[Luận văn bằng tiếng anh - GRADUATION THESIS] ACCOUNTING FOR SERVICE PROVISION AND DETERMINING BUSINESS RESULTS AT VINASINCO JOINT STOCK COMPANY – HANOI

GRADUATION THESIS ACCOUNTING FOR SERVICE PROVISION AND DETERMINING BUSINESS RESULTS AT VINASINCO JOINT STOCK COMPANY – HANOIThe production of material wealth is considered to be one of the most important conditions for the existence and development of the human society. Along with the society, the production and business activities of enterprises have been expanding and developing persistently. Nowadays, with the condition that the economy has macromanagement from the State, businesses are having a favorable production environment: businesses are allowed to freely develop and compete against each other with complete equality before the law; the domestic market is also allowed to open, but it also faces a lot of difficulties from the impact of the competition rules from the new mechanism. This is also a great opportunity for Vietnamese businesses to recognize their real capabilities, crafting new business strategies, and solving problems relating business and production activities, in order to adapt and overcome the rigorous selection and elimination process of the market.

GRADUATION THESIS

ACCOUNTING FOR SERVICE PROVISION AND DETERMINING BUSINESS RESULTS AT VINASINCO JOINT STOCK COMPANY – HANOI

Supervisor: PhD Thai Ba Cong

MSc Nguyen Ba Linh

HÀ NỘI – 2022

With the assistance of all of the company's accountants and divisions, I

completed my thesis as part of the project: Accounting for service provision and determining business results at Vietnam Urban Services and Investment Joint Stock Company I'd want to convey my gratitude to Mrs Truong Thi Thanh Thuy, Chief Accountant of the Vietnam Urban Services and Investment Joint Stock Company, for her invaluable advice and assistance throughout my internship

My heartfelt appreciation goes out to my parents for their unwavering

encouragement and support during my studies

STATUTORY DECLARATION

I now formally certify that this submitted Bachelor Thesis was authored

entirely by me and also with the help of PhD Thái Bá Công and MSc Nguyễn Bá Linh I also certify that I did not rely on any other external

sources, except for the literature cited and sources listed at the conclusion of this work

All of the literature and additional sources that was used to produce this academic paper, both verbatim and in substance, were noted and separately listed

Hanoi, Dec 7th, 2021

Student

LIST OF ABBREVIATIONS

VINASINCO Vietnam Urban Services and Investment

TABLE OF CONTENTS

ACKNOWLEDGEMENTS 1

STATUTORY DECLARATION 2

LIST OF ABBREVIATIONS 3

TABLE OF CONTENTS 4

INTRODUCTION 9

1 The urgency of the topic 9

2 Objective of the study 10

3 Object and Scope of the study 10

4 Methods of the study 10

5 Organization of the study 11

CHAPTER 1: BASIC THEORY OF SERVICE PROVISION ACCOUNTING AND DETERMINATION OF BUSINESS RESULTS IN ENTERPRISES 12

1.1 THE NECESSITY OF ACCOUNTING FOR SERVICE PROVISION AND THE DETERMINATION OF BUSINESS RESULTS IN ENTERPRISES 12 1.1.1 General overview of service provision and determination of business results 12 1.1.2 Characteristics of service provision accounting and determining business results 13 1.1.3 The role of service provision accounting and determining business results 14

1.2 ACCOUNTING FOR BUSINESS EXPENSES IN SERVICE

PROVISION BUSINESS 16

1.2.1 Accounting for revenue from services provision and revenue deductions 16

1.2.2 Accounting for Cost of Goods Sold 23

1.2.3 Accounting for selling expenses and administration expenses 24

1.2.4 Accounting for financial incomes and financial expenses 28

1.2.5 Accounting for other incomes and other expenses 31

1.2.6 Accounting for corporate income tax expense 32

1.2.7 Accounting for financial activities income 34

1.2.8 Accounting for other income 37

1.2.9 Accounting for determining business results 39

1.3 ORGANIZATION OF ACCOUNTING BOOKS SYSTEM 42

1.3.1 General Journal method 42

1.3.2 Journal – Ledger method 45

1.3.3 Journal – Vouchers method 46

1.3.4 Book-keeping Documents method 49

1.3.5 Computerized Accounting Method 49

CHAPTER 1 CONCLUSION 52 CHAPTER 2: CURRENT SITUATION OF ACCOUNTING FOR SERVICE PROVISION AND DETERMINATION OF BUSINESS RESULTS AT

