accounting for sales at viet thang petroleum enterprise

For example, on March 1*, 2022, Phu Giang Co., Ltd placed an order for petroleum products, which included only one type of good Diesel 0,05% of Viet Thang Petroleum Enterprise, and had f

NATIONAL ECONOMICS UNIVERSITY

ADVANCED EDUCATIONAL PROGRAMS

NATIONAL ECONOMICS UNIVERSITY

ADVANCED EDUCATIONAL PROGRAMS

HANOIL 2022

ACKNOWLEDGEMENTS

First of all, with the deepest and most sincere affection, allow me to express my gratitude to my supervisor and Viet Thang Petroleum Enterprise that have facilitated and supported me throughout the process of studying and researching this topic

I would like to express my heartfelt gratitude to my supervisor, Ph.D Pham Thi Thuy, who has imparted valuable knowledge to me during the completion of my bachelor thesis Thanks to her guidance and teachings, my research topic can be completed well Once again, I would like to thank my instructor who directly helped and guided me to successfully complete this report during my internship

Next, I sincerely thank Mr Nguyen Tuan Chien, Director of Viet Thang Petroleum Enterprise, for giving me the opportunity to work in the most methodical way the knowledge I have learned and apply in practice I also would like to thank Ms

Le Thi Thao, Chief Accountant, who was in charge of managing me during my internship, and all the accounting members of the enterprise have helped me a lot Last but not least, I would like to thank School of Advanced Educational Programs (AEP) for assisting students in the searching for internship opportunities and putting the knowledge into practice for a successful career

My initial step into practice is still limited, so it is inevitable that I will make mistakes I look forward to receiving valuable comments from teachers so that my knowledge in this field can be more complete and at the same time have additional conditions to improve my consciousness

TABLE OF CONTENTS

ACKNOWLEDGEMENTS

TABLE OF FIGURES

CHAPTER 1: FEATURES OF SALES, ORGANIZING AND MANAGING SALES

1.1 Features of sales at Viet Thang Petroleum Enterprise 4 1.1.1 List of the companys goods (OT s€TVIC@8) se nao 4 1.1.2 Market share of the cormpaniy c2 2n Hè 6 1.1.3 Sales methods of the company - 2 HH2 7

VIET THANG PETROLEUM ENTERPRISE 14

2.1.1 Accounting documents and procedures 14

2.1.2 Detailed accounting for revenue at Viet Thang Petroleum Enterprise

22

2.1.3 General Accounting for revenue at Viet Thang Petroleum Enterprise

29

2.2.1 Accounting documents and procedures 34

2.2.2 Detailed accounting for cost of goods sold at Viet Thang Petroleum

2.3.1 Accounting documents and procedures 44 2.3.2 Detailed accounting for selling expenses 48

3.1 Assessment of the current accounting for sales at Viet Thang Petroleum Enterprise _61

3.2 Solutions to improve accounting for sales at Viet Thang Petroleum Enterprise 66

3.2.1 AccoUTnfing sVSf€TS c2 nh nh nh nh Hà 67

3.2.2 Sales and payment method - c2 22s 2n, 67

3.2.3 Accounting for reVenUe c.cccccccccccesececeeseueueseesesurseeseseserrtenener snes 68

3.2.4 Conditions to implement proposed solufions - 69 CONCLUSION ng HH HH nh nh Họ họng nơ rợn 71

STATUTORY DECLARATION

I herewith formally declare that I myself have written the submitted Bachelor Thesis independently I did not use any outside support except for the quoted literature and other sources mentioned at the end of this paper

I clearly marked and separately listed all the literature and all other sources which I employed producing this academic work, either literally or in content

Hanot1, 21/04/2022 Signature

Tran Thi Thanh Lam

LIST OF ABBREVIATIONS

Figure 2.10 Process of Recording Accounting of Administrative expenses 56 Exhibit 2.1 Sales contract between Viet Thang Petroleum Enterprise and Phu Giang COL, Ltd 17 Exhibit 2.2 VAT invoIce of selling goods to Phu Giang Co., Ltd 21 Exhibit 2.3 Delivery bill of selling goods to Phụ Giang Co., Ltd 22 Exhibit 2.4 Detailed sales book for Diesel 0,05s in March 2022 - 22c scc 24 Exhibit 2.5 Summary table of sales revenue in March 2022 con hiree 25

Exhibit 2.6 VAT invoice with trade discount for Huong Linh Company in March 2022

28

Exhibtt 2.7 Extracted general Journal for Sales revenue 1n March 2022 32

Exhibit 2.8 Revenue Leger of Viet Thang Petroleum Enterprise in March 2022 33

Exhibit 2.9 Purchasing invoice of Viet Thang Petroleum EnfeTrprise 36

Exhibit 2.10 Reealculation table for Cost of goods sold in March - 37

Exhibit 2.11 Detailed book of Cost of goods sold in March 22c 2c c2 39 Exhibt 2.12 Summary table of Cost of goods sold in March sinh 40 Exhibt 2.13 Extracted general Journal for Cost of goods sold in March 42

Exhibit 2.14 Cost of goods sold Ledger at Viet Thang Petroleum Enterprise in March Exhibit 2.15 Payroll report for Sales Department in March eerie 46 Exhibit 2.16 Allocation table for tools and instruments 0.0 0 cceceeeeeteeteeteeneeees 47 Exhibit 2.17 Detailed book of Selling expenses im March - c c se ssey 48 Exhibt 2.18 Extracted general Journal of Selling expenses In March 51

