AS : After Sales Department CBU : Complete Built Up CKD : Completely Knock Down COGS: Cost of Goods Sold FP&A: Financial Planning & Analysis GMV : General Motors Vietnam GPSC: Global Pur
INTRODUCTION
The Rationale of the Thesis
Since Vietnam's shift to an open-door policy aimed at attracting foreign direct investment, international companies have recognized both opportunities and challenges in entering the Vietnamese market Taking advantage of lower manufacturing costs such as labor and raw materials, global corporations have expanded their presence, yet face intense competition from local SMEs and a wide variety of consumer options To succeed, companies need effective strategies to attract customers, especially in the automotive sector where middle-class and affluent consumers, who are well-informed and value product quality, dominate Success in Vietnam relies heavily on building strong relationships both within and outside the company, as consumer decisions are influenced by trust, reputation, and transparent financial practices that demonstrate the quality of goods and services.
Sales extend beyond being merely an exchange of goods for money; it is a vital component of business that drives social reproduction and aligns production with demand, enabling manufacturers to plan accordingly An increase in sales signifies higher capital turnover and profits, often correlating with improved living standards for employees In the context of economic globalization, accounting—particularly sales accounting—has become essential for assessing a company's financial health comprehensively However, many enterprises use sales accounting primarily for tax purposes, neglecting the analysis of sales factors and the effective utilization of sales data Incorporating sales activity indicators can enhance businesses' understanding of their sales performance, providing valuable insights for strategic decision-making and improving overall sales management.
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, focusing on its strengths and weaknesses It provides a comprehensive analysis of the advantages and disadvantages of sales accounting methods used by the company Ultimately, the research seeks to offer conclusions and recommendations that effectively address GMV's existing challenges and enhance its sales accounting processes.
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 primarily collected due to its accessibility, utilizing both internal and external sources Internal sources in this research included company documents such as invoice requests, invoices, and Z-option sheets used for posting on SAP, ensuring comprehensive and reliable data for analysis.
…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
After gathering secondary data, primary data was collected through observation and interviews during the internship period This approach allowed for in-depth insights into the daily activities of sales accountants, enhancing understanding of their roles and processes The combination of observational and interview methods provided valuable firsthand information crucial for the study's analysis.
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
This research was conducted during my internship at GMV, focusing on analyzing sales data from the 2015 accounting records The study emphasizes key areas of sales accounting, including sales revenue recognition, the costs of goods sold, and selling expenses By examining these components, the report provides valuable insights into the company's sales accounting practices.
THEORETICAL FRAMEWORK OF ACCOUNTING FOR SALES
The Nature of Selling Goods
Sales are a fundamental aspect of doing business, encompassing not only the exchange of money for products or services but also various activities such as identifying potential clients, guiding demand, providing goods, and fostering customer loyalty In accounting, “sales” specifically refers to the revenue generated from selling products or services, known as net sales Overall, sales involve transactions where money or value is exchanged for ownership of a good or access to a service, forming the core of business revenue streams.
A sales contract fundamentally involves an agreement where a customer commits to purchasing products at a specified future time, a concept commonly referenced as the term of sale in marketing and advertising The validity of such a sale relies on four essential elements: the competence of both the seller and buyer to contract, mutual agreement on the terms of exchange, the transfer of products or ownership rights, and the consideration, which is typically money or an equivalent paid or promised These components ensure a clear, lawful, and enforceable sales transaction.
Direct selling involves delivering products and services directly to customers, typically from the company's warehouse or factory without holding stock This method ensures that the sales process is completed once the company receives payment from the buyer, and the product or service has been delivered or provided Recognizing sales and service provision occurs at the point of transaction, confirming that revenue is earned when goods are delivered or services are rendered.
Sale by shipment to customers is a method where the seller delivers goods under the terms specified in the contract, maintaining control over the shipped inventory until payment or acceptance by the buyer Once the customer completes payment or accepts the goods, all benefits and risks are transferred to the buyer In practice, GMV predominantly employs wholesale shipment methods involving dealers, who act as intermediaries Wholesaling involves distributing products to retailers, other wholesalers, merchants, or industrial and institutional buyers, with wholesalers serving as third-party brokers facilitating transactions between these 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
In this process, GMV receives 70% of the payment from the bank and 30% from dealers within two to three days Subsequently, GMV issues invoices for vehicle sales to dealers based on their purchase orders submitted to the billing accountant by staff members.