VIETNAM URBAN SERVICES AND INVESTMENT JOINT STOCK

COMPANY 53

2.1 GENERAL OVERVIEW OF VIETNAM URBAN SERVICES AND INVESTMENT JOINT STOCK COMPANY (VINASINCO) 53

2.1.1 Company information and development 53

2.1.2 Characteristics of production and business organization 55

2.1.3 Organizational management characteristics at the company 55

2.1.4 Organizational characteristics of accounting work in the company 58

2.2 SERVICE PROVISION EXPENSES ACCOUNTING REALITY AND DETERMINING BUSINESS RESULTS AT VINASINCO JSC 65

2.2.1 Accounting for cost of goods sold 65

2.2.2 Accounting for selling expenses and administration expenses 66

2.2.3 Accounting for financial expenses 76

2.2.4 Accounting for other expenses 76

2.2.5 Accounting for corporate income tax expenses 78

2.3 SERVICE PROVISION REVENUE ACCOUNTING REALITY AT VINASINCO JSC 78

2.3.1 Accounting for service provision revenue 78

2.3.2 Accounting for revenue deductions 83

2.3.3 Accounting for other incomes 83

2.3.4 Accounting for determining business results 87

2.4 Evaluate the current status of Service Provision Accounting and

determine business results at VINASINCO JSC 91

2.4.1 Strength 91

2.4.2 Weakness 93

CHAPTER 2 CONCLUSION 95

CHAPTER 3: SUGGESTIONS TO IMPROVE ACCOUNTING FOR SERVICE PROVISION AND DETERMINE BUSINESS RESULTS AT VIETNAM URBAN SERVICES AND INVESTMENT JOINT STOCK COMPANY 96

3.1 REQUIREMENTS, PRINCIPLES OF COMPLETING ACCOUNTING FOR SERVICE PROVISION AND DETERMINING BUSINESS RESULTS AT VINASINCO JSC 96

3.1.1 Requirements 96

3.1.2 Perfecting principles 98

3.2 SUGGESTIONS FOR IMPROVEMENTS OF ACCOUNTING FOR SERVICE PROVISION AND DETERMINING BUSINESS RESULTS AT VINASINCO JSC 99

3.2.1 Suggestions 99

3.2.2 Accounting procedure for some key transactions: 100

CHAPTER 3 CONCLUSION 103

CONCLUSION 104

REFERENCES 106

APPENDIX 107

INTERSHIP SUPERVISORS’ COMMENTS 111

1 The urgency of the topic

The production of material wealth is considered to be one of the most importantconditions for the existence and development of the human society Along withthe society, the production and business activities of enterprises have beenexpanding and developing persistently Nowadays, with the condition that theeconomy has macro-management from the State, businesses are having afavorable production environment: businesses are allowed to freely develop andcompete against each other with complete equality before the law; the domesticmarket is also allowed to open, but it also faces a lot of difficulties from theimpact of the competition rules from the new mechanism This is also a greatopportunity for Vietnamese businesses to recognize their real capabilities,crafting new business strategies, and solving problems relating business andproduction activities, in order to adapt and overcome the rigorous selection andelimination process of the market

In the process of producing activities for business, especially with a commercialenterprise, sales are one of the most basic operations that governs otheroperations The business cycle can take place in a smooth and continuous waywhen the enterprise surpasses the consumption stage with great results, whichmay be the basis of creating profits for the business, where it being the coregoal of the business in the market economy To accomplish this, businessesneed s to choose out among products, selecting the most profitable products totrade, with the guarantee of being profitable and covers costs spent, hencecorrectly determine the right business results, which helps in orienting thebusiness, as well as creating momentum for the enterprise’s development

