Cost accounting and product costing in bac mien trung consultancy investment construction and trading joint stock company

DECLARATION I hereby declare that this thesis is my own work and effort and that has no been submitted anywhere for any award Where other resources of information have been used, they have been acknowledged The data, figures and results described in this thesis are taken from the factual situation of the internship company The work was done under the guidance of my supervisor Ms.Cao Phuong Thao, the lecturer of the Academy of Finance Hanoi, 15th February, 2016 Student Pham Thi Lan Anh Pham Thi Lan Anh CQ50/51.02 ACKNOWLEDGEMENT Firstly, I am deeply indebted my supervisor Ms.Cao Phuong Thao, who has continuously helped, and encouraged me to keep the right direction of the thesis Without her patience, enthusiasm and strong expertise knowledge, the thesis could not be completed Secondly, I would like to express my profound gratitude to Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock Company for giving me a chance to expose factual business environment and to collect data for my thesis A sincere thank I want to send to all the company’s staff, especially Ms.Nguyen Thi Hue, the Director, an accountant for their kindness and support during my internship Besides, I also get much support from my friends at the Academy of Finance, whose recommendations and advice are really a great help for my thesis A special deep thank is what I sent to them, by this way Especially, I would not have gone this far but for my family, who are always beside and stimulating me to finish the tasks From my heart, I want to express how grateful I am to them which I cannot say in words I will not forget all these contributions Finally, because of limitations of time and knowledge, the mistakes are unavoidable Therefore, I hope to receive more contributions and suggestions to make my graduation thesis better Pham Thi Lan Anh CQ50/51.02 ABSTRACT In the social-oriented market economy with many sectors, enterprises struggle for a bigger and bigger market share Being aware of the strong competition, enterprises in general, construction enterprises in particular; therefore make a serious concern of accounting Because, accounting makes itself available for the business owners to assess and analyze the business's performance This will help the owner to decide what improvements they need to make, or what practices to keep doing in order to keep the company at it is successful place Due to its specific business characteristics of building many constructions, the accounting for Cost accounting and product costing becomes more difficult and complicated After an internship at Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock Company, my study with topic: “Cost accounting and product costing in Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock Company” will point out how important accounting for expense and cost of product are, and how they are carried out at the company The main content is shown in three chapters Chapter 1: Literature review of cost accounting and costing product Chapter 2: Current situation of cost accounting and product costing in Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock Company Chapter : Some suggestions for improving the efficiency of organizing accounting in company Pham Thi Lan Anh CQ50/51.02 LIST OF ABBREVIATION Numbe r Abbreviation Acc VAS VAT No Dept Full phrase Account Vietnamese Accounting Standard Value Added Tax Number Department TABLE OF CONTENT Pham Thi Lan Anh CQ50/51.02 Pham Thi Lan Anh CQ50/51.02 PART 1: INTRODUCTION Rationale of the study When starting a business, one of the most important aspects to think about is the accounting process and how you choose to account all of your financial information The purpose of accounting for a business is to have a record of the receipts and expenditures of it is daily activities Also, accounting makes itself available for the business owners to assess and analyze the business's performance This will help the owner to decide what improvements they need to make, or what practices to keep doing in order to keep the company at it is successful place Nowadays, every companies work for the only aim of gaining money or profit Companies cannot survive with negative business result for a long continuously period Therefore, the work of calculating expenses and calculating the cost of product is more important The more accurate the expenses are reflected, the easier the management can find out the existing problems and look for solutions That is the reason why accounting for expenses and cost of product is especially paid attention within accounting system From its foundation, Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock Company always realizes the important role of accounting for expenses and costs of product As a student of the Academy of Finance, undergo internship at the company, I was an insight into the organizational structure and the management apparatus of the company and see the importance of the organization of cost accounting and product costs In this situation a research with the topic named: “Organizing accounting for Cost accounting and product costing in Bac Mien