BANKING ACADEMY OF VIETNAM ADVANCED PROGRAM GRADUATION THESIS Major: Accounting TOPIC: ACCOUNTING FOR INCOME, EXPENSE AND DETERMINING PROFIT OR LOSS At Hanoi Delicacy Hotel &
THEORETICAL BASIS FOR ACCOUNTING FOR INCOME, EXPENSE AND DETERMINING PROFIT OR LOSS
Overview for income, expense and determining profit or loss
Revenue, as defined by VAS 14 – Revenue and other incomes, refers to the total economic benefits an enterprise receives during an accounting period from its regular business and production activities, which ultimately contribute to the growth of equity capital.
1.1.1.2 Classification of revenue and revenue deductions a, Classification of revenue
Sale revenues refer to the total income generated by a business through transactions involving products, goods, and services provided to customers This includes all surcharges and any applicable overtime charges.
- Goods sale: Selling products manufactured by the enterprises and bought-in goods
- Provision of services: Performing the work agreed upon in the contracts in one or many accounting periods
Revenue from financial activities refers to the total value and economic benefits an enterprise generates during an accounting period, specifically in relation to its operating expenses These operating expenses primarily encompass interests, royalties, distributed dividends, profits, income from securities trading, and other related costs incurred by the enterprise.
* Other incomes mean revenues contributing to increasing the owner's capital, which is generated from operations other than turnover-generating operations such as
Revenue can be generated from various sources, including asset liquidation and sales, fines imposed on customers for contract breaches, collected insurance compensation, and recovered debts previously written off as expenses Additionally, revenue may increase from payable debts that are now recorded as such due to the absence of their owners.
Revenue deductions decrease the total economic benefits an enterprise earns during an accounting period from its regular business and production activities.
- Trade discount: is a reduction of the listed price granted by the selling enterprises to the buyers of large volumes of goods
- Reduction of the price of goods sold: a price reduction granted to the buyers due to the goods' inferior quality, wrong specifications or old- fashioned
The value of returns of goods sold refers to the total worth of products that have been sold and consumed but are subsequently returned by buyers who chose not to complete the payment.
* Sale revenue shall be recognized if it simultaneously meets the following five conditions:
- The enterprise has transferred the majority of risks and benefits associated with the right to own the products or goods to the buyer
- The enterprise no longer holds the right to manage the goods as the goods owner, or the right to control the goods
- Revenue has been determined with relative certainty
- The enterprise has gained or will gain economic benefits from the good sale transaction
- It is possible to determine the costs related to the goods sale transaction
Revenue from service provision transactions is recognized when the results can be reliably determined For transactions spanning multiple periods, revenue is allocated to each period based on the work completed by the date of the accounting balance sheet Recognition of a service provision transaction's results occurs only when all four specified conditions are met.
- Revenue is determined with relative certainty
- It is possible to obtain economic benefits from the service provision transaction
- The work volume finished on the date of making the accounting balance sheet can be determined
- The costs incurred from the service provision transaction and the costs of its completion can be determined
In transactions involving service provision over multiple accounting periods, the percentage-of-completion method is used to determine service turnover for each period This approach calculates the revenue recognized in a given accounting period based on the percentage of work that has been completed.
In the early stages of a service transaction, when the outcome is uncertain, revenue is recognized equal to the recoverable costs incurred If costs are deemed irrecoverable, the associated turnover is not recognized, and the incurred costs are recorded as expenses to reflect the business results for that period However, if there is reliable evidence that the costs are recoverable, the revenue will be recognized in accordance with established provisions.
Expense are the total value of amounts which reduce economic benefits in the accounting period in the forms of amounts spent, asset depreciation amounts, or give
8 rise to liabilities leading to a decrease in the owner’s equity, excluding amounts distributed to shareholders or owners
The Cost of Goods Sold (COGS) represents the direct expenses incurred in the production of goods sold by a company, encompassing both the costs of materials and labor directly involved in creating the product.
Sales expenses encompass all costs associated with the selling process of goods and services This includes expenses related to product presentation, advertising, labor, materials and packaging, tools and supplies, as well as the depreciation of fixed assets utilized in sales Additionally, other miscellaneous expenses are also considered part of sales expenses.
General and administrative expenses encompass all overhead costs associated with running a business, including salaries and wages for administrative staff, social and medical insurance, labor union fees, and unemployment insurance These expenses also cover office supplies, labor tools, depreciation of fixed assets used in administration, lease payments, provisions for bad debts, and outsourced services such as utilities and asset warranties Additionally, they include other cash expenditures like entertainment and customer conference costs.
Expenses associated with financial activities encompass costs linked to capital investment, including losses from securities trading, capital investment expenses, and costs related to lending activities and foreign currency transactions.
Other expenses refer to costs that are not directly associated with a company's core operations These can include interest expenses, asset sales, impairment and restructuring costs, as well as losses incurred from the disposal of fixed assets.
- Income tax expense is the aggregate amount of current income tax expense and deferred income tax expense during the period
1.1.3 Overview for determining profit or loss
Calculating profit or loss is essential for assessing a business's performance over a specific period, represented by the difference between total revenue and total costs A business generates a profit when its revenue surpasses expenses, while a loss occurs when costs exceed revenue.
Roles and duties of accounting for income, expense and determining
1.2.1 The role of accounting for income, expense and determining profit or loss
Effective management of income and expenses is crucial for assessing a business's profitability and growth A robust revenue accounting system is essential for maximizing profits and addressing the economic, financial, and social dynamics of the business This contributes to enhancing operational capacity, demonstrating research outcomes, and helping businesses establish a strong market presence.
Helping enterprises to regularly monitor their production and business activities: production process, market monitoring Thanks to that, managers manage activities smoothly, effectively manage, internal control well
Documents serve as essential tools for businesses, providing a foundation for planning actions at every stage and period This enables managers to assess work efficiency and determine future activity directions.
