Learning materials

Chapter 6 • Vietnamese accounting standard:

VAS 02 – Inventory, VAS 14 – Revenue and other
Accounting for revenue income, VAS 16 – Borrowing expenses, VAS 17 –
Corporate income tax…
and business result • Circular 200/TT-BTC dated 22/12/2014
• Chapter 7 – Financial Accounting - text book
• Other related materials,…

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6.1 Accounting for revenue

Contents
6.1 Accounting for revenue
6.1.1 Definition
6.2. Accounting for cost of goods sold
6.1.2 Recognition criteria
6.3 Accounting for selling expenses and administrative
expenses
6.1.3 Measurement
6.3. Accounting for financial expenses and financial income
6.1.4 Accounting for sales and sales
deductions
6.4. Accounting for other expenses and other income
6.5 Accounting for corporate income tax expenses
6.6. Accounting for business result
3 4
 6.1.2 Revenue recognition points
6.1.1 Revenue -Definition – Manufacturing Cycle
Revenue is the gross inflow of economic benefits
during the period arising in the course of the ordinary
activities of an entity when those inflows result in
increases in equity, other than increases relating to
contributions from equity participants (VAS 01 –
Framework)

5 5
6

6.1.2 Revenue – Recognition criteria Example 6.1

Specific rules for recognition of revenue from sales of
goods (VAS 14)
• If the business received $45,000 in cash for
a. The entity has transferred to the buyer the significant risks
and rewards of ownership of the goods; goods sold in the year and was owed $5,000
b. The entity retains neither continuing managerial for sales on credit at the end of the year,
involvement to the degree usually associated with
ownership nor effective control over the goods sold; what was the revenue for the year?
c. The amount of revenue can be measured reliably; • $50,000
d. It is probable that the economic benefits associated with the • $45,000
transaction will flow to the entity; and
• $40,000
e. The costs incurred or to be incurred in respect of the
transaction can be measured reliably.
7 8
 6.1.3 Revenue – Measurement 6.1.3 Revenue – Measurement
Revenue shall be measured at the fair value of the Revenue shall be measured at the fair value of the
consideration received or receivable consideration received or receivable
•Net sales=Total sales-Sale deductions
. .
•Exchange of goods or services:
•Revenue to be received: Revenue shall be determined by converting
the nominal value of amounts receivable in future into the actual +Goods or services of a similar nature are exchanged, no
value at the time of turnover recognition at the current interest transaction has occurred and no revenue is recognized.
rates. The actual value at the time of revenue recognition may be + Goods or services of a dissimilar nature are exchanged,
smaller than the nominal value receivable in future. a revenue transaction is recognizes at the fair value of the
Eg 6.2: N company sells goods with a cost of 100,000 to M goods or services received. If such fair value is not readily
company for 140,000 and a credit period of six months. N determinable, revenue is recognized at the fair value of the
company’s normal cash price would have been 125,000 with a
goods given up or services provided. In both cases,
credit period of one month or with a 5,000 discount for cash on
delivery revenue is adjusted for any cash or cash equivalent
9 transferred. 10

Revenue Deductions 6.1.4 Accounting for revenue and revenue

• Trade discount is the amount of money that enterprise deductions
credited or paid to customers who bought goods and services
Source documents and accounts used
in large volume in accordance with the agreement that the
seller will give trade discount to the buyer. * Source documents :
• Sales returns is the amount of goods sold which have
subsequently been returned due to the following reasons: • VAT invoice (Form No.01-GTKT)
breaching the commitment or the economic contract, or in a • Sales invoice (Form No.02 - GTTT)
wrong quantity, quality or specifications. • Payment documents (Receipt note, cheque,...)
• Sales allowance is a reduction made when the goods are not • VAT declaration (Form No.07A/GTGT)
the same specification as those mentioned in the economic • Other related documents
contract.
• Taxes: VAT in direct method, export duty
TH¤NG T¦ liªn tÞch

11 12
 6.1.4 Accounting for revenue and revenue
deductions Account 511 - Revenue

Accounts used:
Acc 511
.
Acc. 511 – Revenues
Special consumption tax, export tax Revenue from selling
Acc. 521 – Sale deductions: và non-deductible VAT goods/providing services
Acc. 5211 Trade/Sales discounts Revenue deduction in the period
Acc. 5212 – Sales returns Transfer net revenue

