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Account Using Account 711 – Other Income Debit:


Make adjusting entries before closing the accounting books to calculate business results.

Close the books at the end of the period, calculate business results, prepare periodic financial reports and propose effective business and investment plans.

2.2. Accounting for revenue and other income

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Accounting for sales revenue and service provision

2.2.1.1. Concept

Account Using Account 711 – Other Income Debit:

Sales and service revenue is an important indicator in the financial statements of an enterprise because it reflects both the scale of the business and the ability to generate cash flow, thereby determining the business's profit to demonstrate the company's operating efficiency. In other words, revenue is the total economic value that the enterprise has or will collect to offset business costs and generate profits.

2.2.1.2. Conditions and principles of recognition

a. Conditions of recognition

Sales revenue is recognized when all five of the following conditions are satisfied:

The enterprise has transferred the significant risks and rewards of ownership of the products or goods to the buyer.

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

Revenue is determined relatively reliably.

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

Identify the costs associated with sales transactions.

Unlike the manufacturing industry, the products of the service industry do not have a physical form, and the quality of the service products is assessed by the senses or actual products of customers. Therefore, the conditions for recognizing service revenue are different from sales revenue. Specifically, with the following conditions:

Revenue is determined relatively reliably.


It is possible to obtain economic benefits from the transaction of providing that service.

Identify the portion of work completed at the time of reporting.

Determine the cost of the transaction and the cost to complete the transaction to provide that service.

b. Principle of recognition

Accrual basis: Revenue must be recorded at the time it arises, regardless of whether the money has been collected or not.

Matching: When recording revenue, a matching expense (expense related to revenue) must be recorded.

Caution: Revenue and income are only recognized when there is solid evidence of the possibility of obtaining economic benefits.

2.2.1.3. Documents used

Contracts, value added tax invoices, sales invoices.

List of sold consignment goods

Payment documents: Receipt, bank credit note.

2.2.1.4. User account

Account 511 - Sales revenue and service provision Debit:

Indirect taxes payable (VAT, special consumption tax, export tax, environmental protection tax).

Revenue from returned goods; Sales discounts and trade discounts carried forward at the end of the period.

Transfer net revenue to Account 911 "Determining business results".

Creditor:

Revenue from sales of products, goods, investment real estate and provision of services of the enterprise during the accounting period.

Account 511 has no end date, including 6 sub-accounts:

Account 5111: Revenue from sales of goods

Account 5112: Revenue from sales of finished products


Account 5113: Service revenue

Account 5114: Subsidy and subsidy revenue

Account 5117: Revenue from investment real estate business

Account 5118: Other revenue

2.2.1.5. Accounting for arising transactions

For products, goods, services, investment real estate subject to VAT, special consumption tax, export tax, environmental protection tax, accounting reflects sales revenue and service provision at pre-tax selling price, indirect taxes payable (details of each type of tax) are separated immediately upon recording revenue (including VAT payable by direct method), record:

Debit account 111, 112,131,… (Total payment amount)

Credit account 511 - Sales revenue and service provision (price excluding tax) Credit account 333 - Taxes and amounts payable to the State

In case the taxes payable cannot be separated immediately, the accountant records revenue including the taxes payable. Periodically, the accountant determines the tax payable and reduces the revenue, recording:

Debit account 511 – Sales revenue and service provision

Credit account 333 – Taxes and taxes payable to the State

Accounting for revenue deductions

2.2.2.1. Trade discount content

“Trade discount is the amount of money a business reduces the listed price for customers who buy in large quantities” (Financial Accounting, 2015, Labor Publishing House).

2.2.2.2. Contents of returned goods

“Returned goods are the value of products and goods returned by customers due to the following reasons: Violation of commitments, violation of economic contracts, poor quality goods, loss of quality, incorrect type or specification” (Financial Accounting, 2015, Labor Publishing House).


2.2.2.3. Sales discount content

“Sales discount is a deduction for buyers due to poor quality products or goods or goods that do not meet the specifications specified in the economic contract” (Financial Accounting, 2015, Labor Publishing House).

2.2.2.4. Documents used:

Sales invoice with document on the company's trade discount policy.

Minutes of price reduction proposal.

Invoice for returning purchased goods with return agreement, warehouse receipt for returned goods.

2.2.2.5. User account

Account 521 – Revenue deductions Debit:

Amount of trade discount accepted for payment to customers.

Amount of sales discounts approved for buyers.

Revenue from returned goods, refunds to buyers or deductions from customer receivables for products and goods sold.

