Enhance the accounting for revenue, expenses and evaluation of business results at ttp holdings joint stock company

Ltd Company Limited 2 CEO Chief Executive Officer 3 CIT Corporate Income Tax 4 COGS Cost of goods sold 5 E-invoice An electronic invoice 6 IT Information technology 7 PIT Personal Income

FACULTY OF ACCOUNTING AND AUDITING

Hanoi, 2023

FACULTY OF ACCOUNTING AND AUDITING

Hanoi, 2023

DECLARATION

I hereby declare that this thesis is my own work and effort and that has not been submitted anywhere for any award Where other sources of information have been

used, they have been acknowledged

The data and results described in the thesis are derived from the actual situation of the practice company

Hanoi, 17 May, 2023

Nguyen Tram Anh

ACKNOWLEDGEMENTS

I would like to express my deeply indebted and grateful gratitude to the Board of School directors of Banking Academy and all the teachers in the Faculty of Accounting and Auditing for helping me gain knowledge about my major as well as

my practical knowledge In particular, I would like to express my deepest gratitude

to PhD Nguyen Tien Dat for always accompanying me and supporting me to the fullest extent so that I could complete this research project completely

I would also like to express my sincere thanks to the Board of Directors of TTP Holdings Joint Stock Company for facilitating me to practice at the company, I would like to sincerely thank the members in the accounting department for their help wholeheartedly guide, help and create the most favorable conditions for me to complete my graduation thesis well During my internship as well as in the process

of completing my thesis, due to time constraints as well as knowledge, it is hard to avoid mistakes Therefore, I sincerely hope to receive the omission of the lecturers and also look forward to receiving the contributions to make the thesis better Finally, I would like to extend my heartfelt thanks to my entire family and friends They are always a great source of unceasing encouragement and support during my whole journey

Sincere thanks!

TABLES OF CONTENT

INTRODUCTION 1

(1) Abstract 1

(2) Study overview 1

(3) Objectives 2

(4) Subjects of the study 2

(5) Scope of the study: 2

(6) Research methods 2

(7)The structure of the thesis 3

CHAPTER I: THEORICAL FRAMEWORK FOR ACCOUNTING REVENUE, EXPENSES AND EVALUATION OF BUSINESS RESULTS IN THE ENTERPRISE 4

1.1 Some basic concepts of revenue, expenses and Evaluation of business results 4

1.1.1 Basic concepts 4

1.1.1.1 The concept of revenue and other income 4

1.1.1.2 The concept of expense 5

1.1.1.3 The concept of Evaluation of business results 6

1.1.2 Roles and responsibilities of accounting for revenue, expenses and Evaluation of business results in the enterprise 7

1.1.2.1 Roles 7

1.1.2.2 Responsibilities 8

1.2 Accounting for revenue, expenses and Evaluation of business results in the enterprise 8

1.2.1 Accounting for sales revenue 8

1.2.2 Accounting for Sale deductions 10

1.2.3 Accounting for Cost of goods sold 11

1.2.4 Accounting for Selling and administrative expenses 14

1.2.4.1 Accounting for Selling Expenses 14

1.2.4.2 Accounting for Administrative Expense 15

1.2.5 Accounting for Financial income and financial expenses 17

1.2.5.1 Accounting for Financial Income 17

1.2.5.2 Accounting for Financial Expense 19

1.2.6 Accounting for Other incomes and other expenses 21

1.2.6.1 Accounting for Other incomes 21

1.2.6.1 Accounting for Other expenses 23

1.2.7 Accounting for Corporate income tax 25

1.2.8 Accounting for Evaluation of business results 26

Conclusion of chapter 1 28

CHAPTER 2: STATUS OF ACCOUNTING FOR REVENUE, EXPENSE AND EVALUATION OF BUSINESS RESULTS AT TTP HOLDINGS JOINT STOCK COMPANY 29

2.1 Management organization and characteristics of revenue and expenses of TTP Holdings Joint Stock Company 29

2.1.1 Overview of business activities of TTP Holdings Joint Stock Company 29

2.1.1.1 History of TTP Holdings Joint Stock Company 29

2.1.1.2 Oriented development of TTP Holdings 30

2.1.1.3 Human resources and Management Organization of TTP Holdings 30 2.1.2 Business characteristics of TTP Holdings Joint Stock Company 33

