Accounting for salesrevenue, consumption tax and sales deductions uses these main accounts: - 511: Revenues from Sales and Services Using the double-entry bookkeeping method, the company
INTRODUCTION
The Rationale of the Thesis
Since Vietnam adopted an open-door policy to attract foreign direct investment, global companies have gained both opportunities and challenges in entering the Vietnamese market Leveraging advantages like lower manufacturing costs, including labor and raw materials, international corporations face stiff competition from other global firms and local SMEs, along with diverse consumer choices These obstacles have prompted businesses to develop effective strategies aimed at attracting and retaining customers In Vietnam’s automobile industry, where purchases are mainly made by the middle class and affluent consumers—who possess substantial knowledge about financial and product quality factors—success depends heavily on building strong relationships both internally and externally Consequently, companies must continuously demonstrate product quality and service excellence through transparent financial reporting and positive market reputation to gain consumer trust and achieve sustainable growth.
Sales go beyond simply exchanging goods for money; it is a crucial component of business that drives social reproduction and meets demand, allowing manufacturers to plan production and consumption effectively For businessmen, increased sales indicate higher capital turnover and profits, often leading to improved living standards for employees In the context of economic globalization, thorough sales accounting becomes essential for organizations to assess their financial health comprehensively However, many enterprises use sales accounting primarily for tax purposes, neglecting detailed analysis of sales factors and the strategic use of sales data Implementing sales activity indicators can enhance companies’ awareness of their sales performance and provide valuable insights to evaluate and improve their sales strategies.
Thank to these above reasons and along with the kindly guidance of my supervisor PhD, CPA Tran Manh Dung, I have finally chosen the research topic
“Improving the Accounting for Sales at General Motors Vietnam Company”.
Research Objective
This study aims to evaluate the current practices of sales accounting within GMV, highlighting both its advantages and disadvantages The first objective is to assess how sales are currently recorded and reported, while the second focuses on analyzing the benefits and challenges associated with GMV's sales accounting methods Ultimately, the study seeks to provide conclusions and recommendations that can effectively address existing issues, improving the accuracy and efficiency of GMV's sales financial management.
Research Methodology
To do the research, variable methods of collecting data were applied Generally,
I focused on two main types of data being primary and secondary data The process of collecting was taken place as below:
Secondary data was initially collected due to its accessibility, utilizing both internal and external sources Internal data included company documents such as invoice requests, invoices, and Z-option sheets used for posting on SAP, providing valuable insights for this research.
…I also picked up the information from financial statements and other related documents whilst the main source of external data came from the legal documents, internet and so on
This study combined secondary data with primary data collected through observation and interviews During the internship, I gained valuable insights by analyzing the work of sales accountants through firsthand observation and engaging interviews, enhancing my understanding of their daily operations.
Invoice requests Invoices Z-options Financial statements
Legal documentsNewspapersInternetOhers well as accounting computer system Besides, I decided to make some interviews directly and indirectly in addition via emails, telephone and internet.
After the collecting procedure, the data processing was performed The process included analysis, comparison and synthesis to reflect and assess the accounting for sales in GMV.
Research Dimesion
During my internship at GMV, I conducted research analyzing sales data from the 2015 accounting books The report focuses on key aspects of sales accounting, including Sales Revenue accounting, Costs of Goods Sold (COGS) accounting, and Selling Expense accounting This comprehensive analysis provides valuable insights into the company's financial performance related to sales activities.
THEORETICAL FRAMEWORK OF ACCOUNTING FOR SALES
The Nature of Selling Goods
Sales in business encompass the entire process of buying and selling, which includes not only transactions involving money for products or services but also essential activities such as identifying potential clients, guiding demand, providing quality goods, and building customer loyalty The definition of “sales” varies depending on context, but it generally refers to a transaction where value or money is exchanged for ownership of a product or access to a service In accounting, sales specifically represent a company's revenue generated from the sale of goods or services, often referred to as net sales.
A sales contract involves a promise to purchase products at a predictable future time, central to marketing and advertising strategies The four essential elements of a valid sale include the mutual competence of both buyer and seller, a clear agreement on the terms of exchange, the transfer of specific products or services, and consideration in the form of money or its equivalent.
Direct selling involves delivering products and services directly to customers, typically from the company's warehouse or factory without maintaining stock This method ensures that the sale process is initiated once payment is received, and the product's value is recognized Providing products or services directly to buyers confirms the completion of the sales transaction, emphasizing the importance of efficient delivery and payment collection in the sales process.
Shipment-based sales involve delivering goods to customers according to signed contracts, with the seller maintaining control over the shipped goods until payment is accepted or received Once payment is made or accepted, all benefits and risks are transferred to the buyer In practice, GMV typically combines wholesale methods with direct shipment to dealers, who act as intermediaries Wholesale distribution encompasses supplying merchandise to retailers, other wholesalers, merchants, and industrial or institutional buyers A wholesaler functions as a third-party intermediary, facilitating transactions between different business entities.
Wholesaling theoretically takes place in case large quantities of merchandise are reassembled, sorted, then repackage, and distribute in smaller lots.
Wholesaling is one step existing on the supply chain, which combines various companies like suppliers, manufacturers and retailers Being developed in the
1980s to meet the need of maximizing efficiency in the business process, supply chain management (SCM) involves in moving goods from original suppliers to end users.
Wholesale financing process is taken place via the three-party contract method which is displayed as the figure 2.1 below:
Figure 2.1: GMV’s wholesale financing process
GMV's vehicle sales process begins with receiving 70% of the payment from the bank and 30% from dealers within two to three days Following this, GMV issues invoices to dealers based on their purchase orders (PO), which are submitted to the billing accountant by staff members.
