Accounting for sales and determination of business results at quang ninh cotto company limited

Suggestion to improve the efficiency of management accounting for salesQuang Ninh Cotto Company Limited...131CONCLUSION OF CHAPTER 3...134CONCLUSION...135 Trang 9 FLOW CHARTFlow Chart 1

The purposes of the dissertation

Purposes of the research: To gain an in-depth understanding of the organization of sales accounting and determination of business results, giving an overview of the achievements and shortcomings in sale accounting work and determining business results, then make suggestions to improve the accounting and sales activities and determination of business results at QuangNinh Cotto Company Limited.

The object and scope of the dissertation

- Research object: Accounting for sales and determination of business results at Quang Ninh Cotto Company Limited

+ About the content: Focusing on researching the actual situation of the sales accounting and determining business results at Quang Ninh Cotto Company Limited from the perspective of financial accounting

+ About space: Research at Quang Ninh Cotto Company Limited located in Quang Ninh City.

+ About time: Researching theoretical issues and surveying current situation documents at Quang Ninh Cotto Company Limited in 2022, 2023.

Research Method

Research is based on the methodological basis of dialectical materialism and historical materialism Specific research methods include using a combination of theoretical research, practical surveys, interviews, expert consultation, statistical data, analysis, and comparison to collect information data and document processing (collecting primary and secondary documents, synthesizing and processing collected documents using descriptive statistics, qualitative analysis, and comparing the actual situation to the theoretical basis to deduce, infer, and present research findings.

The structure of the dissertation

In addition to the introduction and conclusion, the dissertation consists of three chapters:

Chapter 1: Basic theory issues on sale accounting goods and determination of business results

Chapter 2: Actual situation of accounting for sales and determination of business results at Quang Ninh Cotto Company Limited

Chapter 3: Several solutions to improve accounting for sales and determination of business results at Quang Ninh Cotto Company Limited

BASIC THEORY ISSUES ON SALE ACCOUNTING

Necessity of organization of sales accounting and determination of

Today, in the competitive free market economy, the business environment is extremely exciting and complex The competition between economic sectors is very fierce, every business wants to be first in the race for profits Because profit is the highest goal of any business, it reflects the business performance of the business, and is also a condition that ensures business maintenance and development To do so, not only depends on the management level of the business owner, accounting work also occupies an important position, especially sales accounting and determining business results.

Selling is the last step in the business process of commercial enterprises It is the transfer of ownership of goods to customers, businesses collect money or have the right to collect money Through sales, the capital of a commercial enterprise is transformed from the form of goods in kind to the form of monetary value, the enterprise can recover the capital spent, cover the costs, and generate profits for the purpose also they continue to invest in business expansion.

The sale process is considered completed when two conditions are met:

- Buyer pays or accepts payment.

That is, the sale only occurs when the goods are delivered, money is received or the buyer accepts to pay These two jobs can happen at the same time, but are mostly separate Goods can be delivered first, money received later or receive money first and then deliver later That leads to the fact that sales revenue and cash from sales are not concurrent.

When making the exchange of money, the business must spend expenses called selling expenses Cash from sales is called sales revenue.

Funded sales represent the entire purchase amount that the buyer paid for the business.

Distinguishing sales revenue and cash from sales to help businesses determine the exact time to end the sales process, help the management department find a reasonable and effective payment methods, actively use of capital to bring the biggest profit for the business.

Business results are the final results of business and other activities of an enterprise after a certain period of time, expressed as a total profit or loss.

Determining business results is the comparison of expenses spent and income achieved in the whole business process If the income is greater than the expenses, the business makes the profit, otherwise, the business suffers a loss The determination of business results is usually carried out at the end of an accounting period of a month, quarter, or year, depending on business characteristics and management requirements of each enterprise.

1.1.3 Roles and duties of sales accounting and determination of sales results 1.1.3.1 The role of sales accounting and determining sales results

Selling is not by itself a process of production and business, but it is a necessary stage of social reproduction The end result of commerce is measured by the flow of goods, which depends on sales process The more goods a business can

Gain (loss) from ordinary business activitiesordin ary business activities sell, the more powerful it becomes Thus, sale is a decisive factor for the existence and development of businesses.

Through the market, sales contribute to regulating the balance between production and consumption, between goods and money in circulation, between consumer demand and ability to pay.

