Accounting for sales and business result in Phu Tho educational book and equipment joint stock company

PREFACE In order to survive and develop in a market economy, there is the management of the socialistoriented state. Any business, whether it is business or commercial, must go through consumption and be effective as a top target. To do that, managers must be aware of the role of accounting. Accounting is the source of information needed to effectively manage the companys economic performance. Commercial business objects are goods that are labor products purchased by commercial enterprises to sell in order to meet the needs of consumer production and export. Enterprises that want to have revenue must have goods. But the value and value of use can only be done through the consumption process. Sales are the final stage of the reproduction process. Good implementation of sales will facilitate the recovery of capital and offset the cost of production. On the other hand, create conditions for businesses to well fulfill their obligations to the state budget for investment and development, improve workers lives ... More than ever, perfect revenue accounting, expenses and determine operational results. Business dynamics are often a problem for businesses. Completion of revenue accounting, cost and determination of business results will contribute to increasing competitiveness, improving the quality of business decisions, increasing financial information transparency. Currently accounting is an important tool for managing the economy both micro and macro. Through the internship at Phu Tho educational book and equipment, JSC, I am particularly interested in the process of consuming goods, identifying and distributing the business results of the company, so I choose the part “Accounting for sales and business result in Phu Tho educational book and equipment, JSC. ”for my graduation thesis. Although I tried to understand and receive the enthusiastic help of the Board of Directors, the staffs the accounting department along with the teachers instructions Dr. Tran Thi Ngoc Diep, I have grasped gain a part of the actual situation of accounting for sales and determine the business results at Phu Tho educational book and equipment joint stock company. In addition to the introduction and conclusion, my topic has 3 chapters:

MINISTRY OF FINANCE ACADEMY OF FINANCE Student : Le Kim Thoa

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

Student

Le Kim Thoa

In order to survive and develop in a market economy, there is the management

of the socialist-oriented state Any business, whether it is business or commercial,must go through consumption and be effective as a top target To do that, managersmust be aware of the role of accounting Accounting is the source of informationneeded to effectively manage the company's economic performance

Commercial business objects are goods that are labor products purchased bycommercial enterprises to sell in order to meet the needs of consumer productionand export Enterprises that want to have revenue must have goods But the valueand value of use can only be done through the consumption process Sales are thefinal stage of the reproduction process Good implementation of sales will facilitatethe recovery of capital and offset the cost of production On the other hand, createconditions for businesses to well fulfill their obligations to the state budget forinvestment and development, improve workers' lives More than ever, perfectrevenue accounting, expenses and determine operational results Businessdynamics are often a problem for businesses Completion of revenue accounting,cost and determination of business results will contribute to increasingcompetitiveness, improving the quality of business decisions, increasing financialinformation transparency

Currently accounting is an important tool for managing the economy both microand macro Through the internship at Phu Tho educational book and equipment,JSC, I am particularly interested in the process of consuming goods, identifyingand distributing the business results of the company, so I choose the part

“Accounting for sales and business result in Phu Tho educational book andequipment, JSC ”for my graduation thesis

Although I tried to understand and receive the enthusiastic help of the Board ofDirectors, the staffs the accounting department along with the teacher's instructions

- Dr Tran Thi Ngoc Diep, I have grasped gain a part of the actual situation ofaccounting for sales and determine the business results at Phu Tho educationalbook and equipment joint stock company

In addition to the introduction and conclusion, my topic has 3 chapters:

CHAPTER 1: GENERAL THEORETY OF SALES ACCOUNTING AND EVALUATION BUSINESS RESULTS IN COMMERCIAL ENTERPRISES CHAPTER 2: THE ACTUAL ACCOUNTING FOR SALES AND BUSINESS RESULT IN PHU THO EDUCATIONAL BOOK AND EQUIPMENT JOINT STOCK COMPANY.

