Accounting for revenue, expense and r ndetermining of business results at r nmercedes benz vietnam co , ltd

CHAPTER 1 CONCLUSION: ...18 CHAPTER 2: ACTUAL SITUATION OF REVENUE, EXPENSE ACCOUNTING PROCESS AND DETERMINATION OF BUSINESS RESULTS AT MERCEDES - BENZ VIETNAM.. Research objective and s

INTRUCTOR: NGUYEN HOANG DIEU HIEN STUDENT NAME: HA CHUC LY

STUDENT CODE: K184050681 CLASS: K18405CA

HO CHI MINH CITY, 04/ 2022

DECLARATION

I declare that this is my original work and has not been presented in any other studies The

information and documents are also cited clearly

AUTHOR

HA CHUC LY

SUPERVISOR’S COMMENT

……….……… ……

……… ……….……….……

……… ……… …

……….……….………

……… ……… ………

……….……….………

……… ……… ……….………

……….………

……… ……… ……….………

……….………

…… ……… ……….………

……….……… …………

………… ……….……….…………

……… ……… ………

……….……….………

……… ……… ………

….……….………

……… ……… ……….………

……….………

……… ……… ……….………

……… ……… ……….………

………

Ho Chi Minh city,…………2022

Supervisor

REVIEWER’S COMMENT

……….……… ……

……… ……….……….……

……… ……… …

……….……….………

……… ……… ………

……….……….………

……… ……… ……….………

……….………

……… ……… ……….………

……….………

…… ……… ……….………

……….……… …………

………… ……….……….…………

……… ……… ………

……….……….………

……… ……… ………

….……….………

……… ……… ……….………

……….………

……… ……… ……….………

……….………

………

Ho Chi Minh city,…………2022

Reviewer

TABLE OF CONTENTS

DECLARATION i

SUPERVISOR’S COMMENT ii

REVIEWER’S COMMENT iii

LIST OF TABLES xi

LIST OF FIGURE xi

LIST OF ABBREVIATIONS xii

INTRODUCTION 1

1 Necessity of the research 1

2 Research objective and scope of the thesis 2

3 Methodology 2

4 Structure of the report 3

CHAPTER 1: BASIC THEORY OF REVENUE AND EXPENSE ACCOUNTING ORGANIZATION AND DETERMINATION OF BUSINESS RESULTS 3

1.1 Overview about revenue, expense and determination of business results in enterprises 4

1.1.1 Overview about revenue 4

1.1.1.1.Definition 4

1.1.1.2.Revenue recognition 4

1.1.2 Overview about expense 8

1.1.2.1.Definition 8

1.1.2.2.Expense recognition 10

1.1.3 Determination of business results 11

1.2 Accounting for revenue, expense and determination of business results 11

1.2.1 Accounting for revenue 11

1.2.1.1.Accounting for sales and sale deduction 11

1.2.1.2.Accounting of other income 12

1.2.1.3.Accounting for financial operating revenues 13

1.2.2 Accounting for expenses 14

1.2.2.1.Cost of goods sold 14

1.2.2.2.Accounting for expenses from financial activities 15

1.2.2.3.Accounting for administrative expenses 16

1.2.2.4.Accounting for other expenses 17

1.2.3 Accounting for business results 17

CHAPTER 1 CONCLUSION: 18

CHAPTER 2: ACTUAL SITUATION OF REVENUE, EXPENSE ACCOUNTING PROCESS AND DETERMINATION OF BUSINESS RESULTS AT MERCEDES - BENZ VIETNAM LTD 19

2.1 General introduction 19

2.1.1 Overview of Mercedes-Benz Vietnam Company 19

2.1.2 History of formation and development process of MBV 19

2.1.3 The organizational structure of Mercedes Benz Vietnam 23

2.1.3.1.Organizational chart of organizational management 23

2.1.3.2.Functions and duties of department 23

2.1.4 Organizational characteristics of accounting department 27

2.1.4.1.Accounting organization 27

2.1.4.2.Organize the document system 30

2.1.4.3.Accounting policies 30

2.1.4.4.Accounting software used at the company 31

2.2 Characteristics of sales and service provision, sale deduction and miscellaneous revenue of MBV 31

2.2.1 Accounting for sales and service provision 31

2.2.1.1.Revenue from sale of vehicle, spare parts and provision of services 31

2.2.1.2.Principles of revenue recognition from sales and service provision 32

2.2.1.3.The process of transferring documents at MBV 36

2.2.1.4.Account used at MBV 37

2.2.1.5.Accounting transaction for revenue from sales and service provision at MBV .38