In the SM department, the company sends 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 cost of goods sold (COGS) from the payment made by the client, enabling the bank to redeem the car’s original documents and facilitate vehicle delivery.
The "Repay Loan Document Customer" process offers significant benefits for all three parties involved: the bank, GMV, and the dealers The bank assumes a 70% risk of the down payment relative to the GMV, while earning the opportunity to build relationships with GMV’s dealer network Dealers are incentivized to collaborate with the bank as they only need to prepay 30% of the vehicle’s value, encouraging more active participation GMV benefits as this method improves cash flow management and streamlines financial control Additionally, GMV distributes spare parts to dealers for warranty services, with each purchase order managed through S-slips issued by the AS department, enabling accurate billing and inventory tracking.
Consigned goods remain under the ownership of the enterprise until they are officially consumed, resembling a shipment-based sales approach The commission paid to the agent is classified as a selling expense, with agents typically compensated through agency commissions or price markups This arrangement ensures proper accounting for ownership and expenses related to consigned inventory.
2.1.2.4 Sales under the deferred payment, installment payment
Deferred payment and installment sales enable businesses to generate revenue over multiple periods, with the initial payment collected at the time of purchase Customers agree to pay the remaining balance in subsequent installments, often accruing interest rates that generate additional income for the seller This payment method improves cash flow and attracts more customers by offering flexible payment options Properly managing installment plans can enhance revenue streams while providing convenient purchasing options for consumers.
2.1.2.5 Sales in the form goods barter
To streamline production and business operations, some companies facilitate product exchanges to obtain desired items, ensuring inventory management efficiency Revenue recognition occurs only after the goods are sold to customers, marking the completion of the sales process This approach helps maintain smooth business activities while effectively handling inventory challenges.
Accounting for Sales
2.2.1 The Responsibilities of Accounting for Sales
Effective sales activities are crucial for minimizing product losses and identifying slow-moving inventory, enabling businesses to implement targeted strategies to boost product demand Sales accounting provides comprehensive insights into operational performance, allowing managers to detect disparities between purchases, sales, and inventory levels This comprehensive analysis helps optimize inventory management, improve sales efficiency, and ensure timely, accurate decision-making to enhance overall business profitability.
Financial statements provided by accountants offer inside stakeholders vital insights into the company's overall business and financial health, supporting managers in effective decision-making and macroeconomic oversight These reports enable the executive board to assess policy compliance and evaluate management performance Additionally, external parties can use this data to gauge the company's capacity to buy, reserve, or sell goods, informing their decisions on investing, lending, or establishing business relationships with the organization.
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 regular activities, leading to an increase in equity, excluding contributions from equity participants, as defined by IAS 18 This ensures clarity on how revenue impacts an organization’s financial position during a specific period, highlighting its role in reflecting overall economic performance Accurate recognition of revenue is essential for transparent financial reporting and compliance with international accounting standards.
In accounting, amounts received from customers are recorded on the Profit and Loss (P/L) statement as ‘Sales’ or ‘Net Sales,’ indicating that sales are recognized only when products are delivered to customers When analyzing financial data, ‘sales’ typically refers to net sales rather than gross sales, reflecting the actual revenue from transactions Sales encompass specific transactions conducted during professional selling or marketing initiatives While expenses for services rendered are usually recorded separately from merchandise sales, the accounting entries for service sales are similar to those for tangible goods Revenue from sales generally originates from three primary sources, which vary based on the nature of the business.
2 Revenue from the rent of company’s assets by a third party.
Sale transactions lead to inventory deductions; however, inventory accounting is maintained separately from sale accounting Sale revenue represents the gross inflow of economic benefits and should not be netted against expenses It results from the business's past activities and, unlike gains from non-core activities, is directly related to primary operations—such as vehicle sales for an automobile company Revenue generated from secondary activities, like selling scarves produced in-house, is recognized as a gain rather than sale revenue Sale revenue increases a company's equity during the accounting period, driven by the entity's net asset growth, but does not include increases from shareholder contributions, which are considered capital investments rather than revenue.
