282 ACOUNTING FOR REVENUES, EXPENSES AND INCOME SUMMARY IN VIET ANH CONSTRUCTION DEVELOPMENT COMPANY LIMITED

MINISTRY OF FINANCE ACADEMY OF FINANCE Student: Pham Thi Linh Group: CQ54/51/01 GRADUATION THESIS TOPIC: [ACOUNTING FOR REVENUES, EXPENSES AND INCOME SUMMARY IN VIET ANH CONSTRUCTION DEVELOPMENT COMPANY LIMITED] Major : Accounting Financial English Student code : 165D2202010021 Supervisor : Cao Phuong Thao Hanoi – 2020 DECLARATION I hereby declare that this graduation thesis is my own work and effort It has not been submitted anyone All of sources of information and data have been used, they have been acknowledgement Hanoi, 10 January, 2020 Graduation thesis author Pham Thi Linh ABSTRACT The development of accounting related to the development of social economy The more developed society is, the more important accounting becomes It becomes an indispensable tool in state and enterprises economic management Nowadays, to exist, the enterprises have to have suitable business strategy and business management Accounting organization plays significant part in the business management and running business Specially, good accounting organization for revenues, expenses and income summary can help enterprises increase return investment ability and develop strongly Besides, income summary helps businesses capture all business activities through indicators reflecting business results and identify clearly the factors affecting business performance, thereby facilitating business development and effective business operations.That reason why all businesses should have good accounting system ,especially, revenue, expense accounting and reporting business result accounting ACKNOWLEDGMENTS A completed research would not be done without any assistance.Therefore, the author who conducted this study gratefully gives acknowledgement to the support and motivation in the duration of doing this thesis First of all, I would like to express my sincere gratitude and gratefulness to my supervisor Mrs.Cao Phuong Thao who helped, supported and encouraged me enthusiastically while I conducted this graduation thesis Her kindly support and continuous advice went through the process of the completion Her encouragement and comments had significantly broadened and bettered my work Without her inspiration, motivation and instructions, the study would have been impossible to be done effectively Moreover, I would like to express my appreciation to the staffs as well as the managers of the departments in Viet Anh Construction Development Company Limited who helped me to conduct data collection for the study to make it more detailed Last but not least, I would like to state my special thanks to approve to my parents for their endless love, care, assistance and motivation to me for the whole of my life; my deeply thanks come to all my friends whose kindly help, care, motivation gave me strength and lift me up all the trouble for the rest of my life LIST OF ABBREVIATIONS No Abbreviation VA R 10 11 E IS A No VAT GJ GL IBSB COGS Full phrase Viet Anh Construction Development Company Limited Revenues Expenses Income summary Accounting Number Value Added Tax General Journal General Ledger International Accouting Standards Board Cost of Goods Sold LIST OF FIGURES AND TABLES Flowcharts: Table: TABLE OF CONTENTS INTRODUCTION Rationale of the study In the modern economic world, especially when the number of bankrupt enterprises is rising, accounting for sales and business results has become more and more important every company in general, and VA in particular It will point out the importance of having an effective accounting department for sales and business results Specially, good accounting organization for revenues, expenses and income summary can help enterprises increase return investment ability and develop strongly Besides, income summary helps businesses capture all business activities through indicators reflecting business results and identify clearly the factors affecting business performance, thereby facilitating business development and effective business operations Recognizing the importance of this matter, VA is improving accounting R, E, IS step by step Therefore, based on important role of accounting for R, E, IS above, I would like to take “Accounting for revenues, expenses and income summary in Viet Anh Construction Development Company Limited” as my research topic for my graduation thesis” Aims of the study The study “Accounting for revenues, expenses and income summary in Viet Anh Construction development Company limited” as my research topic for my graduation thesis is toward following objectives Firstly, the study needs to systematizing theoretical issues of revenue, expense and income summary The second aim is studying the accounting work, specially, accounting for revenues, expenses and income summary in Viet Anh Construction development company limited" In this, the graduation thesis focus on revenues from sales and services redering, other income, general administration expenses and income summary The last objective is suggesting some methods and solutions to improve accounting for revenues, expenses and income summary in Viet Anh Construction development company limited as my research topic for my graduation thesis To sum up, this study aims above