Sales Revenue Accounting Process

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Diagram 2.4: Sales revenue accounting process

(Source: Finance and Accounting Department) The accounting books used to record sales revenue include detailed accounting books and general accounting books.

+ General journal.

+ Detailed book of account 131, account 521, sales book.

+ Ledger account 511, ledger account 521, ledger account 131…

Process explanation: When the two parties agree on goods, payment, and transportation, the sales department will draw up an economic contract, which will be the initial basis for carrying out the sales process. At the time of delivery, the accountant will issue a VAT invoice.

VAT invoice will be an important document used to record revenue, and

made into 3 copies:

- Copy 1: Saved in the invoice book,

- Copy 2: Give to the customer as the original document so that the customer can return to the warehouse at their unit, pay for the purchase, and record in the accounting books.

- Copy 3: For internal circulation.

At the same time, if the customer pays immediately in cash, the accountant will create a receipt. If the customer pays by bank transfer, the accountant will receive a credit note from the bank.

The accountant will collect and classify the vouchers. From those vouchers, the accountant will record them in the General Journal ( Appendix 17) , the General Ledger of related accounts, the sales detail book... At the end, the sales detail book will be created to compare with the data in the general ledger account 511.

* Quote some related operations

Example 2.1: On December 7, 2019, the Company sold Hexagonal Tiles KT 31*26*6 cm to HMP Industrial Engineering Joint Stock Company. Quantity 1,100 m2 , unit price excluding 10% VAT is 230,000 VND/m2 , price excluding tax is 253,000,000 VND, 10% VAT is 25,300,000 VND, total payment price is 278,300,000 VND. The accountant issues VAT invoice No. 0000950 as Appendix 12 .

Not collected from customers yet.

Then on December 10, 2019, HMP Industrial Engineering Joint Stock Company paid by bank transfer, the accountant received a credit notice as in Appendix 13.

Revenue deductions:

* Documents used: VAT invoice, warehouse receipt, sales discount record, goods receipt record...

Through reviewing accounting books and documents, in 2019 the Company did not have any cases of revenue deduction.

Detailed accounting of sales revenue

Based on the original documents, the accountant records in the general journal ( Appendix 17) . The data from the general journal is recorded by the accountant in the general ledger account 511 ( Appendix 18) and the sales detail book.

The company sets up a detailed sales book for each item sold, and at the end summarizes it in a detailed sales revenue summary table to compare with the data in the general ledger account 511.

Sales detail book is presented in Appendix 14, 15

A detailed sales summary table is presented in Appendix 16.

2.2.2.2. Accounting for financial activity revenue

Financial revenue arising in the Company mainly includes interest on deposits at

Bank, payment discount enjoyed.

* Accounting documents used:

To account for financial revenue, the Company uses the following documents: VAT invoice, Bank credit note, Receipt...

* Accounting account used

To account for financial activity revenue, the Company uses account 515: Financial activity revenue.

* Quote some related transactions

Example 2.2 : On December 26, 2019, the Company purchased products from Hong Quang Telecommunications Network Solutions Joint Stock Company according to VAT invoice No. 0001256, the total payment amount was 195,628,400 VND. Due to early payment transfer, the Company received a payment discount of 1.5%, equivalent to the amount of 2,934,426

When the employee brings the money home, the accountant creates receipt number 425 according to Appendix 19.

Based on the original documents, the accountant records in the General Journal (Appendix 17) .

Then record in General Ledger Account 515 (Appendix 23) and detailed ledger Account 515 (Appendix 21) .

Example 2.3 : On December 31, 2019, the Company received a Notice of Interest on Deposit, amount of VND 6,984,154, the notice form is available in Appendix 20 .

Based on the original documents, the accountant records in the General Journal (Appendix 17) .

Then record in ledger account 515 (Appendix 23) .

Accountants use the detailed book of account 515 to reflect the details of financial revenue. This book is created according to each type of financial revenue that arises. At the end of the period, the data on the detailed book is summarized into a detailed summary table of financial revenue. This table will be compared with the main number of account 515.

2.2.2.3. Other income accounting

Other income in the Company mainly arises from liquidation and sale of fixed assets, fines if partners violate contracts, or other unusual income.

To account for other income, the Company uses the following documents: VAT invoices,

Fixed asset liquidation minutes, receipts, credit notes.

Account used: Account 711 - Other income

However, in 2018 and 2019, the Company did not generate other income.