Exhibit 2.19 Ledger of Selling expenses at Viet Thang Petroleum Enterprise in March Exhibit 2.20 Table of assets and deprecIation 1n March 5 c2 2s re 54 Exhibit 2.21 Payroll report for Administrative Department in March 2022 55

Exhibit 2.22 Detailed book of Administrative expenses In March 56

Exhibit 2.23 Extracted general journal of Administrative expenses in March 59 Exhibit 2.24 Ledger of Administrative expenses at Viet Thang Petroleum Enterprise in

INTRODUCTION

Petroleum is an important product in all fields of economy and social life From

an economic point of view, the value of all goods and services more or less contains the value of gasoline It can be said that with the increasing socio-economic development, the demand for petroleum is increasing and the role of petroleum is increasingly important The domestic petroleum market is still developing The size of the petroleum market is increasing, and there have been many business participants in the market and there has been a small competition Petrol prices, although affected by the market, are still regulated by the State, so in general, they are still quite stable The petroleum distribution system on the Vietnamese market is constantly expanding and developing

The final step in the production process that must be completed before things can be sold is the sales stage This stage is one of the most critical stages in deciding a company's success Moreover, this stage’s success can aid the organization in recouping costs, gaining new clients, and retaining existing ones Viet Thang Petroleum Enterprise uses an accounting system to handle the company's business activities Accounting for sales aims to track and manage the sales process, as well as the amount and cost of goods sold, so that accountants can compute the company's total cost, gross profit, and net income precisely at the conclusion of the accounting period The accountants will then prepare financial statements, and the final report will

be issued to assist the board of directors in developing new goals and putting new restrictions in place

Research proposes

In reality, accounting professionals, sales and income statement accounting, all have constraints that must be evaluated and handled Following my internship at Viet Thang Petroleum Enterprise, I had the opportunity to learn and apply accounting in the actual world, and I noticed that the company's sales accounting is still limited in terms

of accounting journal entry and sometimes determining revenues without adhering to Ministry of Finance Circulars, for example, a new accountant cannot distinguish sales resale from sales

After working as an accounting intern at Viet Thang Petroleum Enterprise for a few months, I realized how critical sales accounting is to the company's management and development Therefore, I decided to focus my internship on this topic: Accounting for Sales at Viet Thang Petroleum Enterprise

The subject and scope of thesis “Accounting for Sales at Viet Thang Petroleum Enterprise”

Scope of the research:

In March 2022, I focused my research on theoretical and practical challenges related to sales accounting from a financial and accounting approach

Research Methodologies

During my internship at Viet Thang Petroleum Enterprise, I gathered primary and secondary data to ensure that all of the information in the thesis was accurate Primary information: I interviewed administrators at Viet Thang Petroleum Enterprise, such as the Director, Chief Accountant, accountants in charge of each accounting section, and a few other related employees to gain a thorough understanding of sales accounting issues in preparation for thesis implementation I have prepared some interview questions as well as an interview schedule The following topics were discussed during the interview: The primary sales tactics employed by the company, accepted payment methods, document transfer, and the mechanism for documenting revenues and expenditures

Secondary data: all accounting books pertinent to my thesis topic, such as the General Ledger, Revenue Subsidiary Ledgers, Cost of Goods Sold, Selling and Administrative Expenses, and so on

The structure of the thesis

My thematic report includes three main parts:

Chapter 1: Feature of sales, organizing and managing sales at Viet Thang Petroleum Enterprise

Chapter 2: Current situation of accounting for sales at Viet Thang Petroleum Enterprise

Chapter 3: Improving accounting for sales at Viet Thang Petroleum Enterprise Due to my lack of real-world knowledge and experiences, as well as the fact that

I completed large-scale learning in a short period of time, there are some unavoidable errors in my report I'm excited to hear from my teacher and instructor at Viet Thang Petroleum Enterprise about how to improve the value and significance of my piece in both theory and practice

CHAPTER 1 FEATURES OF SALES, ORGANIZING AND MANAGING SALES AT VIET THANG PETROLEUM

ENTERPRISE

1.1 Features of sales at Viet Thang Petroleum Enterprise

LA1 List of the company’s goods

Viet Thang Petroleum Enterprise specializes in the selling of petroleum products such as diesel, Ron 95 — II, Ron 92, kerosene, mazut, gas, lubricants, additives, and solvents, making petroleum goods and services more accessible to Phu Tho province residents

Main products of Viet Thang Petroleum Company:

As shown in Figure 1.1, the two petroleum goods that account for the greatest percentage of Viet Thang petroleum enterprise are Diesel 0.05%S and RON 95 Diesel 0.05%S accounted for 29 percent of total sales revenue, while RON 95 accounted for

27 percent Furthermore, ES RON 92 is an important commodity for the company, accounting for more than one-fifth of total products revenue

Diagel Ron 95 E5 RON 92 MiỂUut Gas Others

Figure 11 Proportion of products of Viet Thang petroleum enterprise in 2021 (Source: Statistical documents of Viet Thang Petroleum Enterprise)