objectives to make clearly the content about Accounting for revenues, expenses and income summary in Viet Anh Construction development company limited” as my research topic for my graduation thesis Scope of the study VA is a small- medium enterprise which operates in the construction field Now, it has not yet applied managerial accounting In the near future, applying management accounting is not feasibility So that, the study only focuses on accounting for revenue, expense and income summary in VA from the perspective financial accounting The subjective of the study is issues related to Accounting for R, E and IS, specially, revenues from sales and services redering, other income, general administration expenses and income summary in scope of VA The related data source is collected from company in the first quarter of 2020 ( January, Feberuary and March) Methodology of the study This thesis is completed through knowledge at university, documents and actual research process to achieve these above objectives through several methods of studying the thesis are used as follow Firstly, the thesis is collected figure from websites, magazines, internet and internal information as documents sources and bookkeeping of the company Besides, based on method of analyzing, summarizing, synthesizing materials and books from the theoretical background to complete information Secondly, the author also uses figure comparison, data evaluation, judgment and conclusion to give the most objective information Lastly, the other also combine practical observation and evaluate to have more date for this thesis.Based on above methods, the thesis will be complete with useful information and achieve aims towared Organization of the study Apart from introduction, list and conclusion, this thesis includes three chapter The first chapter is literature review which shows overview about accounting for revenues, expenses and income summary in VA The second chapter is accounting for revenue, expense and income summary in VA In this chapter, the author introduces VA background and focus on accouting revenues from sales and services redering, other income, general administration expenses and income summary Finally, recommendations and suggestions to improve accounting system in VA are presented in the last chapter To sum up, contents of three chapter helps make clearly about accounting for R,E and IS in VA as well as this graduation thesis 10 Journal Vocher Vocher A No B Date C 31/03/2020 PKT 31/03/2020 31/03/2020 PKT 31/03/2020 31/03/2020 PKT 31/03/2020 D Opening balance Incurred Page Row E G Transfer revenues from sales and services redering Transfer other income Transfer adminitrative expenses Total Incurred TABLE 2.27: Table of transfering in GL of Account 911 If the 911 account’s balance is at credit side, it means that the company’s operation is profitable If the 911 account’s balance is at debit side, that the company’s operation is losses 106 H 511 18 711 10 642 28 CHAPTER 3: RECOMMENDATIONS AND SUGGESTIONS TO IMPROVE ACCOUNTING SYSTEM IN VIET ANH CONSTRUCTION DEVELOPMENT COMPANY LIMITED 3.1 Review about Accounting system of Viet Anh Construction Development Company Limited 3.1.1 Advantages Through many year experience, the accountant department has changed a lot to meet managerial needs, There are some strong points as follows 3.1.1.1 - About accounting system The accounting for sales and business result has ensured the consistency and coherence in terms of scope and method of calculation, some economic standards between the accounting department and other related departments - and divisions Almost incurred selling and administration expenses are totally collected and displayed in the income statement and notes to financial statements This helps pointing out mistakes in determining net sales and net income for the - company All most transactions are recorded completely, timely and matched with accounting requirements Periodic accounting system is applied, which saves a lot of time and efforts for accountants 3.1.1.2 - About source documents, accounts, bookkeeping All original vouchers issued by VA are suitable with Ministry of Finance’s decisions as well as managerial needs Invoices and vouchers are issued only after collecting enough documents and meeting all sales recognitions Invoices and vouchers are arranged and stored chronologically, which facilitates the future examination and uses 107 - Reports related to sales status, selling expenses and administration expenses are prepared weekly, therefore it’s easier for managers to review and consolidate Besides, the company also issues some sub-accounts for easier - check – up, recording and reviewing Each of the five persons in the accounting department is responsible for different accounts and books This task allocation helps to increase the consistency in recording books and facilitate the examination and - comparison at the end of the fiscal years Sales reports are formed weekly by subject and by model, which helps - managers to catch the sales status as the earhest convenience In addition, VA doesn’t apply any sales deductions, which makes the accounting entries for sales easier, simpler and minimizes the possible - mistakes Cost of goods sold is calculated year-end in In-out reports which show the increases, decreases