Effective accounting of income and expenses is essential for corporate governance, enabling businesses to accurately assess their profit or loss By proficiently managing revenue and expenditures, companies can thrive in a competitive market Accounting serves as a vital tool for data collection and processing, aiding businesses in managing inventory and determining financial outcomes.
1.2.2 The duty of accounting for income, expense and determining profit or loss
With an aim to managing sales and evaluating profit or loss, accounting for income, expense and determining profit or loss has some missions as below:
- Fully, timely, accurately reflecting and recording occurred transactions and movements of each type of goods and products under quantity, quality, model and value
- Fully, timely, accurately reflecting and recording sales, sales deductions and expenses of each business activity, as well as following and supervising customer receivables
- Accurately calculating and reporting results of each transaction
- Monitoring the implementation of state obligations and division process of business result
- Interpreting accounting reports to information users Accounting information must be reliable, understandability and useful
Accounting for income, expense and determining of profit or loss must follow the accounting standards and able to adapt to the status of the company’s accounting system.
Accounting for income, expense and determining profit or loss
1.3.1.1 Accounting for revenue from goods sale and provision of services
- Payment voucher of goods on consignment
Account 511 “Sales”: This account is used to record sales of goods and services of enterprise in an accounting period, including sales of goods, products and
12 services provided to parent companies and subsidiaries in the same group in the accounting period
This account reflects the turnover of production and business activities from the following transactions and operations:
- Sales: Selling products manufactured by enterprises, selling goods purchased and investment real estate
- Service provision: Performing the agreed work under a contract, or multiple accounting periods, such as provision of transportation, tourism, fixed asset
Account 511 does not have closing balance and it comprises 6 sub – accounts:
+ Account 5112: Turnovers from finished goods
+ Account 5113: Turnovers from service provision
+ Account 5117: Investment real estate sale
Figure 1 1: Accounting entry for revenue from goods sale and provision of services applying deductible VAT method
Figure 1 2: Accounting entry for revenue from goods sale and provision of services applying export tax, excise tax and environment tax
+ VAT invoice or sales invoice + Economic contracts
+ Minutes of sales allowances + Sales allowances invoice + Accounting voucher of sales allowances
+ Minutes of goods return + VAT invoice or sales invoice + Goods receipt
+ Accounting voucher of sales returns
Account 521 is designated for revenue deductions, capturing adjustments that lower revenue from goods sales and service provisions within the accounting period This includes trade discounts, sales returns, and price reductions on sold goods Notably, this account does not account for taxes deducted from sales, such as output VAT payable under the direct method.
Account 521 does not have closing balances and it comprises 3 sub – accounts:
When receiving the goods return, the accountant shall record:
Figure 1 3: Accounting entry for revenue deduction
Account 515: Financial incomes This account is used to record revenues from interests, copyrights, dividends, distributed income, and other income from financial activities of enterprises
Account 515 has no closing balance
Figure 1 4: Accounting entry for financial incomes
- Debit notes and Credit notes
- Minutes of handling surplus and missing assets
- Property liquidation and sale record
Account 711: Other income This account is used to record other income, revenues that not arising from operating activity of business
Account 711 does not have closing balance
Figure 1 5: Accounting entry for other income
1.3.2.1 Accounting for Cost of goods sold
According to VAS 02, cost of goods sold shall be calculated by the following methods:
- Specific identification method: This method shall apply to enterprises having a few goods items or stable and identifiable goods items
The weighted average cost method (AVCO) calculates the value of inventories based on the average cost of similar goods at the beginning of the period, along with the costs of items purchased or manufactured during that time This average can be determined either by specific periods or by the timing of when goods are warehoused, depending on the circumstances of the enterprise.
AVCO includes AVCO Periodic and AVCO Perpetual:
+ AVCO Periodic: By the end of the period, the value of goods sold in the period will be calculated:
The weighted average unit cost is calculated by dividing the sum of the value of goods at the beginning of the period and the value of goods purchased during the period by the total number of inventory at the beginning of the period plus the number of goods purchased during the period.
+ AVCO Perpetual: After each purchase, redefining the real value of inventory and the average unit cost
The weighted average unit cost for the i-th sale is calculated by dividing the total value of goods at the beginning of the period, along with the value of goods purchased prior to the i-th sale, by the total number of inventory at the beginning of the period plus the number of goods acquired before the i-th sale.
The first-in, first-out (FIFO) method operates on the principle that the earliest inventories acquired or produced are the first to be sold or delivered Consequently, the remaining inventories at the end of the period are those that were purchased or manufactured more recently.
The value of delivered goods will be calculated based on the price of the lot of goods stored at the beginning of the period or shortly thereafter.
The value of inventories is determined based on the price of goods stored at the end of the period or shortly before it Consequently, net income calculated using the FIFO method tends to increase over time.
COGS during the period = Opening inventory + Purchases/ Costs of production – Closing inventory
Account 632 “Cost of goods sold” This account is used to record cost of goods, products, services, investment property, costs of production of construction products, etc, …
Account 632 does not have closing balances
In case business applies perpetual inventory method:
In case business applying periodical inventory method:
Figure 1 6: Accounting entry for COGS applying perpetual inventory method
Figure 1 7: Accounting entry for COGS applying periodical inventory method
- Table of salary distribution and social insurance
Account 641: Selling expenses This account reflect expenses actually incurred in process of selling products, goods, providing services, including publicity expenses, demonstration expenses, advertising expenses…
Account 641 does not have closing balances and it comprises 7 sub – accounts:
Figure 1 8: Accounting entry for selling expenses
1.3.2.3 Accounting for general and administrative expenses
Account 642 pertains to administration expenses, which encompass the overhead costs associated with running a business This includes salary expenses for administrative staff, social and medical insurance, labor union fees, lease rent, and outsourced services such as electricity, water, telephone, and fax, along with other cash expenses.