CHAPTER 3: SOLUTIONS TO COMPLETE SALES ACCOUNTING AND DETERMINING BUSINESS RESULT AT PHU THO EDUCTIONAL BOOK AND EQUIPMENT JOINT STOCK COMPANY

However, due to the limited level of reasoning and practical access, my topic

is inevitable I look forward to receiving comments from the teachers, so that mytopic will be improved

TABLE OF CONTENT

CHAPTER 1: GENERAL THEORETY OF SALES ACCOUNTING AND EVALUATION BUSINESS RESULTS IN COMMERCIAL ENTERPRISES 1.1 Overview of sales process:

1.1.1 Definition

1.1.2 Characteristics of sales process:

1.1.3 Methods of sales

1.1.4 Payment methods

1.1.5 The task of accounting for sales and determining business results

1.1.6 Accounting for sales revenue:

1.1.7 Accounting for sales deduction

1.1.8 Accounting for Cost of goods sold

1.2 Evaluating business result

1.2.1 Accounting for selling expenses and administrative expenses

1.2.2 Accounting for financial expenses and financial incomes

1.2.3 Accounting for others expenses and other incomes

1.2.4 Accounting for corporate income tax expenses

1.2.5 Accounting for determining business results

1.2.6 Accounting for revenue and business results in terms of accounting

software application

CHAPTER 2: THE ACTUAL ACCOUNTING FOR SALES AND BUSINESS RESULT in PHU THO EDUCATIONAL BOOK AND EQUIPMENT JOINT STOCK COMPANY.

2.1 The foundation and development process of company

2.1.1 Overview of the company

2.1.2 Foundation and development

2.1.3 Characteristics of business operation

2.1.4 The corporate management organization

2.1.5 The organization of accounting works in the company

2.2 The actual accounting for sales and business results in Phu Tho

educational book and equipment joint stock company.

2.2.1 Actual situation of methods of sales and payment at the company

2.2.2 Accounting for sales revenue and revenue deductions

2.2.3 Accounting for costs of goods sold

2.2.4 Accounting for selling and administrative expenses

2.2.5 Accounting for financial expenses and financial incomes

2.2.6 Accounting for other incomes and other expenses

2.2.7 Accounting for determining business results

2.3.General comments on sales finance accounting and determining business results at Phu Tho educational book and equipment, JSC.

2.3.1 Advantages

2.3.2 Limitations

CHAPTER 3: SOLUTIONS TO COMPLETE SALES ACCOUNTING AND DETERMINING BUSINESS RESULT AT PHU THO EDUCTIONAL

BOOK AND EQUIPMENT JOINT STOCK COMPANY

3.1 Requirements, principles of completing accounting for sales and

determining business results at Phu Tho educational book and equipment, JSC.

3.1.1 Requirements

3.1.2 Perfecting principles

3.2 Some suggestions to improve sales accounting and determining business results at Phu Tho educational book and equipment, JSC.

Flowchart 1.3 : Accounting entry for sales through agents

Flowchart 1.4 : Accounting entry for sales in case of deferred or instalment

payment

Flowchart 1.5 Accounting entry for revenue deductions

Flowchart 1.6 : Accounting for COGS applying perpetual inventory method

Flowchart 1.7 : Accounting for COGS applying periodical inventory method.Flowchart 1.8 : Accounting entry for selling expenses

Flowchart 1.9 : Accounting entry for selling and administrative expenses

Flowchart 1.10 : Accounting entry for financial expenses

Flowchart 1.11 – Accounting entry for other incomes

Flowchart 1.12: Accounting entry for other expenses

Flowchart 1.13 – Accounting entry for other incomes

Flowchart 1.14 – Accounting entry for other incomes from the liquidation or sale

of fixed assets

Flowchart 1.15 : Accounting entry for income tax expense

Flowchart 1.16 : Accounting entry for business result

Flowchart 2.1:Management apparatus

Flowchart 2.2: Accounting apparatus

IMAGE CATALOG

Figure 2.1: Display screen of “Quản lý kế hoạch- phát hành”

Figure 2.2: Display screen of “ Kế toán 2019”