and available balance of products or services Thanks to that, managers can easily realize the present status and predict the future - consumption level, and then draw sound decisions All financial statements used in VA have the same form stated by Ministry of Finance These forms are clear, logical and easy-to- follow 3.1.2 Disadvantages Despite changes to meet the managerial requirements and changes by Ministry of Finance, VA also has some weaknesses Now, after carefully studying the accounting system for sales and services, I can point out some weaknesses as follows: - Despite changes to meet the managerial requirements and changes by Ministry of Finance, VA also has some weaknesses Now, after carefully studying the accounting system for sales and services, I can point out some - weaknesses as follows Although the periodic accounting system saves a lot of time and efforts, this requires a manual check – up (counting at the warehouse) at the end of the fiscal year It is widely known that there are a lot of stuff things for 108 accountants to complete at the end of the fiscal year such as preparing financial statements, printing ledgers, rearrange files… Therefore, if not effectively prioritizing their to – lists, accountants could not submit - financial statements timely In selling and administration expenses, accounts 641 and 642 only reflect the total ending balance of sub-accounts Therefore, if the accountant wants to review the detail for selling and administration expenses, he/she needs to - open their sub- accounts, which takes a lot of time In internal sales, the assigned accountant only depends on the goods dispatch cum internal bill note It works only when the transaction happens simply It will be a problem if there are more than related transactions in selling - internally For account receivables and account payables, the accountant only uses codes for subject parts (each customer and dealer has one unique code) This may create difficulty if the managers not remember all their names Besides, advertising and marketing expenses take a rather large part in the total selling and administration expenses Therefore, it will be clearer and - easier to manage if the sub accounts for these activities will be created Although financial reports are prepared clearly and logically in accordance with Ministry of Finance’s standard forms, these will be useless if the managers want to compare between two fiscal years 3.2 Suggestions to improve accounting system in Viet Anh Construction Development Company Limited 3.2.1 Requirement to improve accounting system When Vietnam joined WTO and changed to a market-oriented economy, most companies are required to pay more attention to their sales and business activities Therefore, accurate, timely, complete accounting information is very important for their existence From these reasons, it is necessary to enhance and develop an effective accounting system for sales and business result Besides, the more complicated business activities are, the more complex accounting entries are So, 109 the possible accounting system must be changed flexibly, in both form and content to adapt to changes In enhancing the accounting system for sales and business result, the company must comply with following requirements: - Ensuring to follow regulations and laws on accounting issued by Ministry of Finance; Being suitable with the company’s characteristics and managerialrequirements; Saving time, money and effort; Providing timely, complete and accurate accounting information Some improtance requirement have to be remembered in accounting system: - About initial accounting and chart of account: + Initial accounting is the process of recording, booking all economic transactions into accounting vouchers, which are the base for accumulation and conclusion Initial accounting is helpful only when fulfilling all such steps as determining what voucher is needed, how many vouchers will be formed, who is responsible for the vouchers, steps of transferring these vouchers + The current chart of accounts used in most of Vietnamese enterprises is announced by the Ministry of Finance It contains groups of on – balance sheet accounts and off – balance sheet accounts The reflected content, structure and recording methods in these accounts are decided by the Ministry of Finance in advance, which every enterprise must compile with However, the arrangement and usage of this chart of accounts are up to the enterprises Therefore, there will be some mistakes if the enterprise has applied in a wrong way or opened unnecessary sub-accounts or had no management on the chart usage - About accounting books In order to reflect the consumption status, some accounting books must be issued monthly, quarterly and yearly What books will be issued is dependent on the accounting form applied in the enterprise Recording, accumulating and systemizing accounting information to form financial reports is the biggest phase in financial accounting with a huge number of tasks to This phase needs the assigned accountants to be very good at booking Therefore, the application of a system of 110 accounting books compatible with production scope and characteristics as well as the enterprise’s managerial level will promote accounting productivity, provide