Account 642 has no closing balance and it comprises 8 sub – accounts:
- Account 6427: Outside purchasing services cost
Figure 1 9: Accounting entry for general & administrative expenses
- Documents and notices of the joint venture party
- Debit note and credit note
Account 635 is designated for recording financial expenses, encompassing operating costs associated with financial investment activities, as well as losses incurred from lending and borrowing This account also includes costs related to capital contributions in joint ventures and investments in associates.
Account 635 has no closing balance
Figure 1 10: Accounting entry for financial expenses
1.3.2.5 Accounting for corporate income tax expenses
Each quarter, based on the tax declaration, the accountant records estimated current income tax into current income tax expense
At the end of the fiscal year, if the estimated income tax falls short of the actual income tax owed, accountants must adjust the current income tax expense to reflect the additional tax liability Conversely, if the estimated income tax exceeds the actual amount payable, accountants should reduce the current income tax expense by the difference between the estimated and actual figures.
If an entity identifies immaterial errors in the income tax payable from the previous year, accountants must adjust the current year's income tax to reflect the increase or decrease in the prior year's tax payable.
At the end of the fiscal year, the accountants should transfer the current income tax to determine operation result
Account 821 pertains to corporate income tax, which records the income tax expenses of a business, encompassing both current and deferred income tax expenses incurred within the year These expenses are essential for calculating the operating results of the business after tax for the current financial year.
Account 821 has no closing balance
Figure 1 11: Accounting entry for CIT expense
- Debit notes and credit notes
- Minutes of handling surplus and missing assets
Account 811: Others expenses This account is used to record expenses incurred from events or operations separated from normal operation of business
Account 811 has no closing balance
Figure 1 12: Accounting entry for other expenses
1.3.3 Accounting for determining profit or loss
Account 911: Determine profit or loss This account is used to identify and record results of operating activity and other activities during an account year
Account 911 does not have a closing balance
Account 421: Retained earnings This account is used to to record business results (profit, loss) after enterprise income tax and situation of income distribution or loss handling of enterprise
- Account 4211 - Undistributed after-tax profit of the previous year
- Account 4212 - Undistributed after-tax profit this year
Figure 1 13: Accounting entry for determine business performance
In business accounting, the assessment of revenue, costs, and profit determination is crucial as it directly influences company performance, sustainability, and growth Chapter 1 of the thesis outlines fundamental theories related to income accounting, expense tracking, and profit or loss determination, covering key concepts, characteristics, significance, accounting accounts utilized, the system of vouchers and records, and the presentation of pertinent information in Financial Statements.
CHAPTER 2: CURRENT ISSUES OF ACCOUNTING FOR INCOME, EXPENSE AND DETERMINING PROFIT
OR LOSS AT HANOI DELICACY HOTEL & TOURISM
Overview of Hanoi Delicacy Hotel & Tourism Co
2.1.1 The process of formation and development
Company name: Hanoi Delicacy Hotel & Tourism Company Limited
Trading name: Delicacy Central Hotel & Spa
Address: No 59-61 Hang Be Street, Hang Bac Ward, Hoan Kiem District, Ha Noi
Website: http://www.delicacycentralhotel.com
Hanoi Delicacy Hotel & Tourism Co., Ltd was established on May 07, 2018 The hotel is ideally situated in Old Quarter, one of the city’s most popular locales
Delicacy Central Hotel & Spa, a modern hotel in the heart of Hanoi on bustling Hang Be street, strives to meet the needs of both Vietnamese and international guests With 50 spacious rooms featuring a variety of types and luxurious amenities, the hotel offers a contemporary design that ensures a memorable and comfortable stay Spanning 8 floors, each en-suite room is elegantly furnished and decorated to the highest standards, providing a stylish atmosphere for visitors.
Deli Spa, situated on the 2nd floor, offers a refreshing and rejuvenating experience that combines modern techniques with traditional Vietnamese therapy Our highly skilled and dedicated therapists utilize special oils and treatments to ensure guest satisfaction.
Chestnut Central Restaurant stands out in Hanoi's Old Quarter, offering a unique blend of Vietnamese and fusion cuisine inspired by talented chefs Located on the 11th floor, the restaurant features a modern artistic design and can accommodate 52 guests, ensuring a delightful dining experience Meanwhile, the Central Sky Bar on the 12th floor provides a breathtaking 360-degree view of Hoan Kiem Lake, the Old Quarter, the Red River, and the bustling streets below, making it a must-visit destination.
With 80 comfortable seats, including cozy chairs for groups and standing tables that overlook the city, you can savor a hand-crafted cocktail or local beer while immersing yourself in the stunning ambiance of Hanoi.
Delicacy Central Hotel & Spa are committed to offer exceptional hospitality feeling and dedicated customer service to create getaway vibes for the guests while enjoying either holiday or business trip
Delicacy Central Hotel & Spa is now fully equipped to compete in the local tourism market, providing stable employment and income for approximately 50 workers.
Delicacy Central Hotel & Spa has evolved into a premier tourism business, dedicated to fulfilling the diverse needs of travelers The hotel consistently delivers high-quality products and services, fostering customer trust and satisfaction To enhance guest experiences, Delicacy Central Hotel & Spa is committed to continuous improvement and service diversification.
2.1.2 Duties and functions of the company
- Company perform business duties on the basis of autonomy and compliance with current domestic and international laws
- Manage and training staff, improve the quality of professional human resources
- Take care of the employees' lives both physically and mentally
- Fulfill all obligations towards the state
In just three years since its establishment, Hanoi Delicacy Central Hotel & Spa has evolved into a premier tourism business, dedicated to meeting the diverse needs of travelers The hotel consistently delivers high-quality products and services, fostering trust and satisfaction among its customers.
