NATIONAL ECONOMICS UNIVERSITY SCHOOL OF ADVANCED EDUCATIONAL PROGRAMS BACHELOR THESIS Major Accounting Topic Accounting for finished goods at no 10 Limited company Student’s name Nguyen Vuong Thuy Anh[.]
NATIONAL ECONOMICS UNIVERSITY SCHOOL OF ADVANCED EDUCATIONAL PROGRAMS BACHELOR THESIS Major: Accounting Topic: ACCOUNTING FOR FINISHED GOODS AT NO.10 LIMITED COMPANY Student’s name: Nguyen Vuong Thuy Anh Student’s code: 11160360 Class: Advanced accounting 58B Instructor: Assoc Prof Tran Manh Dung Hanoi - 2020 ACKNOWLEDGEMENT This bachelor thesis is the summary of all my academic knowledge after years of studying at university under the instruction of lectures and professors as well as the cooperation with classmates in exploring accounting knowledge I would like to express my special thanks of gratitude to my instructor, Assoc Prof Tran Manh Dung, for providing me with the necessary guidance in writing a thesis This thesis would not have been possible unless the staff at Finance & Accounting Department of No.10 Co., Ltd made available their support in a number of ways for me with many accounting documents and mentoring me brand-new practical experience in accounting work Last but not least, thanks to the judges of National Economics University to consider and spend time for supervising my thesis Your evaluation and comment will help me much in my future work TABLE OF CONTENTS ACKNOWLEDGEMENT LIST OF ABBREVIATIONS LIST OF TABLES LIST OF FIGURES ABSTRACT INTRODUCTION CHAPTER 1: CHARACTERISTICS OF FINISHED GOODS, ORGANIZING AND MANAGING FINISHED GOODS AT NO.10 CO., LTD 1.1 Characteristics of finished goods at No 10 Co., Ltd 1.1.1 List of finished goods .5 1.1.2 Some characteristics of finished goods .7 1.1.3 Classification of finished goods 1.2 Features of finished goods supply chain at No 10 Co., Ltd 10 1.2.1 The methods of manufacturing 10 1.2.2 The methods of stock-out 18 1.2.3 The warehouse system of No.10 Co., Ltd .18 1.3 Finished goods management at No 10 Co., Ltd 19 1.3.1 Functions and responsibilities of some departments and individuals in the supply chain of finished goods 19 1.3.2 The finished goods management in term of the storage and the reservation 20 CHAPTER 2: CURRENT SITUATIONS OF ACCOUNTING FOR FINISHED GOODS AT NO 10 CO., LTD .22 2.1 Detailed accounting for finished goods at No 10 Co., Ltd 22 2.1.1 Detailed accounting for receipt finished goods .22 2.1.2 Detailed accounting for issue finished goods 31 2.1.3 The process of preparing warehouse cards at No.10 Co., Ltd 42 2.2 General Accounting for finished goods at No 10 Co., Ltd .49 2.2.1 Accounts in use .49 2.2.2 Accounting books in use 50 2.2.3 The process of general accounting at No.10 Co., Ltd 50 2.2.3.1 The organization of accounting books .50 2.2.3.2 Accounting entries for finished goods and finished goods consumption 53 2.2.4 The stock-taking procedure of No.10 Co., Ltd 62 CHAPTER 3: ASSESSMENTS AND RECOMMENDATIONS FOR IMPROVING ACCOUNTING FOR FINISHED GOODS AT NO.10 CO., LTD 63 3.1 Assessments of accounting for finished goods at No 10 Co., Ltd 63 3.1.1 Strengths 63 3.1.2 Weaknesses and causes 65 3.2 Recommendations for improving of accounting for finished goods at No 10 Co., Ltd 65 3.2.1 Recommendation for accounting vouchers and accounts 65 3.2.2 Recommendation for accounting books 67 3.2.3 Recommendation for sales policies 67 3.2.4 Recommendation for Inventory value deduction .68 3.2.5 Recommendation for methods of selling 68 3.2.6 Recommendation for managerial accounting 69 3.2.7 Favorable conditions for completing the recommendations 69 CONCLUSION REFERENCES APPENDIXES LIST OF ABBREVIATIONS Abbreviation Explanation Acc Account BOD Board of Directors Co., Ltd Limited company COGS Cost of goods sold FG Finished goods JSC Joint stock company VND Vietnam dong VAT Value Added Tax LIST OF TABLES Table 1.1: Portfolio and codes of finished goods .7 Table 2.1: Sample of Minute of Inspection 29 Table 2.2: Sample of Goods Receipt Note .30 Table 2.3: Sample of Goods issue requisition form .36 Table 2.4: Sample of Purchase order .37 Table 2.5: Sample of Goods Dispatch Note 38 Table 2.6: Sample of VAT invoice 39 Table 2.7: Sample of List of sale invoice (extracted) .40 Table 2.8: Interface for data entry of Invoice attached with GDN 41 Table 2.9: Sample of Warehouse card for Limestone 1x2 44 Table 2.10: Detailed accounting ledger for Account 155 .46 Table 2.11: Stock Summary Report .48 Table 2.12: General Journal (extracted) 57 Table 2.13: General ledger for account 155 (extracted) 59 Table 2.14: Sample of Inventory record of finished goods 61 LIST OF FIGURES Figure 1.1: The manufacturing process of Made-to-order products at No.10 Co., Ltd 11 Figure 1.2: Manufacturing process at limestone - aggregate quarry of the company 17 Figure 1.3: Manufacturing process at quarry of the company 18 Figure 2.1: The procedure of finished goods receipt at No.10 Co., Ltd 27 Figure 2.2: The rotation flow of receipt finished goods at No.10 Co., Ltd 28 Figure 2.3: The procedure for finished goods issue .34 Figure 2.4: The rotation flow of issue finished goods at No.10 Co., Ltd .35 Figure 2.5: The flow of VAT invoice at No.10 Co., Ltd 36 Figure 2.5: Detail accounting by parallel card method at No.10 Co., Ltd 42 Figure 2.6: Procedure of accounting entries recording under General Journal form 52 Figure 2.7: Procedure of accounting entries recording under General Journal form on METADATA software .52 Figure 2.8: Procedure of accounting entries recording for finished goods .53 ABSTRACT This topic is to get an understanding about the accounting for finished goods in general and in detail and their surroundings like the manufacturing process and some issue in accounting activities in a construction company Through my research in the company No.10 Co., Ltd, I have an insight about these activities and make some recommendations