Acc. 5213 – Sales allowances

Acc. 333 – Tax and statutory obligations
Acc 3387 – Unearned revenue

13 14

* Used accounts Acc 3331– VAT payable

Acc 511 has 6 sub-accounts Acc 3331
• Input VAT deducted • VAT payable for sold goods and
- TK 5111 – Revenue from goods provision •Deductible VAT of services
- TK 5112 – Revenue from finished goods provision returned goods • VAT payable for financial activities
- TK 5113 – Revenue from service provision • VAT paid to state budget and other activities
- TK 5114 – Revenue from government grants • VAT payable on imported goods
- TK 5117: Revenue from investment properties
- TK 5118: Other revenue VAT payable at the end of period

Sub accounts:

TK 33311: Output VAT

TK 33312: VAT payable on imported goods

15 16
 BASIC TRANSACTIONS
Acc 3387 “Unearned revenue”
1. Sold directly 6. Sale with cash
to customers
Acc 3387 discount

Transferred Unearned revenue 3. Sale of goods in 5. Goods sent on

revenue earned in 2. Installment sale exchange for other consignment
incurred
dissimilar one
the period
4. Finished goods
Unearned revenue at for business
activities
the end of period

Other related accounts: Acc 111, 112, 131,…

17 18

2. Credit sale with interest payment, installment sale

Revenue = Cash sale price
1. Cash sale or credit sale without interest on late payment:
Interest income = Credit sale price – cash sale price
(1a). Revenue
Acc 511 Acc 111, 112
(2a). Revenue
Revenue Payment in cash Acc 111, 112
(1a) 1 (2a) Received money
Acc131 from customer
Acc 333 (1) Acc 511
Receivable from Acc 131
VAT payable customer Receivable (2b)
(if any) from customers

(1b.) Cost of good sold (Perpetual method) Acc 333 (1)

VAT (if any)
Acc 154, 155, 156 Acc 632
Acc 515 Acc 3387
(1b) COGS Interest
2c

(2b).Cost of goods sold – similar to case (1)

This transaction is not applicable for periodic method 19 20
Example 6.3
 3. Dissimilar exchange of goods 4. Product used for business activities (i.e. material, tool, fixed
assets…) or for promotion purposes
* Revenue
Acc 131 Acc 152, 153... • Internal revenue
Acc 511
Revenue Payable to (3)c Value of
(3)a exchange received goods Acc 511 Acc 621, 211, 627, 641, 642
parner
Acc 333(1)
VAT
Acc 133
Acc 111, 112 Deductible Acc 333 (1) Acc 133
VAT (if any) (if any)
(3)d

• Cost of good sold

* Cost of goods sold
Related Acc Acc 632 Acc 154, 155 Acc 632
COGS
(3)b
Example 6.4:
21 22

5. Goods sent on consignment 5. Goods sent on consignment with fixed price

a. At consigner’s
Cost of good sold - Cost of good sold
Related Acc. Acc. 157 Acc. 632
5(a) 5(c)
Acc 154, 155, 156 Sent goods on consignment Goods was sold
Acc 157 Acc 632
4(a) 4(c) - Revenue recognition: When goods are sold by consignees .

Revenue Case 1: Consignees deduct commission fee before making payment

to consigners Acc. 133
(if any)
Acc 511 Acc 111, 112, 131
4(b)
Acc. 511 Acc. 641
Revenue Commission
Acc 3331
5(b1)
Acc. 111, 112, 131
Acc. 333
23 (1) 24
VAT
a. At consigners
Case 2: Commission fee is paid seperately Case 1: Commission fee is deducted before payment to consigners

Acc. 511 Acc. 111,112, 131 Acc. 331 Acc. 111,112, 131
5(b2 )
Revenue
Payable to consigner
Total sale
Acc. 511 Total sale
Acc. 3331 revenue
Commission fee revenue
Output
VAT Acc. 133
Commission fee paid for consignees: Acc. 333(1)
Output VAT
Acc. 111,112 Acc. 641
b. At consignee 5(d) Case 2: Commission fee is calculated and paid at the end of period
Acc. 331 Acc. 111,112, 131
- When received goods: Record on the detailed journal for goods sent
Total sale revenue paid to
on consignment consigner
Acc. 511 Acc. 111,112, 131
- When sold the goods to customer: At the end of period:
Commission fee
Acc. 333(1)
25 26
Output VAT