To effectively meet and serve customer needs, the hotel is committed to continuously enhancing quality and diversifying its services Currently, it offers a wide range of activities, including accommodation, food services, transportation, both international and domestic travel, entertainment, sauna and massage spa, a sky bar, and various other travel services.
Figure 2 1: Organization chart of the Company
* Functions and duties of departments:
The general director of the hotel holds the highest authority and responsibility, overseeing the hotel's operations and departmental performance This role involves setting business goals, organizing management activities, and approving plans for staff training, selection, promotion, and discipline Additionally, the general director manages assets, ensures service quality, and oversees the execution of assigned tasks.
The Food and Beverage Manager collaborates with the director to oversee the hotel's culinary operations, defining the strategic direction for the food and beverage sector This role is accountable for the department's business performance while establishing regulations, processes, and standards for catering services and ensuring their effective implementation.
The Room Division Manager oversees the front office and housekeeping sections, ensuring efficient operations They must stay updated on room status and plan rentals for upcoming weeks and months Additionally, they handle information from travel agents, confirm payments at the front desk, and address any customer complaints.
The administrative department supports the hotel director in organizing human resources by managing staff profiles, overseeing labor contract signings, and monitoring monthly and quarterly commendation activities, as well as managing staff movements.
The Accounting Department provides essential guidance to directors for effective financial management, ensuring compliance with legal accounting practices They assist in overseeing hotel revenues and expenditures, managing materials and equipment, and controlling spending Additionally, the department collaborates with other teams to analyze and evaluate overall business performance.
The Sales Department plays a crucial role in advising Directors on business strategies, overseeing the execution of hotel business plans, and organizing marketing initiatives It is responsible for identifying visitor sources and conducting market research to drive development and growth.
The Planning Supplier Department provides strategic advice to the General Director regarding investment and the expansion of hotel facilities It is responsible for reviewing and approving proposals for the purchase of goods, fixed assets, tools, equipment, and supplies prior to their submission for the General Director's final approval.
The financial situation and business results of the Company
To evaluate the financial condition of Hanoi Delicacy Hotel & Tourism Company Limited, I will analyze the Balance Sheets and Financial Statements from the past two years, specifically 2019 and 2020.
Total assets of the hotel decreased by 1,034,491,501 VND equivalent to a decrease of 6.71% due to both current assets and non – current assets decreasing
Current assets experienced a significant decline of 866,959,902 VND, representing a 28.30% decrease, primarily driven by a sharp reduction in short-term investments and other current assets, although inventories saw only a minor decrease Conversely, cash reserves increased by 38.22%, and receivables rose by 131,063,068 VND, or 20.60% Additionally, non-current assets fell by 167,531,599 VND, a decrease of 1.36%, largely attributed to a reduction in the hotel's fixed assets amounting to 1,166,710,053 VND.
VND equivalent to 10.19%, besides, long-term prepaid expenses increase of
The hotel is experiencing a reduction in both current and non-current assets, suggesting a trend of downsizing Additionally, the rise in receivables may signal challenges in debt collection for the hotel.
To ensure the growth and sustainability of the hotel, it is essential to implement effective policies that facilitate operational expansion, manage cash flow efficiently, and adopt strategies for debt recovery to prevent capital misappropriation.
The hotel's assets primarily stem from stockholder's equity and liabilities, with stockholder's equity representing a significant portion of the total capital This substantial equity indicates a high level of autonomy for the hotel, enabling it to mitigate short-term risks effectively.
Total liabilities and equity tends to decrease by 1,034,491,501 VND equivalent to a decrease of 6.71%, which is due to an increase in liabilities but a decrease in equity with a larger value
Liabilities rose by 454,476,177, representing a 22.14% increase, primarily driven by a corresponding rise in short-term debt The hotel's liabilities consist solely of short-term obligations, and this increase in short-term liabilities may result in higher interest expenses, potentially leading to negative financial fluctuations.
Net sales revenue decreased by 152,093374 equivalent to 1.38%, because the hotel’s sale revenue decreased by 160,401,391, equivalent to 1.45 %, at the same time, revenue deductions decreased by 8,308,018 VND, equivalent to 22.24%
The cost of goods sold rose by 591,753,928 VND, representing a 6.41% increase, which led to a decline in gross profit by 743,847,302 VND, or 41.47% This trend indicates a troubling business situation for the hotel, as revenue is decreasing while COGS is on the rise.
Regarding financial income, in 2020, it decreased by 4,992,518 VND, equivalent to 10.67% compared to 2019 However, financial expenses increased sharply by 1,005,623 VND, equivalent to 90.44%
General and administrative expenses decreased by 186,723,748 VND, equivalent to 18.96%
The hotel experienced a significant decline in profit after tax, dropping by 534,778,005 VND, or 62.46% This alarming trend is attributed to a decrease in revenue coupled with rising expenses, indicating inefficiencies in hotel operations and poor cost management To address these issues, the hotel must implement strategies to optimize resource utilization and enhance operational effectiveness, while also focusing on cost-saving measures and improved expense control.
Organizing accounting work at Hanoi Delicacy Central Hotel & Spa
2.3.1 Organization structure of accounting department at Hanoi Delicacy Hotel & Tourism Co., Ltd
Figure 2 2: Organization structure of accounting department
The Chief Accountant oversees the organization of accounting operations and supervises all financial activities within the company They provide consultations to directors to facilitate informed decision-making At the conclusion of each accounting period, the Chief Accountant collects data from various departments, prepares financial statements, assesses results, and evaluates the overall business performance of the company.
The treasurer plays a crucial role in overseeing the management of cash flow, including the import and export of funds necessary for the company's daily operations Each day, the treasurer is tasked with verifying the actual cash fund balance and ensuring it aligns with the recorded data in both the cash fund and cash book.