Diesel 0,05s is one of the main products which is being traded by Viet Thang Petroleum Enterprise With the strong development of equipment and machines to replace human power and bring convenience to life, the existence of fuels such as gasoline and diesel is certainly indispensable Diesel oil is widely used in machinery such as diesel generators, generators, water pumps, etc It can be said that diesel oil is one of the indispensable fuel sources for people today 0.05s diesel oil is an oil with a sulfur content of less than 500mg/kg, so it is environmentally friendly and suitable for use in forklift engines (DO 0.05% S)

e RON 95- TT

RON 95 is used as a fuel, an internal fuel such as a motorbike, a car or can also be some basic items in daily life such as lighters, heaters, and so on This is a high-class gasoline with yellow color and octane value of 95 RON 95 gasoline was launched at the same time as RON 92, but RON 92 gasoline is still preferred and used more The reason many customers use RON 92 instead of RON 95 is because of the price However, RON 95 is also gaining more and more trust with customers

e E5 RON 92

E5 RON 92 is a mixture of traditional unleaded gasoline and bio-alcohol, of which

90 - 95% by volume is traditional unleaded gasoline, and 5 - 10% by volume is bio- alcohol used for fuels of internal combustion engines such as motorcycles and cars E5 gasoline is safe, actively contributing to environmental protection It is the most suitable fuel source in the period when the problem of environmental pollution is extremely hot and urgent The problem of gradually depleting fossil fuel resources deep

in the ground is only one of the secondary reasons for E5 biofuel to take the throne and dominate the market, not a key condition

e Gas

The number of products has gotten richer and more diverse during the years of operation The company is diversifying into gas (9%) and other products in addition to its former primary products of oil, gasoline and lubricant Gas is the cleanest fuel today, which does not pollute the environment, and is widely used in civil, commercial, transportation and industrial applications Supplying civil gas for use in households,

restaurants, cafeterias, and hotels such as heating and providing fuel for hot water; used for cooking; used for air conditioning system; heating pool and spa systems in cold weather conditions; operating generators, so on Gas is also used commercially to operate industrial stoves, ovens, hot water heaters in restaurants, and in the food processing industry

In addition, Viet Thang Petroleum Enterprise also provides many other petroleum products Including mazut (FO oil) which is used as fuel for furnace combustion in the industry of boilers, furnaces, evaporative furnaces, chimneys, or for internal combustion engines of ships and so on

11,2 Market share of the company

Because petroleum is a significantly specialized and necessary commodity that

is regulated by the government, the pool of customers is frequently fairly diverse, encompassing people of all ages, industries, and socioeconomic levels Customers are usually both men and women between the ages of 18 and 59 who own gasoline- powered vehicles, and commute or have frequent travel needs

The share of the population in working age (15-64 years old) ranges between 66-70 percent according to the Population and Housing Census figures In 2020, the 15

to 64 age group will account for 68.10 percent of the overall population The target market is both huge and prospective due to the necessary petroleum demand For wholesale, Viet Thang Petroleum Enterprise has top 3 largest customers as shown in the table 1.1 below:

Table 1.1 Main retailers of Viet Thang Petroleum Enterprise

Company

Phu Giang Co., Ltd

Because petroleum is a government-controlled commodity in Vietnam, Viet Thang Petroleum Company is only permitted to distribute to a limited number of retailers

1.1.3 Sales methods of the company

1.1.3.1 Sales method

Viet Thang Petroleum Enterprise's primary sales channels are wholesale and retail Viet Thang employs a variety of sales strategies tailored to each market Although the company primarily sells to retailers, wholesale is the company's primary sales strategy Throughout the month, whenever a client requests a product, both parties will sign a principal contract that specifies the quantity of each good, the unit price, and other parameters such as guarantee, delivery term and discounts

The corporation will then create and deliver the products to retailers based on the contracts of both parties This technique will keep the quantity of things sold and the revenue earned for the month steady, allowing the company to stay on target Furthermore, the firm can contact the client directly, ensuring that the customer relationship does not deteriorate over time and that the firm has a thorough understanding of the customers’ desires to improve the goods The Business Department will gather consumer information and contact them to explain the company's products and provide customer advice based on the size of their business and their goals

After finalizing the contract, the Business Department will send it to the Accounting Department to determine whether there is sufficient inventory and to figure out the pricing depending on the costs incurred of the merchandising procedure The firm and the potential consumers will then schedule a time for the items to be picked

up Consumers in the North and Middle will receive the items from the company, while customers in the South will engage another delivery company or have their drivers pick

up the items This strategy is straightforward since it allows the organization to engage directly with customers and gather input in order to improve products

1.1.3.2 Sales policies

Sales policy is a systematic process for developing, coordinating, and monitoring the various decisions that directly affect a company's sales performance

The goal of the sales policy is to provide effective guidelines for a company's efforts to optimize customer satisfaction, in addition to stimulating its profitability and competitiveness As a result, in order to ensure the company’s revenue growth, the Business Department has implemented a number of sales strategies to encourage purchases, inspire consumers, boost sales through mutual benefit, and maintain long- term, sustainable connections The following are the fundamental sales rules: The subject of payment discount is the customer who pays the goods before the specified time in the contract but does not include the deposit to receive the goods instead of the payment guarantee The amount as the basis for calculating the payment discount rate is the amount paid before the due date of each shipment The payment discount rate is equal to the demand deposit interest rate or does not exceed the term deposit interest rate The time as the basis for calculating the payment discount is the period from the time the customer makes the payment before the due date to the payment term stated in the sales contract between the two parties (the due date for payment according to the contract — (( minus) prepayment date)

Based on the needs of customers, Viet Thang will consider applying an extension of the payment term depending on the company’s ability to balance cash flow

in order to increase competitiveness and be consistent with the actual situation in the market Financial costs for the extension of payment term will be calculated and agreed for customers to pay Viet Thang based on the interest rate, the actual situation at each time and on the principle of not reducing the efficiency of the Company compared with the plan being implemented under the contract The maximum payment extension is 60 days compared to the payment period specified in the contract, the time limit for application of the payment extension is not more than 06 months and is decided by the General Director