Trung Pham Thi Lan Anh CQ50/51.02 Consultancy Investment Construction and Trading Joint Stock Company” was chosen to be carried out Aims of the study The study was carried out in order to achieve: First, it is to show the situation of carrying out organizing accounting “Cost accounting and product costing”in Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock Company to compare with theory Second, it is to point out the strengths and weaknesses, achievements and limitations existing, and suggest possible solutions to improve the efficiency of organizing accounting in future Scope of the study My study mainly focuses on expenses, cost of product and all items reflected in Journal at June, 2015 Another focus is the accounting method and procedures applied by the company All data and figures belong to accounting fiscal year 2015 Methods of the study There are two main research methods: qualitative and quantitative approach that was decided on gathering relevant information from primary and secondary data sources for the study The data for the study was collected from financial statements of Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock Company (general journals, ledgers and related vouchers) which is focused on expenses, cost of product and all items reflected in Journal at June, 2015 It is primary data The secondary data which were collected from existing literature formed the literature review of this study The sources of the secondary data included books, journals, articles obtained from the internet Pham Thi Lan Anh CQ50/51.02 Organization of the study The study comprises three main chapters: Chapter 1: Literature review This chapter gives a general overview of accounting for cost accounting and product costing Chapter 2: Reflects to current situation of accounting for Cost accounting and product costing in Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock Company Chapter 3: Some suggestions for improving the efficiency of organizing accounting in company Pham Thi Lan Anh CQ50/51.02 PART : MAIN CONTENT CHAPTER 1: LITERATURE REVIEW OF COST ACCOUNTING AND PRODUCT COSTING 1.1 The necessity of organizing the collection of costs accounting and calculate cost of product in the enterprise 1.1.1 Meaning of accountants set costs accounting and product costing in the construction business In today market economy, competition is inevitable; it forces companies to enhance their production as well as the quantity and quality of the products However, at high quality, the products price must be acceptable to customer This is the reason why every company needs cost accounting to accurate measure and record any costs and expenses appear at the right time, and from that information, managers could produce ideas and make decision for future production development in order to generate as much profit as possible for the company Making things simple, we can say that there are three points should be attempt by every corporation: product quality and design, low down production costs and expenses, and low price for theproducts and services While cost accounting is often used within a company to aid in decision making, financial accounting is what the outside investor community typically sees Financial accounting is a different representation of costs and financial performance that includes a company's assets and liabilities Cost accounting can be most beneficial as a tool for management in budgeting and in setting up cost control programs, which can improve net margins for the company in the future One key difference between cost accounting and financial accounting is that while in financial accounting the cost is classified depending on the type Pham Thi Lan Anh CQ50/51.02 of transaction, cost accounting classifies costs according to information needs of the management Cost accounting, because it is used as an internal tool by management, does not have to meet any specific standard set by the Generally Accepted Accounting Principles and as result varies in use from company to company or from department to department Scholars have argued that cost accounting was first developed during the industrial revolution when the emerging economics of industrial supply and demand forced manufacturers to start tracking whether to decrease the price of their overstocked goods or decrease production During the early 19th century when David Ricardo and T R Malthus were developing the field of economic theory, writers like Charles Babbage were writing the first books designed to guide businesses on how to manage their internal cost accounting By the beginning of the 20th century, cost accounting had become a widely covered topic in the literature of business management All types of businesses, whether service, manufacturing or trading, require cost accounting to track their activities Cost accounting has long been used to help managers understand the costs of running a business Modern cost accounting originated during the industrial revolution, when the complexities of running a large scale business led to the development of systems for recording and tracking costs to help business owners and managers make decisions In the early industrial age, most of the costs incurred by a business