2.3.2 Duties and functions of accounting department
The accounting department, under the leadership of the General Director, collaborates with the sales and marketing, administrative, and planning supplier departments to efficiently complete tasks and provide financial management advice to the Board of Directors.
The accounting department receives the economic contract documents from the Sales Department for monitoring and accounting in accordance with the standard
The accounting department collaborates with the administrative department to monitor the personnel changes, make accounting for salaries and bonuses of staff
The accounting department collaborates with the Planning Supplier Department to evaluate and authorize proposals for purchasing goods, fixed assets, tools, and equipment This coordination is essential for effectively managing the import and export of hotel goods and assets, as well as ensuring timely payments to suppliers.
Delicacy Hotel & Tourism Co., Ltd utilizes Vietnam's accounting system for small and medium enterprises, specifically adhering to Circular No 200/2014/TT-BTC issued on December 22, 2014, by the Ministry of Finance, along with other relevant accounting regulations and their amendments in Vietnam.
The accounting year: the fiscal year starts from January 1 to December 31 of the calendar year
Currency unit: Vietnam Dong(“VND”)
Depreciation method: Straight-line method
Inventory accounting method: weighted average method
The financial statements of the company include:
The hotel utilizes computer-based accounting forms supported by SMILE software, which automates the entire accounting process, enabling automatic recording of vouchers and efficient result generation.
This software streamlines the entire accounting process, enabling accountants to efficiently print various accounting books and generate financial statements automatically and on time.
Procedures for recording accounting books in the form of computerized accounting:
Figure 2 3: Procedures for recording accounting books in the form of computerized accounting Notes: : Entered daily data
: Print books, reports at the end of month, year : Compare, check
Every day, accountants rely on verified accounting vouchers or general sheets of similar vouchers to guide their book entries This process involves identifying the appropriate debit and credit accounts to accurately record data in the accounting system, following the pre-designed templates within the accounting software.
According to the accounting software's process, the information is automatically entered into accounting vouchers, general ledgers and sub- ledgers and others ledger related
At the end of each month, the accountant conducts book closing operations and prepares financial statements, ensuring an automatic comparison between aggregate and detailed data.
Perform operations to print financial statements as prescribed
At the close of each month and year, general ledgers and sub-ledgers are printed, bound into books, and processed according to legal requirements for manual accounting records.
Accountants can check and compare figures between accounting books and financial statements after printed.
Current issues of accounting for income, expense and determining
2.4.1 Current issues of accounting for income at the company
2.4.1.1 Overview for revenue at the company
Revenue at hotel mainly includes 3 main activities: revenue from selling goods, revenue from provision of services and revenue from services charge The details are presented as follows:
About the account used: The account 511 of the hotel has 3 sub – accounts as follows:
- Account 5111: Revenue from goods sale
- Account 5112: revenue from provision of services
- Account 5113: Revenue from service charge
In hotel accounting, account 1382 is utilized to document revenue that has been recognized without the issuance of invoices This indicates that the revenue has been generated, and the customer has agreed to the payment, although they have not yet received an invoice.
A VAT invoice, also known as a service invoice, is a crucial document utilized at the front desk of hotels It serves as the primary point of interaction for guests upon arrival and is also where payments for all services are processed upon their departure This invoice provides a comprehensive summary of all services utilized by guests during their stay that remain unpaid at the time of checkout.
A VAT invoice, commonly referred to as an INVOICE (VAT), is primarily utilized in restaurants and bars When customers purchase goods or services and request immediate payment, the cashier at the counter issues this invoice to the customer.
An internal invoice, also known as an information bill, is a VAT invoice that is valid exclusively within the hotel premises This type of invoice is utilized in restaurants and bars when customers purchase goods or services but opt to pay upon their departure from the hotel In such cases, the cashier issues the internal invoice and forwards it to the reception, which monitors and collects the outstanding payment when guests check out.
+ Retail invoice: is a VAT invoice but only valid inside the hotel This invoice is used in the housekeeping section, when guests order services, drinks to the room and unpaid
The above invoices have 3 copies: copy 1: save (file), copy 2: for customers, copy 3: for internal
2.4.1.2 Accounting for revenue from goods sale
At the hotel, the primary offerings consist of food and beverages, which are provided by the Restaurant, Bar, and Housekeeping departments Guests utilize these commodities during their stay, and to track revenue from these sales, the hotel maintains a detailed account labeled 5111.
- Account 51111 - Food revenue: is the revenue from the provision of hotel dishes, or from the provision of parties pre-ordered by customers
- Account 51112 - Beverage revenue: reflects the revenue from the sale of beverages including beverages served in the room
- Account 51113 - Breakfast revenue: reflects the proceeds from breakfast for customers
The process of accounting for revenue at the restaurant
After dining at the restaurant, customers request payment, prompting the cashier to issue an invoice For external customers, payment is made immediately, and a VAT invoice is provided Hotel guests have the option to pay right away or settle their bill upon check-out If they choose immediate payment, the restaurant collects the funds and issues a VAT invoice Conversely, if guests opt to pay after check-out, an internal invoice is created and sent to the front desk At the end of the day, the restaurant's cashier compiles a report detailing these transactions.
- The payment report includes 3 copies, the list of sales includes 3 copies, submits to the F&B manager for approval
- Invoice INVOICE(VAT), INFORMATION BILL
Cash is paid to the treasurer, the treasurer shall write the amount, stamp
"CASH COLLECTED" on the payment statement
The revenue accountant prepares the receipt based on the restaurant report and submits it to the treasurer for approval, followed by the chief accountant and the hotel director After obtaining the necessary approvals, the accountant updates the revenue monitoring book and the related sub-ledger to ensure accurate synthesis at the end of the month.