2.2.3. Cost accounting

2.2.3.1. Accounting for cost of goods sold

* Accounting documents used

To account for cost of goods sold, the Company uses the Warehouse Delivery Note as a document.

* Accounting account used

To account for cost of goods sold, the Company uses account 632: Cost of goods sold.

* Document circulation order : Accountants will base on VAT invoices to create PXK, PXK is created in 3 copies: Copy 1 is kept in the book, Copy 2 is sent to the customer, Copy 3 is recorded by the warehouse keeper on the warehouse card and then sent to the accountant.

The company applies the regular declaration method to monitor the detailed import and export situation of goods, and accounts for inventory according to the method.

Parallel card method so both accounting department and warehouse keep track of import and export situation, in which warehouse keep track of quantity, while accounting department keep track of quantity and value.

Method of calculating the cost of goods sold

The company uses the first-in, first-out method to calculate the cost of goods sold. For example, the cost of goods sold for the product Hexagonal Tiles 31x26x6 cm is calculated as follows:

Date

Content
1/12	Initial inventory 850 m2 , unit price 170,210 VND/ m2
4/12	Imported 1,500 m2 , unit price 173,500 VND/ m2
5/12	Exported warehouse for sale 150 m2
7/12	Exported warehouse for sale 1,100 m2
12/15	Warehouse for sale 230 m2
…	….

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Warehouse value on December 5: 150*170,210 = 25,531,500 VND

Warehouse value on December 7: 700*170,210 + 400*173,500 = 188,547,000 VND Warehouse value on December 15: 230*1173,500 = 39,905,000 VND

PXK is created corresponding to the VAT invoices in the above section as follows:

Example 2.4: On December 7, 2019, PXK No. 341 was sold to HMP Industrial Engineering Joint Stock Company, the product was Hexagonal Tiles with dimensions of 31x26x6 cm, quantity of 1,100m2 , warehouse value of 188,547,000 VND. PXK is presented in Appendix 24

Every day, based on the original documents, the accountant records in the general journal (Appendix 17) , from which the accountant records in the general ledger accounts 632, 155 and the detailed book of cost of goods sold.

Detailed accounting of cost of goods sold

Accountants create detailed cost of goods sold books for each item, at the end of the year summarize them in the detailed cost of goods sold summary table and compare them with the data in the general ledger account 632.

The detailed cost of goods sold book is presented in Appendix 25, 26.

A detailed summary of cost of goods sold is presented in Appendix 27.

2.2.3.2. Financial cost accounting

The Company's financial expenses are mainly bank loan interest, in addition to payment discounts for customers, ...

* Accounting documents used

To account for financial costs, the Company uses the following documents: Invoices

VAT, Payment voucher, Debit notice...

* Accounting account used

To account for financial costs, the Company uses account 635 - Financial costs.

* Quote some related transactions

Example 2.5 : For a short-term loan from Vietnam Joint Stock Commercial Bank for Industry and Trade, the amount of VND 800 million from March 1, 2019, the monthly interest rate that the Company must pay the Bank is 0.55%/month, equivalent to VND 4,400,000/month, paid on the last day of the month. When paying interest for December 2019, the Company disburses cash with payment voucher No. 318 as Appendix 29 .

Example 2.6 : On December 31, 2019, the Company accepted a payment discount for Thanh Hai Hung Yen Trading Company Limited, the amount of VND 1,300,000. The Company withdrew cash with payment voucher No. 320 as shown in Appendix 30 .

Accountants use a detailed financial expense book (made according to each type of financial expense incurred) and a detailed financial expense summary table. This table will be compared with the data on the general ledger account 635.

Finally, the data is updated to the Financial Cost Detail Summary Table:

To account for financial expenses, accountants use account 635: Financial expenses. When there is a transaction related to financial expenses, accountants record it in the General Journal ( Appendix 17) and the general ledger account 635 (Appendix 33).

2.2.3.3. Accounting for sales costs

* Accounting documents used:

To account for sales costs, the Company uses the following documents:

- VAT invoice

- Payment voucher

- Warehouse delivery note

- Salary allocation table and salary deductions

- Fixed asset depreciation calculation and allocation table

- Other documents

* Accounting account used

To account for sales costs, the Company uses account 641: Sales costs.