2.2.2 Sales deductions 40

2.2.3 Accounting for miscellaneous revenue 40

2.2.3.1.Accounting for miscellaneous revenue at MBV 40

2.2.3.2.Other revenue recognition principles 40

2.2.3.3.Process of document 40

2.2.3.4.Documents and account used 40

2.2.3.5.Accounting transaction for other miscellaneous revenue 41

2.3 Characteristics of expenses of MBV 41

2.3.1 Selling and administrative expense 41

2.3.1.1.Accounting for selling and administrative expense 41

2.3.1.2.Account used and process of accounting 42

2.3.1.3.Accounting transaction for selling and administrative expense at MBV

42

2.3.2 COGS 43

2.3.2.1.Account for COGS 43

2.3.2.2.Account used and process of accounting 43

2.4 Accounting for business results at MBV 44

2.4.1 Accounting for business results 44

2.4.2 The process of transferring documents 45

2.4.3 Document used 45

2.4.4 Accounts used 45

CHAPTER 2 CONCLUSION: 45

CHAPTER 3: RECOMMENDATIONS 45

3.1 Provide additional human resources for the finance department 46

3.2 Review and re-check all information of products, thereby improving the accuracy of posting entry .46

3.3 Updating information technology system and maintain the SAP software .46

3.4 Utilizing information technology and advanced warehouse equipment system to rearrange the location of items being stored in the warehouse, especially for components and spare parts .47

CONCLUSION 47

APPENDIX 49

REFERENCES 66

LIST OF TABLES

Table 1.1: Account 511 structure 12

Table 1.2: Account 711 structure 13

Table 1.3: Account 515 structure 14

Table 1.4: Account 632 structure 15

Table 1.5: Account 635 structure 16

Table 1.6: Account 642 structure 17

Table 1.7: Account 811 structure 17

Table 1.8: Account 911 structure 18

Table 1.9: Account 821 structure 18

Table 1.10: Account 421 structure 18

LIST OF FIGURE Figure 1.1: Revenue recognition condition 6

Figure 2.1: Firm’s logo……… 19

Figure 2.2: Structure of MBV……… 20

Figure 2.3: Organizational structure of the company……… 23

Figure 2.4: Accounting organization flowchart……… ………….27

Figure 2.5: Revenue recognition process of vehicle 33

Figure 2.6: Revenue recognition process of spare part 35

LIST OF ABBREVIATIONS

INTRODUCTION

1 Necessity of the research

In the integration age, Vietnam's economy has been constantly developing quickly, which opening up many opportunities and challenges for domestic and foreign investors Therefore, enterprises need to innovate, actively obtain information, and improve production activities to assert their position and role in the market as well as help the economy of the country to develop in the direction of globalization

At each stage of development, the leaders need to have business strategies and management plans suitable to the economic situation of the country and the world There are many tools for effective management, in which the indispensable and important tool

is accounting

Besides trade promotion methods to accelerate consumption with the ultimate aim of maximizing profits, businesses need to capture necessary and accurate information and data from the accounting department, which helps managers have an accurate view of the enterprise’s financial situation From there, making appropriate management decisions in order to improve the efficiency of business management, which can publicly disclose financial information to attract investors

On the other hand, accounting is also constantly improving and developing in terms of knowledge, methods as well as organizational form so as to meet the increasing demands

of corporate managers The accounting department is associated with economic and financial activities, in charge of the information organization system, as a basis for making economic decisions For businesses, through accounting, businesses will know which markets and products that are sold the most effectively This not only ensures the company to compete in a volatile market, but also allows them to achieve their economic goals such as revenue, profit and prestige

In a market economy, the primary objective of an enterprise is to maximize profits Therefore, companies need to propose reasonable business strategies to achieve their goals Adhere with the openness of the economy in Vietnam and radical technology change, the accounting information system is changing and improving to contribute to the truthful reflection of the financial accounting situation at the enterprises It plays an

important role in helping managers propose reasonable business strategies, improve the efficiency of production and operation activities, and determine the success or failure of enterprises It is necessary to accurately, comprehensively, and timely determine the current business income and expenses in order to have a strong financial background Revenue, expenses, and operating results are not only important information for the company, but also for the state, investors, and other financial institutions The convincing figures of accounting system will advise managers to make correct, accurate and timely decisions in the management, administration and development of the company

Recognizing the importance and role of accounting impact business’s operation and development, the author chooses the topic “REVENUE, EXPENSE ACCOUNTING AND DETERMINATION OF BUSINESS RESULTS AT MERCEDES - BENZ VIETNAM CO., LTD”

2 Research objective and scope of the thesis

This thesis aims to analyze the revenue, expense accounting and determination of business results at Mercedes - Benz Vietnam Co., Ltd in 2021 Base on the findings; the author also recommends several solutions to improve the accounting work in the company Specific objectives are as following:

- Systematize the general theory related to revenue, expense accounting and determine business results through the business process at the company such as purchasing, selling, managing and accounting

- Analyzing the current situation of revenue and cost accounting, and determine the business results of Mercedes - Benz Vietnam Co., Ltd through SAP software

- Based on the theory findings and data analysis, the author also recommend several solutions to improve the accounting work of the company

3 Methodology

In order to achieve the mentioned objectives, the author has used different methods:

- Inheritage method: inherit previous study and accounting standards related to revenue and expense in order to build a basis for determining business results of Mercedes-Benz Vietnam Company This method is used to achieve the first objective

- Observation method: used during the actual working process, for achieving the second and third objectives

- Analyzing method: analyze data; identify problems and causes of the problems, used for the fourth objectives

4 Structure of the report

Apart from the introduction and conclusion, the thesis includes three following chapters:

- Chapter 1: Basic theory of revenue and expense accounting organization and determination of business results