The sales report is transferred to the commodity accountant as a basis for the accountant observe and review goods sold during the day
2.4.1.3 Accounting for revenue from provision of services
The hotel offers a wide range of diverse services to its guests; however, the primary source of revenue remains the accommodation services provided.
Accounts used: 5114 - revenue from provision of service
The process of accounting for revenue from accommodation service at Delicacy Central Hotel & Spa a) About the tenant's characteristics: includes 2 basic types:
Customers seeking hotel services often find them online, either through direct searches or recommendations Typically, retail customers face higher room rates compared to those booking through tours, with pricing based on the published rate table available at the front desk.
Customers at the hotel are primarily those referred by travel service companies, with all expenses covered by tour operators as per the contractual agreement established for a specified duration These tour operators act as "patrons" of the hotel, typically booking accommodations via email or fax, which are processed by the sales department Guests are limited to the services included in their agency's booking, such as rooms and breakfast, while any additional services must be paid for either immediately or at check-out Check-in schedules for tour guests are communicated in advance through a designated board.
Every day, after negotiating and making a reservation at the front desk, customers check in, if they are tour guests traveling in groups brought by travel
Fifty companies utilize a reservation contract system, allowing receptionists to efficiently allocate rooms for guests while notifying the sales department for follow-up The accounting department leverages customer profiles in the SMILE software to execute the "cut date" procedure, ensuring that guest room charges are automatically applied based on pre-agreed prices entered into the system.
Guests can enjoy various hotel services, including dining, spa, and laundry, without immediate payment, settling the total amount upon checkout Service providers will request guests to sign and note their room number on an internal bill, which the receptionist will use to update the customer's profile with the services utilized Upon checkout, the front desk cashier will provide a VAT invoice for the aggregate services and goods consumed during the stay Payment methods accepted at the hotel include various options for guest convenience.
The receptionist selects the "TIEN MAT" payment option on the invoice prior to printing The invoice is produced in three copies, with the second copy (red) given to the customer upon payment, while the first and third copies are submitted to the accounting department along with the sales report.
Customers can conveniently pay using credit cards like MasterCard and VISA The cashier selects "CARD" as the payment method on the invoice when the customer requests to pay The customer then provides their card for swiping through a bank-provided machine, entering their secret code as the cashier inputs the payment amount After the transaction, the customer signs the VAT invoice and receives both their card and a copy of the receipt.
After each card swipe, the machine automatically generates a VAT invoice in triplicate, which the cashier will present to the customer.
51 to sign and hand over the red copy to the customer, the remaining 2 copies will be stored and transferred to the accounting department according to reception’s report
* Payment by bank transfer: This method usually applies to the travel companies, travel agency
Evaluation on accounting for income, expense and determining profit
profit or loss at Hanoi Delicacy Hotel & Tourism Co
During my internship at Hanoi Delicacy Central Spa Hotel, I gained valuable hands-on experience in document management and accounting processes, focusing on income, expenses, and the assessment of profit or loss within the hotel industry.
Basically, the accounting work at the hotel has complied with Circular
While there are similarities, notable differences exist as well The use of computer-based accounting eliminates the need for a physical register book for recording vouchers within the accounting system Furthermore, the hotel has also introduced a new initiative.
The company maintains 72 detailed accounts to meet its accounting requirements, with selling expenses integrated into production costs As the hotel primarily offers intangible products, production and consumption occur simultaneously, resulting in no unfinished products Separating production costs for each product is impractical due to high costs and time demands Consequently, all production costs are consolidated into account 627 and subsequently transferred to account 911.
Accounting and management of the hotel also have the following advantages and limitation:
The hotel has complied with the Vietnamese accounting regulations and standards, laws, circulars and decisions related to the recording and accounting
The accounting department's facilities are fully equipped: computers, printers, scanners, copiers, create favorable working conditions
The hotel utilizes a voucher recording system that simplifies the accounting process, making it easy to verify and compare records while ensuring an even distribution of tasks With the assistance of SMILE BO accounting software, the accounting operations are streamlined SMILE BO is specifically designed as a financial and accounting management system tailored to the unique needs of hotel management.
BO offers a comprehensive suite of features typical of a standard financial management system, enhanced with specialized functionalities tailored for the hotel industry SMILE BO ensures compliance with Vietnamese accounting standards while also adhering to the management practices expected of international 5-star hotels.
- SMILE' s support policy always ensures that the system is updated with the latest policy changes
- SMILE integrates many unique features of the hotel to help make accounting work easier, easier and less error SMILE BO is directly linked with
SMILE FO, SMILE POS to form a total solution, SMILE BO has dedicated solutions for inventory management, cost price, quantity, to meet the activities of the hotel
The revenue accounting method that integrates traditional Vietnamese practices with international revenue recognition standards in high-end hotel management facilitates the straightforward identification of taxable revenue and tax liabilities for the period, as reflected in sales invoices and services rendered This clarity is crucial for tax authorities, particularly at the local level Additionally, accurately determining the hotel's actual monthly revenue is vital for assessing monthly profits and losses, enabling the implementation of effective cost management strategies and enhancing operational efficiency.
SMILE BO optimizes the automatic accounting method to streamline accounting tasks, improve workflow, and minimize errors The initial setup is tailored to each hotel's processes, allowing for seamless operation without the need for ongoing accounting intervention This enhances productivity and labor efficiency for accountants while ensuring timely access to management information for administrators.
- All SMILE functions have commands to transfer data to Excel 100% SMILE reports can export data to Excel This feature is extremely useful for accountants
Vouchers, including receipts and payment slips, are printed immediately after accounting as original documents They come in various types and can be customized to meet the specific needs of each company.