Creditor:

At the end of the accounting period, transfer all trade discounts, sales discounts, and sales returns to Account 511 "Sales and service revenue" to determine net revenue of the reporting period.

Account 521 – Revenue deductions has no ending balance, has 3 sub-accounts:

Account 5211 – Trade discounts

Account 5212 – Returned goods

Account 5213 – Sales discounts

Account 521 has no ending balance.


2.2.2.6. Transactions arising

In case the products and goods sold at a discount, trade discount and payment to the buyer for the amount of returned goods are subject to VAT calculated by the deduction method and the enterprise pays VAT calculated by the deduction method, record:

Debit account 521 – Revenue deductions

Debit account 3331 - VAT payable (output VAT is reduced) Credit account 111, 112, 131,..

In case of returned goods, accountants must record an additional entry into the inventory of returned products and goods, reflecting the cost of returned goods:

Debit account 154, 155, 156

Have account 632

At the end of the accounting period, transfer the total revenue deductions arising during the period to Account 511 - "Sales and service revenue".


Account 111, 131

Trade receivables, sales returns, discounts

sales revenue

Account 521

Transfer of revenue reduction

Account 511

Account 3331

VAT refund to customers

Diagram 2.1: Accounting diagram for revenue deductions


Financial Revenue Accounting

2.2.3.1. Financial revenue content

Financial revenue is the receivables of the enterprise including: interest (loan interest, bank deposit interest, bond investment interest, discount)


payments received from the purchase of goods, services, etc.), royalties, dividends, profit sharing and other financial operating revenue.

2.2.3.2. Documents used

Bank deposit notice, bank sub-ledger.

Economic contract, receipt for payment discount received if payment is made in cash, other relevant documents.

2.2.3.3. User account

Account 515 – Financial activity revenue Debit:

VAT payable calculated by direct method (if any).

Transfer net financial revenue to Account 911 - "Determination of business results".

Creditor:

Operating revenues arising during the period. Account 515 has no ending balance.

2.2.3.4. Transactions arising

Accounting for interest on bank deposits, loan interest, stock interest, and bonds received during the period:

Debit account 111,112 – Interest received Credit account 515 – Financial revenue

Accounting for foreign currency sales, record:

Debit account 111 (1111), 112 (1121) – Actual selling exchange rate

Credit account 111 (1112), 112 (1122) – Exchange rate on accounting books Credit account 515 – Interest earned due to exchange rate difference

The amount of payment discount received for paying for the purchase before the deadline approved by the seller, recorded:

Debit account 331 – Payable to sellers Credit account 515 – Financial revenue



Account 3331

VAT according to

Account 515

Account 331, 111

direct method

Payment discount

purchase enjoy

Account 112

Bank deposit interest

Account 1112, 1122

Account 1111, 1121

Account 911 Foreign currency sales

Foreign exchange profit

Transfer of businessAccount 3387

Financial revenue Allocation of interest on sales on credit


Account 4131

Year-end, carryover

exchange rate gain on revaluation of long-term debt


Diagram 2.2: Financial Revenue Accounting Diagram

Other income accounting

2.2.4.1. Other income content

Other income is income other than the production and business activities of the enterprise or irregular activities: income from the sale and liquidation of assets, differences due to revaluation of materials, goods, fixed assets contributed as capital, fines collected from customers violating contracts, refundable taxes, etc.

2.2.4.2. Documents used

Contract for sale and liquidation of fixed assets

Receipts, tax refund documents, VAT declarations

2.2.4.3. Account used Account 711 – Other income Debit side:


VAT payable (if any) calculated by direct method

At the end of the period, transfer other income arising during the period to Account 911 "Determining business results".

Side has :

Other income arising during the period.

Account 711 has no ending balance.

2.2.4.4. Transactions arising

Accounting reflects revenue from liquidation and sale of fixed assets: Debit account 111, 112, 131 - Total payment

Credit account 711 – Income before tax

Credit account 3331 (33311) – VAT payable (if any)

When collecting fines from customers due to economic contract violations or collecting bad debts that have been settled, record:

Debit account 111,112 – Customer fines Credit account 711 – Other income


Account 3331

Account 711

Account 111, 112, 131

VAT payable

pay by direct method

Sale and liquidation of fixed assets

Account 3331

Account 911

Other income transfer

VAT

(if any)

Account 111, 112

Collect compensation, collect other fines

Account 331, 338

Clear away bad debts

identify creditors

Account 333

Taxes are reduced

in the year

Diagram 2.3: Diagram of accounting for Other income

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