The SM department initiates the process by sending the car's original documents to the bank as collateral for the mortgage When a customer purchases a vehicle, the dealer repays 70% of the car's cost of goods sold (COGS) from the payment made by the customer This allows the bank to redeem the car's original documents and facilitate the delivery of the vehicle to the customer.
The "Repay Loan Document Customer" process benefits all three parties involved: the bank, GMV, and the dealers The bank assumes a 70% risk of down payment based on the Gross Merchandise Value (GMV) but gains new customers by partnering with GMV’s dealers, who are encouraged to collaborate closely with the bank by holding invoices and vehicle certificates Dealers are more motivated when only required to prepay 30% of the vehicle's value, increasing their activity and sales GMV also benefits from improved cash flow management through this approach In addition to selling cars, GMV distributes spare parts to dealers for warranty services, with each purchase order (PO) managed through S-slips issued by the After-Sales (AS) department The billing accountant uses these S-slips to generate spare parts invoices, ensuring accurate and efficient financial documentation.
Consigned goods remain under the ownership of the enterprise until they are officially consumed, functioning similarly to sales via shipment The commission paid to the agent is classified as a selling expense, with agents compensated through agency commissions or price markups This approach aligns with standard sales and marketing practices, ensuring clear financial responsibilities and costs associated with consignment arrangements.
2.1.2.4 Sales under the deferred payment, installment payment
Deferred payment and installment sales are strategic methods for collecting revenue over multiple periods Typically, customers make an initial payment at the time of purchase, agreeing to pay the remaining balance through subsequent installments These arrangements often include interest charges, providing a percentage of additional revenue for the business Implementing installment payments can enhance cash flow flexibility and attract customers seeking convenient payment options.
2.1.2.5 Sales in the form goods barter
To streamline production and business operations while managing inventory, some companies facilitate product exchanges to receive alternative products Revenue is only recognized once the goods are sold to customers, marking the completion of the goods consumption process.
Accounting for Sales
2.2.1 The Responsibilities of Accounting for Sales
Effective sales activities are crucial for minimizing product loss and identifying slow-moving inventory, enabling businesses to implement targeted demand-promoting strategies Sales accounting provides comprehensive insights into overall operational performance, allowing managers to detect discrepancies between purchases, sales, and inventory levels This visibility helps companies take timely, accurate actions to optimize stock management and boost sales growth, ultimately enhancing profitability.
Financial statement data provided by accountants offers inside stakeholders insight into the company's financial health and overall business condition, enabling effective management and economic oversight Furthermore, the executive board can assess policy compliance and performance, ensuring sound business governance These financial insights also inform external parties about the company's capacity to buy, reserve, or sell goods, aiding in investment decisions, loan evaluations, and establishing or maintaining business relationships.
2.2.2 Requirements of Accounting for Sales
Three main requirements for sales accounting are:
1 Tightly control the consumption of goods on all dimensions: quantity, quality…
2 Avoid the unexpected problems of loss, damage, corruption, waste
3 Consider the reasonableness of the cost, accurately allocate selling expenses to determine the final business results.
Revenue represents the gross inflow of economic benefits generated through an entity's normal business activities, leading to an increase in equity, excluding contributions from shareholders or owners (IAS 18).
In accounting, amounts received from customers are recorded as “Sales” or “Net Sales” on the Profit and Loss (P/L) statement, with sales recognized upon delivery of products For financial analysis, “sales” typically refers to net sales rather than gross sales Sales involve specific transactions in professional selling or marketing efforts Expenses for services rendered are usually documented separately from merchandise sales, although the accounting processes for recording sales of services are similar to those for tangible goods Revenue from sales generally originates from three main sources.
2 Revenue from the rent of company’s assets by a third party.
Sales result in inventory deduction, but inventory accounting is maintained separately from sale accounting Sale revenue represents the gross inflow of economic benefits and should not be netted against expenses, as it reflects income generated from past business activities Revenues from activities outside the main operations are classified as gains, not sales; for example, selling automobiles is considered sale revenue, whereas selling scarves produced in-house is recognized as a gain Sales increase a company's equity during the accounting period, provided these increases are not due to shareholder contributions Importantly, sale revenue must stem from an increase in net assets; however, increases from additional capital investments by owners do not qualify as sales revenue.
Companies utilize various vouchers and voucher rotation processes tailored to their selling methods, ensuring accurate documentation of sales activities Revenue recognition, consumption tax, and sales deductions are recorded through vouchers and supporting documents such as sales invoices, delivery notes, payment notes, and dispatch notes, which serve as the basis for accounting entries These documents are essential for proper financial recording, enabling precise tracking of sales revenue, consumption tax, and sales deductions The accounting for these transactions relies on key accounts designated for sales revenue, consumption tax, and sales deductions, ensuring compliance with financial regulations and facilitating transparent financial reporting.
- 511: Revenues from Sales and Services
Using the double-entry bookkeeping method, a sale is recorded by debiting cash or accounts receivable and crediting the sales account, reflecting the actual transaction value rather than the list price Revenues primarily originate from the sale of goods and services, although they can also come from interest, dividends, or royalties received from other organizations According to Circular 200/2014/TT-BTC, the journalization process for sales involves specific procedures to ensure accurate financial recording.
1 “When selling products, goods or providing services for immediate cash, the following accounts shall be recorded:
When accounting for products, goods, and investment properties subject to VAT, special excise duty, import duty, and environmental protection tax, revenues should be recorded based on the tax-exclusive selling prices It is essential to separate indirect taxes payable, including VAT payable calculated using the subtraction method, to ensure accurate financial reporting.
Cr 511 – Revenues (tax-exclusive prices)
Cr 333 – Taxes and other payables to the State.”