Figure 2.3: Examples of list of textbook

Figure 2.4: VAT invoice

Figure 2.5: Inventory list

Figure 2.6: Delivery invoice on “ Quản lí kế hoạch- phát hành”

Figure 2.7: The interface of entering sales invoice on “ Kế toán 2019”

Figure 2.8: General ledger of Account 511

Figure 2.9: Table trade discount rate

Figure 2.10: VAT invoice No 002611

Figure 2.11: Inventory list

Figure 2.12:General ledger of account 521

Figure 2.13:General ledger of account 632

Figure 2 14 Payment order

Figure 2.15: General ledger of account 641

Figure 2.16: Water bill

Figure 2.17: The interface of entering payment voucher

Figure 2.18: Electricity bill

Figure 2.19: The interface of entering electricity invoice on “ Kế toán 2019”

Figure 2.20: Payment order

Figure 2.21:Table of salary distribution and social insurance

Figure 2.22: Depreciation table of fixed assets

Figure 2.23 General ledger of Account 635 – Financial expenses

Figure 2.24: General ledger of Account 515 – Financial incomes

Figure 2.25: The interface to transfer revenue and determine business results on “

Kế toán 2019”

Figure 2.26: General ledger of Account 911Figure 2.27: General ledger of Account 4212

CHAPTER 1: GENERAL THEORETY OF SALES ACCOUNTING AND EVALUATION BUSINESS RESULTS IN COMMERCIAL ENTERPRISES 1.1 Overview of sales process:

1.1.1 Definition

Sales is the transfer of ownership of a product or goods associated with most ofthe benefits, or risks to customers, and the customers make payment or acceptpayment

1.1.2 Characteristics of sales process:

Sales process is the process of exchanging ownership, between buyers and sellers

in the operating market Goods sold to individuals and organizations outside the enterprise are called external sales, while goods supplied to units within the same company or corporation are referred to as internal sales Sale is the final stage in the business operation of a commercial enterprise

 Wholesale in stock:

Under this method, purchased goods are put into warehouse, then sold at

warehouse The method of selling goods in stock has two forms:

- Direct form: enterprises deliver goods directly to customers at warehouses or goods preservation places of enterprises The goods are recorded as sold when the buyer has received them and sign the confirmation on the sales invoice.

- Delivery form: the seller will transfer the goods to the buyer’s warehouse or to a location specified by the purchaser Goods is considered to be sold when the buyer has received the goods and paid or accepted to pay for the goods received

 Wholesale by shipping directly:

Commercial enterprises after purchasing and receiving goods do not bring themback to their warehouse, but sell them directly to the buyer With this form,

businesses also have two forms: direct delivery or indirect delivery

- Direct delivery: The enterprise received goods from the seller and deliver directly

to its customer Goods is considered to be sold when the buyer received all the goods and signed on sale invoice

- Indirect delivery: The enterprise received goods from the seller and transfer these goods to its customer Goods is considered to be sold when the customer check andpaid or accepted to pay for the goods received

1.1.3.2 Retail:

It is a method of selling goods and services in small quantities and often stableprices This method usually applies directly to consumers of such goods and

services Retail has various forms of implementation than wholesale

 Retail direct money collection: customers pay money, sellers deliver

goods to customers

 Centralized collection of sales: the customer pays money to the cashierand receives the invoice to receive the goods at the delivery counter

 Sales in the form of customers’ choice: customers choose items

purchased in supermarkets and pay at the cashier counters

 Sending agents, consignment agents: selling businesses sign contracts

with agents, deliver them goods to sell and pay them commissions

1.1.4 Payment methods

Payment method is a method of performing property obligations Payment may

be made by cash, check, bank payment, letter of credit, commodity Exchange oragreement of the parties

The method may be paid in one time, more times or periodically or depending

on agreement by the parties

Normally, it is done in two forms: direct payment and deferred or installment

payment

 Direct payment method: customers pay immediately for enterprises afterreceiving goods, without sending it through a third party

