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

Necessity of the research

In the era of integration, Vietnam's rapidly growing economy presents numerous opportunities and challenges for both domestic and international investors To maintain a competitive edge and contribute to the nation's globalization efforts, businesses must innovate, proactively seek information, and enhance their production processes.

Effective leadership requires tailored business strategies and management plans that align with both national and global economic conditions Among the various tools for successful management, accounting stands out as an essential and critical resource.

To maximize profits, businesses must implement effective trade promotion strategies while also gathering precise data from their accounting departments This information enables managers to gain a clear understanding of the company's financial status, facilitating informed management decisions that enhance operational efficiency Additionally, transparent financial reporting can attract potential investors, further supporting business growth.

Accounting is continually evolving to meet the growing demands of corporate managers by enhancing knowledge, methods, and organizational structures The accounting department plays a crucial role in managing economic and financial activities, providing an organized information system that supports informed economic decision-making Through effective accounting practices, businesses can identify their most successful markets and products, enabling them to compete effectively in a dynamic market while achieving key economic objectives such as revenue growth, profit maximization, and enhanced reputation.

In a market economy, enterprises primarily aim to maximize profits, necessitating the development of effective business strategies In light of Vietnam's open economy and rapid technological advancements, accounting information systems are evolving to enhance the accurate representation of financial conditions within businesses This transformation is crucial for ensuring transparency and reliability in financial accounting.

Accurate and timely assessment of business income and expenses is crucial for managers to develop effective strategies and enhance operational efficiency, ultimately determining the success of an enterprise Revenue, expenses, and operating results serve as vital information not only for the company but also for the state, investors, and financial institutions A reliable accounting system provides compelling data that enables managers to make informed, precise, and timely decisions in the management and growth of the organization.

Understanding the significance of accounting in influencing business operations and growth, the author focuses on the topic "Revenue and Expense Accounting and the Determination of Business Results at Mercedes-Benz Vietnam Co., Ltd."

Research objective and scope of the thesis

This thesis analyzes the revenue and expense accounting, as well as the determination of business results at Mercedes-Benz Vietnam Co., Ltd for the year 2021 Based on the findings, the author proposes several solutions to enhance the company's accounting practices The specific objectives of the study are outlined in detail.

- 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.

Methodology

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

The Inheritage method involves utilizing prior studies and accounting standards concerning revenue and expenses to establish a foundation for assessing the business performance of Mercedes-Benz Vietnam Company This approach is essential for achieving the initial 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.

Structure of the report

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

BASIC THEORY OF REVENUE AND EXPENSE ACCOUNTING

Overview about revenue, expense and determination of business results in

Revenue refers to the total assets acquired or liabilities settled in exchange for the sale of goods, provision of services, utilization of resources, asset exchanges, or liability liquidations, ultimately affecting the net assets of an entity.

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)

Vietnam Accounting Standards Number 14 (VAS14) defines revenue as the total economic benefits accrued by an enterprise during an accounting period, resulting from its regular production and business activities, which ultimately contribute to an increase in equity This standard was established by the Ministry of Finance under decision No 149/2001/QD-BTC on December 31, 2001.

Revenue refers to the total value generated from the sale of products, goods, or services provided to customers, encompassing various concepts and interpretations.

Understanding the nature of revenue is crucial for accurately defining the scope, timing, and basis for revenue recognition, which directly impacts the objectivity and integrity of financial statements Therefore, it is essential to identify the appropriate timing for recording revenue to ensure transparent and honest financial reporting.

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

Incentive management significantly influences the revenue recognized during a reporting period, as the value of invoices is determined by the incentive schemes active at the time of invoicing.

Typically, consideration is represented by cash or cash equivalents, with revenue reflecting the contractually agreed amount received or expected, such as the net invoice value from goods sold.

The chart below details the criteria that must be met for recognizing revenue from the sale of goods, in compliance with IAS 18.14 and VAS regulations.

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

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

To effectively transfer the risks and rewards of ownership to the buyer, the seller must possess these rights at the time of sale recognition; otherwise, the seller cannot convey any rights that they do not own or that have not yet been established.

- Has not yet produced the asset; or

- Not yet acquired the asset

The transfer of risks and rewards associated with sold goods typically occurs at the time of delivery, although legal title transfer is not necessary for revenue recognition According to the standard Dealer Agreement, ownership title is transferred only upon full payment receipt.

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 relinquish managerial control typically associated with ownership of the sold goods, which usually happens when the goods are transferred to the buyer At this point, the seller is generally divested of immediate control over the items sold.