6. Sale with cash discount

Cash sale with cash discount sale transactions with deductible VAT

Acc 511 Acc 111, 112

Acc 133 Acc 333(1)
Acc 333 (1) Deductible VAT
Acc 635
(if any) Payment discount

Credit sale withcash discount

Acc 111, 112

Acc 511 Acc 131

Acc 333 (1) At date of When make Acc 635

sale payment
Payment
discount
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 6.1.4 Accounting for revenue deduction
sale transactions with non-deductible VAT
b. Account used:
Price is included VAT, import tax and special consumption tax
Acc. 521 – Revenue deduction: (Article 81 – Circular 200, p.g 378)
Acc 111,112,131 Acc. 521
Acc 333 Acc 511
Sale discount, sale Transfer sale discount, sale
allowance and returned allowance and returned goods
goods incurred for net revenue calculation

Tax payment to State Budget Acc 521 has 3 TK sub-account:

- TK 5211 - Sale discount

Acc 111,112 Acc 333
- TK 5212 - returned goods
- TK 5213 - Sale allowance

29 30

(2) Returned goods

6.1.4 Accounting for revenue deduction
- Revenue deduction from returned goods
Acc 5212 Acc 511
(1) Sale discount, sale allowances Acc 111, 112
Transfer

TK 111, 112 TK 5211, 5213

TK 511 Acc 131 Acc 333 (1)
Amount has (2). Transfer
been paid (if any)
TK 131 TK 333 (1)
Amount has Reduced VAT - COGS of returned goods
not paid payables
TK 632 TK 155, 156...

TK 111, 112 TK 641

Other related expenses
31 32
 6.2 Accounting for cost of goods sold
At the end of the period
Cost of good sold calculation
After recording revenue deduction at time inccurred, accountants - If the company applies perpetual method
calculate net revenue before transfering to income summary COGS calculation is based on Good issuing Notes
account
- If the company applies periodic method
Net revenue = Total revenue – Revenue deduction COGS calculation is based on the following equation
Cost of
Cost of
goods
Acc 911 Acc 511 Cost goods Cost of
sent on
COGS in of sent on goods Cost of
Transfer consig
the perid = invent + consig + receive - inventor - nment
ory at nment d in y at the
at the
the at the the end
end
beg. beg. period

33 34

6.2 Accounting for cost of goods sold Account 155 “Finished goods”
 Value of finished goods  Value of finished goods
increases decreases
Accounts used:  Surplus of finished goods  Shortage of finished goods
detected in the physical detected in the physical
• Acc. 155 – Finished goods inventory count inventory count
• Acc. 156 – Merchandise goods  Transfer the closing balance  Transfer the opening balance
of finished goods (the periodic of finished goods (the periodic
• Acc. 157 – Goods on consignment inventory method) inventory method)
• Acc. 632 – Cost of goods sold
Value of finished goods in stock
at the end of the period

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 Account 632 “The perpetual inventory method” Account 632 “The periodic inventory method”
 Cost of goods sold and  Cost of goods returned  Cost of finished goods and out  Cost of finished goods and out of
services during the period. of the warehouse but not yet the warehouse but not yet sold
 Reverse of provision for sold at the opening of transferred to the debit side of
 Other cost recorded to cost of inventory at the end of fiscal accounting period account 155,157 at the end of
goods sold year accounting period
 Cost of finished goods during
 Provision for inventory  Cost of goods sold transferred the period  Reverse of provision for
to account 911 inventory at the end of fiscal year
 Provision for obsolete stock
 Cost of goods sold transferred to
account 911

Acc 632 has no ending balance

Acc 632 has no ending balance

37 38

Accounting for cost of goods sold

(The perpetual inventory method) Explanations
Ac. 154,155, 1. Cost of goods sold incurred during the period
156,157… Ac. 632 Ac. 155,156 2. Other costs recorded to ac. cost of goods sold
1 3 (to be charged to profit/loss account)
3. Cost of goods returned
Ac. 154,627, Ac.911
241,138…
4. Cost of goods sold transferred to Ac. 911 at
4 the end of the period (to determine business’s
2
performance)