2.1.2.1 Business sectors of TTP Holdings 33

2.1.2.2 Characteristics of revenue of TTP Holdings 34

2.1.2.3 Characteristics of expenses of TTP Holdings 35

2.1.3 Accounting policy of TTP Holdings 35

2.2 Status of accounting for revenue, expenses and evaluation of business results

at TTP Holdings Joint Stock Company 36

2.2.1 Accounting for sales revenue and other income 36

2.2.1.1 Structure of revenue of TTP Holdings in 2022 36

2.2.1.2 Accounting for Sales revenue 37

2.2.1.3 Accounting for Sale deductions 45

2.2.1.4 Accounting for Finance income 45

2.2.1.5 Accounting for Other income 46

2.2.2 Accounting for expense 46

2.2.2.1 Structure of expense of TTP Holdings in 2022 46

2.2.2.2 Accounting for Cost of goods sold 47

2.2.2.3 Accounting for Selling expenses 52

2.2.2.4 Accounting for Administrative expenses 52

2.2.2.5 Accounting for Financial expenses 55

2.2.2.6 Accounting for Other expenses 55

2.2.3 Evaluation of business results 55

2.2.3.1 Accounting for Corporate income tax 55

2.2.3.2 Accounting for Evaluation of business results 56

2.3 Assessment of the status of accounting revenue, expenses and evaluation of business results at TTP Holdings Joint Stock Company 58

2.3.1 Strengths 58

2.3.2 Weaknesses 60

Conclusion of chapter 2 63

CHAPTER 3: DISCUSSION OF ACCOUNTING REVENUE, EXPENSE AND EVALUATION OF BUSINESS RESULTS AT TTP HOLDINGS JOINT STOCK COMPANY 64

3.1 Development orientation of the Company 64

3.2 Recommendations to TTP Holdings 65

3.2.1 Enhancing the accounting system 65

3.2.2 Strengthen management accounting 66

3.2.3 Enhancing accounting methods 68

3.2.4 Enhancing documents and the document rotation process 69

3.3 Recommendations to the Government 70

Conclusion of chapter 3 71

FINAL CONCLUSION 72

REFERENCES 73

LIST OF ABBREVIATIONS

No Acronyms Meaning

1 Co Ltd Company Limited

2 CEO Chief Executive Officer

3 CIT Corporate Income Tax

4 COGS Cost of goods sold

5 E-invoice An electronic invoice

6 IT Information technology

7 PIT Personal Income Tax

8 SCT Special Consumption Tax

9 SHUI The combination of three compulsory insurance in

Vietnam, including the Social insurance (SI); Health insurance (HI) and Unemployment insurance (UI)

10 VAT Value Addex Tax

LIST OF TABLES AND FIGURES

number

Diagram 1.1: Accounting diagram of Account 511 - Sale revenue

according to Circular 133/2016/TT-BTC 9

Diagram 1.2: Accounting diagram of Account 632 - Cost of goods

sold according to Circular 133/2016/TT-BTC 12 Diagram 1.3: Accounting diagram of Account 642 – Business

administration expenses according to Circular 133/2016/TT-BTC 15 Diagram 1.4: Accounting diagram of Account 515 - Finance

Income according to Circular 133/2016/TT-BTC 17 Diagram 1.5: Accounting diagram of Account 635 - Finance

Expenses according to Circular 133/2016/TT-BTC 19 Diagram 1.6: Accounting diagram of Account 711 - Other

Incomes according to Circular 133/2016/TT-BTC 21 Diagram 1.7: Accounting diagram of Account 811 - Other

expenses according to Circular 133/2016/TT-BTC 23 Diagram 1.8: Accounting diagram of Account 821 - Corporate

income tax according to Circular 133/2016/TT-BTC 24 Diagram 1.9: Accounting diagram of Account 911 - Income

Summary according to Circular 133/2016/TT-BTC 26 Figure 2.1: Management Organization of TTP Holdings Joint

Figure 2.4: Recording of VAT invoice 1C22TYY No 27 dated

July 30 2022 on FAST accounting software (1) 40

Figure 2.5: Recording of VAT invoice 1C22TYY No 27 dated

July 30 2022 on FAST accounting software (2) 40 Figure 2.6: Output VAT invoice 1C22TYY No 35, dated

Figure 2.7: Recording of VAT invoice 1C22TYY No 35, dated

November 1, 2022 on FAST accounting software (1) 42 Figure 2.8: Recording of VAT invoice 1C22TYY No 35, dated

November 1, 2022 on FAST accounting software (2) 42 Figure 2.9: General ledger of Account 511 43 Figure 2.10: Subsidiary ledger of Account 511 43 Figure 2.11: Recording of Deposit interest from Vietcombank

account on FAST accounting software 44 Figure 2.12: Subsidiary ledger of Account 515 45 Figure 2.13: Structure of expenses of TTP Holdings Joint Stock