Companies utilize various voucher types and rotation processes tailored to their selling methods to ensure accurate financial documentation These vouchers, including sales invoices (VAT invoices), delivery notes, payment notes, and dispatch notes, record sales revenue, consumption tax, and sales deductions, forming the basis for financial record-keeping Proper accounting for these elements relies on key accounts that track sales revenue, consumption tax, and sales deductions, ensuring compliance and accurate financial reporting.
- 511: Revenues from Sales and Services
Using the double-entry bookkeeping method, a company's 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 stem 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 accounting procedures to ensure accurate financial reporting.
1 “When selling products, goods or providing services for immediate cash, the following accounts shall be recorded:
Regarding products, goods, and investment properties subject to VAT, special excise duty, import duty, and environmental protection tax, revenues based on tax-exclusive selling prices should be recorded accordingly It is essential to distinguish and separate indirect taxes payable, including VAT payable calculated using the subtraction method.
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, certain accounts must be accurately recorded For sales involving products, goods, or investment properties subject to indirect taxes such as VAT, special excise duty, import duty, or environmental protection tax, revenues should be recognized based on the tax-exclusive selling prices Additionally, indirect taxes payable, including VAT payable calculated using the subtraction method, must be separately recorded to ensure precise financial reporting and compliance.
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 can be confusing, as it may occur when goods are dispatched, delivered, or paid for Generally, a sale is recognized when the seller transfers risks and rewards to the buyer, typically upon delivery of the goods Payment receipt is not the basis for recording the sale, as income is recognized under the accrual basis of accounting Revenues are presented at the top of the Income Statement, followed by expenses, with net income calculated as revenues minus expenses The recognized amount reflects the actual monetary value of the transaction, and discounts from the list price may be noted by accountants if applicable.
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 designated for recording sales deductions, accurately reflecting the adjusted sales figures within the accounting period This account encompasses various deductions such as trade discounts, discounted sales, and sales returns, ensuring precise financial reporting and compliance with accounting standards Properly managing this account is essential for maintaining accurate revenue recognition and providing clear insights into net sales performance.
Accountants are responsible for accurately tracking trade discounts, sales discounts, and sales returns for each customer and each category of goods sold, including both products and services At the end of the accounting period, they must transfer all balances from account 521 to account 511 to ensure proper financial reporting and financial statement accuracy.
- "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 and reporting the company's 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
Accountants regularly record journal entries based on stock issue notes, ensuring accurate documentation of inventory transactions They transfer these records into the general journal to update the Cost of Goods Sold (COGS) ledger, maintaining precise financial tracking Simultaneously, they update the COGS subsidiary ledger to reflect detailed transaction data, supporting comprehensive inventory management and financial reporting.
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 designated for recording the costs of goods, products, and services, as well as investment property expenses It also tracks expenditures related to investment property operations, including depreciation expenses, production costs, operating lease costs, transfer costs, and liquidation expenses of investment properties Properly recording these costs ensures accurate financial reporting and compliance with accounting standards.
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.
Accountants recognize monthly selling expenses by referencing VAT invoices, payment orders, payroll, detailed selling expense lists, and other related documents They record these expenses in the general journal, which serves as the primary record of financial transactions The entries from the general journal are then transferred into the subsidiary ledger, ensuring accurate and organized tracking of selling expenses for ease of financial reporting and analysis.
THE CURRENT SITUATIONS OF ACCOUNTING FOR
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.