Condition 3: The amount of revenue can be measured reliably

Revenue must be reliably measurable at the time of recognition If agreements include rescission or cancellation clauses, such as rights to reinstate goods, the sales price is deemed uncertain until these clauses are no longer valid.

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

Revenue is recognized when it is likely that cash or cash equivalents from the transaction will be received by the company in exchange 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

7 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 associated with a transaction are recognized simultaneously Expenses, such as warranties and costs incurred post-shipment, can be reliably measured once the criteria for revenue recognition are met (IAS 18.19) Typically, the costs of capital and labor involved in production are easily measurable and directly attributable to the corresponding revenues.

Commercial discounts refer to the monetary reductions offered by a business to buyers who purchase goods, products, or services in bulk These discounts are outlined in the trade discount agreements specified in economic sale contracts or purchase commitments.

Accounting for revenue, expense and determination of business results

1.2.1.1 Accounting for sales and sale deduction

- Retail list of consumed goods, services and goods

- Payment documents: Receipts and notices from the bank

The 511 account captures the sales revenue and service delivery of a business during a specific calculation period, encompassing the sales of goods, products, and services to subsidiaries within the same corporate 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 5117 - Investment real estate business revenue

When businesses sell goods and services

Sales revenue and service provision for enterprises are recorded in account 511 based on VAT invoices, sales invoices, and payment documents such as receipts and performance service reports Any output VAT payable is reflected in account 333(3331), while the amounts received are recorded in account 111 (Cash), account 112 (Bank deposits), or account 131 (Receivables from customers) according to the total payment amount.

- Net revenue transfer result into account

- 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

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

Receipts, liquidation of fixed asets

Account 711 (Other income): This account reflects the income of non-operating activities that generate revenue for the business:

- Collect from the liquidation of the sale of fixed assets and the remaining value of the fixed assets for liquidation and sale of fixed assets (if any);

- Difference in interest due to revaluation of goods, fixed assets to contribute joint venture capital, invest in affiliated companies, other long-term investments;

- Collect fines from customers who violate economic contracts;

- 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 transferred to account 911

- 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

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

- The amount of VAT payable by direct method (if any)

- Result in transfer of net financial operating revenue to Account 911

- Interest, dividends and profits are divided

- Profit due to the sale of investments in subsidiaries, joint ventures and affiliates

- Interest rate incurred during the period of business activities

- Exchange rate interest incurred when selling foreign currency

- Exchange rate interest due to the revaluation at the end of the fiscal year of foreign currency items of business activities

- 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

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

Enterprises account for inventory using periodic inventory method:

- Carrying forward the value of finished goods inventory at the beginning of the period;

- Cost of goods sold or exported in the period;

- Cost of finished products in stock and completed services;

- The amount of provision for devaluation of inventory

- Transfer of cost of goods sent for sale but not yet sold;

- Carrying forward the value of finished goods inventory at the end of the period;

- Reversal of provision for devaluation of inventories at the end of the financial year;

- Carrying forward cost of goods sold in the period to Account 911 “Determination of business results”;

- Cost of goods sold and completed services determined as sold during the period in account 911 "Determination of business results"

1.2.2.2 Accounting for expenses from financial activities

This account reflects financial operating expenses

- Expenses for loan interest, late payment interest, and property rental interest;

- 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;

- 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

- Salary and social insurance allocation table

- Spreadsheet and depreciation allocation of fixed assets

- Allocation table of materials and tools

Business administration expenses have 2 level accounts:

- Business administration expenses incurred in the period

- Provision for doubtful debts, provision for payables

- Reversing provision for doubtful debts, provision for payables

- Transferring business administration expenses to Account 911 "Determination of business results"

Account 811 – Other expenses: This account records all expenses incurred due to transactions separate from the ordinary operations of the business

- Other expenses incurred during the period

- At the end of the accounting period, all other expenses incurred will be transferred to Account 911

Account 911: Determination of business results

Account 821: Corporate income tax expenses

- Capital value of products, goods, and services sold

- Expenses from financial operation, corporate income tax expenses and other expenses

- Net revenue of products, and services sold through the period

- Revenue from financial activities, other income and reduction of corporate income tax expenses

- Corporate income tax expenses incurred in the year;

- Deferred corporate income tax expenses

- Actual amount of current corporate income tax payable in the year;

- The payable corporate income tax amount is recorded as a decrease due to detecting non-material errors of the previous years

- Transferring corporate income tax expenses to account 911 “Determination of business results”

- Amount of losses in business activities of the enterprise;

- Distributing dividends and profits to shareholders, investors, joint venture parties;

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

CONCLUSION

Chapter 1 delves into the essential theoretical aspects of revenue and expense accounting, as well as the evaluation of business performance within enterprises It covers key definitions, characteristics, and management requirements, aligning with Vietnamese accounting standards and the current accounting framework.