After receiving information from the Business Department, Viet Thang will send the customers a new quotation via email, and after both parties have successfully negotiated the order and signed the contract, the customers will finally send the purchase order to Viet Thang Petroleum Enterprise In the case of a new client, Viet Thang also provides a discounted sample that the customer can use for a trial or other purposes As a result, Viet Thang can confidently dismiss any consumer concerns

Viet Thang Petroleum Enterprise also includes a selling section under the Business Department to accommodate consumers who wish to purchase directly from the corporation The market price determines the price charged to these customers After the customers have received their purchases and paid their bills, the salesperson pays the cashier, and the sales accountants prepare receipts and enter them into the accounting book

Customers have several options for paying their payments The company currently employs two main tactics:

+ Payment in cash: Retail customers who purchase multiple products from warehouses or stores will pay directly to sales personnel, sales accountants, and then the cashier Customers who have already signed a contract will pay the delivery person directly and will recetve a VAT invoice The cashier will then be paid by the delivery person

+ Payment via bank transfer is required for bills totaling more than 20 million VND Customers who purchase items but do not recetve VAT bills or who are in financial hardship can pay a portion of the cost as a deposit and owe the remainder It's referred to as customer debt, and the accountant will record it as a debit on account 131 and a credit on account 511 Banks to perform transactions in operating activities as below

Agribank Doan Hung Branch

= This bank account is mostly used for payroll purposes

MB Bank Phu Tho Branch:

= Account number: 011110377005

= The entity's main bank account serves as the principal bank account for cash inflows (Receive payment from customers)

1.2 Sales management at Viet Thang Petroleum Enterprise

The organizational structure of the enterprise is straightforward, compact, and ideal for a small entity It consists of four departments and three linked stores, as well

as a director who is also the company's owner Administrative departments, accounting departments, sales departments, and technical departments are among them As stated

in Table 1.2 below, the company employs 32 staffs across all departments, with the majority having graduated from universities or technical colleges

Table 1.2 Employees’ qualification and classification of Viet Thang Petroleum Enterprise

Department

Administration Sales Accounting Technical Store's staff ot

NN Department Department Department Department

Degree - |

Direct | Indirect | Direct | Indirect | Direct | Indirect | Direct | Indirect | Direct | Indirect Bachelor Degree 5 3 1 4 2 2 Associate Degree l 4 4 Intermediate 1 l 2 Degree

High School > Diploma ~ Total 6 9 4 3 10

(Source: Statistical documents of Viet Thang Petroleum Enterprise)

In details, the structure of sales department at Viet Thang Petroleum Enterprise now includes nine employees:

- Four with bachelor degree

- Four with associate degree

- One with intermediate degree

The vast majority of the employees have intermediate or higher level of education In particular, there are currently 17 employees with a bachelor's degree, nine with an associate's degree, four with a vocational intermediate degree, and only two with a high school diploma working for the company Direct labor accounted for 16 employees, and indirect labor also accounted for 16 employees, including technical, administrative, and accounting departments The company has the same number of direct and indirect employees

General Director

Figure 1.2 Viet Thang's organizational structure

Figure 1.2 illustrates the organizational structure or sales management of Viet Thang Petroleum Enterprise which includes:

General Director: is the company's legal representative and is in charge of coordinating and organizing the execution of commercial and other firm’s activities The CEO directs the operations of all the departments of Viet Thang Petroleum Enterprise In all of the company's trading and business activities, he is also the enterprise’s representative for signing documents and contracts, as well as giving directions, formulating plans, and performing legal tasks

Administration Department: boosts workforce quality, establishes strategies for the structure of the human resources apparatus, remuneration, and employee training based on the company’s actual annual situation In addition, in order to satisfy the demands of high business efficiency, the administrative department actively investigates and develops solutions to enhance and supplement the organizational structure An annual plan is in place to coordinate staff reward and discipline, as well

as labor management strategies and policies This department also puts numerous other projects into action once they have been accepted by the general director

The administration department will provide paperwork support to other divisions within the corporation Furthermore, it also reports to the director on the quality and number of staff by monitoring, evaluating, and analyzing them This also serves as a link between the director and the other departments

Accounting Department: accountable for aiding the director in organizing and coordinating accounting and statistics activities Simultaneously, they check and supervise the financial records and documentation of the enterprise In charge of ensuring efficient capital management and utilization, as well as producing annual financial statements for managers and state officials

After the contract of both parties is completed, the sales team will submit all sales invoices and payment records (combining recently paid retail customers and unpaid invoices from other entities) to the accounting department to record for sales revenue, manage debts of the buyer, and prepare financial reports on the enterprise’s financial situation In order to increase the key performance indicator, they also assist the sales department with financial analysis

Sales Department: takes overall responsibility for the company's business plan, collaborating with the accounting department to create short-term and long-term strategies Provide strategic business recommendations to Viet Thang’s director, as well

as develop corporate and investment strategies

The sales department will compile statistics and supply customers with documentation and contracts, allowing the accounting department to record and maintain the transactions Following the completion of the financial statements, the accounting department will provide the sales department with financial analysis information to establish an effective sales plan for the future

Technical Department: operates machinery and equipment, monitoring and fixing it as needed Make preparations to replace aging machinery with newer, more cost-effective models

The technical department is in charge of assisting all other departments with technical issues The status of used equipment will be communicated to the technical department by other departments Simultaneously, the maintenance technical department will inform others of the extent of equipment’s damage, or the time required to fix them

Furthermore, the enterprise operates three storefronts that trade all types of petroleum goods, which are the company's primary merchandising items, as well as provide transportation-related services The director and division managers within the company share control of the three stores The transactions will be handled by retail salespeople The store managers will then compile and transmit reports to the sales and accounting divisions If they encounter any difficulties, they can seek assistance from the administrative department.