The accounting apparatus is clearly organized, arranged and assigned
Each accountant manages specific operations under the supervision of the Chief Accountant This structure, along with the integration of cashiers, storekeepers, and supply receipts, ensures a streamlined, precise, and efficient flow of information.
The 74 network boasts a highly responsible and well-trained staff with strong expertise, continually enhancing the efficiency of accounting operations The management system and service processes are organized, fostering a cohesive relationship throughout the service chain, ensuring unity among leaders, officers, and employees.
The bookkeeping method has been effectively implemented in accordance with regulations, utilizing accounting software to streamline processes By consolidating production and business costs into account 627 and directly transferring them to account 911, the accounting steps for accounts 621, 622, 154, and 632 are reduced This innovative approach not only saves costs but also addresses the specific needs of the hotel industry However, it is essential to implement measures to mitigate the limitations of this application.
Every quarter, the hotel conducts an inventory of its properties This will limit the loss as well as define personal responsibility accurately
The hotel always offers stimulus policies, discounts appropriately to attract potential guests At the same time, the hotel also organizes promotions during holidays to increase revenue for the hotel
In addition to the advantages, the accounting of income, expense and determining profit or loss at Delicacy Central Hotel & Spa still has some shortcomings, which are:
The lack of regular maintenance and repair of hotel facilities negatively impacts business performance, leading to unnecessary expenses due to outdated assets and equipment For instance, frequent copier malfunctions result in increased costs for paper, ink, and repairs, while inefficient computer systems and slow machines hinder the productivity of the accounting department.
The current method of collecting production costs in Account 627 has significant shortcomings, as it aggregates all hotel expenses into production and business costs This approach complicates the accurate calculation of costs for individual products and services, making it challenging to ascertain the actual cost of goods sold for each activity, ultimately resulting in an undetermined exact cost of sale.
Assessing business performance remains broad, as specific results for each activity are not clearly defined Identifying high-performing activities is essential for guiding investment and development efforts, while recognizing low-performing activities allows for cost-saving measures and revenue enhancement This approach ultimately aims to improve overall business efficiency.
- The lack of professionalism in service of some employees has made customers unhappy lead to the impact of revenue is inevitable
Due to the hotel's primary clientele being contract tour visitors, it can compile monthly invoices to send to travel companies at the start of the following month As a result, while revenue is recorded throughout the month, the actual funds have not yet been collected, leading to a temporary appropriation of the hotel's income.
Solutions to complete accounting for income, expense and determining
3.1 Solutions to complete accounting for income, expense and determining profit or loss at Hanoi Delicacy Hotel & Tourism Co
3.1.1 Development orientation of the company until 2025
In the competitive landscape of economic opening, Hanoi Delicacy Hotel & Tourism Co., Ltd focuses on stability and customer retention while expanding its hotel operations and forming partnerships to access new markets This strategy aims to enhance product distribution and consumption, ultimately increasing profits to improve employee livelihoods and strengthen the company's reputation and customer trust Additionally, the company prioritizes human resource development, offering training sessions on computer technology applications to leverage the advantages of the 4.0 technology era in its business operations.
3.1.2 The need for completion of accounting for income, expense and determining profit or loss
To achieve its goals amidst intense competition and the challenges posed by the Covid-19 pandemic, the company must enhance its organizational structure and engage every employee The accounting department plays a crucial role in this process, as it is responsible for accurately and promptly reflecting the company's financial status and production activities.
78 time giving the right steps to advise the Board of Directors of the company Therefore, it is necessary that the accounting apparatus must always be constantly improving and developing
Income, expenses, and the assessment of profit or loss are crucial indicators of a company's business performance These metrics enable the Board of Directors to effectively monitor the company's financial health and are of significant interest to investors, government agencies, and financial institutions Consequently, accurate accounting of income and expenses, along with the determination of profit or loss, is essential for the economic operations of the organization.
While the income, expense, and profit or loss assessments of the company are functioning effectively, there are still limitations that must be addressed to enhance their role as reliable tools for high-quality financial management for the Board of Directors in a sustainable manner.
3.1.3 Orientation to complete accounting for income, expense and determining profit or loss
To thrive in today's competitive landscape, hotels must implement effective strategies to enhance their operations and reduce costs Consequently, it is essential for hotels to focus on refining their accounting practices, particularly in managing income, expenses, and accurately determining profit or loss.
During my internship at Hanoi Delicacy Central Hotel & Spa, I gained valuable insights into the accounting processes Based on my knowledge and evaluation, I propose several ideas to enhance the accuracy of income and expense accounting, as well as to improve the determination of profit or loss for the company.
Hotels need to have operational strategies to increase revenue by innovating advertising, marketing on mass media channels, researching to change forms of
To effectively evaluate the results of advertising aimed at domestic and foreign tourists, it is essential to develop a suitable pricing policy that maximizes room occupancy This process should encompass all stages, from initial research and price construction to final inspection and approval Additionally, pricing strategies must remain competitive and take into account various input factors.
During a price storm, the most effective strategy is to prioritize savings Individuals should cultivate a savings mindset regarding utilities like electricity and water For food supplies, it is essential to source from reputable suppliers and negotiate for the best prices Additionally, restructuring financial management by setting strict cost norms and eliminating unnecessary administrative and production expenses can enhance business efficiency Hotels should adopt scientific and economical management methods to minimize costs associated with receptions and meetings Close monitoring of departmental expenses is crucial; any unusual fluctuations or unreasonable costs must be investigated and addressed promptly.
The company's accounting system is currently in place, but as operations expand and market dynamics evolve, it faces increasing competition and the need for timely strategic decisions To address these challenges, it is essential to establish a management accounting department within the accounting framework A recent survey indicates that there are two effective approaches to implement this additional function.
The company can be structured to integrate both financial accounting and management accounting, with the chief accountant or general accountant overseeing the assignment of responsibilities.