November 1, 2022 dated September 30, 2022 52

Figure 2.21: Recording of VAT invoice 1C22TAA No 00000792,

dated November 1, 2022 dated September 30, 2022 on FAST

accounting software

53

Figure 2.22: Subsidiary ledger of Account 642 53 Figure 2.23: Subsidiary ledger of Account 811 54 Figure 2.24: Subsidiary ledger of Account 911 55 Figure 2.25: Subsidiary ledger of Account 421 56 Figure 2.26: Statement of Profit or Loss in of TTP Holdings Joint

Stock Company for financial year 2022 56 Table 3.1: Recommended form for Table of direct labor cost

Table 3.2 Table of recommended detailed account for sale revenue 67

INTRODUCTION (1) Abstract

In the modern economic world, especially when the number of bankrupt enterprises

is rising, accounting for revenue, expenses and evaluation of business results has become more and more important, for every company in general, and for TTP Holdings Joint Stock Company which is a new company, in particular Therefore, my

thesis with the topic “Enhance the accounting for revenue, expenses and evaluation

of business results at TTP Holdings Joint Stock Company” will point out the importance of having a healthy and effective accounting department for revenue, expenses and evaluation of business results

(2) Study overview

Working on this issue, there are some typical doctoral theses such as: Research by author Nghiem Thi Tham (2014) with the thesis "Improving the organization of cost and revenue accounting and results in DNSX of construction ceramics” The author has said that business activities in accounting, cost accounting, revenue and business results are one of the factors that ensure the success of business decisions of enterprises Since then, the author has also proposed some solutions to improve the organization of cost, revenue and business results accounting for construction ceramics manufacturing enterprises With this, the thesis only stops to study general issues related to enterprises in the construction ceramics industry, some issues have only been mentioned by the author without specific research

Besides, there are also a number of master theses such as: Author Nguyen Ngoc Anh (2017) in the master's thesis of accounting "Accounting revenue, expenses and determining business result in META online network joint stock companies." The thesis has generalized the theoretical contents of revenue, expenses and determined business results, and provided a view on management accounting for the remaining limitations in META company However, author Nguyen Ngoc Anh has not yet made suitable recommendations and solutions for META

In addition, there are a number of graduate theses that also study this issue:

Author Dinh Thi Tuyen (2016) in the thesis "Accounting revenue and determining business results at ACB Japan Joint Stock Company" also clarified the theoretical basis of cost accounting, revenue, business results in the service sector, clearly stating the current situation of cost accounting, revenue, business results at ACB Japan Joint Stock Company as well as providing complete solutions

From the above studies, it can be seen that the studies on costs, revenue, and business results have said a lot about specific businesses The research works are carried out

on both financial accounting and management accounting perspectives, the research results are very practical However, the research results can only be applied to each specific research industry and focus on large companies

This thesis will focus on in-depth research on the current status of the accounting for

revenue, expenses and evaluation of business in small and newly established companies such as TTP Holdings

(3) Objectives

This study was carried out with the aim of systematizing the general theories of revenue, expenses and evaluation of business results in commercial and service enterprises Through studying and analyzing the current situation of revenue, expenses and evaluation of business results at TP Holdings Joint Stock Company, to propose and make recommendations on solutions to improve accounting for revenue, expenses and evaluation of business results at TTP Holdings Joint Stock Company

(4) Subjects of the study

The thesis will research, analyze the accounting revenue, expenses and Evaluation of business results at TTP Holdings Joint Stock Company

(5) Scope of the study:

+ About space: TTP Holdings Joint Stock Company

+ About time: The source of data provided in the research is collected at the focus company in 2022

(6) Research methods

To complete the research project, I applied the following methods:

 Interview method: during the internship, interviewing seniors helped me answer problems and questions related to the accounting process and actual accounting work

at the company

 Data collection and processing methods: collect data related to the topic at the company, then process the data to select necessary and reasonable data for presentation in the thesis to be accurate, relevant and scientific, providing useful information to readers

 Comparative and statistical methods: Based on the collected and processed data, combined with the application of statistical and comparative methods to make judgments to give causes and recommendations for company

(7) The structure of the thesis

The content of the thesis consists of 3 chapters:

Chapter 1: Theoretical framework for accounting for revenue, expenses and evaluation of business results in the enterprise

Chapter 2: Status of Accounting for revenue, expenses and evaluation of business results at TTP Holdings Joint Stock Company

Chapter 3: Discussion of Accounting for revenue, expenses and evaluation of business results at TTP Holdings Joint Stock Company

CHAPTER I: THEORICAL FRAMEWORK FOR ACCOUNTING

REVENUE, EXPENSES AND EVALUATION OF BUSINESS RESULTS IN

THE ENTERPRISE

1.1 Some basic concepts of revenue, expenses and Evaluation of business results

1.1.1 Basic concepts

1.1.1.1 The concept of revenue and other income

According to Accounting Standard No.1 in Vietnamese accounting standards was published and issued under Decision No: 165/2002/QD-BTC on December 31, 2002

by the Ministry of Finance:

