding out measures to improve production and business efficiency, the organization and management of accounting are also an essential requirement. Especially, information on expenses, revenue, income and business results plays an important role in accounting information. This information is always concerned by businesses and investors. More than ever, perfecting accounting for expenses, revenue, income and determining business results will contribute to increasing competitiveness, improving the quality of business decisions, and increasing the transparency of financial information.

-*** -GRADUATION THESIS

TOPIC ACCOUNTING FOR EXPENSES, REVENUE, INCOME AND

DETERMINATION OF BUSINESS RESULTS

AT ASIA BUSINESS CONSULTING CO., LTD

Ha Noi - 2020

TABLE OF CONTENTS

1 The general introduction of the topic

Enterprises operating in the market mechanism are strongly competing

to survive and stand out on the market Especially, at this time, the economy

is facing many difficulties and challenges; in order to survive and develop,enterprises need to have a flexible production and business method; properand timely management; reasonable use of human resources

To do this, businesses have to determine their right investment,production scale, needs and their ability in terms of production and businessconditions which help them make the right decision Therefore, theorganization and management of accounting records serving the needs ofcapturing, collecting and processing information to evaluate business resultsare an indispensable requirement They show size and business method aswell as the ability to grow or regress of an enterprise, and helps make rightdecisions in the future

Facing that situation, Asia Business Consulting Co., Ltd understandsthat, besides finding out measures to improve production and businessefficiency, the organization and management of accounting are also anessential requirement Especially, information on expenses, revenue, incomeand business results plays an important role in accounting information Thisinformation is always concerned by businesses and investors More than ever,perfecting accounting for expenses, revenue, income and determiningbusiness results will contribute to increasing competitiveness, improving thequality of business decisions, and increasing the transparency of financialinformation

My internship at Asia Business Consulting Co., Ltd is an opportunityfor me to approach accounting practice at the company, especially accountingfor expenses, revenue, income and business results Along with the guidance

of the instructor - Ms Tran Thi Ngoc Han and the accountants of theaccounting department of the company, I gained knowledge about thecompany as well as accounting work Being aware of the importance ofaccounting for expenses, revenue, income and business results, I decided tochoose this topic to write my final thesis: " Accounting for expenses, revenue,income and determination of business results at Asia Business ConsultingCo., Ltd.”

2 Research subject and purpose

determination of business results

expenses, revenue, income and determination of business results, making anoverview of achievements and shortcomings From there, making suggestions

to improve the accounting for expenses, revenue, income and determination

of business results at Asia Business Consulting Co., Ltd

3 Scope of the research

The thesis focuses on theoretical and practical issues of accountingfor expenses, revenue, income and determination of business results atAsia Business Consulting Co., Ltd in the 2019 period

4 Research methods

The thesis uses dialectical materialism, historical materialism combinedwith the methods of analysis, statistics, synthesis, comparison between theory

proposed a solution to improve the accounting for expenses, revenue, incomeand determination of business results at Asia Business Consulting Co., Ltd.

5 Structure of graduate thesis

In addition to the Introduction, Conclusion, Lists, Tables, my thesis isdivided into 3 chapters:

- Chapter 1: General theory of accounting for expenses, revenue, incomeand determination of business results in the service-providingenterprise

- Chapter 2: Accounting for expenses, revenue, income anddetermination of business results at Asia Business Consulting Co., Ltd

- Chapter 3: Some comments to perfect accounting for expenses,revenue, income and determination of business results at Asia BusinessConsulting Co., Ltd

Due to the limited time and knowledge gained, the topic still haveerrors, so it is expected that I will receive the help and evaluation,suggestions from the management, accounting staff of Consulting Co., Ltd.Asian Business and the teachers at Academy of Finance, especially thementor – Ph.D Tran Thi Ngoc Han so that I can best complete my thesis.Thank you sincerely!