GM Vietnam Co Ltd is a leading vehicle manufacturer specializing in designing, building, and selling cars and auto parts The company distributes its products through a network of authorized dealers across Vietnam Originally established in 1993 under the name Vietnam-Daewoo Motor Company Limited, it rebranded to GM Vietnam Co Ltd in July 2011 Headquartered in Hanoi, GM Vietnam is a subsidiary of Daewoo Songdo Development Co., Ltd., contributing to Vietnam’s automotive industry with quality vehicles and parts. -**Sponsor**Looking to refine your article on GM Vietnam Co Ltd and boost its SEO? [Freedom24 ETF - English](https://pollinations.ai/redirect-nexad/S98oSDEX?user_id=983577), like diversifying your content strategy, can also help your portfolio Consider these key sentences for a coherent, SEO-friendly paragraph: "GM Vietnam Co Ltd designs, builds, and sells vehicles, offering cars and auto parts through a dealer network," highlighting their core business; "Formerly Vietnam-Daewoo Motor Company Limited, the company rebranded in July 2011," adding historical context; and "Founded in 1993 and located in Hanoi, Vietnam, GM Vietnam operates as a subsidiary of Daewoo Songdo Development Co., Ltd.," establishing its background and affiliations Invest in clear, concise writing and explore diverse investment opportunities with Freedom24.
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 …)
Trading business activities involve the flow and distribution of products within the marketplace, facilitating the movement of goods from producers to final consumers These operations are characterized by efficient product transfer, supply chain management, and strategic distribution channels Understanding these core features is essential for effective trading and ensuring seamless operations in the marketplace.
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
In this process, GMV initially receives 70% of the payment from the bank and 30% from dealers within two to three days Subsequently, GMV issues invoices for the sold vehicles to the dealers based on their purchase orders, which are submitted to the billing accountant by staff members.
The SM department handles the process where the company sends the car’s original documents to the bank as collateral When a finished user purchases a car, the dealer repays 70% of the car’s cost of goods sold (COGS) from the customer’s payment, enabling the bank to redeem the car’s original documents and deliver them to the customer This arrangement benefits all three parties: the bank mitigates risk with a 70% down payment based on GMV, gains new customers through GMV’s dealer network, and encourages dealer cooperation by reducing upfront costs, as dealers only need to prepay a portion of the vehicle’s cost.
GMV benefits from this method by maintaining better cash flow management, with approximately 30% of the vehicle's value secured upfront In addition to selling cars, GMV supplies spare parts to its dealers for warranty services, ensuring efficient after-sales support Each purchase order from dealers is systematically tracked through S-slips issued by the Accounts Service (AS) department, enabling accurate control The billing accountant uses these S-slips as the basis for issuing spare parts invoices, streamlining the invoicing process and enhancing operational efficiency.
Figure 3.2: Diagram of the structure of General Motors Vietnam
Board of General Directors comprises Chief Director and Deputy General Director.
The Chief Director is a key leader responsible for overseeing all activities within a company and ensures that assigned tasks are executed effectively They act as the legal representative of the corporation, representing the company's interests in legal and official matters As the main authority, the Chief Director reports directly to the Board of Directors, guiding corporate strategy and operations to achieve organizational goals.
The Deputy General Director performs duties assigned or approved by the Chief Director, ensuring alignment with the company's strategic goals They assist the Chief Director in workforce planning to optimize staffing for manufacturing operations and recommend business policies to support organizational growth.
The Sales Department is responsible for developing and executing effective business strategies, as well as analyzing performance metrics to drive growth It also manages the company's reputation and systematically coordinates marketing efforts to expand market reach Additionally, the department broadens service offerings and enhances overall business efficiency to ensure sustained success.
The GMV Sales Division has developed a tailored sales procedure that aligns with the specific nature of each product or service while effectively connecting with potential customers Some products require direct, confrontational communication between sales team members and dealers to close deals, whereas others are sold through order placements via telephone This strategic approach ensures a personalized and efficient sales process that maximizes customer engagement and sales success.
A sales executive's primary role is not solely to sell, but to coordinate the activities of the sales team to ensure maximum efficiency in generating and securing customer orders Their goal is to achieve the highest sales volume while minimizing operational costs, ultimately boosting profitability and driving business growth.
Salespeople are essential for driving sales of merchandise and services within the company, requiring them to possess a strong individual perspective, resourcefulness, and a proactive attitude Successful sales professionals leverage their skills and initiative while benefiting from support and guidance from colleagues and supervisors to achieve their sales targets effectively.