When selling products, goods, or providing services for immediate cash using bank funds, specific accounting procedures must be followed Revenues from the sale of products, goods, or investment properties subject to indirect taxes such as VAT, special excise duty, import duty, and environmental protection tax are recorded based on tax-exclusive selling prices It is essential to separately account for indirect taxes payable, including VAT payable calculated through the subtraction method, ensuring accurate financial reporting and compliance with tax regulations.
Dr 112 – Cash in bank (total payment)
Cr 511 – Revenues (tax-exclusive prices)
Cr 333 – Taxes and other payables to the State.”
Recognition of cash sale and credit sale is performed as the table below:
Table 2.1: Recognition of cash sale and credit sale Cash sale
Credit Sales Revenue (Income Statement)
Credit Sales Revenue (Income Statement)
When the receivable is paid in due, the receivable balance will have be reduced and the accountantwill record the following double entry
Determining the point of sale recognition can be confusing, as it may occur when goods are dispatched, delivered, or when payment is received Generally, sale is considered to occur when the seller transfers risks and rewards associated with the asset to the buyer, typically upon delivery when the customer has received the goods Receipt of payment is not the primary factor for sale recognition due to the accrual basis of accounting, which recognizes income when earned Revenue is reported at the top of the income statement, forming the basis for calculating net income by subtracting expenses from revenues The actual monetary value of the transaction, including any discounts from the list price, is recorded in the accounts.
511: Revenues from Sales and Services
- The amount of SCT, export and import taxes relating to the actual revenue generated within the period.
- COGS returned and sales discounted should be transferred at the end of the period.
- Net income is transferred to account
- Revenues from sales and servies
- Value of beginning finished goods.
- Value of finished goods produced in the accounting period.
- Transferred value of finished goods (if the company applies periodic method for inventory)
- Actual value of warehousing finished goods sold within the period.
- Actual transferred value of beginning finished goods (if the company applies periodic method for inventory)
- Actual value of ending finished goods
- Purchased goods (includes all types of non-refundable taxes)
- Outsourced processing goods (including purchasing price and processing fee)
- Surplus goods in merchandise inventory
- Transferred value of ending inventory (if the company applies periodic method for inventory)
- The value of goods taken out for selling, outsourcing or manufacturing.
- Transferred value of beginning inventory (if the company applies periodic method for inventory)
- Value of cost of selling inventory
- The number will be received from customers when selling products and services
- Revaluation of receivables in foreign currency (when the exchange rate is bigger than 1)
- The amount was paid by customers
- Cash discount and trade discount
- Revaluation of receivables in foreign currency (when the exchange rate is smaller than 1)
The accounting procedures for revenue and selling according to the Circular200/2014/TT-BTC are illustrated in the figures below:
Figure 2.2: Accounting for revenue of products and services
Account 521 is dedicated to recording sales deductions, reflecting adjusted sales figures within the accounting period It encompasses various reductions such as trade discounts, discounted sales, and sales returns, ensuring accurate representation of net sales Proper use of this account is essential for precise financial reporting and compliance with accounting standards.
Accountants are responsible for accurately recording trade discounts, sales discounts, and sales returns for each customer and product category, including both goods and services At the end of each accounting period, they must transfer all balances from account 521 to account 511 to ensure proper financial reporting.
- "Revenue from sales and services" to determine the net sales of products, goods and services that were actually made during the reporting period.
This account is processed as follows:
- The trade discounts have been accepted for customers;
- The sale price reduction was approved for the purchase;
- Sales of goods sold are returned, money is returned to the buyer or subtracted from the customer receivables on the products and goods sold
At the end of the accounting period, accountants transfer all amounts from account 521 to account 511, "Revenue from Sales and Services," to accurately determine the net sales of products, goods, and services This process ensures proper revenue recognition and financial statement accuracy Properly recording these transfers is essential for calculating the company's gross income and assessing overall sales performance.
This account has no balance at the end of the accounting period.
- Deducted values from account receivables
- Transfer all the trade discounts, sales returns into the account 511
2.4 Accounting for Cost of Goods Sold
Accepted Documents: o Goods dispatched note o Proposals on goods sold o Inventory records o Others
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At the end of month:
- Close COGS subsidiary ledger and use it as the basis for formulation of COGS summary report.
- Close COGS Ledger and compare it with data from the COGS summary report.
Account 632 - "Cost of goods sold" is opened to more than one level-down account to track cost of each specific type of goods.
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Accounting for Selling Expense
- Salary allocation and salary deduction table
Accountants use Account 641 - "Selling expenses", to collect and forward selling expenses actually incurred in the accounting period This account is structured as follows:
Increase selling expenses Reduce selling expenses
Transfer selling expenses to determine business result
This account has no balance at the end of the accounting period.
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THE CURRENT SITUATIONS OF ACCOUNTING FOR SALES
Features of GMV Company
- Company name: General Motors Vietnam
- Location: Km12, Tu Hiep, Thanh Tri District, Hanoi
- The legal representative: Director, Head of Government Relations Nguyen Van Quy.
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In this proposal I will go abysmal into the information of vehicle business activities.
The company's car products include:
- Pick-up car (Colorado – imported from Thailand)
- Five-seat passenger car (Cruze, Aveo, Spark …)
- Seven-seat passenger car (Captiva, Orlando …)
Trade business operations involve the flow and distribution of products within the marketplace, ensuring products move seamlessly from producers to final consumers This process is essential for efficient market functioning and customer satisfaction Key features of trading activities include product logistics, inventory management, and timely delivery to meet consumer demand Optimizing these operations can enhance supply chain efficiency, boost profitability, and strengthen market competitiveness.