Student

Nguyen Thi Anh

CHAPTER I GENERAL THEORY OF ACCOUNTING FOR EXPENSES, REVENUE, INCOME AND DETERMINATION OF

BUSINESS RESULTS IN THE SERVICE- PROVIDING

ENTERPRISE

1.1 The need and mission of accounting for expenses, revenue, income and determination of business results in the service- providing enterprise

1.1.1 The meaning of expenses, revenue, income and business results

Revenue is the economic benefits that an enterprise gains in the course

of its production and business activities For service-providing enterprises, therevenue mainly comes from service-providing services In addition,enterprises can get revenue from financial activities and other activities.Businesses are always eager to achieve the maximum revenue

Expenses are the amounts of money that an enterprise must spend toconduct business activities Every business wants to minimize costs tomaximize profits

Business results are economic benefits that enterprises gain afterdeducting all expenses Business results of an enterprise include: Results ofproduction and business activities, Results of financial activities and Results

of other activities

Revenue, expenses or business results are indicators to evaluate theeffectiveness of production and business activities in enterprises Based onthese criteria, business owners can come up with timely plans and solutions to

goal of maximizing profits , increase the value of the business Investors canrely on these indicators to decide whether to invest in a business or not.Suppliers rely on that to determine their strategy of providing goods andservices,

1.1.2 Management requirements for expenses, revenue, income and business results

- Expenses, revenue, income and business results play a key role in thedevelopment of the business so it is necessary to have strict management inall aspects

- The management of expenses, revenue, income and business results shouldpay attention to the following:

+Understanding each service delivery method, payment method applied foreach certain object

+ Building a list of customers, with each object, it is necessary to specify thepolicy applicable to debts to have reasonable, timely and complete debtrecovery measures, while ensuring the reputation of the business, attractingcustomers, has quickly recovered capital to implement specific plans andplans

+ Clearly categorize revenues and expenses, record them at the right time and

in the right value Distinguish revenue from supply activities and incomefrom other activities Strictly manage expenses, propose cost-effective andeffective management measures to maximize profits

+ The work of transferring revenues, expenses and determining sales resultsshould be cautious, ensuring full and accurate accounting records

1.1.3 The need and mission of accounting for expenses, revenues, income and determining business results

1.1.3.1 The need of accounting for expenses, revenues, income and determining business results

In a market economy, the problem that businesses are alwaysinterested in is how to operate business most effectively (maximizing profitsand minimizing costs) Factors that are directly related to determining acompany's profit are revenue, income and expenses Therefore, theorganization of accounting work on expenses, revenue, income anddetermination of business results plays an extremely important role

Accounting for expenses, revenue, income and determination of businessresults is not only necessary for business executives, but it is also importantfor other people in the economy

+ For investors: Accounting for expenses, revenue, income anddetermination of business results is the basis for investors to evaluate theproduction and business efficiency of each enterprise From there, they willmake reasonable investment decisions

+ For financial intermediaries such as banks, financial leasingcompanies, accounting for expenses, revenue, income and determination ofbusiness results is a prerequisite to conduct appraisals and assess the financialposition of the business, in order to make decisions about how much the loanand the loan term

+ For macroeconomic management agencies: Accounting for expenses,revenue, income and determination of business results helps the Statepolicymakers to summarize, analyze data and provide necessaryparameters which help government regulate the economy at macrolevel, determine the right corporate income tax that enterprises have topay to the State

1.1.3.2 The mission of accounting for expenses, revenues, income and determining business results

Today, accounting in general and accounting for expenses,revenues, income and determining business results in particular havehelped businesses and state agencies evaluate the completion of theplan on service costs, costs and profits to overcome the shortcomingsand limitations in the management The organization and rationalarrangement between the stages of service provision will createfavorable conditions in the service provision accounting and determinebusiness results, and at the same time create a unity in the generalaccounting system of the business In order to promote the role of

expenses, revenues, income and determining business results inenterprises need to perform the following tasks:

- Reflecting, recording fully, promptly revenues, deductions of revenueand all expenses incurred in the period to collect revenue and fee forthe period at the end of the period to determine business results

- Monitoring regularly, continuously increasing and decreasing salesand service provision, financial activities and other income

- Accurately determining business results, monitoring the performance ofobligations to the State

- Providing accurate and timely accounting information for the preparation offinancial statements and periodically analyzing business activities related torevenue and determine business results

- Determining the process of accounting for expenses, revenue, income and

- Making recommendations and measures to improve consumption anddetermine business results, providing management with the informationneeded to develop specific plans to improve the operational efficiency ofenterprise

1.2Accounting for expenses, revenue, income and determination of business results

1.2.1 Accounting for expenses in the service- providing enterprise

1.2.1.1 Accounting for cost of goods sold

1.2.1.1.1 Overview

- The cost of service is the total business expenses associated with theprocess of providing the service

- Determine cost of goods sold:

Finished products and services cannot be stored like physical productsand other goods, but they shall be accounted into the prime cost of goods soldimmediately Therefore, for the finished services whose revenue has not yetbeen recorded, the cost for those tasks is still considered to be the cost of theunfinished product However, service activities usually do not account forincompleted product costs Therefore, the cost of products and services isexpressed as the cost of living labor needed and materialized labor creates theproducts and services provided to customers

At the end of the business period, due to the characteristics of productsand services without physical artifacts, the finished product cost is transferredfrom Acc154- Unfinished production and export expense to Acc632- Cost ofgoods sold

1.2.1.1.2 Documents and account used

- Documents used: Accounting vouchers, Minutes of acceptance of works,cases,

- Account used:

Acc 632- Cost of goods sold

Other related account: Acc154- Unfinished production and export expense

1.2.1.1.3 Accounting order

Diagram 1.2.1.1: Ordering of accounting of Cost of goods sold

Note:

(1) Service fee for the period

(2) Transferring cost of goods sold

1.2.1.2 Accounting for selling expenses and administrative expenses

1.2.1.2.1 Overview

- Selling expenses are actual expenses incurred in the process of sellinggoods and providing services, including expenses such as: the salary cost ofsalesperson, social insurance, health insurance, unemployment insurance,business insurance of salesperson, sales commissions, product warranty costs,goods preservation costs, freight expenses, customer conference costs, fixedasset depreciation expenses for sales activities,

- Administrative expenses are the administrative and generalmanagement costs of the enterprise, including the salary costs of managementdepartment staff, the cost of office materials, the depreciation of fixed assetsused for business management department, social insurance, health insurance,unemployment insurance, business insurance of business management staff,

from outside (electricity, water, telephone, ), other money costs (receptions,conferences, ).

1.2.1.2.2 Documents and account used

- Documents used:

Delivery receipt, Spreadsheet and salary allocation, Tool allocation table,VAT Invoice, Sales Invoice, Receipt, Expense, Debit Note, Credit Note,Advocate List,

-Account used: Account 642 - Business management costs:

Account 6421 - Selling expenses This account is used to collectand transfer selling expenses, other costs related to sales activities ofenterprises This account has no ending balance

Account 6422 - Administrative expenses This account is used togather and transfer expenses for business management, administrative andother general services related to the operation of the enterprise This accounthas no ending balance

(1) Salary and deductions from salaries of salespeople and business managers(2) Depreciation of fixed assets used for sales and business management

(3) The cost is allocated gradually

(4) Expenses for services purchased from outside, other expenses in cash(5) Excise tax, land tax must pay into the state budget

(7) Refunding provisions for payables

(8) At the end of the accounting period, transferring of sales expenses,

administrative expenses incurred in the accounting period

1.2.1.3 Accounting for financial expenses

products, goods, providing labor and services

+ Lending costs: short-term and long-term selling expenses; the cost of joint venture activities is not included in the value of contributed capital; cost of selling foreign currency

