- When goods or services are exchanged for dissimilar goods or services, the exchange is considered a revenue-generating transaction. In this case, revenue is determined by the fair value of the goods or services received, after adjusting for additional cash or cash equivalents paid or received. When the fair value of the goods or services received cannot be determined, revenue is determined by the fair value of the goods or services exchanged, after adjusting for additional cash or cash equivalents paid or received.
1.1.1.1.4. Factors that increase and decrease sales revenue.
Sales deductions :
Revenue deductions such as trade discounts, sales discounts, returned goods, VAT paid by the direct method and import and export taxes are included in the initially recorded revenue to determine net revenue as a basis for calculating business results in the accounting period. Revenue deductions must be reflected, tracked in detail, and separately in appropriate accounting accounts to provide accounting information for preparing financial statements (Business results report, financial statement explanation).
+ Trade discount :
Is the amount of discount that a business gives to customers who buy in large quantities. The discount can arise on the volume of each batch of goods that the customer has purchased, or it can arise on the total cumulative volume of goods that the customer has purchased in a certain period of time, depending on the seller's trade discount policy.
+ Returned goods:
The number of goods that have been considered consumed (ownership has been transferred, payment has been collected or the buyer has accepted payment) but have been rejected and returned by the buyer due to reasons such as: Violation of commitment, violation of economic contract, poor quality goods, loss of quality, incorrect type, incorrect specifications... When the enterprise records the value of returned goods, it is necessary to simultaneously record a corresponding reduction in the value of cost of goods sold in the period.
+ Sales discount:
Is the amount deducted for the buyer from the agreed selling price due to special reasons belonging to the seller such as: poor quality goods, goods not meeting specifications, bad goods or late delivery as stated in the contract.
+ Special consumption tax, export tax, VAT calculated by direct method:
Taxes are determined directly on sales revenue according to current tax law regulations depending on each different item. Special consumption tax (in case it is considered one of the revenue deductions) arises when a business provides products manufactured by the business (or services) subject to special consumption tax to customers. At that time, sales revenue is recorded in the period at the cash price including special consumption tax (excluding VAT). The business must determine the amount of special consumption tax payable to the State budget based on sales revenue and service provision arising in the period.
* Factors that increase revenue:
Financial operating revenue:
Revenue from financial activities includes revenues generated from financial investment or capital business activities such as: interest, royalties, dividends, shared profits, exchange rate differences and other financial revenue of the enterprise.
Other income:
Other income is income that the enterprise does not anticipate or anticipates but is unlikely to realize, or is irregular such as: revenue from liquidation and sale of fixed assets, value of materials and surplus assets in production; debts without owners or debts that no one can collect, reversal of provisions for inventory price reduction, bad debts, fines, income from transfer of intellectual property rights, etc.
1.1.1.2. Financial operating revenue.
1.1.1.2.1. Concept:
Financial revenue mainly includes: interest, royalties, dividends, shared profits, income from investment activities, securities trading and revenue from other financial activities of the enterprise.
1.1.1.2.2. How to determine Financial Activity Revenue.
Financial revenue reflected in account 515 includes interest, royalties, dividends, shared profits and other financial revenue considered to be realized during the period, regardless of whether such revenue has actually been collected or will be collected.
For revenue from securities trading activities, revenue is recorded as the difference between the selling price and the original price, interest on bonds, bills or stocks.
For revenue from foreign currency buying and selling activities, revenue is recorded as the profit difference between the foreign currency selling price and the foreign currency buying price.
For the investment interest received from stock and bond investments, only the interest portion of the periods in which the enterprise repurchases this investment is recorded as revenue arising in the period. The investment interest received from accumulated investment interest before the enterprise repurchases that investment is recorded as a decrease in the original price of the bond and stock investment.
For income from the sale of investments in subsidiaries, joint ventures, and associated companies, revenue is recorded in account 515 as the difference between the selling price and the original price.
1.1.1.3. Other income.
1.1.1.3.1. Concept:
Other income is income that the enterprise does not anticipate or anticipates but is unlikely to realize, or is irregular such as: revenue from liquidation and sale of fixed assets, value of materials and surplus assets in production; debts with no owner or debts that no one can pay.
recovery, reversal of inventory price reduction provisions, bad debts, fines, collection of intellectual property rights transfers...
1.1.2. About the cost of goods sold.
1.1.2.1. General concept of cost
Cost: Is the monetary expression of all the expenses of live labor and materialized labor that businesses have spent to conduct production and business activities in a certain accounting period.
1.1.2.2. The role and position of costs in businesses
- Cost plays the most important role in businesses. If costs decrease, profits will increase. Therefore, reducing costs reasonably is a vital task for every business.
1.1.2.3. Cost of goods sold and cost of goods sold.
Cost of goods sold:
Is the capital value of products, materials, goods, labor, and consumed services. For products, labor, and consumed services, it is the production cost (factory cost) or production cost. For consumed materials, the capital value is the book value, and for consumed goods, the capital value includes the purchase value of consumed goods plus the purchase cost allocated to consumed goods.
Determining the cost of goods sold is extremely important, it has a direct impact on business results, especially in the current volatile market economy, businesses must pay more attention to choosing the appropriate method of determining cost of goods for themselves so that it is most beneficial while still accurately reflecting the cost of goods according to the regulations of the Ministry of Finance.
Cost of goods sold :
Cost of goods sold includes:
+ Selling costs
+ Business management costs Sales costs:
Is a part of circulation costs arising in monetary form to carry out sales transactions. Sales costs include expenses incurred
costs related to consumption activities such as: sales staff costs, transportation, packaging, goods returned to agents.