Sales is the basis of revenue, profit and income generation to cover expenses, preserve and develop business capital through sales methods suitable to customer’s requirements.

Simultaneously with the consumption of goods, determining the correct business results is the basis for evaluating the final efficiency of business activities in a certain period of the enterprise Accurately determining business results helps businesses determine business directions for the next period, and at the same time provides data to interested parties, attracts investment in the business and helps the business maintain its reputation on the market.

So, sales play an extremely important role in making profits of businesses in particular, and in the development of the country's general economy Therefore, the organization of sales and accounting of the sales process at the enterprise is extremely necessary Sales accounting and determining business results are good to ensure accurate information is provided to business managers and stakeholders, helping businesses ensure the existence and its development.

1.1.3.2 Duties of sales accounting and determining sales results

Sales accountants need to ensure the following tasks:

- Record and reflect promptly, fully and accurately the sales situation of the enterprise in the whole period in terms of both value and quantity of goods sold in total and on each item, not the sales location, each sales methods.

- Calculate and accurately reflect the total payment price of goods sold, including sales revenue, output VAT of each group of items, and each invoice.

- Accurately determine the actual purchase price of the goods sold, and at the same

- Check and urge the collection and management of money, manage debtors, track details of customers and outstanding amounts Urging and inspecting to ensure sufficient and timely collection of sales proceeds to avoid unreasonable capital appropriation.

- Provide necessary information about the sales situation, serving the direction and operation of the business.

- Advise leaders on solutions to promote the sales process.

- It is a method of selling goods to commercial units, manufacturing enterprises, etc. to sell or to process and sell.

+ Goods are still in the field of circulation, not yet in the field of consumption. + Prices are sold in batches or sold in bulk.

+ Price fluctuates depending on sales volume and payment method.

* Warehouse wholesale method: is a wholesale method in which the goods sold must be exported from the enterprise's warehouse.

- Wholesale through the warehouse in the form of direct delivery: the buyer sends a representative to the warehouse of the enterprise to receive the goods Enterprises export goods to sell and deliver them directly to buyers After the buyer's representative receives the goods, pays the money or accepts the debt, the goods are determined to be sold.

- Wholesale through warehouses in the form of delivery: based on signed contracts or orders, enterprises export goods, use their own means of transport or outsource,and deliver goods to the buyer's warehouse or the buyer's location specified in the contract Reconciliation and sale still belong to the ownership of the enterprise, only when the buyer confirms, pays or accepts payment, the transferred goods will be considered as sold, the seller loses ownership of the goods Shipping costs are agreed upon by both parties in the contract.

* Wholesale method of direct shipping: After purchasing, enterprises receive the purchased goods, do not bring them to the warehouse, but sell them directly to the buyer:

- Wholesale and direct shipping in the form of direct delivery (three-way delivery): After purchasing goods, enterprises deliver directly to the buyer's representative at the seller's warehouse After delivery, the buyer's representative signs to receive the goods, the buyer has paid or accepted the debt, the goods are determined to be sold.

- Wholesale and direct shipping in the form of goods delivery: After receiving the purchased goods, use their own means of transport or outsource the goods to be delivered to the buyer at the specified location The goods are still under the ownership of the enterprise, only when payment is received from the buyer or a notice from the buyer that the goods have been received in full and accepted for payment, will the goods be shipped to be sold.

- It is a method of selling goods directly to consumers or to economic organizations or collective economic units for internal consumption.

- Goods have left the field of circulation and entered the field of consumption.

- Value and use value of used goods.

- Selling single or small quantity, selling price is usually stable.

* Retailing of goods has the following forms:

- Centralized retail: the collection of money from the buyer and the delivery of goods are separate Each stall has a staff member who collects the money of the customers, write invoices for customers to come and receive goods at the stalls sold by the delivery staff.

- Direct cash-collecting retail: sales staff directly collect money from customers and deliver goods to customers.

Accounting methods for sales process and determination of business

1.4.1 Accounting of sales revenue and sales deductions

- Sales revenue is the total value realized from the sale of goods, products, provision of services or services to customers Total sales revenue is the total amount recorded on sales invoices, invoices for provision of services and/or services.

 The revenue generated by transactions is established by the agreement between the firm and the buyer or asset user It is calculated as the fair value of received or receivable amounts less (-) trade discount, payment discount, price reductions for items sold, and the value of returned goods sold.For cash amounts or cash equivalents not yet immediately received, revenue shall be determined by converting the nominal value of amounts receivable in future into the actual value at the time of revenue recognition at the current interest rates The actual value at the time of turnover recognition may be smaller than the nominal value receivable in future.

