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Position and Role of Nvl – Ccdc in Production and Business

Based on the source of supply, accountants can classify raw materials into the following groups:

Purchased raw materials: are raw materials purchased by businesses from outside, usually from suppliers.

Self-processed raw materials: produced by the enterprise itself to manufacture products.

Outsourced raw materials: are raw materials that are not produced by the enterprise, nor purchased from outside, but are rented by the enterprise from processing facilities.

Joint venture capital contributed materials: are the types of materials contributed by the joint venture parties according to the agreement in the contract.

Granted and rewarded materials: are materials granted by superior units according to regulations.

1.2.1.2 Classification of CCDC

Similar to raw materials, fixed assets are also divided into detailed groups depending on the management requirements and accounting work of each enterprise. To facilitate accounting management, all fixed assets are divided into 3 types:

- Labor tools: disassembly tools, tool kits, management tools, labor protection clothing, molds, sheds.

- Rotating packaging.

- Tools for rent

1.2.2 Evaluation of materials and equipment

1.2.2.1 Evaluation of imported raw materials

Raw materials are one of the elements that make up inventories, so accounting for raw materials must comply with inventory accounting standards. Inventories are calculated at original cost, in case the net realizable value is lower than the original value, it must be calculated at the net realizable value. The net realizable value is the estimated selling price of the inventory in the normal production and business period minus the estimated costs to complete the product and the estimated costs necessary for proper consumption. The original cost of inventories includes the cost of purchase, processing costs and other directly related costs incurred to obtain the inventory at the current time and state. In order to monitor the fluctuations of raw materials and synthesize economic indicators related to raw materials, enterprises need to calculate the price of raw materials. Calculating the price of raw materials is an accounting method that uses monetary measures to express the value of imported - exported raw materials and inventories during the period.

Raw materials of the enterprise can be priced at actual price or accounting price. The actual price of raw materials imported into the warehouse is determined depending on each source of import, each specific import as follows:

- Raw materials purchased from outside:

Actual value of imported materials and components

Purchase price on invoice

= invoice (Including import tax + if any)

Purchase cost (including depreciation - within the norm)

Deductions incurred when purchasing

+ In case an enterprise purchases raw materials used in the production and trading of taxable goods and services (VAT) by the direct method or not subject to VAT, or used for career activities or project welfare, the value of purchased raw materials is reflected according to the total payment value including non-deductible input VAT (if any).

+ In case an enterprise purchases raw materials used in the production and trading of goods and services subject to value added tax (VAT) under the deduction method, the value of the purchased raw materials is reflected at the purchase price excluding tax. Input VAT when purchasing raw materials and input VAT of transportation, loading, unloading, storage services, etc. are deducted and recorded in account 133.

+ For raw materials purchased in foreign currency, they must be converted into Vietnamese Dong at the transaction exchange rate.


Original price = Purchase price +

Non-refundable tax (if any)

Purchase cost

+ goods (if any) -

Deductions (if any)

- Self-processed materials: The actual value of self-processed materials returned to the warehouse includes the actual value of materials exported for processing and processing costs.

Actual warehouse price

= Actual material price

export processing

+ Processing costs

- Outsourced materials:

The actual value of outsourced materials returned to the warehouse includes the actual value of materials exported for outsourcing, processing costs and transportation costs from the enterprise's warehouse for processing and from the processing location back to the enterprise's warehouse.

Actual price

=

Actual price

+

Expense

+

Expense

import


Outsourcing


machining


transport

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Position and Role of Nvl – Ccdc in Production and Business

- Raw materials received as joint venture capital contribution

The actual value of raw materials received as joint venture capital or equity capital contribution is the actual price accepted by the capital contributing parties.

Actual warehouse price

= Price agreed between the parties contributing capital

+ Related costs (if any)

1.2.2.2 Evaluation of raw materials released from warehouse

Because raw materials are imported at different times from different sources and at different actual import prices, businesses can apply one of the following pricing methods:

- Method of calculation based on actual price

The method of calculating by actual price is to determine the price of each type of raw material based on the actual price of each import and each specific import source. This method is often applied to businesses with few types of goods, high-value goods or stable and identifiable goods.