 Deferred payment method: enterprises only collect part of

money that customers have to pay, customers will gradually pay the rest and a

certain amount of interest Deferred payment arrangements are often used in retail

sales

1.1.5 The task of accounting for sales and determining business results

1.1.5.1 The necessity of accounting for sales, determining business results

Sales and determining business results play an important role not only for

businesses but also for the entire national economy For the enterprise itself, it is possible to earn income to compensate for the costs and conditions to expand the business, to improve the lives of workers, to create a source of accumulation for the national economy Accurate determination of business results is the basis for determining the operational efficiency of enterprises through the payment of taxes, fees and charges into the state budget; determining the reasonable costing structureand highly effective using of the profits earned to harmonize economic benefits Accounting for sales and determining business result is an important task of the enterprise in order to determine the quantity and value of sold goods as well as the turnover and business results of the enterprise However, in order to bring into full play the role of well performing the tasks, it is necessary to organize accounting work in a scientific way, and at the same time, accountants must firmly grasp the contents of sales accounting and determination of business results in enterprises

1.1.5.2 The missions of accounting for sales, determining business results

With an aim to managing sales and evaluating business result, accounting for

sales and determining business results 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 andvalue

- Fully, timely, accurately reflecting and recording sales, sales deductions andexpenses of each business activity, as well as following and supervising customerreceivables

- Accurately calculating and reporting results of each transaction

- Monitoring the implementation of state obligations and division process of

The concept of revenue according to VAS standard 14 “Turnover and other

income are the total value of economic benefits of the enterprise earned in the accounting period, arising from normal production and business activities and other activities of the enterprise, contributing to increasing equity, excluding

capital of shareholders or owners ”

 Revenue recognition principles:

- Sales of goods are recognized when all of the following five conditions aresimultaneously met:

(a) The enterprise has transferred substantially all risks and benefits of ownership

of the product or goods to the buyer;

(b) The Company retains neither continuing managerial involvement to the degreeusually associated with ownership nor effective control over the goods sold;

(c) The revenue is determined reliably;

(d) The enterprise has gained or will gain economic benefits from the sale;

(e) Determine the costs associated with the sale

- The service revenue of a transaction is recognized when the outcome of thattransaction can be reliably determined Where a transaction involving the rendering

of services is attributable to several periods, revenue is recognized in each period

by reference to the percentage of completion of the transaction on the date ofmaking balance sheet The outcome of a transaction can be measured reliably whenall four (4) following conditions are satisfied:

(a) The revenue is determined reliably;

(b) Be able to derive economic benefits from the provision of that service;

(c) Determine the amount of work completed on the balance sheet date;

(d) Determine the costs incurred for the transaction and the cost to complete thetransaction to provide that service

In cases where a service provision transaction is conducted in many accountingperiods, the determination of the turnover of a service in each period is usuallymade according to the completion rate method By this method, the revenuerecognized in the accounting period is determined by the proportion of thecompleted work

The completed work is determined by one of the following three methods,depending on the nature of the service:

(a) Assess completed work;

(b) Comparing the percentage (%) between the completed workload and the totalworkload to be completed;

(c) The ratio (%) of expenses incurred to the total estimated cost of completing theentire service delivery transaction

The completed work does not depend on recurring payments or advances bycustomers

- Revenue from interests, royalties, dividends and shared profits of an enterprise isrecognized when both (2) of the following conditions are satisfied:

(a) Be able to obtain economic benefits from the transaction;

(b) The revenue is determined reliably

This account reflects the turnover of production and business activities fromthe following transactions and operations:

+ Sales: Selling products manufactured by enterprises, selling goodspurchased and investment real estate;

+ Service provision: Performing the agreed work under a contract, or multipleaccounting periods, such as provision of transportation, tourism, fixed asset + Other revenues

- Structure:

Acc 511

- Payable indirect taxes (VAT,

excise, export, environmental

protection);

- Turnover from returned goods

transferred at the end of period;

- Discounts transferred at the end

Account 511 does not have closing balance and it comprises 4 sub – accounts:+ Account 5111: Turnover from sales

+ Account 5112: Turnovers from finished goods

+ Account 5113: Turnovers from service provision

+ Account 5118: Other turnovers

- Account 3331: Payable VAT

 Accounting entries

Flowchart 1.1: Accounting entry for direct sales (applying deductible

VAT method).