 When goods or services are exchanged for goods or services of dissimilar nature and value, such exchange shall be regarded as a turnover-generating transaction In this case, turnover shall be determined as reasonable value of the received goods or services after adjusting cash amounts or cash equivalents additionally paid or received Where it is impossible to determine the reasonable value of the received goods or services, turnover shall be determined as equal to the reasonable value of the exchanged goods or services, after adjusting cash amounts or cash equivalents additionally paid or received.

 When goods or services are exchanged for goods or services of similar nature and value, such exchange shall not be regarded as a turnover-generating transaction.

* Pursuant to the VAS 14: “Turnover and other income”, the recorded sales revenue must satisfy the time the following five conditions:

- The enterprise has transferred substantially all the risks and rewards of ownership of the product or goods to the buyer.

- The enterprise no longer holds the right to manage the goods as the owner of the goods or to control the goods.

- Revenue can be measured with relative certainty.

- The enterprise has received or will receive economic benefits from the sale transaction.

- Determine the costs associated with the sales transaction.

* When considering the 5 conditions to recognize sales revenue, businesses should note the following points:

- Enterprises must determine when to transfer most of the risks and rewards of ownership of the goods to the buyer in each specific case In most cases, the time when the substantial part of the risk is transferred coincides with the transfer of the benefits associated with legal title or control of the goods to the buyer.

- Revenue from sales is recognized only when it is guaranteed that the enterprise will receive economic benefits from the transaction In case the economic benefits these uncertainties have been resolved If the revenue has been recognized in case the money has not been collected, when determining this receivable amount is uncollectible, it must be accounted into production and business expenses in the period without recording a decrease in revenue When it is determined that the receivables are not certain to be collected, bad revenue must be established When it is determined that it is really uncollectible, it shall be offset by the provision for bad debts.

- Revenue and expenses related to a transaction must be recognized simultaneously on the matching principle Expenses including costs incurred after the date of delivery (warranty and other costs) are usually ascertained when the revenue conditions are satisfied Advances received from customers are not recorded as a repayment debt at the time of receipt of customer advances Debts payable on pre- received amounts from customers are recognized as revenue only when the above- mentioned conditions are simultaneously satisfied.

Under the current regime, deductions include:

* Trade discount: is the amount of money that businesses reduce or pay to customers for buying products, goods and services in large quantities according to the agreement on commercial discount stated in the economic purchase and sale contract or the purchase and sale commitments.

 Returned goods: businesses will return to customers an amount of money when the goods are determined to be sold but of poor quality, customers do not accept and return them.

 Sales discount: is the amount of money that businesses reduce to buyers due to poor quality goods, wrong specifications or outdated tastes

 SCT and export tax payable for goods and services subject to excise tax and export tax.

 Rent VAT for goods and services sold by tax payers by the direct method.

Account 511 “Revenue from sales and service provisions”

 This account is used to record revenue of enterprises in an accounting period, including revenue of selling goods, products, and provisions of services for the parent company, subsidiary company in the same group.

 This account records revenue of production and trading activities from the following transactions and operations:

 Sales: Selling products manufactured by business, selling of goods purchased and real estates invested.

 Providing services: carrying out services agreed in contract for one or more accounting periods, such as providing transportation or travel services, leasing of Fixed Assets in ways of operating lease, turnovers from construction contract

Account 3387 – Unearned revenues: records current amounts and increases and decreases in unearned revenues of the enterprise during a period Unearned revenues include amounts of customers paid in advance for one or many accounting periods for asset lease; interests received in advance when lending or buying debt instruments; or the difference between selling prices under deferred and from installment payment as committed and cash price; revenues corresponding to the value of goods, services or discounts to clients in the traditional client programs, etc

Account 3331 – VAT payable: Recording input VAT, VAT payable of import goods, deductible VAT, paid VAT and outstanding VAT payable to government budget.