Recognizing the importance of sales accounting and determine business results,applying the theory that has been studied at school, and combining it with thereality from the accounting organization Vietnam Urban Services andInvestment Joint Stock Company, with the will to learn more about salesaccounting and determine business results, I chose the topic “Accounting forservice provision and determining business results at Vietnam Urban Servicesand Investment Joint Stock Company.”

2 Objective of the study

The research purpose, is to discover the current status of sales accounting anddetermine business results of Vietnam Urban Services and Investment JointStock Company, therefore giving general observations on the achievements andshortcomings in sales accounting and determining business results, from which

3 Object and Scope of the study

Object: Accounting for service provision and determination of business results

at Vietnam Urban Services and Investment Joint Stock Company

The scope of research content will focus on accounting for service provisionand evaluating results of the revenue, selling expenses, revenue deductions, andadministration expenses, some other related expenses and incomes, accountsused to do accounting and accounting entries in Vietnam Urban Services andInvestment Joint Stock Company within 2021

4 Methods of the study

This thesis uses the method of analyzing as the most appropriate method for thepractices of accounting for sales and defining business result at the company, aswell as analyzing the impact it has on the company’s development Other

methods, such as comparison between theory and reality, is also being used togive a proposed solution to refine sales accounting and determine businessresults at Vietnam Urban Services and Investment Joint Stock Company from

2020 to 2021

5 Organization of the study

The main content, apart from the introduction, conclusion and references, isdivided into three chapters as follows:

Chapter 1: The basic theory of accounting for service provision and determination of business results in enterprises.

Chapter 2: Current situation of accounting for service provision and determination of business results at Vietnam Urban Services and Investment Joint Stock Company.

Chapter 3: Solutions to improve accounting for service provision and determination of business results at Vietnam Urban Services and Investment Joint Stock Company.

CHAPTER 1: BASIC THEORY OF SERVICE

PROVISION ACCOUNTING AND DETERMINATION OF

BUSINESS RESULTS IN ENTERPRISES1.1 THE NECESSITY OF ACCOUNTING FOR SERVICE

PROVISION AND THE DETERMINATION OF BUSINESS RESULTS IN ENTERPRISES

1.1.1 General overview of service provision and determination of business

results

 Service provision definition:

Service, unlike products, are those that provide an activity or the performance

of a task with a commercial purpose

In a broad sense, service is the concept that refers to all activities, in which theirresults do not exist in a physical form Service activities cover all fields with ahigh experience level, greatly influencing the development process of socio-economic and environment of each country, region in particular and the wholewide world in general Not only service includes traditional industries such astransportation, banking, commerce, insurance, post and telecommunications,but it also spreads to new fields such as office services, administrative, andconsulting services

In a narrower sense, service is to do a job for another individual or community,

is something that effectively meets a certain human need, such astransportation, repair and maintenance of equipment, machinery, orconstruction

Business results are the results of an enterprise’s production and businessactivities in a certain accounting period; in other words, business results areexpressed in cash in the difference between total revenue and total expenses ofall economic activities performed If the income is greater than the expenses,the business result is a profit; if the income is less than the expenses, thebusiness result is a loss Depending on the business characteristics andmanagement requirements of the business, the determination of business results

is conducted at the end of the business period such as at the end of the month,quarter or year

The business results from an enterprise contains the results of its ordinarybusiness operations, plus other activities Moreover, their business activityresults are normally the outcome of an enterprise’s revenue-gathering activities,specifically from selling, providing services and financing activities

1.1.2 Characteristics of service provision accounting and determining

This characteristic, however, leads to a fact that the production,consumption and management process of business services are oftendifficult to separate