39 40
 Accounting for cost of goods sold Explanations
(The periodic inventory method) 1. At the beginning period, transferring the opening balance
of finished goods in stock and finished goods sent on
Ac. 155,157 Ac. 632 Ac. 155,157 consignment to account 632
1 2. At the end of the period recording cost of finished goods
4
during the period
Ac. 631 3. At the end of the period recording cost of merchandise
2 Ac.911
goods sold
5
4. At the end of period, transfer the ending balance of
Ac. 611 finished goods in stock and finished goods sent on
3 consignment to the debit side of account 155,157
5. At the end of the period, transfer cost of
finished/merchandise goods sold to Ac. 911
41 42

6.3. Accounting for selling expenses and 6.3.1. Accounting for selling expenses
administrative expenses 6.3.1.1. Contents
* Definition
*Selling expenses includes:
6.3.1. Accounting for selling expenses 1) Sale staff expenses
6.3.2. Accounting for adminstrative expenses
2) Material and packing material expenses
3) Tools and instruments expenses
4) Fixed asset depreciation expenses
5) Warranty expenses
6) Outside services expenses
7) Other expenses

* Notes: Selling expenses incurred is transferred to income

43 44
summary for business result calculation
 6.3.1.2. Accounting for selling expenses 6.3.1.2. Accounting for selling expenses
a. Source documents: b. Accounts used:
- Salary and social insurance allocation sheets
Acc 641
- Material allocation sheet
- Items reduced selling
- Depreciation allocation sheets
Selling expenses expense in the period
- VAT invoice, Sale invoice incurred in period.
- Transferring “Income
- Payment voucher, Credit notes from bank Summary” accounts
-….
b. Accounts used: Acc641 – Selling expenses TK 6411 - Sale staff expenses
( Article 91-Cir 200, pg. 418) TK 6412 - Material and packing material exp.
Sub
accounts of TK 6413 - Tools and instruments expenses
Acc 641 TK 6414 - Fixed asset depreciation expenses
TK 6415 - Warranty expenses
TK 6417 - Outside services expenses
45 46
TK 6418 - Other expenses

6.3.1.2. Common transactions Flow chart explaination

Acc 334, 338
Acc 641 1. Sales staff’s salary, wages and social insurance, health
Acc 152, 111,.. insurance, trade union fees…
(1) (6)
Acc 152,153, 242… 2. Costs materials/tools and allocation costs of supplies and
tools.
(2) 3. Depreciation of fixed assets used for selling and distribution
Acc 214 Acc 911
purposes
(3) 4. Provisions for warranty expenses or warranty expenses
(7)
Acc 111, 112, 352… incurred without previous provision.
(4)
5. Services and other expenses in cash.
Acc 133
Acc 331, 111, …
6. Reducing selling expenses (Reverse provision…)
(5) 7. Selling expenses allocated and transferred to determine
operation result. 48
47
6.3.2. Accounting for administrative expenses 6.3.2.2. Accounting for administrative expenses
6.3.2.1.Contents a. Source documents:
* Definitions: - Salary and social insurance allocation sheets
*Contents: - Material allocation sheet
- Depreciation allocation sheets
1) Administrative staff expenses 5) Taxes, fees and charges - Tax declaration: License tax,…
2) Office supply expenses 6) Provision expenses - VAT invoice, Sale invoice
3) Office equipment expenses 7) Outside services - Payment voucher, Credit notes from bank
4) Fixed asset depreciation 8) Other expenses -….
b. Account used: Acc 642 – Administrative expenses

Notes: Selling expenses incurred is transferred to income

summary for business result calculation

49 50

6.3.2.2. Accounting for administrative expenses

6.3.2.2. Common transactions
Accounts used: TK 642 Acc 642
Acc 334, 338 Acc 111, 152,…
Administrative - Items reduced selling expense in the (1)
(7)
expenses incurred in period
Acc 152,153, 242…
period. - Transferring “Income Summary” (2)
accounts Acc 911