+ Loss of short-term and long-term securities selling; loss of transfer,

withdrawal or liquidation of investments in subsidiaries, joint ventures,

associates, other investments; losses due to selling foreign currencies

+ Foreign exchange losses

+ Provision for loss of long-term financial investments

+ Other financial operating expenses

- Document used: Loan calculation slip, Payment slip, Debit note,

1.2.1.4 Accounting for other expenses

Other expenses are expenses for activities other than revenue

generation activities of the enterprise, including:

- Expenses for liquidation and sale of fixed assets

- Remaining value of liquidated and sold fixed assets

- Differences due to revaluation of assets and capital contribution to jointly controlled business establishments, investment in associations and other long-term investments

- Amounts fined for violating economic contracts

- Amounts subjected to tax penalties and tax payment

- Other expenses

1.2.1.4.2 Document and account used

- Document used: Payment slip, Debit note,

- Account used:

Acc 811- Other expenses

1.2.1.4.3 Accounting ordering

Diagram 1.2.1.4: Odering of accounting for the other expenses

Note:

(1) Expenses incurred during the liquidation and sale of fixed

(2) The residual value of fixed assets

(3) Depreciation of fixed assets

(4) Transferring other expenses

(1)

Acc.133 VAT deducted

1.2.1.5 Accounting for corporate income tax expenses

1.2.1.5.1 Overview

Corporate income tax expense includes current corporate income tax expense and deferred income tax expense when determining results in the period

Enterprise income tax expense is the payable enterprise income tax amount calculated on the taxable income in the year and the current enterprise incometax rate

Deferred income tax expense is the amount of corporate income tax payable

in the future arising from:

+ Recognition of deferred income tax payable during the year

+ Refund of deferred income tax assets which has been recorded from

previous years

Deferred income tax income is the amount of the deferred expense tax

expense arising from:

+ Recognition deferred income tax assets of the year

+ Reimbursement of deferred income tax has been recorded from previous years

1.2.1.5.2 Account used

Acc 821 - Corporate income tax expenses

1.2.1.5.3 Accounting ordering

(2) The difference between the temporarily paid enterprise income tax

amount and the payable enterprise income tax amount

(3) Transferring of corporate income tax expenses

1.2.2 Accounting for business income

1.2.2.1 Revenue from service provision

1.2.2.1.1 Overview

- Reflecting the turnover of service provision of an enterprise in an

accounting period of business activities from the performance of agreed work under a contract, or multiple accounting periods such as provision of

Acc.911Acc.821

Acc.3334

(1)

(3)

(2)

transport services , tourism, lease of fixed assets, by mode of operating lease, construction contract revenue,

+ The revenue can be measured reliably

When the contract stipulates that the buyer is entitled to return the service purchased under specific conditions, the enterprise may record revenue only when those specific conditions no longer exist and the buyer is not entitled to return the service provided

+ The business has gained or will gain economic benefits from the service provision

+ Identify the work completed at the reporting time

+ Determine the costs incurred for the transaction and the cost to

complete the service delivery transaction

- Determine revenue:

+ Revenue is determined by the fair value of collected or receivable amounts.+ Revenue arising from a transaction or agreement between a commercial enterprise and the buyer or user of the property and is determined by the fair value of the amounts collected or will be collected after deducting the

discounts, sales rebate, returned merchandise

+ For cash amounts or cash equivalents not immediately received, revenue is determined by converting the nominal value of future amounts to actual value

at the time of recognition according to the ratio current interest rate

- Accounting principles

+ Sales of goods and services do not include indirect taxes, such as VAT(including VAT directly applied), import and export duties, special

+ In case the enterprise has written the sale invoice and collected the goodsbut has not yet delivered the goods to the end of the period, the value of thisitem is not confirmed as sold and must not be reflected to account 511 "Revenue from sale of goods and rendering of services” which is onlyaccounted to the Credit side of Account 131" receivable from customers "onamounts collected from customers.

