3 accounting for expenses, revenue, income and determination of business results at ha dong woollen joint stock company

Academy of Finance

Graduation thesis
DECLARATION

I hereby declare this is my own research. Data, results stated
in
graduation

the
thesis

are

honestly

come

from

the

actual

condition of Ha Dong Woollen Joint Stock Company.
Hanoi, (date) 29 (month) 5 (year) 2020
Graduation author
Quach Thu Trang

Mentor: Tran Thi Ngoc Han

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Graduation thesis
ACKNOWLEDGEMENT

Firstly, I would like to express my very great thankfulness to all
lecturers in Accounting Faculty at Academy of Finance for their professional
guidance and valuable support.
Especially, I would like to show my deep gratitude to my research Mentor
Ms. Tran Thi Ngoc Han, for her patient guidance, enthusiastic encouragement
and useful critiques during the planning and development of my graduation
thesis and for her assistance in keeping my progress on schedule.
I also want to thank Ha Dong Woollen Joint Stock Company for giving me
permission to commence this thesis in the first instance, to do the necessary
research work and to use departmental data. I have furthermore to thank the
CEO and Chief Accountant as well as all seniors at Ha Dong Woollen Joint
Stock Company who gave and confirmed this permission and encouraged me
to go ahead with my thesis.
Finally, because of limitation of time and knowledge, mistakes are
unavoidable, so I wish to receive more contribution and suggestions to make
my thesis better

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Graduation thesis
TABLE OF CONTENTS

DECLARATION........................................................................................................i
ACKNOWLEDGEMENT.........................................................................................ii
TABLE OF CONTENTS.........................................................................................iii
LIST OF DIAGRAM..............................................................................................vii
LIST OF TABLES..................................................................................................viii
LIST OF ABBREVIATIONS...................................................................................ix
INTRODUCTION.....................................................................................................1
CHAPTER 1: GENERAL THEORY OF ACCOUNTING FOR EXPENSES,
REVENUE, INCOME AND DETERMINATION OF BUSINESS RESULTS IN
THE BUSINESS SERVICE PROVIDER..................................................................4
1.1 The necessity and duties of accounting for expenses, revenue, income and
determination of business results in business service provider (BSP).......................4
1.1.1 Definitions of expense, revenue and business results.......................................4
1.1.2 Management requirements of accounting for expense, revenue, income and
business results in business service provider (BSP):.................................................4
1.1.3 The necessity and duties of accounting for expense, revenue, income and
business results determination in business service provider (BSP)............................5
1.2 Accounting for expenses, revenue, income and determination of business results
in business service provider (BSP)............................................................................8
1.2.1 Accounting for expense in business service provider (BSP).............................8
1.2.1.1 Accounting for cost of goods sold (COGS)..................................................8

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1.2.1.2 Accounting for selling expenses....................................................................9
1.2.1.3 Accounting for administrative expenses......................................................11
1.2.1.4 Accounting for financial expense.................................................................13
1.2.1.5 Accounting for other expenses.....................................................................15
1.2.1.6 Accounting for corporate income tax expense.............................................17
1.2.2. Accounting for revenue in Business service provider....................................19
1.2.2.1 Accounting for revenue, income in BSP.....................................................19
1.2.2.2 Accounting for revenue deduction...............................................................23
1.2.2.3 Accounting for financial revenue.................................................................25
1.2.2.4 Accounting for other income.......................................................................27
1.2.3 Accounting for business results......................................................................29
1.2.4 Organization of bookkeeping system systems of accounting for expenses,
revenue, income and business results......................................................................31
1.2.4.1 General journal form of bookkeeping..........................................................31
1.2.4.2 Journal-Ledger form of bookkeeping..........................................................33
1.2.4.3 Journal voucher form of bookkeeping.........................................................34
1.2.4.4 Voucher form of bookkeeping......................................................................35
1.2.5 Accounting for expenses, revenue, income and determination of business

results in the application of accounting software.....................................................37
1.2.6. Presentation on financial statement:..............................................................40
1.2.6.1 Preparing a balance sheet:............................................................................40

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Graduation thesis

1.2.6.2. Preparing an income statement:..................................................................40
CONCLUSION OF CHAPTER 1...........................................................................45
CHAPTER II: PRACTICAL SITUATION OF ACCOUNTING FOR EXPENSES,
REVENUE, INCOME AND DETERMINATION OF BUSINESS RESULTS AT
HA DONG WOOLLEN JOINT STOCK COMPANY............................................46
2.1 Overview of Ha Dong Woollen Joint Stock Company......................................46
2.1.1 The foundation and development of Ha Dong Woollen Joint Stock Company
................................................................................................................................. 46
2.1.2 Characteristics of business operation at Ha Dong Woollen Joint Stock
Company.................................................................................................................48
2.1.3 Features of the business operation process at HAWOCO...............................48
2.1.4 Characteristics of organizing management mechanism..................................51
2.1.5 Characteristics of organizing accounting system............................................53
2.1.5.1 Organization of accounting apparatus..........................................................53
2.1.5.2 Characteristics of the accounting form and accounting software of the

company.................................................................................................................. 58
2.1.5.3 The accounting policies and basic accounting methods of Ha Dong Woollen
Joint Stock............................................................................................................... 70
2.2 PRACTICAL SITUATION OF ACCOUNTING FOR EXPENSES, REVENUE,
INCOME AND DETERMINATION OF BUSINESS RESULTS AT HA DONG
WOOLLEN JOINT STOCK COMPANY...............................................................71
2.2.1 Accounting expenses in the company.............................................................71
2.2.1.1 Accounting for cost of goods sold (COGS).................................................71