Understanding revenue and cost accounting fundamentals is essential for evaluating business performance in commercial enterprises This knowledge will serve as a foundation for assessing the current practices and recommending improvements in the accounting of revenues and costs at Mercedes-Benz Vietnam Company Limited.

ACTUAL SITUATION OF REVENUE, EXPENSE ACCOUNTING

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

Administered tax authority: Ho Chi Minh City Tax Department

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

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

On April 14, 1995, Mercedes-Benz was awarded license No 12-5/GP to establish a joint venture, Mercedes-Benz Vietnam, focused on assembling cars and lightweight trucks in Ho Chi Minh City The joint venture had a total investment of 50 million euros, with Mercedes-Benz contributing 70% and its local partner, Saigon Transportation Mechanical Corporation Limited (SAMCO), providing the remaining 30% through land rental fees and existing factory resources This venture marked a significant milestone in Vietnam's automobile industry, as it became one of the first manufacturers to assemble and distribute both passenger cars and commercial vehicles in the Vietnamese market.

Source: Human Resources department of the company

In May 1996, the company launched its CKD car assembling factory, introducing the E230 and MB140D car series The E230 is a medium-sized luxury vehicle renowned for its advanced safety features and technology, while the MB140D is a 16-seat minibus designed to cater to the needs of short- and medium-distance passenger transport in Vietnam.

In 1997, MBV showcased the MB700 model at an attractive price point while simultaneously inaugurating Vietnam's largest car sales and maintenance center in Giang Vo District, Hanoi.

In 1998, MBV experienced significant growth, introducing a diverse range of vehicles, including the MB100 (10-seat minibus), MB140 Avantagarde (16-seat minibus), Citi Liner (coach), and the highly successful C200 tourism car series, which became a best-seller in the luxury segment This year also saw the inauguration of the Hang Xanh car sales and maintenance center (Haxaco) on Dien Bien Phu Street in Ho Chi Minh City.

Between 1999 and 2000, MBV showcased its luxury car series, the E240, while achieving significant quality milestones by obtaining the ISO 9002 certification in 1999 and the ISO 14001 certification in 2000, demonstrating its commitment to product excellence and advanced manufacturing practices.

In 2007, Mercedes-Benz Vietnam introduced the next-generation C-Class model (W204), marking a strategic move to strengthen its leadership in the luxury automotive segment This launch generated significant excitement within the industry, highlighted by the exhibition of two impressive "diamonds" in front of the Opera Houses in Ho Chi Minh City and Hanoi Notably, this event featured the first use of laser light in a car launch ceremony in Vietnam, merging modern vehicle design with the architectural beauty of the Opera House, and creating a unique blend of technology, culture, and art.

In 2008, Mercedes-Benz Vietnam was granted the license to import Complete Build-up Units (CBU), enhancing its domestic car production capabilities This strategic move has established MBV as a leader in the luxury passenger car segment in Vietnam.

In 2009, Mercedes-Benz Vietnam launched the 9th generation E-Class (W212), which, alongside the new C-Class, quickly became the best-selling model for the brand and dominated the mid-size luxury car segment.

In 2012, Mercedes-Benz Vietnam transitioned from a joint venture to a limited company, marking a significant milestone in its 17-year journey in the Vietnamese market During this time, the Mercedes-Benz brand achieved remarkable success, capturing over 50 percent of the luxury car market share 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 early 2014, Mercedes-Benz Vietnam celebrated a significant milestone with the official rollout of the first domestically assembled S-Class from its production line, attended by the company's management and top officials from Daimler AG This event marked a pivotal moment for both Mercedes-Benz Vietnam and the broader Vietnamese automotive industry With the launch of 19 new products, the company successfully captured 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

The "Three-Pointed Star" has established itself as a trusted leader in the luxury passenger car market, with Mercedes-Benz Vietnam being one of the select factories globally to receive the prestigious "Best Factory" award from Daimler Group in 2013 This accolade highlights the exceptional car assembly skills of the technical staff in Vietnam and reflects the company's commitment to quality and excellence.

MBV has not only led the way in assembly line investments but has also embraced advanced technology and Industry 4.0 innovations in its production processes A prime example is the inauguration of an automated electrostatic coating factory in 2014, which represents the most advanced electrostatic painting line for Mercedes-Benz globally, backed by an investment of nearly 10 million US dollars.