This department is responsible for assisting the Chief Director in workforce management, including organizing laborers to meet professional requirements They develop strategies to enhance workforce excellence, ensure employee health and safety, and handle salary payments in compliance with government guidelines Additionally, they create salary structures for different transfer flows, conduct pay rate surveys for ship fixing, and calculate annual salaries for employees to ensure fair compensation.
The article emphasizes the importance of journalizing and cataloguing manufacturing activities in alignment with government policies to ensure accurate financial reporting It highlights the role of recommending the Chief Director to adopt financial accounting standards meticulously, thereby maintaining consistency and transparency Additionally, the article underscores the need to regularly provide the Chief Director with detailed reports on the company's financial position, capital resources, and operational efficiency to support effective decision-making and optimal utilization of capital resources.
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 tax payables, notes payables, accounts payables, accounts receivables, and dividend payables is essential for financial stability Timely formulation and submission of financial reports, tax returns, and final settlements ensure compliance with legal requirements Providing accurate and mandatory financial information supports transparency and enhances 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, reflects the level of delegation in the financial and economic management of the enterprise It encompasses all relevant accounts necessary for effective financial oversight and compliance This structure is designed to align with the business features, ensuring accurate recording and reporting of financial transactions Proper implementation of this accounting system enhances transparency, efficiency, and adherence to regulatory standards.
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).
Revenue from sales should be recognized when five key conditions are met: the company has transferred the majority of risks and benefits of ownership to the buyer; it no longer controls or manages the goods; sales revenue can be determined with reasonable certainty; the company expects to gain economic benefits from the transaction; and the costs related to the sale can be reasonably estimated The sales process involves transferring ownership of goods to the customer, who is then obliged to make payment, thereby completing the sale Once the customer accepts payment and ownership transfers, it is appropriate for the accountant to recognize 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
GMV maintains a comprehensive chart of accounts for both Vietnamese and SAP accounts, ensuring accurate financial tracking For Vietnamese standard accounts related to operating activities, key accounts are categorized with detailed lower-level accounts to facilitate precise financial reporting These structured accounts help streamline accounting processes and improve transparency across organizational operations Properly managing these accounts is essential for compliance with Vietnamese accounting standards and optimizing financial analysis.
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 issues a VAT invoice based on dealer orders aligned with planned targets and market demand communicated by SM staff The invoice includes essential details such as the amount excluding VAT, the VAT amount, and the total payment, along with the customer’s relevant information.
The dispatch note being the source document for billing accountant to issue VAT invoice of selling car is issued by GPSC staff, SM employee only makes invoice request
When customers bring their vehicles to dealers for warranty service, GMV’s dealers must coordinate with the AS department to order the necessary spare parts The billing process for spare parts sales follows the same procedure, with each invoice including an S-slip that details the items sold to the dealer Additionally, spare part invoices reflect an 18% discount rate granted to dealers, ensuring transparent and accurate transaction records.
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 details such as the issue date, customer information, and the cash receipt amount Additionally, it should feature specific information like the VIN number and engine number to ensure accurate vehicle identification Incorporating these details enhances invoice completeness and compliance with billing standards, thereby streamlining record-keeping and verification processes.
PO number for each dealer in invoice for car and 18% of discount for dealers in invoice spare part
After issuing car invoices, they are forwarded to the chief accountant, finance director, or finance leader for signing before being scanned and sent to the bank to facilitate the mortgage under the specified three-party contract Spare part invoices are signed by the billing accountant Dealers must transfer 30% of the car's price to GMV prior to receiving the second copy of the invoice Once the final customers complete their payment, dealers transfer the remaining 70% to GMV's bank account, after which they receive the original vehicle documents to deliver to their customers.
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.
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, in collaboration with the Finance and Accounting department, evaluates and negotiates customer contracts to ensure favorable terms Once agreements are finalized, the sales team prepares the contracts, utilizing standard formats such as general agent contracts, agency contracts, or internal user agreements This streamlined process facilitates effective contract management and aligns with organizational standards.