were what modern accountants call "variable costs" because they varied directly with the amount of production Money was spent on labor, raw materials, power to run a factory, etc in direct proportion to production Managers could 10 Pham Thi Lan Anh 10 CQ50/51.02 The company needs to allocated tasks effectively for accountants, especially at the end of month and at the end of fiscal year when there is a large workload to deal with At that time, an accountant has to be in charge of many duties For example, the accountant has to issue invoices and books of sales revenue every day, calculate cost of goods sold, books of selling and administration expenses, book some related incomes and expenses, prepare a Journal Therefore, a clear plan for allocation is needed to avoid overloaded situation and transaction misstatements The transfer of vouchers should have more serious rules The company should give a deadline for payment vouchers to be able to manage and understand the operational status of the construction team (a minimum of days, a maximum of 10 days) Besides, company should open sub-accounts for selling expenses ( acc 641) and administrative expenses to follow detail for each transaction and For example, open the account 6411(Staff costs): Reflecting payable to sales staff, employees packing, transport, storage products, goods, including salaries, meals between shifts, wages and deductions for social insurance, health insurance, trade union funding; account 6412(Cost of materials, packaging): Reflects the cost of materials, containers for keeping and consuming products, goods and services, such as packing material costs of products, goods, expenses materials…and other sub-accounts for selling expenses include acc 6413 (the cost of tools and utensils), acc 6414 (Depreciation and amortization), acc 6415 (Warranty costs), acc 6417( Cost of services purchased),and acc 6418(other cash expenses) Since then, the calculation of data is faster and correctly So, directors can monitor details of all activities of the company and make corrective measures if the company had difficulty Pham Thi Lan Anh CQ50/51.02 3.2 For accounting vouchers Most of vouchers used by the company are self- created based on the available forms or inherited from the previous transactions They are quite simple and easy to understand However, it takes much time to rotate a voucher to the accounting department This weakness can be eliminated if the manager reminds and urges their members to send VAT invoices and sales contracts to the accounting department on time This helps to make a timely and accurately record in accounting books, avoid mistakes, save time, money and company’s effort, as well as facilitate exact calculation of followed steps 3.3 For accounting forms Company needs to update a new accounting software such as MISA, FAST, EFFECT, BRAVO, G9…While the science technology obtains so much achievement, the use of accounting software will keep the company not out-dated, as well as reduce the workload for the accounting department, and improve the accuracy of accounting calculation The accounting books will be formed automatically be accounting software; therefore the format and accuracy will be much improved 3.4 General conclusion about cost accounting and costs of product in Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock Company The accounting department of Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock Company is under control and implemented full functions The allocation of five staff in accounting department is quite reasonable One specializes in payment, one is responsible for general accounting, one takes charge of accounting for cash, one is focus on keeping, receiving and paying cash and the other is chief accountant in charge of general accounting performance, tax and business identification Pham Thi Lan Anh CQ50/51.02 This reasonable allocation results in the improvement of accounting bookkeeping and the avoidance of misstatements in financial statements Concretely, all work is allocated clearly which helps almost occurred transactions have been recorded in accounting books timely and accurately Besides, all transactions occurred are recorded in accounting books timely and accurately It helped the Director in efficiency manage and made the correct decisions All accounting books, entries, vouchers, and principles applied by Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock Company are suitable with Decision 200/2014/TT- BTC by the Ministry of Finance Pham Thi Lan Anh CQ50/51.02 PART 3: CONCLUSION In conclusion, the graduation thesis with topic: : Cost accounting and product costing in Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock Company has dealt with its aims step by step Firstly, it gives a general overview of accounting for expense and cost of product Secondly, the situation of accounting for Cost accounting and product costing in Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock Company has been described Finally, basing on my own assessment of company’s strengths and weaknesses, and according to what I got from the practical internship, I have suggested some possible solutions to improve the accounting performance for collecting expense and