MBV boasts the largest network of sales and service centers for luxury cars in Vietnam, featuring the iconic "3-pointed star" brand It is the only luxury car manufacturer with service locations in Hai Phong, Vinh, Da Nang, and Nha Trang, in addition to its presence in Hanoi and Ho Chi Minh City This extensive coverage ensures that customers enjoy convenient access and peace of mind when utilizing their services.

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 adopts a high specialization policy to ensure exceptional quality and performance To achieve this, the company has established distinct divisions, each equipped with its own budget, personnel, and planning staff, all dedicated to optimizing outcomes for their specific area of focus.

The divisional structure offers significant advantages, making it an ideal choice for navigating rapid environmental changes By organizing each product line into its own separate division, companies can effectively manage and control the production process across various functional departments.

2.1.3.2 Functions and duties of department

Departments in Mercedes-Benz Vietnam

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

Characteristics of sales and service provision, sale deduction and miscellaneous

The revenue generated by the company mainly includes revenues from the sale of cars, spare parts and the provision of services, revenues from financial activities and other operating revenues

2.2.1 Accounting for sales and service provision

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

Mercedes-Benz Vietnam focuses on manufacturing and importing vehicles along with auto spare parts The company operates through trade, service, and the supply of goods, making revenue from sales and services its primary source of profitability Achieving profitability is a crucial objective for the company, highlighting its business scale and profit-generating capabilities.

Mercedes-Benz Vietnam distributes products to three companies with an estimated market share in 2019: Vietnam Star 50%, An Du 30%, and Haxaco 20% As an

32 authorized distributor of MBV, the business activities of these businesses depend heavily on its policies

The company will offer dealers an initial listing price for products and a standardized discount of 5% to 6% for each specific item, ensuring consistency among dealers However, it does not impose a retail price, allowing each dealer to set their own prices based on their individual sales policies.

In a highly competitive environment among Mercedes-Benz distributors, many utilize discounts to lower selling prices and attract customers, resulting in a gross profit margin of only about 3% on remaining vehicle sales This slim profit margin is primarily allocated to cover essential business expenses, including selling and administrative costs.

The primary factor influencing dealer profits will be the indirect rewards linked to the achievement of sales and quality targets established by the company Bonuses are scheduled for disbursement at the end of each quarter, mid-year, and year-end, contingent upon distributors meeting over 80% of their committed sales output.

The company's bonuses for businesses are determined by various evaluation criteria, including vehicle sales structure, customer satisfaction index, facilities, training, quality of mechanical management, and the management of customer databases and information.

2.2.1.2 Principles of revenue recognition from sales and service provision

Revenue is acknowledged when a company has shifted the majority of risks and ownership of goods and services to its customers, signifying the receipt of economic benefits from the transaction At this stage, the company also assesses the associated costs.

Timely recording of invoices and revenue is mandated by accounting law, necessitating prompt requests for invoicing to the accounting department Generally, revenue is recognized when the risks and rewards of ownership are transferred to customers For any uncertainties, it is advisable for responsible individuals or departments to consult with the accounting team.

Dealer order new vehicle in Comsys

Approved placed orders in Comsys and SAP

-Approved agreed price order base on the price list and Special Offer

-Perform vehicle release in SAP

Approve credit worthiness by checking dealer approved credit limit

-Perform billing release in SAP

-VAT invoices are issued by Account

Receivable and signed off by CFO

Invoices are sent to Distribution

Daily Aging Report (vehicle Debt Report)

Purchase Order/ VAT Invoices/Special Offer/

Contract/Bank Statement/MCP for G sales

VAT Invoice/Vehicle handover minute

Handover minutes are made when delivering vehicles

Vehicle document will be transferred to Dealers when full payment is received For used cars, the registration cards will be transfer to customer with VAT invoices

For used cars, VAT invoices are only issued when MBV receive full payment

Distribution Dept create Purchase Orders in SAP

When the Purchase Order in SAP is changed, the status of orders in COMSYS will be changed accordingly

-Perform vehicle release in SAP

-The vehicle stock balance will be decreased accordingly

Figure 2.5: Revenue recognition process of vehicle

Source: Accounting department of the company

The invoicing process initiates upon confirmation of a product's shipment to the customer, making it essential to generate an invoice that accurately reflects the shipment details Accounts Receivable (AR) accountants play a crucial role in ensuring timely billing and posting of these invoices.