Flowchart 1.2 : Accounting entry for direct sales for company applying direct

VAT method

Flowchart 1.3 : Accounting entry for sales through agents

Flowchart 1.4 : Accounting entry for sales in case of

deferred or instalment payment

1.1.7 Accounting for sales deduction

- 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

- Sales allowance is a reduction made when the goods are not the same

specification as those mentioned in the economic contract

Accountants must monitor in detail trade discounts, cash discounts, and salesreturns for each customer and each type of goods sold, such as: sales (products, goods), service provisions At the end of period, transferring all to account 511 -

"Revenue from sales of goods and services" to determine the net revenue of

products, goods and services earned in the reporting period

- Minutes of sales allowances

- Sales allowances invoice

- Accounting voucher of sales allowances

Sales returns:

- Minutes of goods return

- VAT invoice or sales invoice

- Goods receipt

- Accounting voucher of sales returns

 Accounting used

Account 521: Revenue deduction

- Number of commercial discounts accepted to pay customers;

- Number of sales discounts approved for the buyer;

- Sales of returned goods, money returned to the buyer or deducted from customer receivables for sold products and goods

- At the end of the accounting period, carry over all trade discounts, sales rebates, sales of returned goods to account 511 "Sales of goods and rendering of services"

to determine net revenue of reporting period

Account 521 does not have closing balances

Revenue deduction are those amounts that are adjusted to reduce the turnover of the sale of goods, products and services provided by the enterprise in the

accounting period Includes: Sales discounts, Sales returns and Sales allowances

- Trade discounts: are the amount discounts for the buyer who buy merchandises with large volume

- Sales returns: are the revenue of products, goods, and services returned by the buyers because of poor quality

- Sales allowances: are the sales allowances for the purchaser because products, goods, services provided have poor quality which does not meet the quality

conditions specified in the contract signed between two parties

 Accounting entry:

Flowchart 1.5 Accounting entry for revenue deductions

1.1.8 Accounting for Cost of goods sold

- Specific identification method: this method tracks the actual physical flow of the goods Each item of inventory is marked, tagged or coded with its “specific” unit cost This method is possible when a business has a limited variety of high-unit-cost items that can be clearly identified

- Average cost method ( AVCO) : The average price of all the goods in stock, regardless of purchase date, is used to value the goods sold Taking the average

product cost over a time period has a smoothing effect that prevents COGS from being highly impacted by extreme costs of one or more acquisitions or purchases.Average cost method ( AVCO) includes AVCO Periodic and AVCO

Number of goods purchased during the period)

+ AVCO Perpetual: After each purchase, redefining the real value of inventory andthe average unit cost

Number of goods purchasedbefore the ith sale)

- First-in, First-out method ( FIFO): The earliest goods to be purchased or

manufactured are sold first Since prices tend to go up over time, a company that uses the FIFO method will sell its least expensive products first, which translates to

a lower COGS than the COGS recorded under LIFO Hence, the net income using the FIFO method increases over time

COGS during

the period =

Cost of goods left at the opening of theperiod

+

Cost of goods increased during the period

-Cost of goods left at the closing of the period

1.1.8.2 Accounting for Cost of goods sold ( COGS)

 Accounting vouchers

- Goods record

- Goods receipt, goods issue

- VAT invoice

 Accounts used

Account 632 “Cost of goods sold”

- Content: This account is used to record cost of goods, products, services,investment property, costs of production of construction products, etc.Structure:

In case business applies perpetual inventory method.

Acc 632

- Costs price of products, goods, services sold duringperiod

- Costs of raw materials, part

of labor costs in excess of normal level, and fixed overhead cost unallocated and added to costs of goods during the period

- Waste, loss of inventory after excluding

compensation received from responsible

individuals

- Transferring cost of products, goods, services sold to acc 911

- Sales returns to be stored

- Trade discounts, sales allowance received after purchasing consumed goods

Account 632 does not have closing balances.