1 The flow of goods is the basic economic movement of commercial enterprises, which is the total of those activities: purchasing process, exchange and storage of products.
2 The purposes of business activities in trading enterprises grouped by sectors:
3 Methods of goods turnover: wholesale and retail
Wholesale is the sale of goods for the intermediate business/third party/dealder but does not exchange directly to the final customers.
Retail is selling directly to the final consumer.
Wholesale financing process is taken place via the three-party contract method which is displayed as the figure 3.1 below:
Figure 3.1: GMV’s wholesale financing process
GMV processes payments by receiving 70% from the bank and 30% from dealers within two to three days Subsequently, GMV issues invoices to dealers for sold vehicles, based on their purchase orders submitted to the billing accountant by staff members This streamlined procedure ensures efficient transaction handling and accurate invoicing in the vehicle sales process.
The company's SM department manages the process of sending the car’s original documents to the bank as collateral When a vehicle is purchased by a final user, the dealer repays 70% of the vehicle's cost of goods sold (COGS) from the client’s payment, enabling the bank to redeem the original documents and deliver them to the customer This arrangement benefits all parties involved: the bank assumes a 70% risk on the down payment relative to the gross merchandise value (GMV), while attracting more customers by partnering with GMV’s dealer network Additionally, dealers are incentivized to be more proactive, as they only need to prepay a portion of the vehicle cost, strengthening cooperation between dealers and the bank.
GMV benefits from controlling 30% of the car's value to improve the company's cash flow management In addition to selling vehicles, GMV distributes spare parts to dealers for warranty services, ensuring efficient after-sales support Each purchase order (PO) from dealers is monitored through S-slips issued by the ASP department, enabling accurate tracking The billing accountant relies on these S-slips to generate spare parts invoices, streamlining the invoicing process and maintaining financial accuracy.
Figure 3.2: Diagram of the structure of General Motors Vietnam
Board of General Directors comprises Chief Director and Deputy General Director.
A Chief Director is a key individual responsible for overseeing all activities within a company and ensuring the successful execution of assignments assigned by the Board of Directors As the legal representative of the corporation, the Chief Director plays a crucial role in managing corporate affairs and maintaining organizational compliance This leadership position involves strategic decision-making and reflects the trust placed in them to steer the company's objectives forward.
The Deputy General Director is responsible for executing tasks assigned or approved by the Chief Director They also assist in workforce planning to align staff deployment with the company's manufacturing needs Additionally, the Deputy General Director implements business policies and provides strategic suggestions to support the organization's overall objectives.
The Sales Department is responsible for developing, implementing, and managing effective business strategies to drive enterprise growth It monitors and analyzes performance outcomes to ensure continuous improvement and success Additionally, this department oversees the company's reputation, streamlines marketing activities to expand market reach, and diversifies services to enhance overall business efficiency and profitability.
The Sales Division at GMV has developed and implemented a tailored sales procedure that aligns with the nature of each product or service while targeting potential customers effectively Some products require direct, confrontational communication between sales team members and dealers to secure sales, ensuring active engagement In contrast, other products or services are sold primarily through telephone orders, emphasizing the importance of remote communication channels This strategic approach optimizes sales processes by adapting to the specific needs of different offerings, enhancing overall sales performance and customer engagement.
A sales executive's primary role isn't just to sell, but to coordinate the sales team to ensure maximum efficiency in generating and securing customer orders Their main goal is to achieve the highest sales volume while minimizing operational costs, emphasizing strategic management over direct selling.
Salespeople are responsible for effectively selling products and services on behalf of their company Success in this role requires having a unique perspective, strong resourcefulness, and a proactive attitude, supported by collaboration and guidance from colleagues and superiors Developing these qualities enhances sales performance and drives business growth.
This department is responsible for assisting the Chief Director in workforce management, including arranging laborers to meet professional requirements and developing strategies to enhance workforce excellence They oversee employee health and safety, ensure salaries comply with government regulations, and create salary structures for various transfer flows Additionally, they survey pay rates for ship repairs and calculate annual salaries for employees to ensure accurate and fair compensation.
This article emphasizes the importance of journalizing and cataloguing manufacturing activities in accordance with government policies, ensuring compliance and transparency It highlights the role of recommending the Chief Director to adopt current financial accounting standards precisely, enhancing the accuracy of financial reporting Additionally, the article underscores the necessity of providing detailed reports on the company's financial position, capital resources, and the efficient utilization of these resources to support informed decision-making by the Chief Director.
3.1.6 Characteristics of Firm’s Finance Activities
Accounting Department is in authority for delivering financial accounting and managerial accounting information satisfactorily for manipulators.
Accountant has to catalogue and check documents at the beginning, journalize, make calculations along with report the company’s whole assets in the approved and promptly manner.
Effective management of financial obligations involves accurately manipulating and settling tax payables, notes payables, accounts payables, accounts receivables, and dividend payables Preparing and submitting comprehensive financial reports, tax returns, and final settlements are essential for ensuring compliance and transparency Additionally, providing mandatory financial information helps organizations meet regulatory requirements and maintain stakeholder trust.
Figure 3.3: Diagram of accounting department’s structure
The accounting system, established in accordance with Circular 200/2014/TT-BTC issued on December 22nd, is designed to reflect the level of delegation in the financial and economic management of the enterprise It encompasses all relevant accounts that align with the company's business features and management structure This comprehensive accounting framework ensures accurate financial reporting and effective management decision-making, in compliance with current regulations.
2014 and the additional amendments account according to the circular.
- The accounting form of general journal shall comprise main documents underneath:
Accounting for Revenue at General Motors Vietnam
Under Vietnamese accounting standard - Conditions for revenue recognition (Accounting Standard No 14).