This account details each expense item: Account 6411 - Employee expenses

Account 6412 - Cost of materials and packaging Account 6413 - Cost of tools and supplies Account 6414 - Depreciation of fixed assets: Account 6415 - Warranty costs

Account 6417 - Cost of outsourced services Account 6418 - Other cash costs: Other related accounts such as:

- Account 133: Deductible input VAT

- Account 334: Payable to employees

- Account 338: Other payables

- Account 214: Fixed asset depreciation

- Account 111: Cash

- Account 112: Bank deposits

- Account 331: Payable to sellers

Documents are collected as soon as expenses arise. The depreciation calculation and allocation table, salary calculation table and social insurance allocation table are collected at the end of the month.

* Quote some business

Example 2.7 . On December 28, 2019, the Company incurred transportation costs for goods for sale, VAT invoice No. 0000421 in Appendix 34 , pre-tax value is 856,300 VND, VAT rate is 10%. The Company issued payment voucher No. 535 for payment ( Appendix 35) .

The data recorded in the Sales Detail Book is presented in Appendix 40, the General Journal ( Appendix 17) and the General Ledger Account 641 (Appendix 42) .

Example 2.8. On December 31, 2019, the accountant prepared a salary allocation table. Accordingly, the salaries payable to the direct production, indirect production, sales, and management departments were 633,967,000, 61,680,000, 214,148,200, and 154,180,000 VND, respectively.

This figure is shown on the salary allocation table in Appendix No. 36. Salary deductions included in expenses are 23.5%.

Example 2.9. On December 31, 2019, the accountant prepared a depreciation allocation table ( Appendix No. 37 ), the depreciation allocated to the production, sales and management departments were 124,467,660, 100,007,000 and 13,221,690 VND respectively.

Detailed accounting of sales costs

To account for sales in detail, accountants create detailed books of account 641, this book is created for each expense item, the basis for recording is VAT invoices, payment vouchers, electricity and water bills, depreciation allocation tables, salary allocation tables in the month...

The sales detail book is presented in Appendix 38, 39, 40. The sales detail summary table is presented in Appendix 41. General accounting for sales expenses

Accountants prepare General Journal ( Appendix 17) and General Ledger Account 641 (Appendix 42) .

2.2.3.4. Business management cost accounting

* Accounting documents used

Business management costs incurred in the Company include salaries and deductions based on salaries of management staff, depreciation costs of fixed assets of the management department, other costs used in the management department such as fuel and travel costs, telephone costs, electricity and water costs, conference attendance costs, etc.

Documents used include:

- VAT invoice.

- Payment voucher, debit note.

- Salary allocation table.

- Fixed asset depreciation allocation table...

* Accounting accounts used:

To account for administrative expenses, the Company uses account 642: Administrative expenses. Account 642

Details by cost item:

Account 6421 - Management staff costs Account 6422 - Management material costs Account 6423 - Office supplies costs Account 6424 - Fixed asset depreciation costs Account 6425 - Taxes, fees and charges

Account 6426 - Provision expenses

Account 6427 - Cost of purchased external services Account 6428 - Other cash costs Other accounts such as: Account 111, 112, 133...

* Quote some related operations:

Example 2.10 . On December 23, 2019, paid business expenses to the accounting department, amount of 3,500,000 VND, payment voucher number 501 ( Appendix 43 ).

Example 2.11. On December 29, 2019, the Company incurred expenses for entertaining guests, VAT invoice No. 0000865 according to Appendix 44 , the pre-tax value is

15,000,000 VND, 10% VAT, accountant makes payment voucher ( Appendix 45 ) to pay money.

Based on the original documents, the accountant records data in the general journal, from which the accountant records in the general ledger accounts such as 642, 133 and the detailed ledger account 642.

Detailed accounting of business management costs

To account for detailed management of enterprises, accountants create detailed books of account 642, this book is created for each expense item, the basis for recording is VAT invoices, payment vouchers, electricity and water bills, depreciation allocation tables, salary allocation tables in the month...

Detailed number of QLDN expenses is presented in Appendix 46, 47, 48. Detailed summary table of QLDN expenses is presented in Appendix 49. General accounting of QLDN expenses

Accountants prepare General Journal (Appendix 17) and General Ledger Account 642 (Appendix 50)

2.2.3.5. Other cost accounting

Other expenses mainly arise from liquidation and sale of fixed assets (liquidation and sale costs and residual value of liquidated and sold fixed assets), and other unusual expenses.

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