In case business applying periodical inventory method.

Acc 632

- Transferring actual cost of finished products in the first period

- Transferring forward the actual cost value of sold

- Transferring actual cost

of finished products at the end of the period

- Transferring the actual capital value of the goods

goods sent beginning.

- Transferring the actual

value of sold goods

sold at the end of the period

- Transferring the actual value of sold goods to determine business results

Account 632 does not have closing balances

 Accounting entries:

Flowchart 1.6 : Accounting for COGS applying perpetual inventory

method

Flowchart 1.7 : Accounting for COGS applying periodical inventory method.

1.2 Evaluating business result

1.2.1 Accounting for selling expenses and administrative expenses

- Administration expenses: are all overhead costs of business including salary expenses of business‘ administrative staffs (salary, wages, subsidies, ); social insurance, medical insurance, labor union expenses, unemployment insurance of administrative staff, expenses of office materials, labor instruments, depreciation

of fixed assets used for administration, lease rent, provision for bad debts,

outsourced services (electricity, water, telephone, fax, assets warranty, fire and explosive accidents, ), other cash expenses (expenses of entertainment, customer conference )

 Accounting vouchers:

- Table of salary distribution and social insurance

- Table of materials allocation

- Depreciation table

- VAT invoice, sales invoice

- Payment voucher, debit note

 Accounts used

- Account 641: Selling expenses

+ Content: reflect expenses actually incurred in process of selling products,goods, providing services, including publicity expenses,demonstrationexpenses, advertising expenses…

+ Structure:

Acc 641

- Cost incurred relating to process

of selling products, goods,

rendering services incurred in

Account 641 has no closing balance

Flowchart 1.8 :Accounting entry for selling expenses

Account 642 : Administration expenses

+ Content: record overhead costs of business including salary expenses of administrative staffs, social insurance, medical insurance, labor union expenses, lease rent, outsourced services ( electricity, water, telephone, fax,…), other cash expenses…

+ Structure:

Acc 642

- Administrative expenses arising

in the period;

- The amount of provision for bad

debts and payables

- Amounts recorded to reduce

administrative expenses;

- Refunding provision for bad

debts and payables;

- Transferring administrative

expenses into acc 911

Account 642 has no closing balance

Accounting entries:

Flowchart 1.9 :Accounting entry for administrative expenses

1.2.2 Accounting for financial expenses and financial incomes:

1.2.2.1 Accounting for financial expenses

 Definition

Financial expenses are all expenses incurred in relation to financial activities of the company, such as borrowings…

Contents of financial expenses:

- Costs of manufacturing products, rendering services

- Operating costs of real estate

- Capital investment expenses

- Expenses covered by other source of fund

- Other financial expenses

Accounting vouchers:

- Invoices

- Documents and notices of the joint venture party

- Payment and receipt voucher

- Debit note and credit note

 Accounts used:

Account 635: Financial expenses

- Content: to record financial operating cost including expenses or losses relating

to financial investment activity, expenses of lending and borrowing, costs of capital contributed to joint venture, to associates, etc

- Structure:

Acc 635

- Financial expenses arising in

the period

- Deductions for setting up

additional reserves for trading securities price decrease and provision for loss of investment in other units

- Refunding provision for devaluation of trading securities, provision for loss

of investment in other units

- Amounts recorded to reduce financial expenses

- Transferring all financial expenses incurred in the period to acc 911

Account 635 has no closing balance

 Accounting entries

Flowchart 1.10 – Accounting entry for financial expenses

1.2.2.2 Accounting for financial incomes

 Definition:

Financial incomes are all incomes gained in relation to financial activities ofthe company, such as borrowings…

Revenue from financial activities includes:

- 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 vouchers:

- Receipt voucher, payment voucher

- Debit note, Credit note

- Other related documents

 Account used:

Account 515: Financial incomes

 Content: to record revenues from interests, copyrights, dividends, distributed income, and other income from financial activities of enterprises