- Service business activities have a variety of methods to implement Forinstance, the tourism industry offers multiple ways to travel such asdomestic or international tours, or package or partial tours, etc.; for anotherinstance, the transportation industry also have different ways to travel suchas: road transport, air transport, or railway, …

With the diversity of methods of service implementation being mentioned,this leads us to the diversity of management objects as well as thecomplexity in organizing the accounting work in general, specifically theorganization of cost, revenue and result accounting, such as: Determiningobjects for cost accumulation, revenue recognition and calculate possibleresults according to each type, method, and form of service provisionbusiness

- In terms of business organization and management, service provisionenterprises often tend to manage business activities according to serviceimplementation processes or to each order This leads to the manifold inprocessing cost, revenue and business results accounting

- Service enterprises have multiple forms of co-operating in order to supporteach other in the business process, namely joint venture or association.These types of form usually lead to the complications in generalmanagement in general, and accounting process in particular: Accountingfor revenue and expenses, in the form of joint ventures “Businesscooperation contract in the form of jointly controlled business activities.”

1.1.3 The role of service provision accounting and determining business

results

Accounting in general and service provision accounting in particular havegiven assistance to enterprises and State agencies to evaluate the completionlevel of the scheme in terms of service costs, expense and revenue, thereforeovercoming the shortcomings and limitations in the management process With

a reasonable organization and arrangement between phases in the process ofservice provisioning, it will create a favorable condition in the serviceprovision accounting process and determining business results, as well ascreating an unification and consistency in the general accounting system of thecompany

In order to elevate the role of accounting in business activities management,service provision and determining business results, it is vital to perform thefollowing tasks:

 Reflect and record all situations of providing every type of service tocustomers, as well as internal supply It is also important to do the same forthe revenue, revenue deductions, and expenses of each activity in thebusiness

 Regularly follow and monitor customer’s receivables, ensuring a fulland timely collection, avoiding unreasonable appropriation of capital

 Providing professional accounting information for the preparation offinancial statements, periodically analyzing activities related to the serviceprovision process, determining, and delivering the results

 Accurately calculate and reflect the outcome of each activity, as well

as supervising the performance of obligations to the State, and thedistribution of operating results

1.2 ACCOUNTING FOR BUSINESS EXPENSES IN SERVICE

PROVISION BUSINESS

1.2.1 Accounting for revenue from services provision and revenue

deductions

1.2.1.1 Content of services provision

According to Vietnamese Accounting Standard No 14 – Revenue and other

income: “Revenue is the total value of economic benefits obtained by the

enterprise in the accounting period, arising from the normal production and business activities of the enterprise, contributing to the increase of owner’s equity”

Service provision revenue is the total amount received or will be collectedthrough transactions and transactions generating revenue for customers,including additional surcharges and fees in addition to the selling price, isreferred to as service provision revenue (if any)

Revenue from service provisioning is only recognized when the outcome of thetransaction can be measured reliably In case the transaction of the serviceprovision involves many periods, revenue is recognized in the period according

to the result of the work completed on the balance sheet date of that period Theoutcome of a service transaction can be measured reliably when all four of thefollowing conditions are satisfied:

- The amount of revenue can be measured reliably

- It is feasible that the transaction will result in economic gains

- The portion of the work completed at the balance sheet date can bemeasured

- The costs incurred for the transaction and the costs to complete thetransaction can be measured reliably

Notes when determining service provision revenue:

- In case the outcome of a service provision transaction cannot be predictedwith certainty, revenue is recorded proportionally to the recognizedrecoverable expenses

- Revenue and costs associated with the transaction should be reported in thesame fiscal year

- In case where the exchange for services for another that’s similar in natureand value, the trade is not regarded a revenue-gathering transaction And norevenue is recognized

Revenue is recognized at the fair value of amounts already collected or to becollected in the future, specifically:

- For service enterprises that calculate and pay VAT by credit method,service revenue is recognized according to prices of services provided that

do not include VAT

- For service enterprises that calculate and pay VAT by direct method,service revenue is recognized according to the total payment price