calculating cost of product in Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock Company In foreseeable future, I can recognize the potential for the development of the company because of economic recovery, the increase in customer’s demand and the Director’s awareness of weaknesses I hope that its accounting for collecting expense and calculating cost of product identification will be improved positively and flexibly to meet the market requirements Due to limitation of time and scope for study as well as my knowledge, this thesis may include some unavoidable mistakes I would appreciate if the supervisor and other lectures could contribute to make my thesis better Pham Thi Lan Anh CQ50/51.02 APPENDIX Flowchart 1.1- Accounting entries for Cost of goods sold for periodic inventory method Acc 155, 156,157 Acc 632 (1) Acc 155, 156,157 (4) Acc 631 Acc 911 (2) Acc 611 (5) (3) (1) At the beginning period, transferring the opening balance of finished/merchandise goods in stock and goods sent on consignment to acc 632 (2) At the end of period recording cost of finished goods during the period (3) At the end of the period recording the cost of merchandise goods sold (4) Transferring the ending balance of finished goods in stock and finished goods sent on consignment to the debit side of acc 155, 156, 157 (5) Cost of goods sold transferred to acc 911 at the end of period Pham Thi Lan Anh CQ50/51.02 Flowchart 1.2- Accounting entries for Cost of goods sold for perpetual inventory method Acc 154, 155, 156, 157 Acc 632 Acc 155, 156 (1) (3) Acc 154, 627, 241, 138 Acc 911 (2) (4) (1) Cost of goods sold incurred during the period (2) Other costs recorded to acc 632 (3) Cost of goods returned (4) Cost of goods sold transferred to acc 911 to determine business result Pham Thi Lan Anh CQ50/51.02 Flowchart 1.3- Accounting entries for selling expenses Acc 334 Acc 641 (1) Acc 911 (7) Acc 142, 242, 152, 153 (2) Acc 111, 152 (8) Acc 352 (3) Acc 214 (4) Acc 111, 333 (5) Acc 111, 112, 331 (6) Acc 1331 (1) Salaries and compensations for selling staff (2) Package, tools and supplies used for selling department (3) Provision accounts payable (4) Depreciation of asset used for selling activities (5) Tax, obligation and other fees (6) Expenses for services rendered paid in cash (7) Selling expenses transferred to acc 911 at the end of period (8) Reversed provision REFERENCES Pham Thi Lan Anh CQ50/51.02 Books Assoc Prof Dr Doan Xuan Tien, et.al (2009) Management Accounting Syllabus Hanoi: Finance Publisher Prof Ngo The Chi, Dr Truong Thi Thuy, et.al (2010) Accounting Syllabus for commercial and service enterprises Hanoi: Finance Publisher Prof Dr Ngo The Chi, and Dr Truong Thi Thuy, et.al (2010) Financial Accounting Syllabus Hanoi: Finance Publisher Internet Sources Vietnamese Accounting Standards (VAS) No.14 Retrieved March 25, 2014 from www.ketoanthue.vn/index.php/chuan-muc-ke-toan-he-thong-cac-chuanmuc-ke-toan-viet-nam.html Definition of accounting from http://www.businessdictionary.com/definition/accounting.html And http://www.encyclopedia.com/topic/accounting.aspx Other documents Nguyen My Trinh, (2012) Lectures of Financial Accounting Vietnamese Law on Accounting No.03/2003/QH11 Date 17/06/2003 NHẬN XÉT CỦA ĐƠN VỊ THỰC TẬP Pham Thi Lan Anh CQ50/51.02 Họ tên người nhận xét: ………………………………… Chức vụ: …………………… Nhận xét trình thực tập tốt nghiệp sinh viên : ………………………… Khóa CQ50; Lớp CQ50/……… Đề tài: “Cost accounting and product costing in Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock Company” Nội dung nhận xét: Về tinh thần thái độ thực tập sinh viên …………………………………………………………………… ……………… Về ý thức kỷ luật, tuân thủ quy định đơn vị thực tập …………………………………………………………………… …………………………………… Về kỹ giao tiếp, kỹ mềm …………………………………………………………………… …………………………………………………………… Về kiến thức chuyên môn Người nhận xét (ký tên, đóng dấu) SUPERVISOR’S EVALUATION Pham Thi Lan Anh CQ50/51.02 Supervisor: M.A Cao Phuong Thao THESIS EVALUATION Student’s name: Pham Thi Lan Anh Group: CQ50/51.02 Code: 125D2202010039 Topic: “Cost accounting and product costing in Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock Company” ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………… Mark: In number: In word: Hanoi, …………,2016 Super visor REVIEWER’S EVALUATION Pham Thi Lan Anh CQ50/51.02 Name of reviewer: …………………………………………………………… THESIS EVALUATION Student: Pham Thi Lan Anh Group: CQ50/51.02 Code: 125D2202010039 Topic: “Cost accounting and product costing in Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock Company” ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………… Mark: In number: In word: Hanoi, …………….2016 Reviewer Pham Thi Lan Anh CQ50/51.02 ... Consultancy Investment Construction and Trading Joint Stock Company, my study with topic: ? ?Cost accounting and product costing in Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock. .. review of cost accounting and costing product Chapter 2: Current situation of cost accounting and product costing in Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock Company. .. COSTING IN BAC MIEN TRUNG CONSULTANCY INVESTMENT CONSTRUCTION AND TRADING JOINT STOCK COMPANY 2.1 Overview about Bac Mien Trung Consultancy Investment Construction and Trading Joint Stock Company