Sale revenues are recognized when five key conditions are met: the enterprise transfers the majority of risks and benefits of ownership to the buyer; it no longer retains control or management rights over the goods; revenue is reliably measurable; the enterprise benefits economically from the sale; and the costs associated with the sale can be determined The sales process involves transferring ownership of goods to the customer, who then commits to making payment per the original agreement Revenue is recognized once the customer accepts the payment, ownership is transferred, and all sales procedures are completed, signaling the appropriate time for accountants to record the revenue.
VAT invoice of selling car
VAT invoice for incentive of car
VAT invoice of selling spare part
VAT invoice for incentive of spare part
Typically, GMV maintains a chart of accounts for both Vietnamese and SAP accounts to ensure accurate financial reporting For Vietnamese standard accounts related to operating activities, some examples include specific accounts and their sub-accounts that facilitate detailed tracking and analysis Implementing these standardized accounts enhances financial transparency and compliance with local accounting regulations Properly structured account hierarchies support efficient financial management and reporting processes within Vietnamese accounting practices.
112011 Cash in bank – VND – Techcombank
112036 Cash in bank – USD – Techcombank
131110 Accounts receivable – finished products sale
333111 Output VAT payable – spare part – opening balance
333113 Output VAT payable – passenger car – opening balance
When selling a car, the billing accountant generates a VAT invoice that includes key details such as the amount excluding VAT, VAT amount, and total payment, based on dealer orders aligned with predefined sales targets and market demand communicated by SM staff.
The dispatch note being the source document for billing accountant to issueVAT invoice of selling car is issued by GPSC staff, SM employee only makes invoice request
When customers bring their vehicles to dealerships for warranty service, GMV dealers must coordinate with the after-sales (AS) department to order the necessary spare parts The billing process for spare parts follows the same procedure as for other sales, with each invoice prominently displaying an S-slip that details the items sold to the dealer Additionally, spare part invoices include an 18% dealer discount, ensuring competitive pricing and transparent transactions.
Generally, VAT invoice includes 3 copies:
1 Copy 1 (white): first copy for keeping
2 Copy 2 (red): second copy for customer
3 Copy 3 (green): third copy for internal use
Each invoice must include essential information like the issue date, customer details, and the cash receipt amount to ensure clarity and compliance Additionally, incorporating specific details such as the VIN number and engine number is crucial for accurate vehicle identification and record-keeping Including both general and special details in invoices enhances transparency and supports effective documentation and validation processes.
PO number for each dealer in invoice for car and 18% of discount for dealers in invoice spare part
After issuing, car invoices are signed by the chief accountant, finance director, or finance leader before being scanned and sent to the bank as part of the mortgage process outlined in the three-party contract Spare part invoices are signed by the billing accountant to ensure proper documentation Dealers are required to transfer 30% of the vehicle's price to GMV prior to receiving the second copy of the car invoice Once the final customer makes full payment, dealers transfer the remaining 70% of the amount to GMV's bank account Following this payment, dealers receive the original vehicle documents and deliver the vehicles to their customers, completing the transaction process.
For example, at date 28 th , April 2015, a car was delivered to Nam Thai Private Company Unit price less 10% VAT is 491,400,000VND, customers paid in credit.
CAR DISPATCHED NOTE Manufacturer: General Motors Vietnam Limited Company
VIN Number: RLLJF696EGH934830 Car type: Chevrolet CRUZE KL1J-JNE11/AA5-1
Weight: 1420 kg Made in: Viet Nam
Number of seat: 5 Working volume: 1796 cm 3
Figure 3.6: VAT invoice for selling car
General Motors Vietnam Limited Company
Address: Tu Hiep Commune, Thanh Tri District, Hanoi
Form: 01GTK3/001 Code: GM/14P Invoice No: 0007631 Date: 28/04/2015
(Third copy for internal use)
Customer Name: Nam Thai Private Company
Address: T6/27 Binh Duong Road, Binh Duc 2, Binh Hoa Ward, Thuan An, Binh Duong
No Content Quantity Unit prize Amount
Chevrolet CRUZE KL1J-JNE11/AA5-1
Exchange rate: Total in VND:
In this Amount without VAT: 491,400,000
Amount in words: Five hundred forty million, five hundred forty thousand dong
Figure 3.7: Spare Part Dispatched Note
General Motors Vietnam Inv No: S-2015-2719-1
Customer: Hung Thuan Thanh Commercial Join Stock Company
No Part/Job Name Unit Qty Sale Price Sale/Lab Amt.
BEFORE DISCOUNT 169,711.60 DISCOUNT (18%) 30,502.22 AFTER DISCOUNT 139,209.38
Figure 3.8: VAT invoice for selling spare parts
General Motors Vietnam Limited Company
Address: Tu Hiep Commune, Thanh Tri District, Hanoi
Form: 01GTK3/002 Code: GM/15P Invoice No: 0006446 Date: 28/04/2015
(Third copy for internal use)
Customer Name: Hung Thuan Thanh Commercial Join Stock Company
Address: Km 9, Ngoc Hoi Road, Hoang Liet Ward, Hoang Mai District, Hanoi
No Content Quantity Unit prize Amt. without VAT
Amount in words: One hundred fifty three thousand zero hundred eighty dong
3.2.2 Procedures of Accounting for Sales
The formula of documental transposition
Figure 3.9: The formula of documental transposition
The Sales division and the Finance & Accounting department collaborate to evaluate and negotiate customer contracts, ensuring favorable terms Once finalized, the sales team drafts the contract consistent with standard templates for general agent, agency, or internal user agreements This streamlined process ensures clear communication and compliance with company policies, facilitating effective contract management.