Value of goods exported during the period

= Quantity of goods exported during the period

x Corresponding export price

Advantage : Accurately determining the price of exported materials makes current costs consistent with current revenue.

Disadvantage : In case the unit has many items, import and export frequently, it is difficult to track and the work of detailed material accounting will be very complicated.

- First in, first out (FIFO) method

According to this method, it is assumed that the first imported materials are first exported, and the first imported materials are exported first, then the last imported materials are exported at the actual price of the exported goods. According to this method, the value of the exported goods is calculated according to the price of the imported goods at the beginning of the period or near the beginning of the period, and the value of the inventory is calculated according to the price of the imported goods at the end of the period or near the end of the period.

Advantage

+ Relatively accurately reflects the value of raw materials used and remaining in stock at the end of the period.

+ When raw material prices tend to increase, applying this method will be more profitable than applying other methods because the current cost of sales is created from the value of raw materials imported into the warehouse from before at a lower price than the current price.

Disadvantages

+ Must closely monitor the details of each raw material warehousing operation.

+ Current revenue does not match current costs because current revenue is generated from past costs.

- Last in - First out (LIFO) method

The last-in, first-out method is based on the assumption that the inventory purchased or produced later is sold first, and the remaining inventory at the end of the period is the inventory purchased or produced earlier. According to this method, the value of goods issued is calculated based on the price of the shipment imported last or almost last, and the value of inventory is calculated based on the price of goods imported at the beginning of the period or near the beginning of the period that are still in inventory.

Advantages : Ensures that current revenue is consistent with current costs. The company's costs respond promptly to market prices of raw materials. Makes information about the company's income and costs more accurate. By calculating with this method, the company often benefits from taxes if the price of materials tends to increase, then the export price will be large, the cost will be large, leading to small profits and avoiding taxes.

Disadvantages : This method causes the net income of the business to decrease during inflationary periods and the value of materials may be understated on the balance sheet compared to its actual value.

- Weighted average method

According to the weighted average method, the value of each type of inventory is calculated based on the average value of each type of similar inventory at the beginning of the period and the value of each type of inventory purchased or produced during the period:

Actual price of raw materials and tools used in the period

= Quantity of construction materials

export tool

x Average unit price



Unit price

average =

Actual value of raw materials, finished goods and construction materials in inventory at the beginning of the period


Quantity of raw materials, supplies and equipment in inventory at the beginning of the period

+ Actual value of materials, equipment and supplies imported into the warehouse during the period


+ Number of materials, equipment

imported during the period

Advantages : This method gives the most accurate warehouse price, promptly reflects price fluctuations, and pricing is carried out regularly.

Disadvantages : The calculation work is complicated and extensive, only suitable for businesses using computer accounting.

The average value can be calculated by period or point in time depending on the situation of the enterprise. Enterprises have the right to choose for themselves the method of calculating the actual price of raw materials in stock to suit the enterprise.

1.3 Position and role of raw materials and supplies in production and business

Raw materials are an important part of the means of production, the objects of labor that have been affected by humans. Raw materials are divided into main raw materials and auxiliary raw materials. This division is not based on physical, chemical properties or consumption volume but on their participation in the formation of new products.

- Unlike raw materials, fixed assets are also means of labor but do not have enough standards to regulate the value and time of use of fixed assets. In the construction process, production costs for the construction industry are closely linked to the use of raw materials, machinery and construction equipment. In that process, fixed assets are also one of the three basic factors of the production process to create new products and constitute the product.

- In construction enterprises, the cost of materials and equipment often accounts for a very large proportion (about 60-70% of the total value of the project). Therefore, materials and equipment have a very important position and role in the production and business activities of the enterprise. Without materials and equipment, it is impossible to carry out material production activities in general and the construction process in particular. Through the construction process, material and equipment accounting can evaluate unreasonable, wasteful or economical expenses. Therefore, enterprises need to organize accounting work to strictly manage materials and equipment at all stages from the process of purchasing, preserving, storing and using materials and equipment to reduce production costs to a certain level, reducing the consumption of materials and equipment in production is also the basis for increasing new products. Through that, we can say that NVL-CCDC has a particularly important and indispensable position and role in the production and business process in general and the construction process in particular.