AR accountants are also the only personnel with authorization to create billing documents in the SAP system

The Sales department staff generates purchase orders (PO) in the SAP system, while the price and revenue Controller from the Controlling function verifies these prices against the approved price list Upon confirming the accuracy of the prices in the order, the Controller proceeds to complete the release module in controlling.

The AR accountant reviews the daily credit limit and aging reports, along with the necessary approved documents, to assess the credit line If the credit limit meets the requirements for the order and the documents are properly approved, the AR Accounting team will proceed to complete the Accounting release in SAP.

After Controlling and Accounting completed releasing the order in SAP, Distribution department prepares the vehicle shipment to the Dealers

All goods shipped are recorded, AR Accountant perform billing in SAP, and recognized as revenue earned on the same day

The Parts Customer Care Group processes orders manually through various channels such as email and fax, storing the order data in the Kerridge Autoline System This system automatically generates VAT invoices and delivery notes based on the price master file, discount tables, and customer information established through sales contracts Both documents include the parts number and can be easily cross-referenced within the Kerridge Autoline System.

Every day, the CRM team sends all hard copies of VAT invoices issued the previous day to the Accounting department The Accounts Receivable Accountant then verifies the accuracy of these invoices before uploading them into SAP using a mass upload template.

Parts Dept -Check orders for validity of parts number, order number, order type, quantity

-Check credit limit in case of selling part for dealers

-Batch release (allocating stock) based on the delivery schedule

Customer Order/Daily Aging Debt Report

Pick part from warehouse, confirm picking slip

Print out “exit permit” for part delivery

AS Sales and Marketing Dept

Issue VAT Invoice, the VAT

Invoice must be signed off by AS

AS Sales and Marketing Dept

Deliver parts and related documents to customers

Exit permit/Delivery note/VAT invoice

For direct customers (including employee): full payment must be made before confirmed picking list.

Process: Parts Selling Invoicing Procedure

-Check against the daily downloaded issued invoice report from KA Sart to the hard copy invoices received from

Parts Dept -Record parts sales transactions in SAP on daily basis

VAT invoice/Daily issued invoice report

Figure 2.6 : Revenue recognition process of spare part

Source: Accounting department of the company

Spare part revenue and accounts receivable are recorded daily, ensuring accurate financial tracking Once sales invoices and incoming payments are fully documented, the Accounts Receivable Accountant generates a daily aging report This report is shared with the CRM team in the Spare Parts Department, enabling them to manage credit limits effectively before processing customer orders.

In addition to primary income from vehicle and parts sales, miscellaneous revenues play a significant role Each request for these revenues is prepared and approved by both the General Manager and Division Director Subsequently, the Accounts Receivable Accountant manually issues the invoice, which is then reviewed and approved by the Chief Financial Officer.

 Services ( warranty, … ): service revenue is recognized at time of performance, as indicated by a completed service order

 Marketing costs which are shared by Dealers

2.2.1.3 The process of transferring documents at MBV

The document circulation process is regulated in the accounting system of the MBV, but also ensures compliance with Vietnamese law

The process of document transfer in the company includes the following steps:

 The departments prepare accounting documents that reflect the emerging economic processes

The accounting department plays a crucial role in gathering and verifying all relevant documents, ensuring their legality and validity It is responsible for confirming the accuracy, truthfulness, and completeness of the information presented Upon identifying any discrepancies during the review of accounting documents, it is essential to promptly inform the manager to facilitate appropriate corrective actions.

 After collecting, accountants will classify documents to serve as a basis for the entry of appropriate accounting books

 Finally, the documents are systematically stored and preserved

When customers need to buy goods, the sales department receives the orders and checks whether there is enough stock to fulfill the order or not After checking, the sales

Characteristics of expenses of MBV

2.3.1.1 Accounting for selling and administrative expense

At Mercedes-Benz Vietnam Co., Ltd., accountants utilize account 641 to document selling expenses, which encompass marketing costs such as catalog printing and advertising in various media, along with license fees, homologation expenses, and warranty costs The expenses related to different goods and finished products for consumption are recorded in account 641 based on relevant documentation.

Account 642 is utilized by accountants to represent the general administrative expenses of an enterprise, encompassing costs such as staff salaries, social and health insurance, union contributions for management personnel, and expenses for office supplies and labor tools It also includes depreciation of fixed assets used in management, license taxes, provisions for doubtful receivables, and outsourced services like utilities and property insurance, as well as other monetary expenses such as customer conferences Accurately accounting for selling and administrative expenses is crucial for businesses, and this process involves several key aspects.