- Revenues and other incomes: are the total value of economic benefits earned by an enterprise in the accounting period, arising from the enterprise’s normal production, business and other operations, contributing to increasing the owners’ equity, excluding capital contributions made by shareholders or owners

- Revenues arise in the process of normal business operations of enterprises and often include: sales revenues, service provision revenues, interests, royalties, dividends and shared profits…

- Other incomes include incomes arising from operations other than generating operations, such as incomes from liquidation or sale of fixed assets, fines collected from customers for their contract breaches…

revenues-According to Accounting Standard No 14 in Vietnamese accounting standards was published and issued under Decision No: 149/2001/QĐ-BTC on December 31, 2002

by the Ministry of Finance, about revenue and other income:

- Revenue from service provision transactions shall be recognized when the performance of these transactions are determined in a reliable way Where a service provision transaction relates to many periods, revenue shall be recognized in each period according to the performance of the work volume finished on the date of making of such period’s accounting balance sheet The result of a service provision transaction shall be determined only when it satisfies all the four (4) conditions below:

+ 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

- Revenue from the provision of services shall be recognized only when there is assurance that enterprises shall receive economic benefits from the transactions If a recognized revenue cannot be recovered, it must be accounted as expense but not recorded as decrease in revenue When it is uncertain to recover an amount which was already recorded into revenue (bad debts), such amount must not be recorded as decrease

in revenue and a bad debt reserve must be set up therefor When a bad debt is actually determined as irrecoverable, it shall be offset with the bad debt reserve source

1.1.1.2 The concept of expense

According to Accounting Standard No.1 in Vietnamese accounting standards was published and issued under Decision No: 165/2002/QD-BTC on December 31, 2002

by the Ministry of Finance, the concept of expense (or cost) is:

- Costs 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 rise to liabilities leading to a decrease in the owners’ equity, excluding amounts distributed to shareholders or owners

- Costs include production and business costs arising in the process of normal business operations of enterprises, and other costs

- Production and business costs arising in the process of normal business operations

of enterprises, such as cost of goods sold, sale costs enterprise management costs, costs for loan interests, and costs related to letting other parties use assets with yields, royalties… These costs arise in the form of cash and cash equivalents, inventories, machinery and equipment depreciation

- Other costs include costs other than production and business costs arising in the process of normal business operations, such as costs for liquidation and sale of fixed assets, fines imposed by customers for contract breaches, etc

- Production, business and other costs will be recognized in the reports on business performance when these costs reduce future economic benefits related to the decrease

in assets or increase in liabilities, and these costs must be determined in a reliable way

- Costs recognized in the reports on business performance must comply with the principle of matching between revenues and cost When economic benefits expected

to be obtained over many accounting periods are related to revenues and other incomes which are determined indirectly, the related costs will be recognized in the reports on business performance on the basis of systematic or proportional amortization

- A cost will be immediately recognized in the reports on business performance in the period if it fails

1.1.1.3 The concept of Evaluation of business results

Evaluation of business results is the final work of production and business activities, financial investment activities and other activities in a certain accounting period The expression of business performance is the amount of Profit (When Revenue is greater than Expenses) or Loss (When Revenue is less than Expenses) The Evaluation of business results is usually carried out at the end of the business period depending on each business characteristics and management requirements of each enterprise

- The formula for determining business performance of an enterprise is as follows:

- Cost of goods

sold

- Selling and administrative expenses

Net income from sales of goods and services is calculated as total revenue from sales

of goods and provision of services minus any sales deductions (trade discounts, sales discounts, sales of returned goods, etc.) .)

Financial performance = Financial income - Financial expenses

Other operating performance = Other income - Other expenses

1.1.2 Roles and responsibilities of accounting for revenue, expenses and

Evaluation of business results in the enterprise

to help businesses fulfill their obligations to the Government through paying taxes, fees and charges to the Government Budget

- For investors

The reliability of accounting information greatly affects the investment decisions of many business-related objects such as suppliers; creditors; investors If the accounting for revenue, expenses and determination of business results is completed well, which means that the investment risk is somewhat reduced

- For the Government

The reliability of information on accounting helps the Government monitor and grasp the situation of enterprises performing tasks for the Government, thereby making policies to encourage enterprises to develop as well as appropriate business management measures

1.1.2.2 Responsibilities

Revenue and expenses are two indispensable factors in evaluation of business results

of enterprises The duties of revenue and expense accounting and evaluation of business results include:

- Prepare accounting vouchers to prove the reality of economic transactions related

to sales and service provision, make general and detailed books to reflect the situation

of goods consumption and supply situation for recording revenue

- Reflect fully, promptly and accurately, costs and business results of the enterprise

in a certain accounting period and record such transactions in accordance with the provisions of the current accounting regime

- Accurately reflect and calculate the results of each activity, monitor the performance of obligations to the Government and the distribution of results of activities

- Provide accounting information for the preparation of financial statements and periodic analysis of economic activities related to revenue and cost accounting and determination of business results Business results must be calculated accurately, reasonably, in a timely manner and accounted for in detail at the request of business managers

1.2 Accounting for revenue, expenses and Evaluation of business results in the enterprise

1.2.1 Accounting for sales revenue

Revenue from sale of goods and provision of services is the total amount received or will be received from transactions and revenue-generating operations such as sales of goods, products, and provision of services to customers, including surcharges and other fees in addition to the selling price, if any

- Documents: Documents used as a base for recording revenue from sales and service provision include: VAT invoices, bill of sale, Credit notice, receipts, contracts,

- Accounting account: According to Circular 133/2016/TT-BTC to record revenue from selling goods and providing services, accountants use account 511- Revenue from sales and service provision Account 511 has no ending balance and has 4 Level

2 accounts The structure of this account is as follows:

+ Account 5111: Sales of goods - This account is used to record sales and net sales

of goods sold in an accounting period

+ Account 5112: Revenue from selling finished products - This account is used to record sales and net sales of finished goods in an accounting period

+ Account 5113: Revenue from service provision - This account is used to record the revenue and net revenue of the volume of services completed, provided to customers and determined to be done during an accounting period

+ Account 5118: Other revenue - This account is used to record revenue from the sale and liquidation of investment properties, subsidies of the Government

Depending on the business characteristics of each business, it is possible to open more detailed accounts

Account 511

Indirect taxes payable (VAT, SCT,

Export tax, Environmental protection

tax);

Sale deductions

Carrying forward of net income to

account 911-Income Summary

Revenue from sales of products, goods, investment properties and provision of services in the accounting period

- Accounting entry: Diagram 1.1

Diagram 1.1: Accounting diagram of Account 511 - Sale revenue according to

Circular 133/2016/TT-BTC

(1) Revenue from sales of goods and provision of services

(2) Ouput VAT (the case of immediate separation of payable taxes at the time of revenue recognition)

(3) Sale deductions

(4) Ouput VAT (the case of immediate separation of payable taxes at the time of revenue recognition)

(5) Carrying forward sale revenue when evaluation of business results

1.2.2 Accounting for Sale deductions

- Documents: VAT invoice, receipt, credit note, discount record, goods return record,

- Types of Sale deductions:

 Trade discount - Trade discount is the amount of money that enterprises credited

or paid to customers who bought goods and services in large volume in accordance with the agreement that the seller will give a trade discount to the buyer

 Sales allowances Sales allowance is a reduction made when the goods are not the same specification as those mentioned in the economic contract This account only reflects the volume of sales allowances out of the VAT invoice according to the agreement between sellers and buyers Price deductions written in VAT invoices are not considered as a sales allowance

 Sales return Sales return is the amount of goods sold which have subsequently been returned due to the following reasons: breaching the commitment or the economic contract, or in a wrong quantity, quality or specifications This reflects the volume of goods which are returned due to the company’s mistakes

- Accounting account: When the sales deduction is incurred, write the Debit side of the account 511

Account 511

Value of sale deduction arising in the

period

- Accounting entry: Diagram 1.1

1.2.3 Accounting for Cost of goods sold

Expense of finished goods and merchandise goods sold (shortly called cost of goods sold) is the expense of goods determined at the time they are sold out According to VAS 2 - Inventory, cost of goods sold can be calculated by the following methods: + Average expense method

+ First-in, First-out method

+ Last-in, First-out method

- Documents: Accountants base on original documents such as VAT invoices, production cost summaries, purchase and sale contracts, sales contracts, etc to determine the cost of goods sold

- Accounting account: Account 632 – Cost of goods sold This account has no ending balance

Account 632

-For production and business

activities:

COGS of products, goods and services

sold during the period

Raw material costs, excess labor costs

and unallocated fixed manufacturing

overheads are included in the COGS

in the period

Loss of inventory after deducting

compensation caused by personal

liability

Expenses for construction and self

-manufacturing of fixed assets in

excess of the normal level are not

included in the cost

Amount of provision for devaluation

of inventories

-For investment investment property

business:

Depreciation of investment property

used for operating lease is deducted

during the period

Expenses for repairing, upgrading and

renovating investment property are

not eligible to be included in the

historical cost of investment property

Expenses arising from the leasing of

investment real estate activities during

the period

Residual value of investment

properties sold or liquidated during

the period

Expenses for sale and liquidation of

investment properties incurred during

Carry forward all operating expenses

of investment real estate incurred in the period to determine business results Reversal of provision for devaluation

of inventory at the end of the fiscal year Value of goods returned to the warehouse

Reimbursement of advance expenses for real estate

Trade discount, sales discount received after the purchase has been sold

Import taxes, excise taxes, and environmental protection taxes have been included in the value of purchased goods, if these taxes are refunded when selling goods

-

- Accounting entry: Diagram 1.2:

Diagram 1.2: Accounting diagram of Account 632 - Cost of goods sold

according to Circular 133/2016/TT-BTC

(1) Cost of finish goods and services sold

(2) Carrying forward cost of goods sold and expenses when evaluation of business results (3) Cost of goods sold

(4) The loss of inventory is included in the cost of goods sold

(5) Sold goods are returned to the warehouse

(6) Actual cost of finish goods converted into fixed assets used for production and business

(7) Manufacturing overheads in excess of normal are included in cost of goods sold (8) Sell investment property - residual value

(9) Accumulated depreciation

(10) Depreciation of investment property

(11) Expenses related to investment property are not recorded as an increase in value (12) If allocated gradually

(13) Deducting expenses in advance to temporarily calculate the cost of real estate sold in the period

(14) Provision for devaluation of inventory

1.2.4 Accounting for Selling and administrative expenses

1.2.4.1 Accounting for Selling Expenses

Selling expenses are all expenses incurred in relation to the selling process of goods and services Selling expenses include: Sale staff salary expense; Indirect material expense; Depreciation expense; Warranty expense; Rendered services; and other expenses

- Principles of collection and allocation of selling expenses: Selling expenses when actually incurred will be collected as selling expenses Besides, selling expenses can

be collected as fixed and variable selling expenses At the end of the period, selling expenses will be carry forwarded to evaluate the business result Allocation criteria may be cost of goods sold or sales revenue

- Accounting account: According to Circular 133/2016/TT-BTC, selling expense and administrative are recorded in the same account, account 642 - Business administrative expenses This account has no ending balance This account has 2 Level 2 accounts:

 Account 6421: Selling expense

 Account 6422: Administrative expense

Account 6421

Selling expenses incurred during the

period

Amount of provision for bad debts,

provision for payable (The difference

between the provision to be made in

this period is larger than the provision

made in the previous period that has

not been used up)

Any reduction of selling expenses; Reversal of provision for bad debts and provision for payables (the difference between the provision to be made in this period is smaller than the provision made in the previous period that has not yet been used up);

Carrying forward of business management expenses to account 911

- Accounting entry: Diagram 1.3

1.2.4.2 Accounting for Administrative Expense

Administration expenses are all expenses incurred in relation to such activities as businesses, administration management, and others which are carried out in the company in general Administration expenses includes: Officer’s salary expense; Office tools; Depreciation; Tax, fees and charges; Provision expense; Service rendered; and others

- Accounting Account: 6422 – Administration expenses This account has no ending balance

Account 6422

Administrative expenses incurred

during the period

Amount of provision for bad debts,

provision for payable (The difference

between the provision to be made in

this period is larger than the

provision made in the previous

period that has not been used up)

Any reduction of administration expenses;

Reversal of provision for bad debts and provision for payables (the difference between the provision to

be made in this period is smaller than the provision made in the previous period that has not yet been used up);

Carrying forward of business management expenses to account

911

- Accounting entry: Diagram 1.3

Diagram 1.3: Accounting diagram of Account 642 – Business administration

expenses according to Circular 133/2016/TT-BTC

(1) Cost of materials and tools

(2) Revenue and expenses reduction

(3) Salary expenses and deductions according to salaries of Office staffs

(4) Carrying forward business administrative expenses when evaluation of business results (5) Depreciation of fixed assets

(6) Amortized expenses, accrual expenses

(7) Provisions payable for corporate restructuring,

(8) Reversing the difference between the provision for doubtful debts set up in the previous year and not yet used up larger than the amount to be set up this year (9) Provision for bad debts

(10) Expenses for external purchases, expenses in other currency

(11) Input VAT is not deductible

(12) Backup refund for warranty, product costs

(13) Finished products, goods and services for promotion, advertising, internal consumption, gifts, for customers outside the enterprise (without the condition that customers have to buy any other goods or services)

(14) Amount to be paid to the export entrustment company

(15) VAT (if any)