+ In case of sale in a foreign currency, the turnover from goods sale andservice provision is determined at the actual exchange rate at the time ofgenerating economic operations In case of receiving advances fromcustomers in foreign currencies, the turnover corresponding to the advanceamount shall be recorded into the accounting currency at the exchange rate atthe time of receiving the advance

1.2.2.1.2 Documents and accounts used

- Documents used:

+ VAT invoice

+ Sales list

+ Payment documents (Receipt, transfer check, payment check, )

+ And other related documents

- Account used:

+ Acc 511 - Revenue from sales and service provision

Acc 5113- Revenue from service provision

+ Account 3331 - VAT payable

+ Acc 3387 - Unrealized revenue

And other related accounts (Acc 111- Cash, Acc 112 - Bank deposits)

*Account 511- Revenue from sales and service provision

Content: This account reflects sales of products, goods and services to outside

and internal consumption revenue in the accounting period of the enterprise.Account 511 has four second-level Accounts:

Account 5111 - Revenue from selling goods

Account 5112 - Revenue from selling finished products

Account 5113 - Revenue from service provision

Account 5118 - Other revenue

*Account 3331 - VAT payable

Content: This account is used to reflect the amount of output VAT payable,

the amount of VAT payable for imported goods, the amount of VAT to be deducted, the amount of VAT paid and must also be paid to the state budget

of enterprises in the accounting period

Account 3331 has two third-level accounts:

*Account 3387 - Unrealized revenue

(1) Service fee for the period

(2) Transferring cost of goods sold

(3) Revenue from sales and VAT of goods

(4) Transferring of revenue from service provision

1.2.2.2 Accounting for financial income

1.2.2.2.1 Overview

Financial income is the total value of economic benefits earned by

enterprises in the accounting period from investment and business activities

on capital, contributing to increasing owners' equity, including:

+ Interest: loan interest, deposit interest, interest on deferred payment,

installment payment, discounted purchase payment, periodic interest of

+ Short-term and long-term selling securities; transfer profits, withdrawals or liquidation of investments in subsidiaries, associates, joint ventures and other investments; profit from selling foreign currencies.

+ Interest of exchange rate differences

+ Revenue from other financial activities

1.2.2.2.2 Account used

Acc 515- Financial income

(3) Payment discount is enjoyed

Acc.121,228 (1)

(3)

(4)

Acc.331

Acc.338 (5)

(2)

(4) Gradually allocate interests on deferred and interest on advance payment

(5) Transferring financial income

1.2.2.3 Accounting for other income

1.2.2.3.1 Overview

Other income is the total value of the economic benefits earned by the enterprise in the period from other activities (in addition to the

revenue generation activities of the enterprise), including:

- Income from the sale and liquidation of fixed assets (including fixed asset sale and lease back transactions)

- The increase is due to revaluation of assets to contribute capital to jointly controlled business establishments, to invest in associates and other long-term investments

- The fine is paid by the unit or individual violating the economic contract with the enterprise

- Taxes that are exempted by the state from corporate income tax Export, import and excise taxes are refundable

- Customers' bonuses related to consumption of goods, products and services are not included in revenue

- Income, gifts, gifts in cash, that individuals and organizations givebusiness

- Other income

(2)

Acc.331,338

(3) (4)

1.2.3 Accounting for business results

expenses

If the difference is positive (+), then the business result is interest, and vice

versa, if the difference is negative (-), the business result is a loss

1.2.3.2 Account used:

Acc 911 - Determining business results

Financial expenses

Normal

business

results

Net sales revenue

Cost ofgoods sold

Financial income

Selling expenses and corporatemanageme

nt costs

Transferring cost of goods sold

Transferring business management costs

Transferring financial expenses

Transferring other expenses

The difference in Debit Account 821 is

greater than that of Credit Account 821

Transfer of current corporate income tax

costs

Transferring profit results (after deducting corporate income tax

Transferring loss results (after deduction of

corporate income tax

Transferring net revenue from sales and service provision

Transferring financial income

Transferring other income

Transfer of current corporate income tax costs

The difference in Debit Account 821 is smaller than that of Credit Account 821

1.2.4 Organisation of bookkeeping systems for expenses, revenue, income and business results accounting

According to the accounting system, there are 4 forms of accounting books for each enterprise to choose:

1.2.4.1 General journal form

Basic characteristics of the General Journal accounting form: All

arising economic and financial operations must be recorded in the Journal, with the focus on the General Journal, in accordance with the arising

chronological order and according to the economic content of that business Then take data from the journals to record the Ledger by each arising

transaction

This form includes the following accounting books: General

Journal, Ledger, Special Diary and detailed accounting books (supplementary books) open for each indicator

Original document

General journal

General ledger: 632, 642,635, 811,511,515,711,131,

.

::

Trial balance

Financial statement

Special

journal

Details books(Detailed customer receivables book,

General detail

Entering data daily:

Reporting at the end of accounting period:

Checking:

1.2.4.2 Journal-Ledger form

Basic characteristics of the Journal - Ledger form: The arising economic and financial operations are combined in chronological order and according toeconomic contents on the same general accounting book The only journal is -Ledger Bases for recording in the Journal - Ledger are accounting vouchers

or general accounting vouchers of the same type

Forms of Diary - Ledger form include the following types of accounting books:

- Diary - Ledger

- Detailed accounting books and cards

Entering data daily:

Reporting at the end of accounting period:

Original document

General tables of accounting vouchers

of the same type

General detail

- Closely combining the recording of economic transactions arising in

chronological order with the systematization of transactions according to

economic content

- Combine widely the general accounting with detailed accounting on the

same accounting book and in the same recording process

- Use printed book forms with account reciprocal relations, economic and

financial management norms and financial statement preparation

Journal voucher form of bookkeeping uses accounting book system:

General Ledgers(511,632,642,911,131,111,

Entering data daily:

Reporting at the end of accounting period:

+ Recording in chronological order on the register of voucher entry

+ Write according to the economic content on the Ledger

- Bookkeeping vouchers made by accountants on the basis of each

accounting voucher or general sheet of accounting vouchers of the same type, with the same economic contents

- Recording vouchers are numbered consecutively in each month or whole year (according to the ordinal number in the register of book entry

vouchers) and accompanied by accounting vouchers, which must be

approved by the chief accountant before recordin accounting book

This form includes the following types of accounting books:

Entering data daily:

Reporting at the end of accounting period:

Checking:

1.2.5 Accounting for expenses, revenue, income and

determination of business results in application with

accounting software

Original document

General tables of accounting vouchers

of the same type

General detail

General Ledgers( 511,

632, 642, 911, 131,111,

Trial balanceRegistered

voucher book

Every day, the accountant base on the accounting voucher or the

checklist of the same type of accounting voucher which has been checked, used as a basis for book recording, to determine the Debit account, account

to write Yes Importing data into computers according to the tables, which are already designed on the accounting software

According to the accounting software process, the information isautomatically entered into the general accounting book (Ledger or Journal -Ledger ) and related detailed accounting books and cards

At the end of the month (or at any time necessary), accountants performbook closing operations (plus books) and make financial statements Thecomparison between aggregated data and detailed data is done automaticallyand always ensures accuracy and truthfulness according to the informationentered in the period Accountants can check and compare data betweenaccounting books and financial statements after printing out paper Performoperations to print financial statements as prescribed

At the end of the month and at the end of the year, general accountingbooks

and detailed accounting books are printed on paper, bound into books andcarry out legal procedures according to regulations on manual accountingbooks

Written on the accounting software form system on the computer

Entering data daily:

Reporting at the end of accounting period:

Checking:

Accounting software

- Detailed accounting books

-General accounting books

Computer Original documents

General accounting

vouchers of the same

type

-Financial statements -Management accounting reports