- As the basis for the cost collection of that period, helping enterprises to accurately determine their profit and economic efficiency

In today's competitive market economy, effectively implementing business plans to reduce costs and increase profits is crucial for enterprises, as pricing plays a vital role in maintaining a competitive edge.

Effective planning, investigation, and analysis by a direct management agency are crucial for controlling enterprise economic activities and preventing inflated costs that distort business results This approach not only facilitates the evaluation of cost utilization against the business plan but also enables the implementation of more reasonable cost strategies Ultimately, these measures support informed management decisions that are essential for the survival and growth of businesses.

2.3.1.2 Account used and process of accounting

In the context of economic transactions involving the consumption of goods and finished products, the accountant meticulously opens the monitoring book and records relevant documents, such as delivery notes and payment slips, in the General Journal.

At the end of each month, the cost of goods sold is recorded in Account 911 to assess business performance, while selling expenses are documented in Account 641, following the guidelines set by the Ministry of Finance.

2.3.1.3 Accounting transaction for selling and administrative expense at MBV

On 14 th December, MBV received Telephone Bill from VNPT Telecommunication service for sales services telephone expense

After inputing data into the accounting software, the data will be automatically updated in the General journal account 641 (Attachment to Appendix 9) and General ledger of Account 641 (Attachment to Appendix 10)

On 5 th December, President invited delegations from Germany to Mercedes - Benz Vietnam to visit and learn more about the company On that day, Admin department booked lunch at Vuon Cau restaurant Accountant received the VAT invoice (Attachment to Appendix 11)

After inputing data into the accounting software, the data will be automatically updated in the General journal account 642 (Attachment to Appendix 12) and General ledger of Account 642 (Attachment to Appendix 13)

- Cost of goods sold is reflected in the General journal, General ledger for account 632, in terms of quantity and value for each type of products However, Toyota motor

Vietnam, Ltd utilizes the weighted average inventory costing method, resulting in the preparation of its ledger at the end of each month On the last working day of each month, the designated accountant calculates the cost of goods sold by assessing the quantity and value of the beginning inventory along with the goods purchased throughout the month.

2.3.2.2 Account used and process of accounting

 Step 1: Issuing goods receipt note and goods dispatch and internal delivery note For goods into warehouse

Upon arrival at the warehouse, the storekeeper verifies the quantity, quality, and value of the goods against the VAT invoices and accompanying documents Subsequently, the statistician prepares and signs the goods receipt note, which is printed in two copies: one for warehouse records and the other for the accounting department.

For goods out of stock

Goods for sale will only be released from stock after the storekeeper verifies the VAT invoice, sales contract, and related appendices For goods intended for internal use, a warehouse officer will generate an internal bill, with such items being accounted for using a specific identification method, although this situation is quite uncommon.

 Step 2: Preparing General ledger of COGs

At the end of each month, the warehouse officer calculates the book ending balance in the General Ledger by considering the beginning balance and the total amount of goods purchased throughout the month.

 Step 3: Sending all papers to accounting department

Once the warehouse officer gathers all pertinent information and data, they will forward it to the accounting department At the end of each month, the designated accountant will document the cost of goods sold in the general journal.

The COGS are recorded into General journal 632 (Attachment to Appendix 14) and General ledger for account 632 (Attachment to Appendix 15).

Accounting for business results at MBV

Mercedes-Benz Vietnam, Ltd primarily generates its business results through revenues from car sales and service offerings Additionally, the company benefits from other income sources, including financial earnings and internal service provisions.

2.4.2 The process of transferring documents

- At the end of the period, based on the number of related accounts, the chief accountant will check and make accounting vouchers to transfer the related accounts to Account

− Then, the chief accountant makes a transfer entry of Account 511, Account 515, Account 632, Account 642, Account 711, Account 811 to Account 911 "Determination of business results" and prepare financial statements

- Summary table of transfer documents

- Account 911 – Determination of business results

Each month, the accounting system updates the debit and credit sides of account 911 based on the ending balances from specific accounts The debit side is influenced by accounts 632, 641, 642, 635, 811, and 821, while the credit side reflects the balances from accounts 511, 512, 515, and 711 Subsequently, the final balance of account 911 is transferred to account 421, which represents Retained Earnings.

On December 31, 2021, the General accountant prepare the General Ledger of account

CONCLUSION

Chapter 2 of the thesis analyzes the accounting practices for revenue, expenses, and business results at Mercedes-Benz Vietnam Co., Ltd The company adheres to the existing accounting regulations and effectively implements the revenue and expense recognition processes from a financial accounting standpoint However, there are still notable limitations that require enhancement.