- Chapter 2: Analysis of actual situation of revenue, expense accounting process and determination of business results at Mercedes - Benz Vietnam Co., Ltd

- Chapter 3: Recommendation to improve the performance of revenue, expense accounting and determination of business results at Mercedes - Benz Vietnam

5 Contribution

The result of this thesis can contribute to help MBV Company identify strengths and weaknesses of revenue and expense accounting performance, then can improve this fields more successfully in the future In addition, the thesis is also a reference for other students in the next courses

6 Limitation

The author has made great efforts do research and complete the thesis, but due to shortcoming of the ability and knowledge, limited time and scope of information searching and data collecting; thus, the content of the report is not sufficient and comprehensive The author will continue to research and improve the topic more deeply

in the future studies with more accurate, complex information and extended analysis to capture all the scope

CHAPTER 1: BASIC THEORY OF REVENUE AND EXPENSE

ACCOUNTING ORGANIZATION AND DETERMINATION OF BUSINESS RESULTS

Chapter 1 summaries the theories, studies and results of many researchers on revenue and expense accounting of a company and its determinants Thereby points out a suitable theoretical framework to analyze the effectiveness of the accounting work in the next chapter

1.1 Overview about revenue, expense and determination of business results in enterprises

1.1.1 Overview about revenue

1.1.1.1 Definition

"Revenue will be used as a general term for the amount of assets received or liabilities liquidated as consideration for the sal of products, the rendition of services, use of resources, exchange of assets, or liquidation of liabilities in a transaction which increases

or decreases the net assets " (Leland, T W., 1948)

IAS 18 defined revenue as the gross inflow of economic benefits during the period arising in the course of ordinary activities of an entity when those inflows result in increases in equity, other than increases relating to contributions from equity participants (para 7)

According to Vietnam Accounting Standards Number 14 (VAS14 - Other Revenue and Income), issued under decision No 149/2001/QD-BTC dated December 31, 2001 of the Ministry of Finance: Revenue is the total value of the economic benefits obtained by the enterprise in the accounting period, arising from the usual production and business activities of the enterprise, contributing to the increase in equity

Although there are many different concepts of revenue, it can be understood that the nature of revenue is the total value made by the sale of products, goods or the provision

of services to customers

Be aware of the nature of revenue and properly determine the scope, time and basis for recording revenues that are decisive in nature to the objectivity and honesty of revenue targets and results in financial statements Therefore, it is necessary to determine the right time to record revenue

1.1.1.2 Revenue recognition

For an enterprise, sources of revenue included:

- Sales: Selling products produced by enterprises and selling purchased goods;

- Providing services: Perform the agreed work under the contract in one or more

accounting periods;

- Interest, royalties, dividends and profits are divided

Revenue should be measured at the fair value of the consideration received or receivable (IAS 18.9)

• Less trade discounts and volume rebates

• Less certain sales incentives

Incentive management can affect the amount of revenue recognised in the reporting period The value of the invoice to be recognised is subject to the incentive scheme in place at the time of invoicing

In most cases, the consideration is in the form of cash or cash equivalents and the amount

of revenue is the contractually agreed amount of cash or cash equivalents received or receivable such as net invoice value from the sale of goods

The following chart outlines conditions which have to be satisfied in order for revenue from the sale of goods to be recognised This is in accordance with IAS 18.14 and VAS

14

The entity has transferred to the buyer the

significant risks and rewards of ownership of the

goods

No managerial involvement to the degree usually

associated with ownership/ effective control over

goods sold

The amount of revenue can be measured reliably

It is probable that the economic benefits associated

with the transaction will flow to the entity

The cost incurred or to be incurred in respect of

the transaction can be measuredreliably

Figure 1.1: Revenue recognition condition

Condition 1: The entity has transferred to the buyer the significant risks and rewards

of ownership of the goods

To be able to transfer the risks and rewards of ownership to the buyer, the seller must hold these at the date of recognition of the sale, or the seller may not transfer any rights that it does not itself hold or that are not yet substantiated The latter is the case if the seller:

- Has not yet produced the asset; or

- Not yet acquired the asset

The transfer of the risks and rewards of the good sold normally coincides with delivery and the transfer of legal title, however the latter is not a requirement for revenue recognition The standard Dealer Agreement states that title shall only pass when payment in full has been received

Condition 2: The entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold

The seller must have relinquished managerial involvement to the degree usually associated with ownership or effective control over the goods sold This normally occurs

at the time the goods are transferred to the buyer Thus, the seller is normally divested

of immediate control over the goods sold

Condition 3: The amount of revenue can be measured reliably

The amount of revenue must be capable of being measured reliably at the time of revenue recognition If the agreements contain any rescission or cancellation clauses, including goods reinstatement rights, the sales price is not considered as certain or determinable until these clauses lose their validity

Condition 4: It is probable that the economic benefits associated with the transaction will flow to the entity

Revenue is recognised only when it is probable that the cash or cash equivalents associated with the transaction will flow to the company as consideration received for the delivery of goods

In the event of sale to an impaired customer, i.e a customer who is already facing insolvency or is significantly impaired in his payment ability at the delivery date, the

revenue cannot be booked against a corresponding impaired receivable The revenue can

be recognised only when receipt of payment is probable

Condition 5: The costs incurred or to be incurred in connection with the transaction can be measured reliably