Acc 214
Sub accounts of Acc 642 (3)
Acc 6421 - Administrative staff expenses (8)
Acc 333
Acc 6422 - Office supply expenses (4)
Acc 6423 - Office equipment expenses
Acc 2293, 352
Acc 6424 - Fixed asset depreciation (5)
Acc 6425 - Taxes, fees and charges Acc 133
Acc 331,111, …
Acc 6426 - Provision expenses
(6)
Acc 6427 - Outside services
51 52
Acc 6428 - Other expenses
 Flowchart explanations 6.4. Accounting for financial income and financial
1. Office staff’s salary, wages and related social insurance, health expenses
insurance, trade union fees…
2. Costs and allocation costs of supplies and tools. 6.4.1. Content of financial income and financial expenses
3. Depreciation of fixed assets used for general administration 6.4.2. Source documents
purposes 6.4.3. Account used
4. Business tax, land rentals and other fees 6.4.4. Common transactions
5. Provisions for doubtful debts and other provision payables for
business restructuring, loss from risky contracts..
6. Services rendered and cash expenses.
7. Reducing administration expenses
8. Administration expenses allocated and transferred to determine
operation result.

53 54

6.4.1. Contents of financial income and financial expenses

TRANSACTIONS

Content Financial expenses incurred Financial income incurred 6.4.2. Source documents
1. Interest Part of interest expenses Interest income - Invoices
2. Loss from the investment is deducted from
- Dividend, distributed profit ... - Receipt notes, payment notes
Financial investment capital
investment Loss from the investment transfer - Profit from the investment transfer - Debit notes, credit notes from bank
Expenses related to financial investment
3.Payment Payment discount paid Payment discount received
- ….
discounts
4. Foreign - Loss from exchange rate difference - Profit from exchange rate difference
exchange (business activities + construction process) (business activities + construction process)
differences -Loss from revaluating closing balance of -Profit from revaluating closing balance of
foreign currency monetary items (business foreign currency monetary items (business
activities + construction process): activities + construction process):
4131 635 4131 515
- Allocate loss from exchange rate -Allocate profit from exchange rate
difference (construction before operation) difference (construction before operation)
4132 242 635 ( 5 years) 4132 242 635 ( 5 years)
... ...
55 56
6.4.3. Accounts used 6.4.4. Common transactions
Acc. 221, 222, 228... Acc. 111, 112,...
Accounts (2a) transfer financial investment
Acc. 635 2291, 2292
Acc. 635 – Financial expenses Acc. 515- Financial income (2b2)Reverse
Acc. 229 provision
(2b1)Make provision Acc. 515
* Acc. 635 - Financial expenses for FX difference Acc. 111, 112, 3387
Acc. 635 Acc. 111, 112,...
(1a) Interest expenses (1b) Interest
Financial expenses Transfer financial income
241; 627 Acc. 331, 111, 112
incurred expenses Acc. 131, 111,112 Acc. 911
(3b) payment discounts
(3a) payment discounts (5a)... (5b)...
* Acc. 515- Financial income
Acc. 413 Acc. 413
Acc. 515 (4b1) FX differences (4b2) FX differences
242
Transfer financial Financial income incurred 3387
Acc. 111, 112, 131...
income Acc. 152, 211...
(4a) transactions related to foreign exchange incurred
57 58

6.5. Accounting for other expenses and other income

6.5. Accounting for other income and other expenses
6.5.1. Contents
6.5.1. Content of other income and other expenses
6.5.2. Source documents
6.5.3. Accounts used * Other expenses includes:
6.5.4. Common transactions • Expenses relating disposal of fixed assets and their carrying
amount.
• Losses from revaluation of materials, goods and fixed asset
which are contributed in joint ventures, associates…
• Compensations for breaches of contracts;
• Tax penalty;
• Other expenses.

59 60
6.5. Accounting for other income and other expenses 6.5. Accounting for other income and other expenses
6.5.3. Accounts used
6.5.2. Source documents
- Invoices
Acc. 811- Other expenses
- Receipt notes, payment notes
- Debit notes, credit notes from bank Other expenses Transfer other expenses
incurred
- Tax receipt
- ….
Acc. 711- Other income

Transfer other Other income incurred

income

61
61 62

6.5. Accounting for other income and other expenses

6.6 Accounting for current Corporate Income Tax
6.5.4. Common transactions
expenses
Acc. 111,..
Acc. 811 Acc. 711 Acc. 111,…
(1) (2) 6.6.1. Process of current corporate income tax calculation
Acc. 911
- Periodically (quarterly)
(3a) (3b) - End of financial year
- …