The Sales and Finance & Accounting departments initially review and distribute the agreement to the Director or their delegate They then provide the contract to the counterparts for thorough review and completion, ensuring clarity and mutual understanding before finalization.
The signed agreement is transmitted to the functional divisions to be accomplished and fulfilled.
The Sales department is responsible for acquiring and executing signed contracts, maintaining the client list, and ensuring compliance with state regulations, industry standards, and company protocols.
After getting the VAT invoice and dispatched note, the accountant set the Detailed Book.
Detailed Book From date 01/04/2015 to 30/04/2015 Account: 5111000 – Revenue for new products
Chevrolet CRUZE KL1J-JNE11/AA5-1 Chevrolet CRUZE KL1J-JNE11/CD5-1
Chevrolet Captiva 1LR26 WITH LE9 ENGINE
Stock Company Chevrolet Spark Van
Chevrolet CRUZE KL1J-JNE11/CD5-1
Chevrolet Captiva 1LR26 WITH LE9 ENGINE
Chevrolet CRUZE KL1J-JNE11/CD5-1 Chevrolet CRUZE KL1J-JNE11/AA5-1
Figure 3.11: Detailed book – Spare Parts
Detailed Book From date 01/04/2015 to 30/04/2015 Account: 5111000 – Revenue for new products
No Customer Name Discount amount Amount w/o VAT VAT Before discount Actual receipt
S-1556-1 28/04/15 3982 Dong Do Thanh Limited Company 2,380,569 12,894,812 1,289,481
- This book included … pages, form page … to …
On a daily basis, according to the VAT invoices and dispatched notes, accountants establish the Journal Voucher, Registration of Journal Voucher and General Ledger.
No Detail Account Total Notes
No Detail Account Total Notes
The journal vouchers encapsulate detailed information on authorized transactions, specifically recording sales that occurred in April 2015 Based on these vouchers, the accountant systematically creates a Register of Journal Vouchers, ensuring accurate documentation and compliance with accounting standards This process facilitates transparent financial tracking and aids in audit readiness for the specified period.
Figure 3.14: Register of journal voucher
At the same time, according to the information gathered from the journal voucher, detailed book and related documents we create the following general ledger:
GENERAL LEDGER (For Journal Voucher method)
30/04 511-01 28/04 Sales on account (for car) 131 15,907,200,000
30/04 511-04 28/04 Sales on account (for spare parts) 131 52,138,189
Accounting for cost of goods sold
Cost of Goods Sold (COGS), also known as "cost of sales," represents the direct expenses associated with producing a product for sale, including raw materials, purchased items for resale, and parts used in manufacturing Understanding COGS is essential for calculating profit margins and assessing the overall profitability of a business, as it reflects the total costs involved in creating the goods sold to customers Accurate COGS calculation helps businesses make informed pricing and inventory management decisions, ultimately supporting financial health and growth.
The cost of goods sold is calculated using the average cost method, based on data from the goods received note and goods dispatched note At the end of each month, bookkeepers review warehouse inventory levels and purchasing quantities to determine the cost of each item This approach ensures accurate valuation of inventory by considering the total goods on hand and purchased during the period, facilitating precise cost calculation.
Cost of goods sold = Number of units sold * Average monthly price.
Average monthly price = (Price of beginning inventory + price of goods purchased in the period)/ (Amount of beginning inventory + Amount of goods purchased in the period)
The beginning balance of tires in April 2015 is:
Tires: 536 units, price 650,000VND/unit
Arising amount in this period:
Using the formula, we have:
The average price of Tires = (529,200,000+ 536* 650,000) / (756+536) 679,257VND/unit
3.3.1.1 Applied accounts: o 632300 Cost of goods sold – adjustment o 156001 Finished goods – purchased vehicle – outside o 156002 Finished goods – purchased vehicle – allied o 156100 Spare part for sale
Accountants record journal entries for stock issues based on the notes provided, ensuring accurate documentation of transactions They then transfer the recorded data from the general journal to update the Cost of Goods Sold (COGS) ledger, maintaining proper financial records Simultaneously, accountants update the COGS subsidiary ledger to ensure detailed tracking of inventory costs and stock movements.
At the end of month:
- Close COGS subsidiary ledger and use it as the basis for formulation of COGS summary report.
- Close COGS Ledger and compare it with data from the COGS summary report.
Account 632 - "Cost of goods sold" is opened to more than one level-down account to track cost of each specific type of goods.
This account is structured as follows:
Debit: Gather the cost of finished products, goods, services considered to be consumed in the period
Other items are included in cost of goods sold during the period
Credit: Cost of goods sold which is returned
The closing cost of goods sold during the period to account 911 –Income summary
The transaction will be recorded to the entry of the book of payment At the end of the month, when determining business outcomes, it will be transferred to Account 911.
Inventory represents merchandise purchased by retailers, wholesalers, and distributors for resale to customers It includes the cost of goods bought but not yet sold, which is recorded in the Inventory account Proper inventory management is essential for accurate financial reporting and effective sales operations.
Accounting document used are: Invoice, dispatched note.
Detailed Books used are: Subsidiary ledger for Cost of goods sold, Subsidiary ledger for Goods.
General Books used are: Journal Voucher, Registration of Journal Voucher, and General Ledgers of account 632, 156, etc.
3.3.2 Procedure of accounting for cost of goods sold
Based on customer purchase orders, a GPSC staff member is responsible for creating the goods dispatched note, serving as essential documentation for outbound shipments Storekeepers verify the actual quantity of merchandise dispatched, ensuring accurate inventory records before goods are shipped to customers The accountant then reconciles the goods dispatched note with VAT invoices to record the cost of goods sold and revenue accurately, making these documents critical for financial recording The invoice acts as strong evidence for recognizing revenue, while the goods dispatched note serves as proof for recording the cost of goods sold, highlighting their importance in financial documentation and compliance.
