Theoretical Basis of Accounting for Revenue, Expenses and Business Results in Commercial Enterprises

- Purpose: To directly access and monitor the activities, operations and working processes of an accounting system to see whether the accounting work to determine the unit's revenue and expenses is in accordance with standards, effective and has advantages and disadvantages.

* Document research method:

- Within the Company: Through the Company's business performance reports, revenue reports, cost allocation tables, through accounting staff...

- Outside the Company: Through media such as the Company's website, accounting textbooks, theses, previous thesis, internet...

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* Comparison method: This method is implemented through comparing objects and phenomena with each other to see the similarities and differences between them. In the process of researching revenue, cost and business results accounting, the content of this method is specified through comparing and contrasting the theory and practice of revenue, cost and business results accounting in enterprises, comparing revenue, cost and business results accounting between enterprises trading in electronics, refrigeration, and household goods to see the strengths and advantages that the enterprise has achieved, comparing data between original documents and related accounting books, comparing end-of-period data between the General Ledger and the Detailed Summary Table to have accurate results when making Financial Statements.

6. Structure of the thesis

In addition to the introduction, conclusion, list of references and appendix, the thesis includes 3 chapters:

Chapter 1: Theoretical basis of accounting for revenue, costs and business results in commercial enterprises.

Chapter 2: Current status of revenue, cost and business results accounting at Long Bien Industrial Gas Joint Stock Company.

Chapter 3: Completing accounting for revenue, expenses and business results at Long Bien Industrial Gas Joint Stock Company.

CHAPTER 1: THEORETICAL BASIS OF ACCOUNTING FOR REVENUE, EXPENSES AND BUSINESS RESULTS IN COMMERCIAL ENTERPRISES

1.1. Characteristics of chemical business operations affect accounting for revenue, costs and business results

According to the 2014 Enterprise Law, Business activities are understood as: "Continuous implementation of one, several or all stages of the investment process, from production to consumption of products or provision of services on the market for the purpose of making a profit". Business activities in some cases are understood as commercial activities. According to the 2005 Commercial Law , commercial activities are activities for the purpose of making a profit, including buying and selling goods, providing services, investing, promoting trade and other activities for the purpose of making a profit.

Therefore, commercial business is the process of bringing products from the production sector to the consumption sector through two main processes: purchasing and selling. The subjects of commercial business are very diverse, including all types of goods circulating on the market, from many different industries such as: Agricultural products, aquatic products, materials and equipment, processed foods, etc.

The basic characteristic of commercial business activities is to organize the circulation of goods and services to meet the increasing demand in social consumption.

Commercial business also has its own characteristics as follows:

- The objects of commercial business are goods classified according to each industry:

+ Equipment and supplies

+ Consumer technology products

+ Food, processed food...

- The service objects of the commercial business sector are consumers, including: Individuals, production and business units, other social units and organizations...

- At the end of a commercial business process, the enterprise's capital is transformed from monetary form to commodity form and from commodity form to monetary form.

- The process of circulating goods in commercial business includes two stages, the purchasing stage and the selling stage, without going through the processing stage that changes the physical form of the goods. In which:

+ Purchasing is the first stage of the process of circulating goods, through purchasing, the exchange relationship and payment relationship between the buyer and seller regarding the value of the goods are realized. In commercial enterprises, goods are only considered purchased goods when they simultaneously satisfy three conditions: Must go through a certain method of buying - selling - paying for goods, the enterprise has taken ownership of the goods, and lost ownership of money or another type of goods, and the goods are purchased for the purpose of selling or being processed and then sold.

+ Sales is the final stage in the business operation of a commercial enterprise. Through sales, the value and use value of goods are realized, the enterprise's capital is converted from commodity form to monetary form, the enterprise recovers its capital, offsets costs and has accumulated resources to expand its business. The sales process is often carried out through two methods: wholesale and retail. The characteristic of wholesale is that, when the buying and selling process ends, the goods are still in circulation, while the characteristic of retail is that, when the buying and selling process ends, the goods have entered the consumer sector. Wholesale and retail of goods are carried out in many forms: direct sales, warehouse sales, direct sales and consignment sales.