Structure:

Acc 515

- The payable VAT amount calculated

by the direct method (if any);

- Transfer of net financial income to

1.2.3 Accounting for others expenses and other incomes

1.2.3.1 Accounting for others expenses

 Definition

Other expenses are the expenses of activities other than production and business activities that generate revenue of the enterprise

Other expenses include:

- Expenses from disposal and liquidation of fixed assets and their net book value

- Losses from revaluation of materials, goods and fixed assets which arecontributed in joint ventures, associates…

- Compensation for breaches of contracts

- Tax penalty

- Other expenses

 Accounting vouchers.

- VAT invoice, sales invoice

- Receipts and vouchers

- Debit notes and credit notes

- Minutes of handling surplus and missing assets

- Property liquidation record

- Tax receipts

 Account used:

Account 811: Others expenses

- Content: to record expenses incurred from events or operations separated from normal operation of business

- Structure:

Acc 811

- Other expenses incurred - Transferring all other

expenses incurred in the period into acc 911

Acc 811 has no closing balance

 Accounting entries

Flowchart 1.12 – Accounting entry for other expenses

1.2.3.1 Accounting for other incomes

 Definition:

Other incomes are incomes that is not a turnover of the business These arethe incomes generated from activities other than the common business activities

of the enterprise, the specific contents include:

- Proceed of disposal of fixed assets

- Gains from the revaluation materials, goods and fixed asset that used to contribute or invest into associates or other long-term investment

- Gains from contract compensation by the customers

- Tax refund from the State Budget

- Accounts unidentifiable as to whom they are payable

- Sales-related tips or awards (if any offered by suppliers which are not included in sales)

- Gifts or donations in cash or in kind by organizations and individuals

- Other income

 Accounting vouchers

- VAT invoice, sales invoice

- Receipts and vouchers

- Debit notes and Credit notes

- Minutes of handling surplus and missing assets

- Property liquidation and sale record

- Tax receipts

 Accounts used

Account 711: Other income

 Content: to record other income, revenues not from operating activity ofbusiness

 Structure:

Acc 711

- The payable VAT amount (if any)

for other incomes in the enterprise

paying VAT by the direct method

- Transferring other incomes arising

in the period to Acc 911

- Other income generated in the

Flowchart 1.14 – Accounting entry for other incomes from the liquidation

or sale of fixed assets

1.2.4 Accounting for corporate income tax expenses

1.2.4.1 Content of corporate income tax expenses

- Each quarter, based on the tax declaration, the accountant records estimatedcurrent income tax into current income tax expense

- At the end of fiscal year, if the estimated income tax is less than the actualcurrent income tax to be paid, the accountant should record additional tax intocurrent income tax expense In case estimated income tax is higher than actualincome tax to be paid for the year, the accountants should decrease the current

income tax expense by the difference between the estimated income tax andthe actual income tax payable.

- If the entity detects immaterial errors relating to income tax payable of theprevious year the accountants should record the increase or decrease of theincome tax payable of the previous year in current income tax of the currentyear

- At the end of the fiscal year, the accountants should transfer the currentincome tax to determine operation result

1.2.4.2 Accounting for corporate income tax

 Accounts used.

Account 821: Corporate income tax

- Content: to record income tax expenses of business, including current income tax and deferred income tax expenses incurred during year, these expenses will be based to determine operating results after tax of business

in current financial year

- Structure:

Acc 821

- Enterprise income tax

expense incurred in the year;

- Enterprise income tax of

previous years must be

additionally paid

- The payable enterprise income taxamount in a year is smaller than thetemporarily deducted enterpriseincome tax amount;

- The payable enterprise income taxamount is reduced due to thediscovery of non-material errors;

- Transfer of corporate income taxexpense arising to acc 911

Account 821 has no closing balance

 Accounting entries:

Flowchart 1.15 – Accounting entry for income tax expense

as regulated and decided by responsible authorities In case of profit,business result will be allocated as regulated by the financial regime

1.2.5.2 Accounting for business result

 Formula