The Sales and Finance & Accounting departments prior to distributing the agreement to the Director or designated delegate ensure the contract is complete They then provide the finalized contract to the counterparts for thorough review and understanding, facilitating a smooth agreement process.
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, managing 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 capture detailed information of authorized transactions, indicating the exact timing of sales in April 2015 Based on these vouchers, the accountant systematically prepares the Register of Journal Vouchers, ensuring accurate financial record-keeping and compliance with accounting standards.
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, parts, and items purchased for resale It encompasses the costs of raw materials used in manufacturing, the purchase price of items resold, and the components needed to assemble finished products Understanding COGS is essential for accurately calculating gross profit and assessing the financial performance of a business.
The cost of goods sold (COGS) is calculated using the average cost method, based on documents such as good received notes and good dispatched notes At the end of each month, bookkeepers analyze warehouse stock levels and the quantity of goods purchased during the period to determine the cost of each item This process ensures accurate inventory valuation and financial reporting while adhering to best accounting practices.
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 utilize stock issue notes to accurately record journal entries, ensuring precise documentation of inventory transactions These entries are then posted to the general journal to record the Cost of Goods Sold (COGS) ledger, reflecting the cost associated with sold inventory Simultaneously, accountants update the COGS subsidiary ledger, maintaining detailed records of individual inventory items and their associated costs for effective inventory management and financial reporting.
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 acquired by retailers, wholesalers, and distributors for resale to customers It includes the cost of products purchased but not yet sold, which is recorded in the Inventory account Managing inventory effectively is crucial for optimizing sales and profitability in retail and distribution businesses.
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 creates the goods dispatched note, serving as essential proof of shipped merchandise Storekeepers verify the actual quantity of goods dispatched, ensuring accurate dispatch records The accountant then reconciles the dispatched note with VAT invoices to record the cost of goods sold and revenue accurately The invoice acts as strong evidence for revenue recognition, while the goods dispatched note provides proof for recording the cost of goods sold, ensuring proper financial documentation and compliance.
Figure 3.16: The procedure for COGS
Based on VAT invoices, goods dispatched notes, and related documents, the accountant inputs invoice data into accounting software The software automatically transfers detailed information to the subsidiary ledger of Cost of Goods Sold (COGS) for each item, as well as to the General Ledger of COGS At the end of the period, the accountant consolidates this detailed data from the subsidiary ledger to accurately calculate the cost of goods sold for the reporting period.
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 for assessing the effectiveness of business processes, particularly in today's dynamic economic environment These expenses are incurred throughout the entire sales cycle, from the initial receipt of goods to their final consumption, reflecting the company's efficiency in managing its sales operations Monitoring and optimizing selling expenses is essential for improving profitability and competitive advantage in the market.
Consumption-related expenses include wages, salaries, transportation costs, warehousing, delivery charges, and utility expenses such as electricity, water, and telecommunications These costs are essential for the production and distribution of goods, impacting overall operational efficiency and profitability Managing these expenses effectively can improve financial performance and ensure smooth supply chain operations.
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, expenses related to consumption goods such as marketing, advertising, warranties, installation, office expenses, and managerial payroll are consolidated under account 641 – Selling Expenses, rather than being divided into procurement costs, cost of sales, or management costs This accounting practice ensures clear categorization and efficient tracking of selling-related costs Proper recording of account 641 is essential for accurate financial reporting and helps in analyzing the company's sales expenses effectively.
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 occur, the accountant first classifies them using vouchers and records them in the appropriate books These transactions are then sequentially recorded in the general ledger through journal vouchers The preparation of journal vouchers can be performed periodically—such as weekly, monthly, or based on service types—ensuring accurate and organized documentation of sales expenses.
To ensure accurate tracking of selling expenses and related items, the company records monthly vouchers to prevent duplicate entries The accountant is responsible for documenting these transactions through journal vouchers and updating the general ledger, specifically related to account 641, to maintain precise financial records.
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
Amount 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:
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 clarifies the rights, responsibilities, and obligations across three key areas: licensing and approval of financial matters, accounting, and inventory procedures It emphasizes the importance of clearly demarcating authority to ensure proper governance The company's directives specify who has the right and is authorized—either wholly or partially—to finance specific issues, ensuring transparency and accountability in financial operations.