1.4 Related documents and records

1.4.1 Documents

- Import documents

+ Regular sales invoice or value added invoice

+ Warehouse receipt

+ Test report

- Export documents

+ Warehouse delivery note

+ Warehouse delivery and internal transport note

+ Material delivery voucher according to quota

- Management tracking documents

+ Warehouse card

+ End of period remaining materials report

+ Inventory record

1.4.2 Books

- Warehouse card (Warehouse book)

- Detailed book of materials, tools, products and goods.

- Detailed summary table of materials, tools, products, goods

1.5 Detailed accounting method for raw materials and fixed assets

1.5.1 Parallel card method

The characteristic of the parallel card method is the use of detailed ledgers to regularly and continuously monitor the fluctuations of each inventory item in both quantity and value.

Daily or periodically, after entering documents at the warehouse, the accountant checks, records prices and reflects in the detailed book both quantity and value.

At the end of the month, the accountant compares the inventory data by type in detail on the detailed books with the inventory data on the warehouse card and the actual inventory data. If there is any difference, it must be handled promptly. After comparing and ensuring that the data is correct, the accountant proceeds to create a detailed summary table of Import - Export - Inventory of raw materials.

The data on the detailed summary table of Import - Export - Inventory of raw materials is used to compare with the data on account 152 "Raw materials" in the general ledger.

The parallel card method is simple, easy to record and compare, but also has the disadvantage of duplication in work. However, this method is very convenient when businesses process work by computer.

Warehouse card

Import documents

Export documents

Diagram 1.1: Detailed accounting of raw materials, tools and equipment using the parallel card method


Summary list of Import - Export - Inventory

Detailed accounting books

Note:





Daily recording End of month recording Data reconciliation

1.5.2 Rotating reconciliation book method

Using the inventory ledger to track the changes in each inventory item in terms of both quantity and value. Recording is only done once at the end of the month and each material item is recorded in a line on the inventory ledger.

Daily or periodically, after receiving documents at the warehouse, accountants need to check, record prices and reflect on import and export lists both quantity and value for each type of material.

At the end of the month, the accountant needs to summarize the quantity and value of each type of raw material imported and exported during the month and proceed to enter the circulation reconciliation book. The accountant needs to compare the inventory data according to the details of each type in the circulation reconciliation book with the inventory data on the warehouse card and the actual inventory data. If there is any difference, it must be handled promptly.

After checking and ensuring the data is correct, the accountant proceeds to calculate the total value of imported and exported raw materials during the period and the ending inventory. This data is used to check account 152 in the general ledger.

The rotating reconciliation book method is simple, easy to record and reconcile, but still has the disadvantage of concentrating work at the end of the month, affecting the timeliness, completeness and provision of information to users with different needs.

Diagram 1.2: Detailed accounting by the rotating reconciliation book method


Import form

Import statement


Warehouse card

Import-Export-Inventory Summary Table

Circulating reconciliation book

Note:





Delivery note

General Accounting

Export list

Daily recording End of month recording Data reconciliation

1.5.3 Balance method

The characteristic of the balance book method is to use the balance book to track the fluctuations of each inventory item only in terms of value according to the accounting price, so this method is often used for businesses that use the accounting price of materials to record in the accounting books during the period.

Periodically, after receiving documents at the warehouse, the accountant needs to check the warehouse keeper's records and sign the document delivery and receipt slip and enter the amount on the document delivery and receipt slip.

Based on the receipts of import (export) documents, the accountant reflects the data into the cumulative import - export - inventory table of each type of material. At the end of the month, the accountant needs to summarize the import and export data during the month and determine the end-of-month balance of each type of material on the cumulative table. The inventory quantity on the balance book must match the inventory value on the cumulative table. The total data on the cumulative table is used to compare with the data on account 152 in the general ledger.

The balance book method is suitable for businesses that perform manual accounting work, limiting duplication of work between warehouse keepers and accountants.

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