enough and helpful information for decision making processes - Abount accounting reports: Every company must prepare financial reports in order to consolidate anddisplay accounting information in an effective and easy-to read way For service providing activities, the final result is shown in the income statement including revenues and expenses In accordance with the accounting department and managerial requirements, financial reports will be prepared monthly or annually In conclusion, how to enhance the accounting system for business and business result depends on the accounting department’s performance, the enterprise’s requirements, the regulated accounting decisions by Ministry of Finance and the changes in the whole economy and its markets 3.2.2 - Suggestion to improve accouting system Allocating tasks effectively to accountants VA is an enterprise operating in the field of interior in Vietnam The determination of profit and loss will be determined by each project Therefore, The company should assign an accountant to carefully monitor the cost of each project including construction labor costs, design costs, material costs, and other costs From there, it is possible to determine the exact profit and loss for each project The management will be more effective and accurate I can propose a sample of statistic project expenses as follows: Viet Anh Construction Development Limited Company STATISTING EXPENSES Project: No Expenses Material Unit Quantity h 111 Price k Total hxk Notes Labour Total b CONTACT VALUE TOTAL EXPENSES PROFIT a b a-b TABLE 3.1: Table of statisting expenses of projects - Every month, VA has not yet have administration expenses report I propose a sample of administration expenses report used internal company to support management That report is as follow: 112 Viet Anh Construction Development Limited Company 32 Linh Duong Str., Hoang Mai Dist, Ha Noi REPORT OF ADMINISTRATION EXPENSES Month: Unit: VND No Description Amount Administation expenses - Stationery cost Administation expenses - Office tools & small equipments Administation expenses - Salary management department Outside purchasing service cost others Administation expenses - Expenses, water, internet Other cash disbursement expenses Total incurred amount Financial management Chief accountant Prepared by Lương Ngọc Lâm Hoang Thi Minh Nghia Phạm Thị Linh TABLE 3.2: Report of administration expenses 113 - Now, for documents related to payments of a contracts, VA uses only “The paper request of payment” I propose a sample of “ The paper confirm of payment” to support payment advances from contracts “The paper confirm payments” must contain all signatures of the customer and the representative of the company receiving the advance and clearly indicate the amount received, date of receipt it hepls to confirm amount that customer has successfully paid the company This paper will be print copies which have enough all signatures Customer keeps a copy and the company keeps a copy which has the same legal validity 114 Viet Anh Construction Development Limited Company 32 Linh Duong Str., Hoang Mai Dist, Ha Noi PAPER OF CONFIRM FOR PAYMENT Date: 2nd January,2020 Payer: Nguyen Chau Giang Amount paid: 83.758.000đ In words : Eighty three millions, seven hundred fifty eight thousand./ For: 40% of construction contract value No 02/01/2020HĐTC Payer Receiver Nguyen Chau Giang Pham Duy The TABLE 3.3: The paper of confirm payment 115 CONCLUSIONS In conclusion, the thesis with the topic “Accounting for R, E and IS in VA and suggestions for improvement” has already achieved its aims step by step Firstly, the thesis has completely reflected the theoretical background of accounting for sales and business result Secondly, almost all of accounting activities for revenues, expenses and income summary in VA were listed and analyzed Thirdly, through the above analysis, the strengths and weaknesses of the accounting system for business result were revealed Thanks to understanding the company’s weaknesses of accounting system and the budget limitations as well as managerial level, the thesis has drawn some possible solutions such as improving accounting system , effective task allocation, sub – accounts issuing, sales discount accounts usage, and improvements in accounting report preparation 116 REFERENCES VA’s document sources the first quarter,2020 (1/1/2020 – 31/03/2020) Websites: - www.vneconomy.vn - www.danketoan.com Textbook Accounting principles - 117 APPENDIX Original documents: Appendix 1.1: Payment of electric, water and internet expenses Appendix 1.2: Payment of demand 118 Appendix 1.3: Payment of salary for management department 119 Appendix 1.4: VAT invoice of liquidating car 120 ... accounting for revenues, expenses and income summary 15 1.2.1 Requirements and roles of accounting for revenues, expenses and income summary In order for requirements of managing revenues, expenses, ... and income summary The second aim is studying the accounting work, specially, accounting for revenues, expenses and income summary in Viet Anh Construction development company limited" In this,... Anh Construction Development Company Limited? ?? as my research topic for my graduation thesis” Aims of the study The study “Accounting for revenues, expenses and income summary in Viet Anh Construction