Revenue and expenses related to the same transaction or other event are recorecognized simultaneously Expenses, including warranties and other costs incurred after the shipment of the goods, can generally be measured reliably when the other conditions for revenue recognition have been satisfied (IAS 18.19) In general, the costs of capital and labor required in the production process can be reliably measured and are relatively easy

to attribute to corresponding revenues

 Revenue deductions

- Commercial discounts: Is the amount of money an enterprise has reduced or paid to

the buyer for the purchase of goods, products or services in large quantities according

to the agreement on trade discount stated in the economic sale contract or the

commitment to purchase and sale

- The goods sold are returned: Is the quantity of goods that have been considered to

be sold (transferred ownership, collected by the buyer to pay) but rejected and

returned by the buyer due to reasons such as: violations of commitments, violations of economic contracts, low quality goods, improper types, improper regulations

- Discount on sales: is a reduction that is accepted by the enterprise (the seller) in a

special way on the agreed price on the invoice, for the reason that the goods are

poorly sold, improperly or not on time specified in the contract

 Financial operating revenue

Financial operating revenues include: loan interest, deposit interest, deferred sales interest, installment payment, payment discount enjoyed due to purchase of goods and services, interest on financial leasing, property leasing, for others to use assets, dividends, divided profits, income on investment activities to buy and sell short-term securities, long-term, transfer income, other investment activities, interest difference due

to selling foreign currencies, foreign currency exchange rate

According to VAS 14 "Revenue and other income", revenues arising from interest, royalties, dividends and profits divided by the enterprise are recorded when simultaneously satisfied with the following two conditions:

- There is the possibility of gaining economic benefits from such transactions

- Revenue is determined relatively firmly

In accordance with VAS 14 "Revenue and other income", revenues from interest, royalties, dividends and profits divided are recorded on the basis of:

- Interest is recorded on the basis of actual time and interest rate each period

- Royalties are recorded on the basis of accumulation in accordance with the contract

- Dividends and profits are recorded when shareholders are entitled to receive dividends

or the parties contributing capital are entitled to receive profits from the capital contribution

1.1.2 Overview about expense

1.1.2.1 Definition

"Expense is used to embrace all product and period charges to be made against revenue

in the measurement of income Expense may arise through a current expenditure of cash,

a total or partial expiration of an asset, or the incurrence of a liability" (Leland, T W., 1948)

According to Vietnam Accounting Standards number 01 (VAS01 - General Standard): Expenses are the total value of items, which reduce economic benefits of company during the accounting period in the form of expenditures, asset deductions or incurred debts resulting in a decrease in equity, excluding distributions to shareholders or owners From the perspective of financial accounting, expenses are considered as actual expenses incurred related to the production and business activities of the enterprise, including expenses incurred in normal business process and other non-expenses to achieve a type of product and certain services Expenses are quantified and expressed in the form of an amount of money spent, depreciation of fixed assets, a service debt, tax debt These expenses are recorded by the accountant on the basis of valid bookkeeping documents proving their incurred in the production and business activities of the enterprise

From the perspective of management accounting, in addition to cost awareness as in financial accounting, managers also have to be aware of costs from the perspective of information identification to serve business decision making Therefore, costs can be the actual costs incurred in production and business activities that are aggregated by each

department, each cost center, as well as determine the value of inventory in each stage

of the production and consumption process The cost may include the costs lost by choosing one option instead of another

Although the perception of costs has many different perspectives, different forms of cost expression, they all have things in common:

- Cost is the waste of resources (both tangible and invisible), material, labor

- These expenses must be tied to the purpose of production and business

- It must be quantified with money and determined within a certain period of time Expense classification:

All expenses related to the production and consumption of the enterprise's products are divided into 5 categories as follows:

Raw materials and materials costs directly: is the entire cost of raw materials and materials directly involved in the production and manufacture of products

Direct labor costs: is the entire salary, remuneration, allowances, allowances and deductions according to salary (social insurance, health insurance, unemployment insurance) that the enterprise must pay to the employee directly involved in the product production process

General production expenses are all the costs incurred at the production stage except for the cost of direct raw materials, direct labor costs In other words, these are fees whose purpose is to organize, manage and serve production in factories and production labor

+ Cost of factory staff including salaries, payables, amounts according to the salaries of the staff of the factory, the production labor

+ Material cost: Includes the cost of materials shared for the factory with the purpose

of serving and managing production

+ Equipment cost: Including the cost of tools and machine used for production and production management

+ Cost of depreciation of fixed assets: includes the full depreciation cost of fixed assets belonging to the production factories for management and use

+ Cost of external purchase services: includes the cost of external services used for production management and production team

+ Other moneytary expenses: are direct expenditures in money used for the service and management of production in the factory

Administration expenses are all the cost used for business and general management including:

+ Salary expenses (salaries, wages, allowances and some other expenses);

+ Deductions for social insurance, health insurance, trade union funds, unemployment insurance and other contributions under the prescribed regime;

+ Expenditures on female workers under the prescribed regime;

+ Expenditure of costumes and labor protection expenditures as prescribed;