for improving the company accounting system The collected data is sourced from both primary data and secondary data It ensures a reconciliation of the company’s method and others’ methods Additionally, I can have an objective view about the work in the cycle accounting for finished goods To obtain information, I have used the method of observation and analysis During internship time, I have observed the accounting work in the company, and after referring accounting documents, I use analysis method to take an insight about the accounting for finished goods The thesis includes some accounting vouchers and accounting documents extracted from accounting books and ledgers that supplied by Department of Finance and Accounting of the company The information about the accounting activities of the company is obtained mainly from my practical work and the interviews with the staff of the company Besides, internet is a valuable source for me to learn and obtain several reference in many fields In conclusion, the thesis includes my recommendations for a better operation in accounting activities of the company I have given my assessments through many issues such as the accounting vouchers, the accounting books, financial statements, the procedure for finished goods, the methods for calculating finished goods cost and some issues related to sales INTRODUCTION From the very beginning, production is the condition for the existence and development of human kind Together with social development, business activities of firms have expanded every day Currently, in market economy under micro control of state, enterprises are having favorable conditions for manufacturing activities and unrestricted in development and fair competition The market is open widely for integration Besides, there will be many difficulties resulting from the pressure of fierce competition in accordance with new mechanics To survive through competitive selection, enterprises must solve their problems in production activities, especially in increasing the capacity of manufacture and products consumption In the market-oriented mechanic, accounting is a significant department in the business management of companies Accounting work includes many different cycles that have organic relationships with each other, which constructs an effective accounting information system The cycle of accounting for finished goods is one of the most influential component and which cannot be deficient The reason is that this cycle reflects the movement of finished goods that can reflect the results of business activities Understanding this importance, the thesis, based on my working activities performed during the internship time, gives an insight of “Accounting for finished goods at No.10 Co., Ltd” The 6-month internship has provided me practical knowledge at professional working environment Rationale for the research The establishment of goods manufacturing had led to the development of socialization of production that now has reached its peak called market economy Market is a place in which social relationships of production are concentrated It acts as the business goal and where the last phase of business process takes place The existence of a business decisively depends on whether the market accepts its goods and services in term of quality, models and prices To get a comprehensive perspective of the business’ entire goods production, accounting is utilized as a compulsory and effective tool, helping not only the management but also the government, particularly, in their governing The accounting activities of production can be known as accounting for finished goods The complexity of accounting for finished goods requires firms to organize the accounting systems in different methods ensuring the compliance with Vietnamese accounting policies and a clear reflection of output-input-inventory, revenues and business performance An accurate and prompt practice of accounting for finished goods as well as determining revenue and consumption will be beneficial for enterprises and the national economy as a whole in measuring its size In operational process, firms have to work out the business performance based on data of revenue and costs So, these profits can be subdivided regarding to reasonable purposes and certain ratios prescribed by national finance mechanism In addition, the management relies on the accounting information to obtain the current situation and changes in finished goods and WIP to properly execute, assess and analyze business activities then make reasonable decisions For example, when the management suspects on the information about the progress of production and calculate the cost of finished goods, they also can detect the errors and imbalances in planning and performance Therefore, the detection helps them in improving and managing accounting for goods price in a better way Summarily, accounting for finished goods is to provide sufficient and accurate information for separate parities for their different purposes Research objectives The research is to take an over view of accounting system and accounting method in term of finished goods in a construction company and to manifest current situation of the accounting activities This study also includes my personal analysis of accounting for finished goods during my internship time in No.10 Co., Ltd From this, the strengths and drawbacks existed in the company’s accounting system are proposed, therefore, I suggest some improvements for a better operation Research object and scope The study object is accounting system of No.10 Co., Ltd, specifically, its manufacturing process and the procedures of finished goods Research scope is defined as follows + Time: a fiscal year (from 01/01/2019 to 31/12/2019) + Department: Finance and Accounting + Topic: Accounting for Finished goods