- If the service is determined to be exported and subject to export tax, therevenue is recorded based on the total freight charge, including the exporttax

- In case a service contract is performed over several accounting periods,service revenue is recognized using the percentage of completion method Aservice business can use the following approaches to determine thecompleted work as the basis for calculating the revenue recognized in theperiod:

 Evaluate completed work

 Comparing the percentage between the amount of work completed and thetotal amount of work to be completed

 Percentage of costs incurred compared to the total estimated cost ofcompleting the entire service provision transaction

- Service revenue is tracked in detail by each type of revenue in service ofrevenue management to determine business results at the request ofbusiness operations management of the unit

- In case of receiving payment in advance for many periods: If the moneywas received from customers who pay in advance for many servicesprovision periods, based on invoices to record unearned revenue to account

3387 – Unrealized turnover, with each period allocated to revenue

according to the matching principle

1.2.1.2 Accounting for revenue deductions

1.2.1.2.1.Definition and contents of revenue deductions

Sales deductions such as trade discounts, sales discounts, sales refunds, direct VAT payable, and excise and export taxes Net sales and business outcomes are calculated using sales deductions during the accounting period Revenue deductions must be reported, tracked in detail, and separately on relevant

accounts to provide information to accountants for financial statement

- Warehouse receipts for returned goods, discount agreement minutes,

and invoices of returns of sold goods

- Vouchers, Bank Debit notes, Tax payment documents

Accounts in use:

- Acc 521 - Trade discounts

- Acc 3332 - Special consumption tax

- Acc 3333 - Import-export tax

- Other related accounts such as: Acc 111, Acc 112, Acc 131…

1.2.1.2.2.Accounting entries for major transactions

Acc 111, 112, 131 Acc 521 Acc 511

- Account 511: Sales This account reflects the business's revenue fromselling goods and providing services in an accounting period of productionand business activities from transactions, sales, and service provision.

This account has the following level 2 accounts:

 Account 5111: Goods sale

 Account 5112: Finished product sale

 Account 5113: Services sale

 Account 5114: Subsidization sale

 Account 5117: Investment real estate sale

 Account 5118: Other sale

- Account 3331:

- Account 3387

- Other related accounts: Account 111, 112, 131, …

1.2.1.4 Accounting entries for major transactions

Account 521, 333 Account 511 Account 111,112,131,136

(6) (1)Account 3331 Account 3387

(7) (3) (2) Account 911 Account 621, 627, 641, 642

(8) (4)

(5)

Graph 1.1 Accounting entries for sales and service provision.

(1): When the agent accepts payment, the revenue from direct sales to

customers or internal units is the immediate selling price of the goods oninstallments or the fair worth of the supplies and goods presented for exchange

(2): Unrealized turnover (total payment) when receiving money for providing

services to customers in advance, operating leases of fixed assets or leasing ofinvestment properties

(3): Periodical calculation and conclusion for the transfer of revenue from

service provision, revenue from operating lease of fixed assets or leasing ofinvestment real estate of the accounting period

(4): Products and goods used for advertising and promotion departments,

specializing in fixed assets (internal consumption)

(5): Products and goods for the purpose of gifting or as a salary payment

(Revenue for internal consumption is recognized as the normal selling price ofthe product)

(6): Transferring deductions from revenue: discounting goods sold, returned

goods, trade discounts, special consumption tax, export duties

(7): Determining the payable VAT amount at the end of the period.

(8): The net revenue is transferred at the end of the period in order to determine

business results

1.2.2 Accounting for Cost of Goods Sold

1.2.2.1 Definition and contents

All business expenditures that are related to providing a service are included inthe cost of a service

Finished products are services, unlike any other physical products and items,cannot be hoarded and must be reflected in the cost of goods sold immediately.The cost of such services is nevertheless counted as part of the cost of theunfinished product Service activities, on the other hand, frequently fail toaccount for costs associated with work-in-progress As a result, the cost ofgoods and services is stated in terms of the cost of living, as well as the cost ofmaterializing labor, in order to provide goods and services to customers

At the end of the business period, due to the characteristics of products andservices that do not have a physical form, the cost of finished products is

transferred from Account 154 – Cost for work in progress to Account 632 – Cost of goods sold.