+ Rewards for improvement initiatives, bonuses for increasing labor productivity, savings in supplies and costs, scientific research costs;

+ Expenses of supplies and stationery;

+ Asset expenditures, such as: Depreciation of fixed assets, expenditures on purchase of property insurance, procurement of tools, maintenance and repair of assets, payment of property rent;

+ Taxes, fees, fees, such as: court expenses, judgment enforcement fees, land rent; + Provisions receivable for collection are difficult to claim, provisions payable;

+ Expenditure on external purchase services (electricity, water, telephone, fax, petroleum, periodic medical examination and treatment expenses for employees and medical expenses under the prescribed regime, expenditure on hiring domestic and foreign experts, );

+ Other monetary expenses (external transactions, customer conferences, staff training expenses, work expenses, auditing, expenditures on environmental protection, )

1.1.2.2 Expense recognition

The recognition of expenses not yet due for payment but will inevitably arise to ensure the principle of prudence and preservation of capital The cost and revenue generated must be recorded simultaneously under the matching principle However, in some cases, the matching principle may conflict with the prudential principle in accounting, the accountant must base on the nature of the transaction to reflect honestly and reasonably Accountants must keep track of all the expenses incurred by factors such as wages, materials, external purchase costs, depreciation of fixed assets

The expense accounts have no balance At the end of the accounting period, all expenses incurred in the period must be transferred to determine the business results

1.1.3 Determination of business results

Business results are indicative of the amount of profit and loss from all kinds of business activities in a certain period of time Business results of an enterprise include results of production and business activities, financial results and other operating results

Principles for determining business results in company:

- Must fully and accurately reflect the results of business activities in accordance with current regulations

- Business results are accounted for in detail by each type of activity, product, industry, and service

- Revenues and incomes are transferred to determine the business results as net revenue and net income

Therefore, accounting for business results must comply with current regulated accounting standards, as well as be adaptable to the current status of the company’s accounting system Besides, if implemented effectively, these above professions will contribute to increasing the accounting productivity in general As a result, accounting information will be helpful for directors and managers in making the right decisions, thereby improving the profits of the business

1.2 Accounting for revenue, expense and determination of business results 1.2.1 Accounting for revenue

1.2.1.1 Accounting for sales and sale deduction

* Documents used

- VAT invoices

- Normal sales invoices

- Retail list of consumed goods, services and goods

- Payment documents: Receipts and notices from the bank

* Account used

The 511 account is intended to reflect the sales revenue and service provision of the business during a calculation, including sales of goods, products and services to subsidiaries within the same group

The 511 account includes 6 level 2 accounts

+ Account 5111 - Sales revenue of goods

+ Account 5112 - Sales of finished products

+ Account 5113 - Revenue of service provision

+ Account 5114 - Revenue of subsidies

+ Account 5117 - Investment real estate business revenue

+Account 5118- Other revenue

When businesses sell goods and services

Based on VAT invoices, sales invoices and payment documents (receipts, acceptance performance service report ) accounting reflected in account 511 - Sales revenue and service provision of enterprises, reflecting the output VAT payable in account 333(3331)- VAT payable (if any), reflecting the amount received on account 111- Cash, account 112- Bank deposit, account 131 - Receivable to customers according to the total payment price

- Indirect taxes payable

- Revenue deductions

- Net revenue transfer result into account

911 " Determination of business results "

- Revenues from selling of products, goods, real estate investment and service provision of enterprises performed in the accounting period

The 511 account has no opening and ending balances

1.2.1.2 Accounting of other income

Other incomes are incomes that are not usually incurred at the business

Table 1.2: Account 711 structure

- The amount of value-added tax payable

(if any) on other incomes in vat payable

enterprises calculated by direct method;

- At the end of the accounting period,

other incomes arising in the period will be

“Determination of business results”

- Other incomes incurred through the period

- Income from the sale and liquidation of fixed assets

- Collecting money earned by customers violating contracts; Collecting hard-to-claim debts has been wiped out

- Refundable taxes; Income of gifts and gifts in money, in kind of individual organizations donated to enterprises

- - Business incomes of previous years are disregarded

The 711 account has no end-of-term balance

1.2.1.3 Accounting for financial operating revenues

Account 515 - Financial operating revenue

This account is used to reflect interest revenue, royalties, dividends, divided profits and other financial activity revenues of the business

Table 1.3: Account 515 structure

- The amount of VAT payable by direct

method (if any)

- Result in transfer of net financial

operating revenue to Account 911

"Determining business results"

- Interest, dividends and profits are divided

- The transfer or allocation of exchange rate interest of the basic construction investment activity (the period before operation) has completed the investment

in financial revenue activities

- Other financial activity revenues arising during the period

The 515 account has no opening and ending balances

1.2.2 Accounting for expenses

1.2.2.1 Cost of goods sold

Account 632: Cost of goods sold

Account 632 is used to reflect the capital cost of products, goods, services, investment

in real estate, and cost of products sold throughout the period

Table 1.4: Account 632 structure

Enterprises account for inventory using periodic inventory method:

- Carrying forward the value of finished

goods inventory at the beginning of the

1.2.2.2 Accounting for expenses from financial activities

* Documents used

- Cheques

- Accounting vouchers

* Account used

Account 635: Financial expenses:

This account reflects financial operating expenses

Table 1.5: Account 635 structure

- Expenses for loan interest, late payment

interest, and property rental interest;

- Payment discount for buyers;

- Loss when selling foreign currency;

- Losses due to liquidation or sale of

investments;

- Exchange rate loss incurred during the

period of business activities;

- Provision for devaluation of securities

investment;

- Transferring the differences of exchange

rate from completed capital construction

investment activities to financial

expenses;

- Other financial investment expenses

- Reversal of provision for devaluation of securities investment;

- At the end of the accounting period, all financial expenses incurred will be transferred

in the period

1.2.2.3 Accounting for administrative expenses

* Documents used

- Salary and social insurance allocation table

- Spreadsheet and depreciation allocation of fixed assets

- Allocation table of materials and tools

- VAT invoice

- Cheques

- Accounting vouchers

- Bank deposit debt notice

Other documents are involved

* Account used

Account 642 – Business administration expenses

Business administration expenses have 2 level accounts:

Account 6421 – Selling expenses

Account 6422 – Administration expenses

Table 1.6: Account 642 structure

- Business administration expenses

incurred in the period

- Provision for doubtful debts, provision

for payables

- Business expenses reduction entries

- Reversing provision for doubtful debts, provision for payables

- Transferring business administration expenses to Account 911 "Determination

of business results"

1.2.2.4 Accounting for other expenses

separate from the ordinary operations of the business

Table 1.7: Account 811 structure

- Other expenses incurred during the

period

- At the end of the accounting period, all

“Determination of business results”

1.2.3 Accounting for business results

* Documents used

- Accounting invoice

- Other supporting documents

* Accounts used

Account 911: Determination of business results

Account 821: Corporate income tax expenses

Account 421: Undistributed profit

Table 1.8: Account 911 structure

- Capital value of products, goods, and

services sold

- Expenses from financial operation,

corporate income tax expenses and other

- Consolidation of losses

Table 1.9: Account 821 structure

- Transferring corporate income tax expenses to account 911 “Determination

of business results”

Table 1.10: Account 421 structure

- Amount of losses in business activities

of the enterprise;

- Distributing dividends and profits to

shareholders, investors, joint venture

parties;

- Supplementing business capital;

- Actual profit from business activities of the enterprise in the period;

- Handling business losses

CHAPTER 1 CONCLUSION:

Chapter 1 has focused on research, shedding light on the fundamental theoretical issues related to revenue, expense accounting and determining business results in enterprises This chapter went through definitions, characteristics, management requirements, contents in accordance with Vietnamese accounting standards, according to the current accounting regime

The basics of revenue and cost accounting and determining business results in commercial enterprises will be the basis for reviewing the actual assessment and proposing solutions to complete the accounting of revenues and costs and determine the business results at Mercedes-Benz Vietnam Company Limited

CHAPTER 2: ACTUAL SITUATION OF REVENUE, EXPENSE ACCOUNTING PROCESS AND DETERMINATION OF BUSINESS RESULTS AT MERCEDES

- BENZ VIETNAM LTD

This chapter analyses the performance of revenue, expense accounting at Benz Vietnam Co., Ltd

Mercedes-2.1 General introduction

2.1.1 Overview of Mercedes-Benz Vietnam Company

Some brief information about the company:

Full name: MERCEDES-BENZ VIETNAM CO., LTD

Short Name: MERCEDES-BENZ VIETNAM COMPANY LIMITED

Abbreviated name: MERCEDES-BENZ VIETNAM LIMITED (MBV)

Headquarters: 693, St Quang Trung, Ward 8, Go Vap District, Ho Chi Minh City Business code: 0300709284

Date of issue: October 24, 1998

Administered tax authority: Ho Chi Minh City Tax Department

Date of commencement: April 14, 1995

Transaction bank: DEUTSCHE BANK

Account number: 1000421-05-0 (Vietnam Account); 1000421-00-0 (USD Account); 1000421-01-0 (EURO Account)

Logo:

Figure 2.1: Firm’s logo

2.1.2 History of formation and development process of MBV

In 1990: Mercedes-Benz Worldwide (member of Daimler Corporation) established representative office in Vietnam in 1990

In 1995: On 14 April 1995, Mercedes-Benz was granted license No.12-5/GP about the establishment of the joint venture Mercedes-Benz Vietnam with the business sector being car and lightweight truck assembly in HCMC The total investment of the joint venture was 50 million euros, in which Mercedes-Benz contributed 70 percent the total investment and its Vietnam-based partner Saigon Transportation Mechanical Corporation Limited (SAMCO) accounted 30 percent the total investment in forms of land rental fees and existing factories The birth of Mercedes-Benz Vietnam marked the turning point of the automobile industry in Vietnam when it became one of the first automobile manufacturers to assemble and distribute passenger cars and commercial vehicles in Vietnamese market

Figure 2.2: Structure of MBV

Source: Human Resources department of the company

In 1996: In May 1996, the company began the operation of CKD car assembling factory MBV introduced first two car series E230 and MB140D In details, E230 was a medium-sized luxury car series with very high levels of safety and technology Meanwhile, MB140D was a 16-seat minibus series, meeting the demand of passenger transport in short- and medium- distance in Vietnam