CHAPTER 2 CURRENT SITUATION OF ACCOUNTING FOR SALES AT VIET THANG PETROLEUM ENTERPRISE

2.1 Accounting for revenue

2.1.1 Accounting documents and procedures

For sales transactions arising in the country of Viet Thang Petroleum Enterprise, the set of documents that the sales accountant needs to pay attention to includes:

- VAT invoice (applicable to enterprises paying VAT by the credit method) This is the first basic and required sales accounting voucher

- Ex-warehousing slip or Ex-warehousing bill cum internal transportation It can

be adaptable depending on the unit or different models

- Delivery note to send to each stores

- Sales report, List of retail sale of goods and services, and Payment table for agent goods (consignment) These reports also will vary depending on the requirements and processes

- Minutes of surplus and shortage of goods, Minutes of sales discount, Minutes

of returned goods and other types of minutes according to the specific requirements of each unit

- Debit, Credit Notes

Moreover, the accounting papers for sales procedure at Viet Thang Petroleum Enterprise consists of ten steps (Figure 2.1):

1 Customers interested in purchasing petroleum products will submit a price request and a sample request form to the company

2 The salesperson gets the quote request, prepares the quote, and informs the customer about the product

3 Customers accept the quotation and place an order or economic contract with the salesperson

4 The salesperson receives the order or contract and forwards it to the

accountant

5 The accountant receives the order and issues the products to the stockkeeper

6 The products are received by the stockkeeper, who then passes them on to the salesperson

7 The accountant will issue a VAT invoice and begin conveying the items to consumers when the salesperson has acquired the goods from the stockkeeper

8 Customers pay after receiving their items and a VAT invoice from the salesperson

9 The payment is collected by the salesperson and delivered to the sales accountants, who issue a receipt or debit note

10 The cashier receives both the receipt note and the cash, which he or she enters into the cash book

Customers Sales persons Accountants | Stock keeper Cashier send request | đ makes

for a quote quotation

and sample _ and -

informati receive the 5 _] = of products

quotation

make the Q) transfer

economic receives the makes G to sales

Fy order or 14] | goods : person

contract and issue sends to

accountant receive

goods, |_7 | | issue VAT | (6)

VAT invoice and

goods receipt receipt (8) or note,

- Debit cash and

A standard sales accounting process will bring practical efficiency Contributing

to improving the revenue efficiency of the business Create professionalism in the hearts of customers and partners It also facilitates accounting Therefore, the sales department in the business needs to be specific and in a certain order This process is detailed as follows:

First of all, the sales accountant is the person who takes orders from the seller or receive a report from the sales department who are responsible for recording and arranging orders

After receiving the order from the buyer, the accountant will check the inventory level to see if the required quantity and type of goods can be met If the goods are not

in stock, they must immediately notify the buyer If the goods meet the requirements, a request for ex-warehousing will be sent to the storekeeper Then the storekeeper will carry out procedures for exporting goods The sales accountant will issue an invoice with the delivery note and handover record Accountants must clearly provide the following information on VAT invoices: Viet Thang Petroleum Enterprise's name and address, the tax number, the quantity, and unit price of products sold, the salesperson's signature, and the head department The accountant will create the receipt once the consumers have paid The cash receipt will be duplicated three times: the first will be maintained in the book, the second will be given to the payer, and the third will be used

as proof to rotate papers and keep track of journal entries After that, the cashier will take money and sign the receipt to show that consumers have paid and that the cashier has received it After recetving payment from the client, the stockkeeper will release the products in accordance with the VAT invoice Customers will receive a second copy

of the VAT invoice, and the stockkeeper will create warehouse cards based on the invoice for each type of merchandise

When they have completed all the procedures and documents for the sale Finally, Viet Thang’s accountant performs the sales accounting must record the arising sales transactions in the general and detailed books Record sales activities in relevant books Because of the specifics of sales business, the accounting for sales in the enterprise must also be reported in detail Including the situation of activities taking place during the day, the number of consumable goods sent to the manager

For example, on March 1*, 2022, Phu Giang Co., Ltd placed an order for petroleum products, which included only one type of good (Diesel 0,05%) of Viet Thang Petroleum Enterprise, and had formed an economic contract (Exhibit 2.1), invoice (Exhibit 2.2) and goods issue with Phu Giang Co., Ltd (Exhibit 2.3)

Exhibit 2.1 Sales contract between Viet Thang Petroleum Enterprise and Phu Giang Co., Ltd

SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness

PRINCIPLE CONTRACT No: 03.01/2022/HDMB

— Pursuant to Civil Code No 91/2015/QH13 passed by the National Assembly of the Socialist Republic of Vietnam on November 24, 2015;

— Pursuant to the Commercial Law No 36/2003/QH11 passed by the National Assembly of the Socialist Republic of Vietnam on June 14, 2005;

— Based on the needs and capabilities of the two Parties,

Today March 1, 2022 At: Viet Thang Petroleum Enterprise Address: Area 4, Chan

Mong Commune, Doan Hung District, Phu Tho Province We include:

Party A: (Seller): VIET THANG PETROLEUM ENTERPRISE

Area 4, Chan Mong Commune, Doan Hung District, Phu Tho

Party B: (Buyer): PHU GIANG CO., LTD

Bank account 2710 201 000 077 — At: Agribank — Doan Hung Branch

Both parties agree with the following term:

Article 1; Purchase and sale of goods

Party A agrees to sell to Party B the following goods: Diesel 0.05S, Gasoline E5 Ron

92, Gasoline Ron 95 - III, Lubricants, lubricants, greases of all kinds

Article 2; Quality and specification of goods

2.1 The quality of goods mentioned in Article 1 is guaranteed according to the basic standards issued by the Vietnam National Petroleum Corporation (Petrolimex) 2.2 Specifications: Liquid goods

Article 3; Location and method of delivery of goods:

3.1 Delivery location: Is the actual number of liters on the pump column at Party A's

store

3.2 Mode of delivery: The two parties agree to deliver Diesel Oil 0.058, Gasoline E5 Ron 92, Gasoline Ron 95 - III, Lubricants, lubricants and greases of all kinds in strict accordance with regulations No: 1783/2000/ QD/BTM dated 26/12/2000 on delivery and receipt of petroleum fuel in liquid form, Unit is in liters Is the actual number of liters through the pump column at Party A's store

3.3 Delivery time:

- Party A sells goods to Party B at any time of the day (24h/24h) at Party A's store when Party B's vehicle needs to get fuel

- After Party A pumps fuel into Party B's fuel tank, through the number of liters and the amount displayed on the fuel pump column, the driver and the salesperson both sign the delivery book as a basis to record the debt closing at the end of the month Article 4; Price and payment method

4.1 Price: Party A sells to Party B at the retail price set by the State at each time Party

B needs to buy goods

4.2 Payment methods:

- Party A closes the book and reconciles the debt on the 30th of every month Party B is responsible for making an advance or paying the amount shown on the VAT invoice in cash, clearing the debt (when Party A has a purchase from Party B) or transferring it within 10 days of the next month

- If Party A has a purchase of Party B's goods in the month, the two parties must make a monthly clearing debt with each other When there are no more purchases of Party A's goods, Party B is responsible for paying all the remaining debts within 05 days after signing the debt

Article 5; Responsibilities of each party:

- Party B stops taking goods from Party A when there is enough legal evidence that the goods do not guarantee quality and quality

- Strictly perform the contract and make payment on time according to Article 4.2

Article 6; Confidentiality and methods of communication

6.1 All papers, documents and information exchanged between the parties are considered to be owned by the Parties The Parties are obliged to keep secret and

only disclose it to the Third Party if it is agreed in advance in writing by the other

party or at the request of a competent state agency,

6.2 The Parties agree on a communication plan by email, phone, and post;

Article 7; Settlement of disputes

7.1 The two parties proactively notify each other of the progress of the contract If there is a disagreement and a dispute arises, it will first be resolved through negotiation and conciliation If no agreement can be reached, it will be brought to the competent people's court to settle the People’s Court of Phu Tho province 7.2 The contract is made into 02 (two) copies of equal value, including 03 pages Each party keeps 01 original

(Source: Accounting Department at Viet Thang Petroleum Enterprise)

Form: 01GTKT3/001 VAT INVOICE

Address: KHC Tho Son, Doan Hung District, Phu Tho Province

Bank account: 2710201000077 — At: Agribank —- Doan Hung Branch

(Sign, full name) (Sign, full name) (Sign, stamp, full name)

(Source: Accounting Department at Viet Thang Petroleum Enterprise)

VIET THANG PETROLEUM ENTERPRISE No: 02 - VT

Area 4, Chan Mong Commune, Doan Hung District, Phu Tho Province (issued under Circular No 133/2016/TT-BTC

August 26, 2016 of the Ministry of Finance)

DELIVERY BILL

March Ist, 2022 No: XK3904

- Full name of consignee: PHU GIANG CO., LTD

- Address (department): Tho Son Administrative Area - Doan Hung district - Phu Tho province

- Reason for ex-warehousing: Exporting goods from PHU GIANG COMPANY LIMITED according to invoice 0001165

No |quality of materials, tools, products,| Code Unit - Actual | Unitprice Total price

Vu Mai Anh Vu Tuyet Lan Le Thi Thao Nguyen Tuan Chien

(Source: Accounting Department at Viet Thang Petroleum Enterprise)

2.1.2 Detailed accounting for revenue at Viet Thang Petroleum Enterprise

Figure 2.2 illustrates the process of recording income detailed books at Viet Thang Petroleum Enterprise:

Each day, Viet Thang's sales accountants will record each transaction incurred in the general journal and detailed sales book with a VAT invoice or other necessary documents The transactions recorded in the detailed book for each item will be aggregated to the Summary table of Sales revenue at the end of the period, then compared with the Ledger of Account 511 - Sales revenue Viet Thang Petroleum Enterprise's sales accountants use the accrual basis to determine which amounts should

be recognized as revenue and which should not Revenue from the sale of products and

goods is only recognized when the following these conditions are satisfied simultaneously

- The business has given most of the risks and rewards associated with ownership of the product or goods to the buyer

- The revenue can be measured reliably

- Revenue has been obtained or there will be economic benefits from the sale transaction