SCT, VAT, export tax Sales revenue recognition

Goods used to pay wages

Flow Chart 1.1: accounting entries for sales revenue and revenue deduction

Direct sales method: According to this method, based on the signed purchase and sale contract, the buyer sends staff to receive goods at the enterprise's warehouse After receiving the goods, the consignee signs the sales invoice and the goods are determined to be sold, the seller has the right to recognize the revenue. Method of sending goods to customers: The method of sending goods to customers by the seller according to the conditions of the signed economic contract The amount of goods sent is still under the control of the seller, when the customer pays or accepts payment, the benefits and risks are transferred to the buyer, the value of the goods has been realized and the time the seller is recognized as sales revenue.

Method of sending agent, consignment: According to this method, the enterprise unloads finished goods and sends them to be sold to customers according to the contract signed between the two parties When goods are shipped out of stock for sale, the goods have not been identified as being sold Goods consigned for sale are only accounted into revenue when the enterprise has received the sales money paid by the customer, the customer has received the goods and accepted the payment, and the customer has advanced the purchase amount for the goods to be sold.

Installment method: Under this method, when selling goods, the enterprise recognizes sales revenue at the immediate selling price, the customer is entitled to late payment of goods and must bear the late payment interest according to the rate of payment rates specified in the sales contract Late payment interest is recognized in financial income Revenue from selling goods and providing services is a one- time payment from the very beginning, excluding interest on deferred payments and installments.

Method of barter: Under this method, businesses take their products and convert them to market prices and then use that converted money to buy products of other units In this case, the revenue is calculated according to the price of products

In commercial enterprises, cost of goods sold is the total cost of keeping goods at the warehouse, including purchase price from suppliers, insurance, VAT, shipping fees,

* Accounting documents and accounts used

Account 632 - Cost of goods sold This account has no balance.

Accounting of selling expenses and administrative expenses

 Selling expenses are all expenses incurred during the selling process of goods and services including expenses for selling and presentation of products, advertising expense, staff cost, materials and packaging expense, cost of tools and supplies, depreciation of fixed assets used for selling, other 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 )

 Selling and administrative expenses, which are not considered as CIT calculation expenses according to the provisions of the Tax Law, but have sufficient invoices and vouchers and have been properly accounted according to the accounting regime, are not allowed to record a decrease in accounting expenses that are adjusted in the CIT finalization to increase the payable CIT amount.

 Payment vouchers, debit note, payment order

 Service bills (electricity, water, product warranty, agency commissions, advertising fees, …)

 Purchase invoices: materials, stationery, etc.

 Table of salary distribution and social insurance.

 Salary sheet for management staffs, receipts for payment of land tax, license tax, etc.

- Applying Circular No 200/2014/TT- BTC, the monitoring and accounting of selling expenses is done on account 641 "Selling expenses" This account reflects, aggregates and transfers the actual expenses incurred in the sale of goods including the mentioned items above Account 641 does not have a closing balance, can be opened in detail according to the management requirements of the enterprise.

Structure of account 641 - Selling expenses

Debit side: Costs incurred relating to process of selling products, goods, rendering services incurred in period.

 Items reduced selling expense in the period;

 Transferring selling expenses to Dr 911 “Income Summary” to calculate operating results in the period.

Account 641 does not have ending balances.

 Account 6411 - payroll expenses: recording accounts payables to sales personnel, package personnel, transportation and maintenance personnel of products, goods, including salaries, intershift meal expenses, wages and appropriation of social insurance, medical insurance and labor union fees, unemployment insurance

 Account 6412 - Costs of materials, package: recording costs of materials and package delivered for protection, consumption of products, goods, services, such as costs of package materials of products, goods, costs of materials, fuels used for protecting, loading, transporting products, goods used for repairing, maintenance of fixed assets, used for sales department

 Account 6413 - Costs of tools, supplies: recording instruments, tools served for consumption process of products, goods, such as measurement tools, computing devices, working facilities

 Account 6414 - Depreciation cost of Fixed assets: recording depreciation expenses of fixed assets in maintenance department, sales department, such as warehouse, stores, quays, loading and transportation facilities, computing and measurement tools, quality verification,

 Account 6415 - Costs of warranty: used to record cost of product and goods warranty Especially, repairing and warranty expenses of construction work are recorded at account 627 “Factory Overhead Expenses”, and not recorded at this account.

 Account 6417 - Costs of outsourcing services: recording costs of outsourcing services for selling products, such as outsourcing costs for repairing fixed assets used directly for selling department, warehouse rent, quay rent, loading and transportation expenses for sales, commission for sales agency, for exporting consignee

 Account 6418 - Other cash expenses: recording other cash expenses incurred is sales operation in addition to above mentioned expenses, such as expenses of entertainment in sales department, demonstration expenses of products and goods, offering expenses, expenses of customer conference.