In 1997: MBV continued to present MB700 model with a very affordable price On the same day, the company inaugurated Vietnam's largest car sales and maintenance center

in Giang Vo District, Hanoi

In 1998: The year 1998 marked the boom development of MBV With the product diversifying strategy, the company continuously present many products, including MB100 (10-seat minibus), MB140 Avantagarde (16-seat minibus) Citi Liner (coach) and, especially, the tourism car series C200 - the best-seller in luxury car segment onward Also in this year, the car sales and maintenance center Hang Xanh (Haxaco) was inaugurated on Dien Bien Phu Street, HCMC

In 1999 - 2000: MBV continues to present the luxury car series E240 Also in 1999, the company was granted the certificate ISO 9002 In 2000, the company continued to receive the certificate ISO 14001, a proof for its product quality and modern manufacturing progress

In 2007: In this year, Mercedes-Benz Vietnam launched the next-gen C-Class model (W204) - a "strategic move" to help the company to further consolidate its number one position in the luxury segment The launch of the new C-Class has created buzz in the automotive industry Mercedes-Benz Vietnam has exhibited two enormous "diamonds"

in front of the Opera Houses in both Ho Chi Minh City and Hanoi This was the first time the laser light has been used in the launching ceremony of a new car in Vietnam automotive market Modern models, architectural space of the city’s Opera House, the laser light have together created “interference” among technology, culture and art

In 2008: Benz Vietnam officially received the license to import Benz Complete Build-up Unit (CBU) Along with domestic car production line-ups, imported cars have helped MBV dominant the luxury passenger car in Vietnam

Mercedes-In 2009: Mercedes-Benz Vietnam unveiled the 9th generation Mercedes-Benz E-Class

in Vietnam Along with the new C-Class, the E-Class (W212) has become the selling car of the company and the sales leading car in the mid-size luxury segment

best-In 2012: Mercedes-Benz Vietnam’s operating model was switched from the joint venture to Limited company, at the same time, marking 17-year journey of operation in Vietnam market with impressive numbers Mercedes-Benz brand accounted for over 50 percent market share of luxury cars in Vietnam

In 2013: 30,000th car of Mercedes-Benz Vietnam was delivered to customers Vietnam was also the fastest growing market in Asia of the “3-pointed star” brand

In 2014: In early 2014, the first S-Class, which was domestically assembled in Vietnam, was officially rolled out from Vietnam’s production line, witnessed by the Mercedes-Benz Vietnam’s management and top officials from its parent Daimler AG This event

is considered a milestone of Mercedes-Benz Vietnam in particular as well as the Vietnam automotive industry in general Thanks to the introduction of 19 new products, Mercedes-Benz Vietnam has achieved success across all market segments

After more than 25 years of investment and development, Mercedes-Benz Vietnam always strives to bring the best quality products to its users, the brand value of the

"Three-Pointed Star" has won users' belief and becoming the market leader in the luxury passenger car segment In addition, Mercedes-Benz Vietnam is one of the few factories

in the world to receive the internal award "Best Factory" from the head company - Daimler Group in 2013 This is a pride and a testament to Car assembly skills of technical staffs in Vietnam

Not only pioneering in the assembly line investment, MBV also responded and continuously applied high technology platform and 4.0 industry achievements to production Typically, an automated electrostatic coating factory was inaugurated by MBV in 2014 This is the most modern electrostatic painting line of Mercedes-Benz worldwide with a total investment of nearly 10 million US dollars

MBV also owns the largest system of sales and service centers in the luxury car segment

in Vietnam "3-pointed star" brand is the only luxury car company with sales and service centers in Hai Phong, Vinh, Da Nang and Nha Trang cities next to Hanoi and Ho Chi Minh City, helping customers not to move too far and always feel secure when using the service

2.1.3 The organizational structure of Mercedes Benz Vietnam

2.1.3.1 Organizational chart of organizational management

Mercedes-Benz Vietnam has 11 different departments with an average of four core teams in each:

Figure 2.3: Organizational structure of the company

Source: Human Resources department of the company

Mercedes-Benz Vietnam has a divisional structure

MBV follows high specialization policy because it focusses on the perfect quality and excellent performance Therefore, the company includes separate divisions and each division has its own budget, personnel, policies & planning staffs that is focused on what

is the best for each particular division

The divisional structure has several strengths that is why it is the best choice to cope with the fast change in the environment instability Since each product line has its own separate division as company can make effective control on the production process across different functional departments

2.1.3.2 Functions and duties of department

Departments in Mercedes-Benz Vietnam

Corporate Communications/Public Relations

This department is responsible for managing the public relations and internal communications of MBV and retailers They promote a positive news media environment for MBV and maintain a positive media image

Core areas include: Brand Public Relations, Product/ Technology Public Relations, Corporate Public Relations and Corporate Communications

Customer Service

Customer service is always there all the time whenever Mercedes-Benz product owners are in need, to answer their questions, provide solutions to problems and provide technical support The staff of the dealer network are also professionally trained, helping them to better serve the needs of their owners

Core areas include: Customer Support Centers, Parts Support Centers, Technical Support Centers and Parts Distribution Centers