- Determine the costs associated with the sales transaction

Figure 2.2 Procedure of recording revenue at Viet Thang Petroleum Enterprise

Revenue is recognized at the time of the transaction, when it is probable that economic benefits will flow to the entity, measured at the fair value of the amounts entitled, regardless of whether cash has been collected or will be collected Revenue is documented when Viet Thang acquires money or has the legal authority to collect money In general, accountants can record revenue once they have completed or nearly completed the necessary processes to transfer items to consumers

Under the matching principle, revenue and the costs of generating that revenue must be recognized concurrently However, the matching principle may clash with the accounting prudential principle in some situations Therefore, Viet Thang's accountants must rely on the nature of the transaction to accurately and fairly depict the transaction For example, on March 1, 2022, after completing the sales procedures for Phu Giang Co., Ltd and transferring control and risk to the buyer, Viet Thang is eligible to recognize sales revenue Firstly, the sales accountant recorded in the detailed sales book for the goods sold as Diesel 0.05s (Exhibit 2.4) Then, at the end of the month, the accountant will summarize the revenue of each type of product and record it on the Summary table of sales revenue (Exhibit 2.5) This recognition will help Viet Thang easily track revenue as well as the main buyers of each type of item and then make appropriate sales policies

Exhibit 2.4 Detailed sales book for Diesel 0,05s in March 2022

VIET THANG PETROLEUM ENTERPRISE

Area 4, Chan Mong Commune, Doan Hung District, Phu Tho Province

Goods name: Diesel 0,05s For the month of March 2022

No S16-DNN (Issued under Circular No 133/2016/TT-BTC dated August 26, 2016 of the Ministry of Finance)

DETAILED SALES BOOK

Tuy Documents Tr Reciprocal Sales revenue Deductions none No, Date opin account | Quantity | Unit price | Total price Tax Others (521)

A B Cc D E 1 2 3 4 5 01/03/2022 |BH000301 | 01/03/2022 |PHU GIANG CO.,LTD {112 2,000 16,291 32,581,818

20/03/2022 |BH000320 | 20/03/2022 |Van Thang Company 131 9,619 25,268 243.051.413

25/03/2022 |BH000325 | 25/03/2022 [Van Thang Company 112 930 25.268 23,500,423

27/03/2022 |BH000327 | 27/03/2022 an NSE 131 10,000 28,780 287,800,000 16,953,000

- This book has 5 pages, numbered from page 01 to page 05

- Book opening date: 01/03/2022

(Source: Accounting Department at Viet Thang Petroleum Enterprise)

VIET THANG PETROLEUM ENTERPRISE

Area 4, Chan Mong Commune, Doan Hung District, Phu Tho Province

SUMMARY OF SALES REVENUE

Account: 511 From 01/03/2022 to 31/03/2022

(Source: Accounting Department at Viet Thang Petroleum Enterprise)

The sales accountant will record a sales transactions in the detailed sales book for each type of products after submitting it and receiving payment The funds are then recorded

in general journal, which displays revenue for each client and product type The accountant is in charge of recording income from all transactions in the revenue ledger every day

Sales deductions

Adjustments are made to identify and report net sales when Viet Thang Petroleum Enterprise provides sales discounts In the direct costs section of the income statement, enterprises may report gross sales, then net sales, and cost of sales, or they may just report net sales on the top line and then move on to costs of goods sold Net sales are calculated by subtracting a company’s gross sales from its deductions

Formula

However, for a few specific items and strictly controlled by the State, such as petrol and oil, the reduction in selling prices and sales returns actually rarely happens

In addition, items such as gasoline and diesel are rarely damaged, so customers will not

be able to return them, unless the buyer cancels the sales contract with the seller and pays compensation Therefore, there is no sales returns and allowances applied for accounting for sales at Viet Thang Petroleum Enterprise

e Trade discounts

For the specific business characteristics of Viet Thang petroleum enterprise, they account net sales equal to the total sales revenue of all types of petroleum products licensed by the State minus the sales discount applied in accordance with the percentage depending on the invoices

Customers who purchase a large number of items each month will receive a trade discount, as required by the Board of Directors The percentage of sales discounts vary depending on the economic positions of both parties and length of discount period The top three most powerful clients will achieve a 5% sales discount on the total value of all orders placed throughout the month Accountants record the amount of sales discount in detailed sales book and general journal based on VAT invoices and economic contracts (if any)

Accountants would compute the net revenue of the accounting period at the end

of the period by crediting the revenue deductions of sales discounts to account 511

“Sales revenue.”

When customers meet all of the discount requirements, the trade discount will

be applied to the VAT invoice by Viet Thang's accountants as shown in Figure 2.3 The attachments will be delivered to the accounting department at the end of each day so that accountants can recognize journal entries A seller will credit assets and debit a sales discount, contra-account to revenue The amount of the discount is then deducted from the gross revenue on the income statement

Vv v v

Make VAT invoice Transport goods

and invoice to customers

Receiving sales (Including discount) discount

The entry would look like this: Debit Trade Discounts - Account 521 and Credit Accounts Receivable: Invoice amount is discounted or Credit Cash - Account 111/1121

At the end of the month, the sales accountant will rely on the revenue ledger to calculate the total revenue per customer From there, select the three customers with the highest purchase value in the month and are eligible for the sales discount