63 64
6.6 Accounting for current CIT expenses
6.6.3 Common transactions
6.6.2. Accounts used
• Acc. 821 – Corporate Income Tax expenses
(3b) At the end of the period, Total
• Acc. 8211 – current Corporate Income Tax expenses debit side < Total crebit side
Acc. 111, 112,.. Acc. 3334
(Article 95 – Circular 200) Acc. 8211 Acc. 911

(1a) Temporary CIT

Acc. 8211 (3a) At the end
(2) CIT payable
of the period,
payment
- CIT payables charged to current - Current CIT actually paid during year < Total debit side
(1b1) Remaining CIT
income tax expenses during year > Total crebit
current CIT temporarily paid payable (Final tax
side
- CIT payables increase due to - CIT payable decrease due to detecting declaration...)
detecting important errors of insignificant errors of the previous year
previous years - Transferring current CIT expenses to Dr.
- Transferring current CIT 911 “Income Summary”. (1b) Overpaid CIT (final tax
expenses to Dr. 911 “Income declaration)
Summary”.

65 66

6.7.1. Contents

6.7. Accounting for business result and profit distribution Definition

From normal business activities
6.7.1. Contents
Business result
6.7.2. Accounts used From other activities
6.7.3. Common transactions

Result from normal business activities

Financi Adminis Financ

Business Net CO Selling ial
= - + al - - trative -
result from GS expens
revenue income expens
normal expense
es es
business s
activities Gross revenue

67 68
 6.7.1. Contents
Result from other activities * Profit distribution
Result from other activities = Other income - Other expenses * Business result in a period could be profit or loss
+ If the company makes loss  ….
Profit before CIT = Business + Other + If the company makes profit, profit distribution as
result result follow:
Profit after = Profit before CIT - CIT • Pay dividend for investors
CIT expenses
• Pay for previous year’s loss
CIT expenses = Current CIT + Deferred CIT • Make reserves from remaining amount
expenses expenses
* In an enterprise, profit distribution has 2 stages:
Stage 1- Temporary distribution: periodically, distribute profit as
Current CIT = Taxable income x CIT rate planned before
expenses (tax regulation)
Stage 2- Final distribution: when the financial year ends

69 70

6.7.2. Accounts used

Acc. 911, Acc. 421 and other related accounts * Acc. 421- Undistributed post-tax profit

*Acc. 911- Income summary Content To record post-tax profit/loss and distributed profit/loss of
an enterprise
Acc. 421
Transfer revenue, income and expenses for business result
- Loss from business activities - Profit from business activities
- Profit distribution - Loss distribution
Acc. 911
Transfer expenses Transfer revenue, income
Undistributed loss Undistributed profit
Transfer profit Transfer loss
Acc. 4211 - Undistributed post-
Acc 421 has 2 sub- tax profits of previous year
accounts:
Acc. 4212 - Undistributed post-
tax profits of current year 72
 Acc. 632 Acc. 911 Acc. 511 Common transactions on business results
Transfer COGS
Transfer revenue Acc. 111, Acc. 511,
Acc. 911
Acc. 632 112, 131 Acc. 521 Acc. 111, 112
Acc. 641,642 DT
Acc. 515
Transfer selling expenses,
Transfer financial Acc. 635, 641, 642 TK 333(1), Acc. 131,
administrative expenses 333(2), 333(3) 136
income
Acc. 635
Transfer financial expenses Acc. 711 Acc. 333(4)
Acc. 3387
Transfer other TK8211, 8212
Acc. 811 income Acc. 152,
Transfer other expenses Acc. 515 153
Acc. 8212 TK 421(2)
Acc. 336 Profit
Acc. 8211, 8212 If Dr. side of acc. 8212 If Dr. side of
payment to
>Dr. side of that account acc. 8212 parent Acc. 333(1)
Transfer
company profit Acc. 711
Current CIT expenses, >Dr. side of Acc. 414,
Acc. 111, 112 that account 418, 353...
Acc. 4212
Temporary dividend payment, profit Funds and
distribution to related parties Transfer profit reserves
Acc. 414, 353, 418,… after CIT Acc. 111,
Make temporary reserves 112, 338
Acc. 3388 Profit
payment
Acc. 111, 112 FY end, identify Transfer loss
Dividend preference share Transfer loss
73

payment payables