1.2.5 Accounting for Financial income and financial expenses

1.2.5.1 Accounting for Financial Income

Financial incomes are all incomes gained in relation to financial activities of the company Interest income such as: loan interest, deposit interest, capital gain from disposing financial investments, distributed dividend and profit, gain from foreign exchange difference, payment discount, other financial incomes,

- Accounting Account: 515 – Financial incomes This account has no ending balance

Account 515

The payable VAT amount calculated

by the direct method (if any)

Carrying forward of net financial

income to account 911-Income

Summary

Revenues from financial activities arising in the period

- Accounting entry: Diagram 1.4

Diagram 1.4: Accounting diagram of Account 515 - Finance Income according

to Circular 133/2016/TT-BTC

(1) Dividends, profits are distributed after the investment date

(2) Discounts for purchases

(3) Selling foreign currency - selling rate

(4) Foreign currency sales profit

(5) Sale and recovery of financial investments

(6) Profit from the sale of the investment

(7) Purchase supplies, goods, assets, services, pay payables in foreign currencies (in case the Creditor has a cash account, it shall be recorded at the recorded exchange rate)

(8) Exchange rate interest

(9) Gradually allocate profits due to late payment, interest received in advance

(10) Carrying forward exchange rate interest due to revaluation of foreign currency balance at the end of the period

(11) Carrying forward finance income when evaluation of business results

1.2.5.2 Accounting for Financial Expense

Financial expenses are all expenses incurred in relation to financial activities of the company, such as borrowings… Expenses related to financial investments such as: loss from investments, other expenses which are not capitalized in the investments, borrowing expenses such as: interest or expenses related to foreign currencies translation, loss from foreign exchange rate difference, provision for financial investments, other expenses related to financial activities,

- Accounting Account: 635 – Financial expenses This account has no ending balance

Account 635

Interest expense on loan, interest on

deferred payment, interest on lease of

financial assets;

Loss of foreign currency sales;

Discount payment to the buyer;

Loss due to liquidation or sale of

investments;

Exchange rate loss incurred during the

period;

Exchange rate loss due to financial

year-end revaluation of monetary

items denominated in foreign

currencies;

Amount of provision for devaluation

of trading securities, provision for loss

of investment in other entities;

Expenses of financial investment

activities

Reversal of provision for devaluation

of trading securities, provision for loss of investments (the difference between the provision to be made in this period is smaller than the provision made in the previous year that has not yet been used up);

Amount recorded as a reduction in financial expenses;

At the end of the accounting period, all financial expenses incurred in the period are carrying forward to account 911-Income Summary

- Accounting entry: Diagram 1.5

Diagram 1.5: Accounting diagram of Account 635 - Finance Expenses

according to Circular 133/2016/TT-BTC

(1) Handling exchange rate losses due to revaluation of monetary items denominated

in foreign currencies at the end of the period into financial expenses

(2) Reversal of difference in provision for devaluation of securities investment and investment loss in other entities

(3) Losses from selling investments

(4) Proceeds from investments

(5) Cost of selling investments

(6) Making provision for devaluation of securities and provision for loss of

investments in other entities

(7) Payment discount for buyers

(8) Interest payable on loan, allocating interest on deferred payment, installment payment

(9) Fair value for exchange - Stock swap

(10) Value received

(11) Selling foreign currency

(12) Loss of foreign currency sales

(13) Buying supplies, goods and services in foreign currency

(14) Exchange rate loss (if any)

(15) Payment of payables in foreign currency

(16) Exchange rate loss (if any)

(17) Collection of receivables in foreign currency

(18) Exchange rate loss (if any)

(19) Carrying forward finance expenses when evaluation of business results

1.2.6 Accounting for Other incomes and other expenses

1.2.6.1 Accounting for Other incomes

Other income is income from activities other than business activities that generate revenue for the enterprise such as: Receivables from liquidation or sale of fixed assets and residual value of liquidated or sold fixed assets (if any); Profit difference due to revaluation of goods and fixed assets used to contribute capital to joint ventures, investments and associated companies, and other long-term investments; Collect fines due to customers' breach of economic contracts;

- Accounting account: 711 – Other incomes This account has no ending balance

Account 711

The VAT amount (if any) calculated

by the direct method for other incomes

in the enterprise paying tax by the

direct method

At the end of the accounting period,

carrying forward of other incomes

arising in the period to account 911

Other incomes arising in the period

- Accounting entry: Diagram 1.6

Diagram 1.6: Accounting diagram of Account 711 - Other Incomes according

to Circular 133/2016/TT-BTC

(1) Collecting fines from customers who violate economic contracts, compensation insurance money

(2) Penalties are deducted from deposits and deposits

(3) Receive sponsorship, donate materials, goods, fixed assets

(4) Collected bad debts written off

(5) Calculated into other incomes payable debts whose owners cannot be identified (6) Import-export taxes, special sales tax, and environmental protection will be refunded by the Government Budget