For instance, for the month of March 2022, Viet Thang granted a 5% discount

on the total value of all March orders to Huong Linh Co., Ltd, who is one of the customers with highest purchasing power of the month and had paid off the previous loan Mr Doan Manh Hung decided to subtract the discount amount from his March VAT invoice On March 27", customer purchased 10,000 liter of petroleum product for 239,020,000 VND A VAT invoice was submitted to the customer The VAT invoice number 0001181 was issued, and all orders received a 5% sales discount Exhibit 2.6 is the invoice of Huong Linh and Viet Thang which is applied trade discount in March 2022

Form: 01GTKT3/001

VAT INVOICE

Sign: 01AA/14P 3" copy: Internal Circulation Only No: 0001181 March 27", 2022

Sales organization: Viet Thang Petroleum Enterprise

Tax code: 2600304236

Address: Area 4, Chan Mong Commune, Doan Hung District, Phu Tho Province

Phone number: 0210.3835.032 Bank account: 2710201000950 — At: Agribank — Doan Hung Branch Buyer

Organization: HUONG LINH CO., LTD

Tax code: 0900282413

Address: 217, Dien Bien II Street, Le Loi Ward, Hung Yen City

No Name Unit Quantity Unit Price Total Price

1 2 3 5 6=4x5

1 DIESEL 0,05%S Liter 10,000 28,780 287,800,000

2 5% Sales Discount 16,953,000

Total: 270,847,000 VAT: 10% VAT: 27,084,700

The trade discount is based on the volume of sales for Huong Linh Co., Ltd in March 2022, so Viet Thang Petroleum Enterprise's accountants will record the sales revenue in the book of account 511 after the adjusted discount amount on the last sales invoice It means that the trade discount will be deducted directly from sales revenue

In addition, because the discount amount is less than the value of the last invoice no

0001181, the accountant will deduct it directly from the last invoice of the month of March (Exhibit 2.7)

Viet Thang Petroleum Enterprise currently manages sales income from business activities in accounting periods, using account 511 The debit of account 511 at the end

of the accounting period shows sales discounts, and net revenue to account 911 (Income summary) The revenue from sales of items completed during the accounting period is recorded in account 511

2.1.3 General Accounting for revenue at Viet Thang Petroleum Enterprise Accounts used for sales accounting

To perform well the sales accounting operations, the sales accountants of Viet Thang must clearly understand the characteristics and roles of the accounts used in the sales accounting of the business according to Circular 133/TT-BTC Therefore, sales accountants at Viet Thang Petroleum Enterprise use the following accounts in recording for economic transactions

- Account 156: Commodities

Used to describe the current worth and fluctuation of a company's commodities, such as those in warehouses and stalls

- Account 511: Sales and service revenue

Used to indicate the revenue of Viet Thang from trading items and delivering services in a fiscal year of business activities from transactions, and sales and service provision

- Account 521: Sales deductions

Reflects the entire number of deductions for customers that are calculated as deductions from business revenue: trade discounts, value of returned goods and discounts on goods sold to buyers in the period

Viet Thang Petroleum Enterprise uses the level 2 accounts: Account 5211 "Trade discount"

- Account 632: Cost of goods sold

Used to reflect the cost of products, goods and services sold in the period

- Account 131: Accounts receivable

Used to record receivables and payment of receivables of the business to customers for the money sold for goods and services

In addition, the sales accountant at Viet Thang Petroleum Enterprise also uses other relevant accounts such as:

Account 111 "Cash"

Account 112 "Cash at bank"

Account 3331 "Output Value Added Tax"

Process of recording sales

Based on documents such as VAT invoices, receipts, and so on, Viet Thang’s accountants will assess the number of merchandising goods sold everyday, as well as whether clients paid immediately with cash, bank transfer or later in credit to record in general journal Products and goods sold information (items, quantity, and method of payment) would be recorded in the detailed sales book, general journal, and revenue ledger, in that order Accountants will prepare a balance sheet for sums that occur during the accounting period, as well as a financial statement at the end of the period When it comes to cash payments, the information from these transactions is put into the Sales book, Cashbook or Cash-in-Bank book, and Revenue ledger The detailed sales book would include data such as the number of products sold, unit price, and total price for each transaction All transactions, whether paid in cash or on credit, are meticulously recorded in a detailed sales book As a result, when clients pay for goods and services with cash or through a bank transfer, accountants will record these transactions in the Cash book or Cash-in-Bank book

and legality

- Methods and forms of

enterprise may have

to bear the costs:

enterprise issues -——‡* VAT mvoice

invoice -Reasonableness, validity

the goods, the sls Goods delivery warehousing note and notes

warehouse accountant notes ~T goods handover record - Inventory detailed will release the goods - Goods have the right book

type and quality

- Receipt if buyer pays in cash eae - Has the customer paid in - H:òh Collect money from -|—>| cussomes pays ty full yet? oa

b uyers bank transfer -Pa t I ~ Is there an advance from ye 5 +) account 131 - Detailed book of

yee the customers?

slip/Debit notes account 331

to pay for selling

Figure 2.4 Process of recording sales of Viet Thang Petroleum Enterprise

Viet Thang transacts with their customers via Agribank (Vietnam Bank for Agriculture and Rural Development) and MB Bank (Military Commercial Joint Stock Bank), both of which have Cash-in-Bank books: Agribank's Cash-in-Bank book and MB's Cash-in-Bank book From the transactions recorded in the general journal (Exhibit 2.7), the accountant will record details in the ledger of account 511 - Sales revenue (Exhibit 2.8), and at the end of the period compare with the summary table of Sales revenue for each type of goods sold in the period The revenue ledger records the income and sales deductions for each order At the end of the period, the closing balance of the income ledger's column "Credit" will be carried to account 911