Documents used: Accounting vouchers, acceptance certificate, …

Accounts used:

- Account 632 – Cost of goods sold

- Other related accounts: Account 154 - Cost for work in progress

1.2.2.2 Accounting entries for some transactions

Account 154 Account 632 Account 911

(1) (2)

Graph 1.2 Accounting entries of Cost of Service

Table explanation:

(1) - Cost of service made in the period

(2) - Deferring costs to determine business results

1.2.3 Accounting for selling expenses and administration expenses

1.2.3.1 Definition and contents

Selling expenses are all costs incurred in connection with the process of sellingproducts, goods and providing services Staff costs, packaging materials costs,tools and supplies prices, fixed asset depreciation charges, product warrantycosts, and outside purchasing services cost are all included in selling expenses.Furthermore, depending on the production and business activities of eachindustry, as well as the management requirements of each unit, account 641 –

“Selling expenses” may open certain additional expenses

General and administrative expenses are all expenses associated withproduction and business management, administrative management, and avariety of other general-purpose items for the entire firm General andadministrative expenses comprise the following: Employees cost, tools cost,stationery cost, fixed asset depreciation, taxes, fees and charges, provision cost,outside purchasing services cost and other costs.

Voucher in use: Goods delivery note

Account in use (according to Circular No 200/2014/TT-BTC):

- Account 641: Selling expenses

This account has the following level 2 accounts:

Account 6411 – Employee’s cost

Account 6412 – Material, packing cost

Account 6413 – Tool cost

Account 6414 – Fixed asset depreciation

Account 6415 – Warranty cost

Account 6417 – Outside purchasing services cost

Account 6418 – Other cost

- Account 642 – General & administration expenses

This account has the following level 2 accounts:

Account 6421 – Employee’s cost

Account 6422 – Tools cost

Account 6423 – Stationery cost

Account 6424 – Fixed asset depreciation

Account 6425 – Taxes, fees, charges

Account 6426 – Provision cost

Account 6427 – Outside purchasing services cost

Account 6428 – Other cost

Other related accounts: Account 111, Account 112, Account 331, Account 334,

…

1.2.3.2 Accounting entries for several major operation

Account 334,338 Account 641, 642 Account 111,112

(1): Cost of sales staff, administrative staff (including salary, allowances, and

(4): Expenses for services purchased outside, plus other monetary expenses in

service of the sales process, business management and deductible input VAT (ifany)

(5): Provisioning of provision for bad receivables debts, job-loss allowance, and

payables

(6): Reversal of provision for bad receivables debts, job-loss allowance and

payables

(7): Deductions in selling expenses, general and administrative expenses

incurred in the period

(8): Deducting expenses for major repair of fixed assets in the sales department,

expenses for major repair of fixed assets for the whole company

(9): Closing entry of selling expenses, general and administrative expenses to

determine business results

1.2.4 Accounting for financial incomes and financial expenses

1.2.4.1 Definition and contents

Financial operating expenses are expenses associated with capital expenditures,financial investment operations, and financial transactions

Financial operating expenses include: Expenses related to investment infinancial instruments, investment in joint ventures, associates, investments insubsidiaries; Cost of holding, liquidating, transferring investments, investmentslosses; Expenses incurred as a result of capital loan and currency trading;Payment discounts when selling items, goods and/or services; non-capitalizedbusiness loan interest expenditures; Variation in loss while buying and sellingforeign currency, loss on difference in international exchange rate; Provision fordevaluation of short-term and long-term financial investments.