- In commercial enterprises, capital goods are the most important capital and commodity trading is a frequently occurring business, accounting for a very large amount of work. Commodity management is one of the most important management contents in commercial enterprises.

In business management in business enterprises, especially commercial enterprises, accounting plays an important role, as a tool to

Management of business activities taking place in an enterprise, in which accounting, revenue, expenses and determining business results are the most basic accounting parts in accounting for business activities as well as in the management of goods of a commercial enterprise. Accounting for revenue, expenses and business results in a commercial enterprise has its own characteristics.

1.2. General overview of revenue, costs and business results in commercial enterprises

1.2.1. Costs and cost classification

Cost concept

In the process of production and business activities, in addition to the necessary living labor and materialized labor costs for existence and development, enterprises also have to spend a lot of other expenses, the expenses can be a new part created by the enterprise and there are also expenses that are sometimes very difficult to determine exactly whether they are living labor costs or materialized labor costs. Therefore, currently, the operating costs of an enterprise are understood as all living labor costs, materialized labor costs and other necessary expenses that the enterprise has spent during the business activities, expressed in money and calculated for a certain period.

From an economic point of view, costs are the total value of amounts that reduce economic benefits in an accounting period in the form of expenditures, asset deductions or debts that result in a decrease in equity, excluding distributions to shareholders or owners. Production and business costs are the monetary expression of all expenses that a business must spend in a period to carry out the process of producing and consuming goods.

For commercial enterprises, economic activities are mainly buying and selling goods to make profits and achieve other socio-economic goals of the enterprise. To achieve their goals, enterprises must spend certain costs, costs that arise every day, every hour at all stages.

different stages of the business process of a commercial enterprise in a certain period. First of all, there are costs incurred at the purchasing stage, which are the costs of transporting goods from the place of purchase to the enterprise's warehouse, and the cost of salaries paid to specialized staff at the purchasing stage for a certain period of time. Next are the costs at the storage and consumption stage. These costs include the costs of selecting, packaging, preserving goods, the costs of transporting goods from the enterprise's warehouse to consumers, warehouse rental, the cost of using equipment, depreciation of fixed assets, advertising and other related costs. In addition to the above costs, there are costs related to the management of the commercial enterprise. In the course of business, enterprises must also carry out other economic activities such as joint venture investment, association, transfer, liquidation of fixed assets, securities trading, investment in the credit system to gain profit, preserve business capital... Economic activities also require commercial enterprises to spend certain expenses during the period, these expenses will be offset by the economic activities of the commercial enterprise during the period. Thus, from the perspective of the enterprise, it can be seen that the business expenses of a commercial enterprise are all the expenses that the enterprise has spent to achieve the socio-economic goals of the enterprise during a certain period. The expenses arising from the stage of purchasing reserves to the stage of selling and the expenses related to capital investment outside and are offset by the income or business revenue of the commercial enterprise during that period.

According to Vietnamese Accounting Standards VAS 01- General Standard: Expenses are the total value of amounts that reduce economic benefits in the accounting period in the form of cash outlays, asset deductions or liabilities that result in a decrease in equity, excluding distributions to shareholders or owners.

❖ Cost classification

Costs in a business are viewed from many perspectives. Cost classification is a way of arranging different costs into the same group based on criteria.

Different classification methods. Cost classification depends on management information needs. Depending on the information requirements, there are different ways to classify costs.

* Classifying production costs according to economic content, costs are divided into 5 categories.

type:

According to this classification, costs incurred if having the same economic content are

classified into the same element, regardless of which department it arises in or what goods it is used to produce. Classification according to this criterion helps to collect and manage costs better, thereby assessing the implementation of production cost estimates, providing documents for making production and business cost estimates. However, this classification does not distinguish costs according to each purpose and cause of costs. According to this classification, production and business costs are divided into 5 elements:

- Material costs: Includes the total value of materials used in business operations during the period.