Chapter 3 will propose some solutions to improve the accounting of revenue, expenses and business results at Hoan Kiem Electronics Co., Ltd.

RECOMMENDATIONS

Provide additional human resources for the finance department

The limited number of personnel responsible for accounting, taxes, and documentation creates an uneven workload across teams, leading to increased pressure and delayed completion times This imbalance negatively impacts the sales processes of dealers and hinders timely revenue recognition.

To optimize the accounting team, a company can assign at least one dedicated staff member, hire interns, or outsource the work While interns may offer a cost-effective solution, they often lack experience and require training time On the other hand, outsourcing guarantees experienced professionals but comes with higher costs Therefore, it is crucial for the company to clearly define its goals and available resources to develop an effective accounting strategy.

Review and re-check all information of products, thereby improving the accuracy of

Inaccurate information from the production department regarding vehicle details such as model, chassis number, or production year can lead to prolonged correction times and invoice cancellations This not only damages the company's reputation but also results in substantial financial losses.

To streamline the export of invoices, staff collaborating with the department and dealers must clearly define the name and nature of each item This information should be accurately recorded in the system to ensure efficient shipment and to assist with the management of similar items in future imports.

Updating information technology system and maintain the SAP software

Accountants can easily access information regarding their operations through the software, but certain tasks require multiple steps to complete, causing delays in other responsibilities.

To enhance efficiency and minimize errors in SAP processes, the Controlling department should collaborate with the Accounting department to create tools that streamline operations This partnership will not only save time but also improve accuracy throughout the workflow.

Utilizing information technology and advanced warehouse equipment system to

MBV not only imports products for sale to dealers but also for warehouse storage, emphasizing the need for optimal space and convenience Given the varying properties of items, particularly parts and accessories—such as fragility, danger, shelf life, and size—it's crucial to clearly define these characteristics to develop an efficient storage system.

To enhance efficiency in inventory management, the company leverages information technology, particularly Excel, to quickly identify item locations Implementing a color management system simplifies tracking stock levels, enabling managers to make informed decisions about restocking based on item demand Additionally, optimizing the distance from storage to shipping points for high-demand items can streamline labor efforts, improve overall efficiency, and minimize product damage, ultimately protecting the company's revenue.

In today's competitive economy, it is essential for firms, including multinational corporations, to ensure the smooth and effective execution of their internal and international operations to create business value and enhance their industry reputation A well-organized accounting system, particularly concerning purchases, revenues, expenses, and business results, is crucial Wipro Consumer Care Vietnam has demonstrated notable achievements in its international purchasing performance, particularly in revenue, pricing, and quality, resulting in growth in both revenue and profit However, despite being a long-established and reputable enterprise with extensive market coverage and a skilled management team, the company faces certain limitations that could impact its revenue accounting processes To thrive sustainably in today’s competitive landscape, addressing these challenges is vital.

48 company needs financial management solutions, as well as effectively use human resources to save costs, increase revenue and generate greater profits to group

The article titled "Revenue Accounting and Determination of Business Results at Mercedes-Benz Vietnam Co., Ltd" explores the author's in-depth understanding of revenue accounting practices and the assessment of business results within the company It highlights the application of theoretical knowledge acquired from university studies and self-research, along with practical experience using the SAP system in a real-world setting The author also presents several recommendations aimed at enhancing the efficiency and effectiveness of the company's accounting operations However, due to time constraints and limited experience, the report acknowledges potential errors and the omission of broader factors The author welcomes feedback from experienced university supervisors and senior colleagues to improve the report further.

MERCEDES - BENZ VIETNAM CO, LTD

Number 693, Quang Trung Street, Ward 18, Go Vap District, Ho Chi Minh City

Tel: (848) 35889 111 - 35889 222 Fax: (848) 38958 715 - 38958 713 Tax code:0300709284 DELIVERY ORDER Form: 03XKNB2/022

Date:03/12/2021 Name of shipper: ……GRL………

To:……… VIETNAM STAR LIMITED COMPANY

(Buyer) (Prepared by) (Checked by) (Approved by)

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

Tel: (848) 35889 111 - 35889 222 Fax: (848) 38958 715 - 38958 713 Tax code: 0300709284 (Form): 01GTKT0/001 VAT INVOICE (Series): AA/21E

(Date): 03/12/2021 Customer name: VIETNAM STAR LIMITED COMPANY

Address: 315, block D5 - 1, Hà Nội - Đài Tư Industry, Phúc Lợi Ward, Long Biên District, Hà Nội Capital, Viet Nam