Vouchers used:

Accounts in use:

- Account 515 – Financial activities income

- Other related accounts: Account 111, Account 112, Account 121, Account

221, …

1.2.4.2 Accounting entries for major transactions

Account 111, 112, Account 635 Account 911

Explanation:

(1): Expenses for holding and selling foreign currencies and financial

instruments; expenses for financial investment activities not included incontributed capital (if any); financial investment loss (if loss is not deductedfrom contributed capital); international exchange rate difference losses; interestexpenses on business loans are not capitalized; payment discount tocustomers…

(2): Loss from foreign currencies selling, financial instruments; loss from

selling, liquidating, transferring financial investments; investment operating

expenses (if included in capital), losses in investment activities should beincluded in contributed capital.

(3): Net exchange rate difference (exchange gain, exchange rate loss) when

revaluating monetary items

(4): Provision for devaluation of financial investments

(5): Reversal of provision for devaluation of financial investments

(6): Transfer of financial expenses to determine business results

1.2.5 Accounting for other incomes and other expenses

1.2.5.1 Definition and contents

Other expenses are costs incurred for activities other than production and

business operations, such as losses due to events or transactions that are

different from the normal business activities of the enterprise

Other expenses include cost of liquidation and sale of fixed assets; Residualvalue of fixed assets liquidated or normally sold; the residual value or sellingprice of the fixed asset sold for sublease by the form of finance lease oroperating lease; Fines for breach of economic contract; Amounts subject to taxpenalties and tax arrears; Expenses due to mistake or omission when recording

in accounting books; Other costs, …

Vouchers used: Payment voucher, debit note

Account used:

- Account 811: Other expenses

- Other related accounts: Account 111, account 112, account 211, …

1.2.5.2 Accounting entries for major transactions

Account 111, 112, 152 Account 811 Account 911

Explanation:

(1): Expenses incurred in the liquidation and sale of fixed assets; additional

expenses such as the cost of recouping losses suffered as a result of businessrisks…

(2): Remaining value of liquidated or sold fixed assets

(3): Penalties for breach of contract, fines, tax arrears

(4): Other expenses are transferred at the end of the period to determine

company performance

1.2.6 Accounting for corporate income tax expense

1.2.6.1 Definition and contents

Corporate income tax expenses include current income tax costs and deferredtax expenses when determining the profit or loss of a financial year

Current corporate income tax expense is the payable corporate income taxamount on taxable income for the year and the current corporate tax rate.

Deferred income tax expense is the amount of income tax payable in the future

as a result of:

- Recognition of deferred tax payable during the year

- Reversal of deferred tax assets that have been deferred recognized from theprevious year

Deferred income tax income is a reduction in deferred income tax expensesarising from:

- Recognition of a deferred tax asset during the year

- Deferred tax refund payables have been recognized from previous years

1.2.6.2 Accounting entries for major transactions

Account 8211 Account 3334 Account 8211

(2) (1)

(7) Account 911 (8)

(9) (10) Account 8212 Account 243 Account 8212

(3) (4)

Account 347

(6) (5)

Graph 1.6: Accounting entries for corporate income tax expense

Explanation:

(1): Company income tax that’s temporarily paid or additionally paid

(2): Overpaid company income tax

(3): Incurred deferred income tax assets

(4): Reversal of deferred tax assets

(5): Incurred deferred tax liabilities

(6): Reversal of deferred tax liabilities

(7 & 8): Carrying forward current tax expenses

(7): Difference in arising debit greater than arising credit Acc 8211

(8): Difference in arising credit greater than arising debit of Acc 8211

(9 & 10): Carry forward deferred income tax expense

(9): Difference in arising amount debt is larger than arising credit amount of

Acc 8212

(10): Difference in arising amount credit is larger than arising debit amount of

Acc 8212

1.2.7 Accounting for financial activities income

1.2.7.1 Definition and contents of financial activities income

Financial income is the total value of economic benefits obtained by a businessfrom financial activities or capital trading during the accounting period.Revenue from financial activities derived from the enterprise’s interests,

royalties, dividends, and distributed profits is recognized only when both of thefollowing conditions are met:

- Has the probability of generating benefits from the transaction

- The amount of revenue can be measured reliably

Revenue from financial activities includes: Interest (interest on deposits, capitalloans, interest on sale of deferred payments, on installment sales); Gains fromselling and transferring financial instruments, investing in joint ventures injointly controlled business establishments, investing in associates; Dividendsand profits distributed; Profit difference due to foreign currency trading,foreign exchange rate difference profit; Payment discount received frompurchasing supplies, goods, services, and fixed assets; Other income related tofinancial activities

Vouchers used: Deposit interest vouchers, receipt, credit note, …

Accounts used:

- Account 515: Financial activities income

- Related accounts: Account 111, 112, 3387, 121, 221, …

1.2.7.2 Accounting entries for major transactions

Acc 911 Acc 515 Acc 111, 112,

Graph 1.7 Accounting sequence for revenue from financial activities

Explanation:

(1): Interest income from deposits, loans, and dividends from investment

activities; profit from selling foreign currency; profit on foreign exchangedifference; profits from selling financial instruments, transferring, andliquidating financial investments; payment discount is entitled

(2): Transfer unrealized turnover to account 515 from sales interest on deferred

payment and installment payment

(3): Divided profit from investment activities and retained for further

investment

(4): Net exchange rate difference (exchange profit and loss compensation > 0)

when revaluation of principal monetary items foreign currency at the end of theyear

(5): VAT calculated by the direct method payable (if any)

(6): Revenue from financial activities is transferred at the end of the period to

determine business results

1.2.8 Accounting for other income

1.2.8.1 Definition and contents of other income

Other income are incomes obtained by activities other than the company’s normal business

Other incomes include Income from sales and liquidation of fixed assets; Residual value or selling price or fair value of fixed assets sold for sublease using finance or operating leases; Fines collected due to economic contracts violation from customers or other units; Collection of bad debts that have been written off; Taxes which are exempted or deducted from corporate income tax

by the State; Collection from payable debts whose owners cannot be identified;Bonuses of customers related to the consumption of goods, products and

services are not included in the revenue (if any); Incomes from gifts and gifts

in money or in kind from individuals or groups in the business, …

Corporate income tax represents corporate income tax of the enterprise,

including current corporate income tax costs and deferred corporate income taxcosts incurred in the year as a basis for determination the enterprise's after-tax results in the current fiscal year

Documents used: Receipt slip (Form 01 – TT), Credit note,

Accounts used:

- Account 711: Other income

- Account 8211 - Corporate income tax and related accounts

The amount of tax payable for the current year is represented by the current taxexpense This is a tax that any business that does business must be aware of

- Related accounts such as: Account 111, 112, 1388, …

1.2.8.2 Accounting entries for major transactions

Account 3331 Account 711 Account 111,112,1388

Account 331, 338 Account 911 (2)

(5) Account 111,112, 152,211,

(3) Graph 1.8: Accounting entries for other income

Explanation:

(1): Reflects revenue from liquidation and sale of fixed assets; amounts

collected from fines and compensation due to other units' violations ofeconomic contracts; receivables from bad debts that have been written off

(2): Reflecting payable debts with unidentifiable owners, unrealized revenue

transfer

(3): Reflecting donated amounts of money and kind; other incomes such as

bonuses, forgotten earnings from the previous year, etc

(4): VAT payable on other incomes calculated by the direct method (if any)

(5): Other incomes are transferred at the end of the period to determine the

results

1.2.9 Accounting for determining business results

1.2.9.1 Definition and contents of determining business results

Business results are the final results of ordinary production and businessactivities, along with other activities of a company in a certain period,expressed in profit or loss The company’s business results include ordinary andother results of operations

The results of operations are generally the results of a business’s generating activities, which include sales, service provision and financingactivities:

-Cost of goodssold and company income tax expense

-Sales expense and general & administration expenses

Result from

financial =

Total net revenue from -

Cost of financial