Distribution & Logistics

The Distribution & Logistics Department ensures timely delivery of vehicles and spare parts to customers in Vietnam They arrange transportation from Mercedes-Benz's global manufacturing plants, manage inventory across the country, and ensure that vehicles and products remain in good condition after the lengthy local shipping process Besides, they are also responsible for allocating and distributing vehicles and spare parts

Core areas include: Vehicle Preparation Centers, Parts Support Centers, Warranty Assessments and Vehicle Test Centers

Engineering

The main function of the Engineering department is to ensure that all Mercedes-Benz vehicles sold in the Vietnamese market meet all applicable regulations, operate as designed and can be serviced by dealers of the company Engineers need professional

skills such as technical testing of products, development of service manuals, trend analysis of replaced parts under warranty, and product design modifications vehicles suitable for the Vietnamese market Mercedes-Benz always strives to improve the safety

of its products That is why the Engineering department is also responsible for understanding and clearly analyzing accidents involving Mercedes-Benz vehicles in order to find technical problems, to further improve the vehicle design to increase the reliability of the vehicle safe

Core areas include: Product Analysis, Service Engineering, Emission Control, Warranty Service, Test Center, Field Technical Service, and Quality Engineering Center

Human Resources

MBV has always been aware that people are what make the brand's star shine It is the goal of motivating the Human Resources department to find, recruit and retain a diverse, highly qualified workforce, while striving to benefit employees and develop the culture that makes MBV become a best workplace

Core areas include: Compensation & Benefits, HR Operations - Talent Acquisition and Partnerships

Information Technology

Information Technology provides and maintains the network infrastructure to support work processes at MBV They help the company run smoothly across departments and countries, allowing for quick, efficient, secure, and accurate analysis and exchange of information

Core areas include: Vehicle Sales Systems, Web/Network Operations, Information Management System

Marketing

The Marketing Department always provides effective marketing strategies for MBV, while strengthening customer relationships and public awareness of products and brands This is achieved through sports and lifestyle events, car shows, internet marketing, and advertising

Core areas include: Product Management, Event Marketing, Media Marketing, Internet Marketing, Market Research & Strategy

Sales

The sales function of MBV mainly supports the dealer network in Vietnam, helping them to sell a large number of vehicles and achieve the set revenue On a national scale, they develop plans, budgets, programs and policies to support the achievement of national sales targets Sales also work closely with the dealer network to translate national programs into tactical programs that can be implemented across the region and

at the dealer level

Core areas include: Sales Operations, Regional Operations, Dealer Development

Finance

Today, effective management of enterprise resources is essential The finance department holds MBV accountable for managing these resources by controlling costs, managing and mitigating risks, and ensuring MBV is in compliance with applicable regulations They ensure the transparency, feasibility and correctness of the company's financial statements

Core areas include: Profit Planning & Financial Reporting, Corporate Finance, Controls and Risks, Corporate Treasury, Tax Management, Purchasing and Payroll

Learning and Performance

MBV provides monthly training courses and learning resources for employees and agents to help them access the latest technologies, hone existing skills, and develop both professionally and soft skills

Core areas include: Corporate training, Retail training

2.1.4 Organizational characteristics of accounting department

2.1.4.1 Accounting organization

Figure 2.4: Accounting organization flowchart

Source: Human Resources department of the company

General Manager (Chief account)

- To ensure stable process of accounting system oversee development of and adherence to internal control and finance policies and to direct all accounting activities reliable and transparent reporting on actual according to the set timelines

- Provide timely and accurate analysis of financial reports and financial trends in order to assist the CEO, the CFO, the Board and other senior executives in performing their responsibilities

- Statements request a fair picture of MBV’s financial situation and financial performance

General Ledger Accounting

- Chart of account and general ledger management

- Vendor and customer master data management; fixed asset management

- Prepare and support for compliance and appropriate finance statement

- Leadership accounting sub-team (Accounts Payables, Accounts Receivables)

- Delegate in absence of Chief Account

Account Receivables

- The AR account have to ensure invoicing are issuing accurately and timely, credit limit/payment are well managed

- Monitor and follow up open items timely and efficiency

- Ensure receivables are recorded and followed up in compliance with company policy, compliance, accounting and tax law

- Ensure a risk monitoring, early warning system and initiate collection process

Account Payables

- Supervise to management about expenses and payable recorded timely

- Review booking entries and journal entries to ensure expense GL accounts in accordance with approved purchase order

- Support GL manager working in accounts payable accruals, service in transits

- Review payment proposal against documentation to ensure payment execution to correct vendors accurately and timely manner Besides that, support Treasury coordinator in foreign currencies deals available timely as payment schedule

- Inter-companies reconciliations: Review the intercompany statements of accounts to affiliate companies received from Shared Service Center (SSC) timely and accurately

- Analyse AP aging report of local and inter-companies transactions by natures for transfer pricing and management purposes

- Cooperate with all MBV employees in term of business expense and other staff claims in order to ensure they are in compliance with MBV policy and tax law

- Working closely with tax manager to ensure the implication of all kindly of taxes

on inter-companies transactions are treated correctly and in accordance with effective tax laws