Figure 3.16: The procedure for COGS
Based on VAT invoices, goods dispatched notes, and related documents, the accountant records invoices into accounting software, which automatically transfers detailed data to the subsidiary ledger and general ledger of COGS for each item At the end of the period, this detailed information is used to accurately calculate the cost of goods sold, ensuring precise financial reporting and compliance.
From the voucher generated, the accountant set the journal voucher, and then the registration of journal voucher, then the general ledger of accounts 632, 156, etc
Journal Voucher Inventory dispatched note
Figure 3.17: Detailed book – Account 6321 (Tire)
DETAILED BOOK From date 01/04/2015 to 30/04/2015 Account 6321 – Cost of Gold Sold Unit: dong
Date Contra ct No Debit Credit
15 Closing cost of goods sold 911 1,031,938,0
Based on the inventory dispatched note, accountant makes journal voucher for cost of goods sold as follows:
Figure 3.18: Journal voucher – Account 632 (No 01)
No Detail Account Total Notes
At the end of the month, accountant sets the General Ledger for Cost of goods sold.
GENERAL LEDGER From 01/04/2014 to 30/01/2015 Account 632 – Cost of goods sold
Accounting for Selling Expense
Selling expenses in a commercial company serve as a key qualitative indicator of the efficiency of business processes, particularly in today's dynamic economy These expenses are incurred throughout the movement of goods, from receipt to consumption, reflecting the effectiveness of sales and distribution activities Monitoring and managing selling expenses are essential for optimizing overall business performance and maintaining competitive advantage.
Consumption-related expenses encompass costs incurred during the production and distribution of goods, including wages and salaries, transportation, warehousing, delivery, and utility expenses such as electricity, water, and telephone services These operational costs are essential for ensuring the smooth production and delivery of goods to the market Effectively managing these expenses is crucial for maintaining profitability and competitive advantage in the marketplace.
To determine the business results as well provided information timely for the corporate governance of the Board of Directors, the Accounting for selling expense is essential.
Selling expenses of GMV Company include:
• The cost of warehousing, transportation
• The cost of equipment, furniture, stationery
At the company, all costs related to the consumption of goods, including marketing, advertising, warranty, installation, office expenses, and managerial payroll, are recorded under account 641 – Selling expenses, rather than being divided into procurement costs, cost of sales, or management costs.
Debit: The costs incurred related to the sale of products, goods and services Credit: Closing selling expense to account 911 – income summary.
3.4.2 Procedure of accounting for selling expense
When sales-related expenses are incurred, the accountant first classifies them using vouchers and records them in the general books in chronological order through journal vouchers These journal vouchers are then posted to the general ledger by item The preparation of journal vouchers can be performed periodically—such as weekly or monthly—or based on specific service types, following the list of relevant selling vouchers.
The company records vouchers monthly for selling expenses and related items to prevent duplicate entries The accountant is responsible for documenting these transactions in journal vouchers and updating the general ledger, specifically focusing on account 641.
According to the VAT Invoice and related documents, the accountant creates the detailed book.
DETAILED BOOK From date 01/04/2015 to 30/04/2015 Account 641 – Selling expense
Date Contrac t No Debit Credit
In accordance with the VAT Invoice and related documents, the accountant set the Journal Voucher.
No Detail Account Total Note
At the end of the month, accountant sets the General Ledger for Selling expense.
GENERAL LEDGER From 01/01/2014 to 31/01/2014 Account 641 – Selling expense
SOME RECOMMENDATION FOR ACCOUTING FOR SALES
Advantages of the General Management and Accounting Management at
at General Motors Vietnam Company
After more than 25 years of development, GMV has some significant achievements in its operating field, specifically achieved positive results in terms of profit and reputation created in the marketplace
After have certain results in the field of activity of the company, specifically achieved positive results in terms of profit and reputation created in the marketplace.
To achieve the good results, the administrative department should have built an effective and independent system as follows:
Supervisor: Tran Manh Dung, PhD, CPA Le Hong Van – Advanced
Building environmental factors in workplace
- The director has an ethics behavior and good performance as the exemplary for staff to follow
-The company has a unified system documents to regulate the recruitment, training, employee evaluation, promotion, payrolls and allowances to encourage people to work with integrity and efficiency.
-The company has used the job description specified quality requirements and knowledge of employees for each position in the organization
Company employees regularly circulated staffs in the sensitive positions, concern to protect the profit of the people working in the company.
The article clearly delineates rights, responsibilities, and obligations across three key areas: licensing and approval of financial transactions, accounting practices, and inventory procedures It emphasizes the company's authority in determining who is authorized to fully or partially finance specific issues, ensuring transparent and well-defined financial governance This structured approach promotes accountability and clarity in financial decision-making processes.
The Company has some measures to prevent senior leaders use funds or assets for personal purposes.
The company held the voucher system, using the right accounting system and forms issued by the Finance Ministry The system of company accounts reflect all economic transactions arising.
Since computers are extensively used in accounting, various computer-related issues can arise, impacting data accuracy and operational efficiency To mitigate these challenges, implementing effective prevention and control measures is essential, including regular system maintenance, data backups, cybersecurity protocols, and staff training These strategies help ensure smooth accounting processes, reduce downtime, and protect sensitive financial information, highlighting the importance of proactive IT management in the accounting sector.
- The accounting staffs must follow the process and the instruction: in order to prevent the computers from virus, if unnecessary, connecting USB and disk are not permitted
- The accounting staffs also need to be trained to have a professional knowledge about computers and informatics to handle common issues in computers.