- Administration expenses are expenses for business management,administrative management and other general services related to the operation of the entire enterprise Administration expenses include salaries and allowances of managers; social insurance, health insurance, trade union fees, unemployment insurance for managers; costs of office supplies, working instruments, depreciation of fixed assets used for enterprise management; land rents, license tax; allowance for bad debts; external services (electricity, water, telephone, fax, asset insurance, fire insurance, etc.); other cash expenses (public relations, events, etc.)

 Source documents and accounts used - Source documents: Salary and social insurance allocation sheets, Depreciation allocation sheets, Tax declaration (License tax, …), VAT invoice, …

 Accounts used: Applying Circular No 200/2014/TT-BTC, enterprises track and record administrative expenses on Account 642 “Administrative expenses”. Account 642 reflects the amount of administrative expenses incurred in the period related to general management activities and the amount transferred to determine the business results in the period Account 642 does not have a closing balance, can be opened in detail for each expense item according to the management requirements of each enterprise.

 Structure of account 642 - General administration expenses

 General administration expenses actually incurred in period;

 Provision for bad debts, provisions for payables (positive difference between provision for this period and unspent provision for last period);

 Items reduced general administration expenses;

 Returning provision for bad debts, provisions for payables (negative difference between provision for this period and unspent provision for last period);

 Transferring general administration expenses to account 911 “Income Summary”.

Account 642 does not have ending balance.

 Account 6421 - Expenses of administrative staffs: Recording payables for administrative staffs, such as: salaries, subsidies, social insurance, medical insurance, labor union expenses, unemployment insurance of board of directors, administrative staffs in business departments.

 Account 6422 - expenses of administrative materials: Recording expenses of materials delivered for use in business management, such as stationery products, materials use for repairing fixed assets), instruments, tools (price is plus VAT or net of VAT).

 Account 6423 - Expenses of office requisites: Used for management works (price are plus VAT or net of VAT)

 Account 6424 - Depreciation expenses of fixed assets: Recording depreciation expenses of fixed assets collectively used for business, such as: offices of departments, warehouses, architectures, means of transportation and transmittance, machinery and equipment used for management in office

 Account 6425 - Tax, duties, fees: Recording expenses of tax, duties, and fees, such as: license tax, lease rent, and other duties and fees.

 Account 6426 - Provisions: Recording provision for bad debts, provision for payables which are charged to costs of production and trade of business.

Accounting for business result

Business result is the final result of the normal activities and other activities during the accounting period Business result in a certain period may be profit or loss In case of loss, business result will be compensated as regulated and decided by responsible authorities In case of profit, business result will be allocated as regulated by the financial regime.

Net profit = (Opening profit + Other profit) – Income tax (expense)

 Other profit = Other income – Other expense

 Operating profit = Gross profit + Financial profit – Selling expenses –

 Gross profit = Revenue – Deductions – COGS

 Financial profit = Financial income – Financial expense

 Account 911  Income summary: This account is used to identify and record results of operating activity and other activities during an account year Results of operating activities of business include: Results of operating activities, results of financial activities and of other activities.

 Costs of products, goods, investment perpetration and services which were sold.

 Costs of financial activities, income tax expenses and other expenses;

 Selling expenses and General administration expenses;

 Net revenues from products, goods, investment properties and service sold in period;

 Revenues from financial activities, Other Income, and decrease record in business income tax expenses;

 Account 421  Undistributed post-tax profits: This account is used to record business results (profit, loss) after enterprise income tax and situation of income distribution or loss handling of enterprise.

Account 421  Undistributed post-tax profits Debit side:

 Loss amount on business activities of enterprises;

 Appropriation of fund of enterprises;

 Distributing dividends, profits for owners;

 Real income amount on business activities of enterprises in period;

 Loss amount from subordinates granted additionally by seniors;

 Handling losses on business activities.

ACTUAL SITUATION OF ACCOUNTING FOR SALES

Chapter 3: Several solutions to improve accounting for sales and determination of business results at Quang Ninh Cotto Company Limited

CHAPTER I: BASIC THEORY ISSUES ON SALE ACCOUNTING GOODS AND DETERMINATION OF BUSINESS RESULTS

1.1 Necessity of organization of sales accounting and determination of business results in enterprises