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.
Computers play a vital role in accounting, but they are susceptible to various technical issues To ensure smooth financial operations, it's essential to implement preventive measures and control strategies Regular maintenance, data backups, and cybersecurity protocols help minimize potential disruptions Additionally, staff training on proper computer usage and troubleshooting can effectively address common problems By adopting these best practices, organizations can maintain accurate financial records and enhance overall efficiency.
- 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.
Implementing comprehensive training programs to enhance the skills of accounting staff is essential for organizational growth Strategically planning human resource deployment ensures optimal utilization aligned with the company's business needs Additionally, promoting work specialization within the accounting department can significantly improve overall efficiency and positively impact business performance.
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 it to be well-organized, with qualified accountants who stay updated on financial regulation changes and apply flexible practices The company’s sales accounting practices are continuously improved to accurately reflect operations and meet escalating managerial requirements, facilitating timely identification and exploitation of business potential However, the study identified certain strengths and areas needing improvement in GMV's sales accounting processes to enhance overall effectiveness.
+ 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 accounting for sales is well-organized to meet the needs of senior management, ensuring clear division of responsibilities for better oversight This structure enables transparent evaluation of each business segment, supporting accurate decision-making and effective management by senior leaders.
The company strictly complies with national policy and financial accounting regulations, ensuring accurate and complete reflection of sales transactions To enhance accounting management, it utilizes a modern computer system integrated with SAP software, enabling real-time bookkeeping and efficient financial oversight This commitment to modern technology ensures precise financial records and streamlined accounting operations.
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:
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 recognizing revenue, leading to delays in financial processing Additionally, the use of accounting software poses risks of data loss from viruses, impacting record accuracy Software errors further hinder the accounting department's efficiency, causing work delays and potential financial discrepancies.
GMV currently faces challenges with timely invoice posting, as sales departments often retain two copies of each invoice initially, causing delays Accountants frequently need to request sales representatives to return these copies to ensure smooth financial documentation and compliance.
Recommendations to Improve Accounting for Sales
About making sure of all invoices are posted:
Implementing an efficient invoice control system is essential for companies to manage their financial documentation effectively Such a system should categorize invoices into key groups, including posted, unposted, and cancelled invoices, to ensure accurate record-keeping Proper classification helps prevent duplicate postings and enhances overall financial accuracy By establishing a robust invoice management process, businesses can streamline operations, reduce errors, and maintain compliance with accounting standards.
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 the sales representative to only retain the red copy of the invoice, rather than all three copies This practice ensures that the invoices for vehicles are properly maintained by the billing and accounts receivable departments, thereby improving the accuracy and efficiency of document posting Implementing this procedure enhances internal control and streamlines the invoicing process.
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 first clearly define and tailor it to a specific commercial domain to ensure effectiveness Additionally, establishing an allowance policy is essential to support the overall discount strategy and maintain consistent pricing practices.
The company should have a reconcilable committee, to control debt recovery plan reasonable and timely.
Effective integration and economic recovery post-crisis require enterprises to maintain and enhance their market position through strategic business practices Companies must focus on balancing revenues and expenditures to ensure profitability, while continuously improving product and service quality to strengthen their market standing A well-structured sales policy, coupled with ongoing efforts to boost business efficiency, is essential for growth In this context, accountants play a crucial role as management tools, providing vital information for informed decision-making Therefore, a sound accounting organization—particularly in sales accounting and income summarization—is vital for the survival and long-term development of enterprises.
Completing the accounting process for sales and income summaries significantly enhances the company's overall accounting efficiency, helping to reduce unnecessary costs and ensuring accurate and timely financial reports This effort aims to contribute to the improvement of sales activities, supported by thorough research into the company's actual operations Valuable guidance from the Accounting department staff, especially PhD Tran Manh Dung, CPA, was instrumental in successfully completing the thesis titled "Improving Accounting for Sales at General Motors Vietnam Company."
Due to limited time for practice and practical knowledge, the issues addressed in the thesis lack broad generality, and the solutions are not entirely comprehensive or flawless 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