(7) Periodically allocate unrealized revenue if included in other income

(8) Invest by fixed assets (in case revaluation value > book value)

(9) Original price

(10) Accumulated depreciation

(11) Value of goods and services offered as gifts (without conditions of purchase or use of other goods and services)

(12) Refund reserve number for construction warranty expenses

(13) Assessment of asset value increase when converting business type

(14) Invest by materials and goods (in case revaluation value > book value)

(15) Book value

(16) Other taxes deducted from income (if any)

(17) Carrying forward other income when evaluation of business results

1.2.6.1 Accounting for Other expenses

Other expenses are expenses of activities other than business activities that generate revenue of the enterprise, including: Expenses for liquidation and sale of fixed assets and residual value of liquidated or sold fixed assets (if any); Difference in losses due

to revaluation of goods and fixed assets used to contribute capital to joint ventures, investments in associates, long-term investments; Fines for breach of economic contracts, tax penalties, tax arrears;

- Accounting account: 811 – Other expenses This account has no ending balance

Account 811

Other expenses arising in the period At the end of the accounting period,

carrying forward of other expenses arising in the period to account 911

- Accounting entry: Diagram 1.7

Diagram 1.7: Accounting diagram of Account 811 - Other expenses according

to Circular 133/2016/TT-BTC

(1) Other costs incurred (costs of liquidation, sale of fixed assets, )

(2) When paying the fine

(3) Penalties for breach of contract

(4) Historical cost of fixed assets contributed as capital in a joint venture or association

(5) Depreciation amount

(6) Value of capital contribution to joint ventures and associates

(7) The difference between the revaluation price is smaller than the residual value of the fixed asset

(8) Assess the decrease in asset value when converting the type of business

(9) Collection and sale of bidding documents for liquidation and sale of fixed assets (10) Carrying forward other expenses when evaluation of business results

1.2.7 Accounting for Corporate income tax

Corporate income tax (CIT) is a direct tax, calculated directly from the taxable income of the goods and services after deducting expenses related to the revenue and taxable income of the enterprise Taxable income: is the taxable income of a period determined in accordance with current tax laws and is the basis for calculating CIT payable CIT rate: Depending on each type of enterprise and business industry, the Government has different tax rates In Vietnam, the current CIT rate is 20%

- CIT calculation method:

CIT payable = Taxable income x CIT rate(%)

- Accounting account: 821 - Corporate income tax expenses This account has no ending balance

Account 821 CIT expense incurred in the year  Transfer CIT expense to account 911

- Accounting entry: Diagram 1.8

Diagram 1.8: Accounting diagram of Account 821 - Corporate income tax

according to Circular 133/2016/TT-BTC

(1) Current income tax payable in the period is determined by the enterprise itself (2) The difference between the temporarily payable CIT payable is larger than the actual payable amount

(3) Carrying forward current CIT expenses

1.2.8 Accounting for Evaluation of business results

According to Circular 133/2016/TT-BTC issued on August 26, 2016 by the Ministry

of Finance, the results of operating activities of business include: Results of operating activities, results of financial activities and results of other activities

+ Results of operating activities are different between net sales and cost of goods sold (such as: depreciation expenses, costs of repairs and upgrading, operating lease expenses, expenses of liquidating and liquidating investment property, selling expenses and administration expenses)

+ Results of financial activities is differential between revenues and expenses from financial activities

+ Results of other activities are different between Other Income and other expenses, and CIT expenses

- Documents: Statement of Profit or loss, receipts, payment, debit and credit notes

of the bank and other relevant documents

- Accounting account: 911 - Income Summary This account has no ending balance

Account 911

Closing entry of cost of goods sold

Closing entry of selling expenses,

administrative expenses, financial

expenses

Closing entry CIT expenses, other

expenses

Closing entry of Profit

Closing entry of Net income Closing entry of Finance income Closing entry of Other income Closing entry of Loss

- Accounting entry: Diagram 1.9

Diagram 1.9: Accounting diagram of Account 911 - Income Summary

according to Circular 133/2016/TT-BTC

(1) Carrying forward of expenses

(2) Carrying forward of revenue and other income

(3) Carry forward current CIT expenses and deferred CIT expenses

(4) Carrying forward of deferred CIT expense reduction

(5) Carry forward of operating profit during the period

(6) Carrying forward of operating loss during the period

The basic issues of Revenue, Expense and Evaluation of business results in the enterprise mentioned above will be the base for reviewing and presenting the current situation as well as proposing solutions to improve the accounting for revenue, expenses and evaluation of business results at TTP Holdings Joint Stock Company