- Labor costs (salaries and salary deductions): All salaries payable and salary deductions such as: salary costs, allowances payable, and social insurance, health insurance, unemployment insurance, and union fees at the prescribed rate on the employee's salary included in the cost.

- Fixed asset depreciation expense: is the total amount of depreciation of fixed assets of the enterprise used for business activities during the period.

- Cost of purchased external services: Is the total amount of money that the business must pay for services used in business operations during the period provided by other units such as: Electricity, water, telephone, etc.

- Other expenses in cash: Including expenses serving business activities not reflected in the above indicators that have been paid in cash during the reporting period, such as expenses for entertaining guests and meetings.

* Cost classification according to relationship with cost aggregation object:

- Direct costs: Are costs directly related to the purchase of a certain type of goods and can be directly accounted for and collected for that goods.

- Indirect costs: Are costs related to many types of goods and many business activities during the period of the enterprise. Accountants must collect them together and then allocate them to each related object according to appropriate criteria.

With this cost classification method, in case indirect costs arise, it is mandatory to apply the allocation method and choose the appropriate allocation criteria. The accuracy of the indirect costs collected for each object depends on the rationality and scientific nature of the cost allocation criteria.

* Classify costs according to their relationship with the indicators on the financial statements:

Cost of goods sold: Is the actual cost of goods sold or the actual cost of completed services that have been determined to be consumed.

Selling costs : are all actual costs incurred in the process of consuming goods and providing services, including costs of offering and introducing goods, sales commissions, product warranties, storage, packaging, and operating costs...

Business management costs : Are all costs related to business management, administrative management, and general management of the entire business.

Financial operating expenses : include expenses or losses related to financial activities such as interest expenses, joint venture capital expenses, foreign exchange rate differences, capital transfer losses...

Other expenses : Including expenses other than business expenses arising during the normal business operations of the enterprise such as liquidation and sale costs of assets, fines for breach of contract, etc.

1.2.2. Revenue and revenue classification

❖ Revenue concept

According to Vietnamese Accounting Standard No. 14 (VAS14 - Revenue and other income) issued under Decision No. 149/2001/QD-BTC dated December 31, 2001 of the Ministry of Finance, it is stipulated that: "Revenue is the total value of economic benefits of an enterprise obtained during the accounting period, arising from the normal production and business activities of the enterprise, contributing to increasing equity capital".

Thus, it can be understood that the nature of revenue is the total value realized by selling products, goods or providing services to customers.

According to Circular 200/2014/TT-BTC issued on December 22, 2014, revenue is defined as economic benefits obtained that increase the enterprise's equity, except for additional contributions from shareholders. Revenue is recorded at the time the transaction occurs, when it is certain that economic benefits will be obtained, and is determined at the fair value of the amounts entitled to be received, regardless of whether the money has been received or will be received.

Related to revenue, there are also revenue deductions including:

Trade discount: Is the amount a business gives at the listed price to customers who buy in large quantities.

Sales discount: is a deduction given to the buyer due to poor quality, incorrect specifications or outdated goods.

Value of returned goods: Is the volume of goods sold that have been determined to be consumed but are returned by customers and refused to pay.

❖ Revenue classification

Revenue is only recognized when it simultaneously satisfies the recognition conditions for sales revenue, interest revenue, dividends and profits shared according to current regulations. If not satisfied, it is not recorded as revenue.

* Revenue classification by sales method: According to this classification, a business's revenue is divided into: Wholesale revenue, retail revenue and dealer sales revenue.

Wholesale revenue: Includes revenue arising from the method of wholesaling goods through warehouses and the method of wholesaling goods transported directly.

Retail sales: Is the revenue from selling goods directly to consumers.

This classification provides necessary information for businesses to plan their product structure and have appropriate management measures for each sales method.

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