Term of payment: Bank transfer

Total Sales amount: 1,995,000,000 VAT rate: 10%

Grand total sales included tax: 2,194,500,000 Amount in words: two billion one hundred and ninety four million five hundred thousand dong

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

Appendix 3: Spare part VAT invoice

Tel: (848) 35889 111 - 35889 222 Fax: (848) 38958 715 - 38958 713 Tax code: 0300709284 (Form): 01GTKT2/002 VAT INVOICE (Series): MB/21T

(Date): 30/12/2021 Customer name: AN DU COMMUNICATION & PAYMENT DATA JOIN STOCK COMPANY

Address: 11, Pham Hung Street , My Dinh 2 Ward, Nam Tu Liem District, Hà Nội Capital, Viet Nam

Term of payment: 14 days net

No Part No Part name Unit price Quantity Amount

Total Sales amount: 7,828,000 VAT rate: 10%

Grand total sales included tax: 8,610,800 Amount in words: eight million six hundred and ten thousand eight hundred dong

Appendix 4: General journal of Revenue (Account 511)

GENERAL JOURNAL FOR REVENUE (Account 511)

CFO Chief Accountant Prepared by (Sign, full name) (Sign, full name) (Sign, full name)

Appendix 5: General ledger of Revenue (Account 511)

GENERAL LEDGER FOR REVENUE (Account 511)

Code Date No Debit Credit

Appendix 6: General journal of Revenue (Account 511)

GENERAL JOURNAL FOR MISCELLANOUS REVENUE (Account 711)

Revenue form sponsoring Golf tournament

Revenue from Scrap (hazardous waste) of Dec.2021

Appendix 7: General ledger of Miscellanous Revenue (Account 711)

GENERAL LEDGER FOR MISCELLANOUS REVENUE (Account 711)

Appendix 8: VAT invoice from VNPT

242, Pham Van Hai, Ward 5, Tan Binh District, Ho Chi Minh City

Customer’s name: Mercedes – Benz Vietnam

Address: 693, Quang Trung Street, Ward 8, Go Vap District, Ho Chi Minh City, Viet

(Seller) (Customer) (Sign, full name) (Sign, full name)

Appendix 9: General journal of Selling expenses (Account 641)

GENERAL JOURNAL FOR REVENUE (Account 641)

639 10/12 Salaries and bonuses for sales department 12/2021 334

Appendix 10: General ledger of selling expenses (account 641)

GENERAL LEDGER FOR MISCELLANOUS REVENUE (Account 641)

31/12 988 Selling expenses - Material, packing cost 152 2,145,687

31/12 1006 Outside purchasing service cost others 33115 8,342,433

Appendix 11: Vuon Cau restaurant invoice

360, Phan Van Tri Street, ward 11, Binh Thanh District, Ho Chi Minh City

Customer’s name: Mercedes - Benz Vietnam

Address: 693, Quang Trung Street, Ward 8, Go Vap District, Ho Chi Minh City, Viet Nam

Item Name Qty Price Amount

Appendix 12: General journal of Administration expenses (Account 642)

GENERAL JOURNAL FOR ADMINISTRATION EXPENSE (Account 642)

Payment for Vuon Cau restaurant 111 3,470,585

294 07/12 Payment for fuels to transport

Appendix 13: General ledger of Administration expenses (Acc 642)

GENERAL LEDGER FOR ADMINISTRATION EXPENSES (Acc 642)

Outside purchasing service cost others 3311 1,235,684

Appendix 14: General journal of COGs (Account 632)

GENERAL JOURNAL FOR COST OF GOODS SOLD (Account 632)

1283 2/12 Buying aluminum from TS company

Buying a welder from Kim Phong construction machine

Appendix 15: General ledger of COGs (Account 632)

GENERAL LEDGER FOR COST OF GOODS SOLD (Account 632)

Appendix 16: General ledger of Net income (Account 911)

GENERAL LEDGER FOR DETERMINING BUSINESS RESULTS (Account

31/12 1014 Transfer costs of goods sold 632 3,567,265,127

Tiêu đề	Accounting for Revenue, Expense and Determining of Business Results at Mercedes - Benz Vietnam Co., Ltd
Tác giả	Ha Chuc Ly
Người hướng dẫn	Nguyen Hoang Dieu Hien
Trường học	University of Economics and Law
Chuyên ngành	Accounting - Auditing
Thể loại	Graduation Thesis
Năm xuất bản	2022
Thành phố	Ho Chi Minh City

Định dạng
Số trang	75
Dung lượng	1,15 MB