To strengthen accounting performance, companies should develop comprehensive training programs to enhance staff skills and ensure continuous professional development Optimally planning human resources allocation based on the company’s business needs is essential for maximizing efficiency Additionally, implementing work specialization within the accounting team can significantly improve overall effectiveness, leading to better financial accuracy and improved business outcomes.
Supervisor: Tran Manh Dung, PhD, CPA Le Hong Van – Advanced
The company needs to develop internal audit system to monitor timely, difficult to assess the contribution of each component in the achievement of the company
Assessment of Accounting Organization for Sales
In December 2015, an assessment of General Motors Vietnam's accounting system revealed that it is well-organized, staffed with qualified professionals, and actively updated to incorporate changes in financial regulations issued by the State The company demonstrates flexibility in its accounting practices, consistently improving its sales accounting procedures to accurately reflect operational realities and meet management’s increasing demands for effective potential analysis, control, and promotion While the internal review identified key strengths, such as a systematic approach and regulatory compliance, it also highlighted areas for improvement to enhance the accuracy and efficiency of sales accounting at GMV.
+ The Company applies Accounting Journal Voucher method which is well- suited to the characteristics of oil trading company.
+ The Company has Sales Department that directly responsible for implementing the sales process as well as has qualified accounting tracking sales activities.
The company's accounting for sales is efficiently organized to support senior management decision-making A clear division of accounting responsibilities ensures transparent evaluation of each business segment, enabling senior leaders to manage effectively and make accurate, informed decisions.
The company strictly adheres to national policy and financial accounting regulations, ensuring transparent and accurate record-keeping Our accountants maintain comprehensive ledgers that precisely reflect all sales activities, supporting effective financial management To enhance efficiency, the company has invested in a modern computer system integrated with SAP software, enabling real-time bookkeeping and streamlined accounting processes.
Although the system is pretty tight managed, accounting department and especially for sales accounting also exists some problems to consider and correct.
I hereby list three main weaknesses of the accounting for sales in GMV company as below:
Supervisor: Tran Manh Dung, PhD, CPA Le Hong Van – Advanced
First of all, the company currently maintain a question that how to make sure that all invoices are posted in SAP?
Vouchers are not updated promptly by staff and storekeepers due to the new accountant’s limited computer skills in revenue recognition, leading to outdated financial data Additionally, the use of accounting software poses risks of data loss from viruses, compromising record accuracy Software errors further cause delays in the accounting department’s workflow, impacting overall operational efficiency.
GMV is currently facing challenges with timely invoice posting, as the two copies kept initially by the sales department often cause delays Accountants frequently need to request sales representatives to return the invoices, impacting the overall efficiency of the invoicing process.
Recommendations to Improve Accounting for Sales
About making sure of all invoices are posted:
Implementing an effective invoice control system is essential for companies to efficiently manage their financial documentation Such a system should categorize invoices into key groups, including posted, pending, and canceled invoices, to streamline tracking and reconciliation By classifying invoices appropriately, businesses can prevent duplicate postings and ensure accurate financial records, enhancing overall operational efficiency An organized invoicing system helps avoid errors, reduces manual oversight, and supports compliance with accounting standards, leading to improved financial management and data accuracy.
About on – time update between staffs:
- The accounting department should create some straining courses about SAP and computer skills for all related newbies
The chief accountant should instruct sales representatives to retain only the red copy of the invoice, rather than all three copies This practice ensures that the invoices for cars are properly managed by the billing and accounts receivable teams, thereby enhancing the accuracy and efficiency of document posting.
The company should take into account trade discount policy With the use of policy, the company may have more customers, as consequence, sales revenue will increase significantly.
When using commercial discounts, the accountant uses account 521 to record the transaction.
Supervisor: Tran Manh Dung, PhD, CPA Le Hong Van – Advanced
Debit: Trade discounts accepted to pay for customers
Credit: At the end of the accounting period, accountant post the account 521 trade discount to account 511 to determine the revenue.
Before implementing a trade discount policy, a company must clearly define and establish it for a specific commercial domain to ensure targeted and effective discount strategies Additionally, integrating an allowance policy is essential to support the overall discount framework, promoting consistency and transparency in pricing practices.
The company should have a reconcilable committee, to control debt recovery plan reasonable and timely.
Supervisor: Tran Manh Dung, PhD, CPA Le Hong Van – Advanced
Successfully navigating economic recovery and market integration requires enterprises to maintain and strengthen their market position through effective business strategies To survive and thrive, businesses must balance revenues and expenditures, improve operational efficiency, and enhance the quality of goods and services A well-planned sales policy coupled with ongoing improvements in efficiency is essential for sustainable growth Accountants play a vital role as management tools, offering critical information for decision-making that supports enterprise stability Therefore, an organized accounting system, particularly in sales accounting and income summarization, is crucial for the survival, development, and competitive edge of businesses.
Completing the accounting process for sales and income summary enhances the overall accounting system of the company, leading to more accurate and timely financial reports while reducing unnecessary costs This effort aims to improve sales activities through thorough research and practical understanding of the company's operations, guided by the expertise of the Accounting department staff Special thanks are due to PhD Tran Manh Dung, CPA, whose enthusiastic guidance was instrumental in developing the thesis titled “Improving Accounting for Sales at General Motors Vietnam Company,” contributing valuable insights for accounting improvement.
Due to limited time for practice and practical experience, the issues discussed in the thesis may lack broad applicability, and the solutions are not entirely comprehensive, inevitably leading to some mistakes I welcome feedback from teachers and staff at General Motors Vietnam to help improve and refine my work.
Supervisor: Tran Manh Dung, PhD, CPA Le Hong Van – Advanced