The accountant on duty will handle both financial and management accounting tasks, ensuring that they possess the necessary professional qualifications Additionally, accountants are required to engage in various general management accounting activities to support decision-making in corporate governance.
When a company separates financial accounting from management accounting, it is essential for the accounting staff to possess the necessary skills and expertise The role of these accountants involves gathering data, conducting analyses, and summarizing findings to provide valuable insights that assist managers in making informed business decisions.
To enhance efficiency, the company should streamline its accounting operations by developing a comprehensive accounting system and hiring knowledgeable staff This approach will alleviate the current workload on accounting positions, allowing professionals to concentrate on their specific areas of expertise and improve overall clarity in their work.
Each accountant responsible for a specific accounting segment should maintain professionalism to minimize errors and confusion, especially when managing multiple roles This collaborative approach allows accountants to support one another and share workloads as needed, preventing situations where any individual accountant becomes overwhelmed with work.
Periodically, it is recommended to swap between accountants so that they have the opportunity to learn, master many parts, be more agile and flexible, and limit boredom at work
To enhance pricing strategies, hotels must accurately assess the expenses and costs associated with each business activity This detailed cost analysis serves as a crucial foundation for determining the pricing of products and services Given that price information is vital for decision-making and developing effective business strategies, it is essential for hotels to prioritize this aspect.
81 products and services to both improve competitiveness and at the same time contribute to increase profits for the hotel
Conditions for implementing solutions and recommendations
3.2.1 From Hanoi Delicacy Hotel & Tourism Co
The accounting department plays a crucial role in a company's success, particularly in managing income, expenses, and determining profit or loss Effective accounting practices are essential for business leaders to make informed decisions A well-structured accounting system is a fundamental goal for all businesses, including the Hanoi Delicacy Hotel, ensuring logical and scientific organization in financial management.
& Tourism Company Limited is trying to improve its accounting
83 apparatus more and more, improve business efficiency, so that the company can develop in the best way
- Investing in facilities, as well as the working environment for employees
- Investing in facilities, as well as the working environment for employees
- Constantly improving and improving skills as well as professional qualifications for individuals in the accounting department at the company
- Organize meetings, frank exchanges between departments, as well as accounting departments to be able to organize and operate with the highest efficiency
- Regularly send accountants to attend short-term training courses, update accounting documents, new accounting policies and regimes of the State and the Ministry of Finance
- Having a regime of commendation and discipline clearly, encouraging dynamism and creativity in the working process to bring the best results
These conditions are of a macro nature and must be carried out from the Government to the relevant authorities Things to do are:
The State must enhance its enterprise management framework by implementing specific legal documents and regulations to foster a supportive economic and legal environment for businesses Additionally, it is essential to streamline administrative procedures, reducing complexity and improving the quality of services provided by the State.
The Ministry of Finance must implement effective strategies to enhance Vietnam's accounting standards and legal frameworks, ensuring they align with the current practical needs of Vietnamese enterprises to achieve desired objectives.
84 of harmony with international accounting standards To achieve that goal, the Ministry of Finance needs:
Issue documents regulating the implementation of accounting policies and regimes for businesses of different types
+ Research international accounting standard, consult experts as a basis for amendment, supplementation and issuance of new accounting documents and regulations in enterprises to suit the environment in Vietnam
+ Have the inspection and evaluation of the implementation of accounting in the business, if any shortcomings, errors need to be amended and supplemented
+ Encourage and create favorable conditions for organizations and associations of accounting and auditing development and expansion contribute to raising the level of accounting knowledge
+ Organize discussions, seminars on shortcomings in accounting work in enterprises and give solutions
The COVID-19 pandemic has significantly affected the business landscape in our country, particularly impacting medium and small enterprises Many businesses are struggling, leading to staff reductions and even bankruptcies To help these businesses navigate this challenging period, state agencies should implement supportive policies, such as extending tax and social insurance payment deadlines and providing assistance for employees.
Chapter 3 addresses the essential requirements and solutions for accurately accounting for income and expenses, as well as determining profit or loss within the Company It offers recommendations for implementing these solutions from both the State and relevant authorities The Company must evaluate its business activities to ensure that its accounting practices align with its operations, thereby enhancing the scientific and effective management of income, expenses, and profit or loss determination.
The Covid-19 pandemic serves as a "purification layer" for the economy, emphasizing the need for businesses to refine their organizational structures to withstand challenges A strong focus on accounting is crucial, as it plays a vital role in enhancing business management capabilities Therefore, prioritizing the improvement of accounting practices is essential for business resilience and success.
Hanoi Delicacy Hotel & Tourism Company Limited, being a newly established entity, requires focused efforts to enhance its accounting practices, particularly in managing income, expenses, and accurately determining profit or loss This improvement is essential for boosting the efficiency of the company's business operations and laying a solid foundation for robust and sustainable growth in the future.
The thesis successfully meets its research objectives by elucidating the theoretical framework for accounting income, expenses, and profit or loss as outlined in Circular 200/2014/TT-BTC It also examines the current accounting practices at Hanoi Delicacy Hotel & Tourism Company Limited, highlighting both strengths and weaknesses Based on this analysis, the study proposes recommendations to enhance the company's accounting processes for income, expenses, and profit or loss determination.
Due to my limited research skills and professional knowledge, my thesis may have shortcomings I welcome feedback from teachers to gain a deeper understanding of the chosen topic.
1 Associate Prof Dr Le Van Luyen, “Financial Accounting Curriculum”, 2017, Labor and Social publishing company
2 Associate Prof Dr Le Van Luyen, “Principle of Accounting Curriculum”,
2017, Labor and Social publishing company
3 Circulars 200/2014/TT- BTC issued by the Minister of Finance
4 Documents of Hanoi Delicacy Hotel & Tourism Comapny Limited