Business management costs:
Business management costs are a type of period cost calculated when accounting for net income. Business management costs reflect general expenses for office management and business expenses not associated with specific addresses in the business organization structure of the enterprise as well as salaries of management staff, office supplies, guest reception expenses, etc.
1.1.3 Business performance of the enterprise
1.1.3.1. Concept.
Business performance of the enterprise: Is an indicator reflecting the total results of production, business, financial activities and other activities that the enterprise conducts during the period. Business performance of the enterprise includes: Production and business performance, financial performance, and other performance.
The close relationship between revenue, costs and business results can be summarized in the diagram below:
Net profit
Corporate income tax | ||||
Profit before tax | Management costs and cost of sales | |||
Gross profit | Cost of goods sold | |||
Net sales revenue | - Sales discount - Discount, return - Special consumption tax | |||
Sales revenue | ||||
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1.1.3.2. How to determine the results of production and business activities.
- The result of production and business activities is the difference between net revenue and cost of goods sold, selling expenses and business management expenses.
- Financial performance is the difference between financial income and financial expenses.
- Other operating results are the difference between other income and other expenses.
General formula of business performance:
= | Sales revenue | + | Operating income finance | + | Other income |
Or :
Business results = Net revenue Cost of goods sold Insurance expenses Management expenses) + (Business revenue - Business expenses) + (Other income Other expenses)
1.1.3.3 .The role and significance of business performance results.
- In today's market economy, businesses that want to survive and develop must operate according to the rule of "taking revenue to cover expenses and making a profit". Profit is an important overall quality indicator of businesses, it shows the business results and quality of business operations. Determine business results and compare revenue with costs, if revenue is greater than costs, the business makes a profit and vice versa, the business will make a loss.
- Business results are the ultimate goal of production and business activities in an enterprise, an important economic indicator that is not only necessary for the enterprise but also necessary for other interested parties such as investors, banks, employees, managers, etc.
- Determining business results is the basis for determining financial and economic indicators, assessing the situation of the enterprise: Determining the number of capital turnover cycles, determining the profit rate on the enterprise... In addition, it is also the basis for determining the enterprise's obligations to the State, determining the structure for dividing and using the profits reasonably and effectively, and harmoniously resolving the economic interests of the State, the collective and the individual workers.
In short, determining business results is vital for businesses to avoid the phenomenon of "fake profits, real losses". Moreover, it is also meaningful to the entire economy.
National economy helps state policy makers to synthesize and analyze data and provide necessary parameters to help the government regulate better at the macro level, create revenue for the state budget, and promote the development of the entire economy.
1.1.4. Tasks of revenue and cost accounting, determining business results
- Organize monitoring, recording, accurately reflecting, fully and promptly, and closely managing the import - export - inventory situation of each type of goods in both physical and value aspects.
- Participate in inventory, evaluation, and reporting on product consumption, sales results, and profit distribution of the business.
- Correctly and fully identify sales costs incurred during the sales process as well as business management costs, allocate costs to appropriate types of consumed goods to determine sales results.
- Accurately determine the actual purchase price (original price) of the quantity of goods sold and allocate the purchase cost to the goods sold to determine the sales results.
- Monitor and reflect accurately, fully and promptly the total payment price of goods sold, including sales revenue, revenue deductions, output VAT of each group of goods, each invoice, each customer, and each affiliated unit.
- Correctly determine the time when goods are considered consumed to promptly prepare sales reports and reflect revenue. Regularly and promptly report on sales and payment status with customers in detail for each type and each economic contract to closely monitor the quantity, quality, and type of goods sold, and urge customers to collect money for the fund.
- Organize the initial document system and the reasonable order of document circulation. The initial documents must be complete, circulated scientifically and reasonably, not too complicated but still ensure management requirements, improve the efficiency of accounting work.
- Prepare and report sales results in accordance with regulations, promptly provide necessary economic information to relevant departments, conduct economic analysis of sales activities and determine sales results, thereby advising the Board of Directors on
solutions to boost the sales process.
1.2. Organize accounting for revenue, expenses, and determine business results.
1.2.1. Revenue accounting.
1.2.1.1. Accounting for sales revenue and service provision.
1.2.1.1.1. Detailed accounting of sales revenue.
a) Accounting documents used
- VAT invoice
- Sales invoice
- Payment documents (Receipts, transfer checks, payment checks, collection orders, bank credit notes...)
- Tax documents
- Other related documents: warehouse delivery note, warehouse receipt note for returned goods...
+ Based on sales documents such as sales invoices with purchase requests, the finished product accounting will record detailed sales for each type of finished product. In addition to the actual selling price of goods consumed during the period, the accountant must monitor additional fees, subsidies, and surcharges according to state regulations.
+ Sales detail books track in detail the quantity and value of each type of product sold during the period. These detail books must also track revenue from returned goods, discounts, rebates, and rebates for customers.
+ From the sales invoice, the accountant determines the output VAT amount (for businesses that calculate VAT using the deduction method, or special consumption tax (SCT) for businesses that produce goods subject to SCT or export tax for each type of product. At the end of the period, the accountant prepares a summary table of VAT, SCT, and Export Tax for all finished products consumed during the period.
+ Based on the sales invoice and receipt, the accountant will enter the payment book with the buyer. The detailed payment book with the buyer is opened on a separate page for all regular customers and opened on a separate page for irregular customers. In addition, the accountant must monitor the payment deadline as well as discounts and rebates for customers. Thereby, the debt officer will have a plan.