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2.2.1.2 Accounting for selling expenses - 641.........................................................82
2.2.1.3 Accounting for administrative expense – 642..............................................83
2.2.1.4 Accounting for financial expenses.............................................................101
2.2.1.5 Accounting for other expense....................................................................107
2.2.2. Practical Accounting for revenue, income at Ha Dong Woollen Joint Stock
Company...............................................................................................................107
2.2.2.1 Accounting for revenue from service rendered..........................................107
2.2.2.2 Accounting for financial income................................................................141
2.2.2.3 Accounting for other income.....................................................................147
2.2.3.Accounting for corporate income tax............................................................148

2.2.4 Accounting for determination of business results.........................................156
2.3 Several Comments on accounting for expenses, revenue, income and
determination of business results at Ha Dong Woollen Company.........................166
2.3.1 Achievements...............................................................................................167
1) About the accounting voucher system...............................................................167
2.3.2 Limitations and the causes of limitations......................................................168
CONCLUSION OF CHAPTER 2.........................................................................171
CHAPTER 3: PROPOSALS TO IMPROVE ACCOUNTING FOR EXPENSE,
REVENUE, INCOME AND DETERMINATION OF BUSINESS RESULTS AT
HA DONG WOOLLEN JOINT STOCK COMPANY..........................................172
3.1 Development orientation of the company in the near future............................172

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3.2 Requirements and principles for improving accounting for expense, revenue,
income and determination of business results at HAWOCO.................................172
3.2.1 Requirements for improving accounting for expense, revenue, income and
determination of business results at HAWOCO.....................................................172
3.2.2 PRINCIPLES FOR IMPROVING ACCOUNTING FOR REVENUE,
EXPENSES AND BUSINESS RESULTS AT HADOCO.....................................174
3.3 Some solutions to improve accounting for expense, revenue, income and

determination of business......................................................................................175
3.4 Conditions for implementing solutions............................................................177
CONCLUSION OF CHAPTER 3.........................................................................180
CONCLUSION.....................................................................................................181
REFERENCES......................................................................................................182

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LIST OF DIAGRAM

Diagram 1.2.1.1 Accounting entries – Ac 632: Cost of goods sold..................9
Diagram 1.2.1.2: Accounting entries of Ac 641 – Selling expenses...............10
Diagram 1.2.1.3 Accounting entries of Ac 642 – Administrative expense.....12
Diagram 1.2.1.4: Accounting entries of Ac 635 – Financial expenses............14
Diagram 1.2.1.5 Accounting entries of Ac 811 – other expenses....................16
Diagram 1.2.1.6: Accounting entries of Ac 821 – corporate income tax
expenses..........................................................................................................18
Diagram 1.2.2.1: Accounting entries of Ac 511 – Revenue............................23
Diagram 1.2.2.2: Accounting entries of Ac 521 – Revenue deductions..........24
Diagram 1.2.2.3 Account 515- Financial revenue...........................................26
Diagram 1.2.2.4: Accounting entries of Ac 711 – other income.....................28
Diagram 1.2.3 Accounting entries of Ac 911 – Income summary..................30

Diagram 1.2.4.1: Booking Procedures in “General journal”...........................32
Diagram 1.2.4.2: Booking procedure in “Journal- Ledger”............................33
Diagram 1.2.4.3: Booking procedures in “Journal voucher”..........................35
Diagram 1.2.4.4: Booking procedures in “Voucher form”..............................36
Diagram 2.1.3 The features of operation process............................................49
Diagram 2.1.4: Organization of management mechanism..............................51
Diagram 2.1.5.1 Organization of accounting apparatus..................................54
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Diagram 2.1.5.2: Booking Procedures in “General journal”...........................59

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LIST OF TABLES

Table 2.2.1.1.1 General Ledger of Ac 632......................................................80
Table 2.2.1.1.2 Detailed book of Ac 632.........................................................82
Table 2.2.1.3 General Ledger of Ac 642.........................................................98
Table 2.2.1.4.1 General Ledger of Ac 635....................................................106
Table 2.2.1.4.2 Detailed book of Ac 635.......................................................106
TABLE 2.2.2.1.1 General Ledger 511..........................................................137
TABLE 2.2.2.2.1 General Ledger of Ac 515.................................................145
Table 2.2.3.1 General Ledger of Ac 821.......................................................155
Table 2.2.3.2 Detailed book of Ac 821..........................................................156
Table 2.2.4.1 The General Ledger 911..........................................................162
Table 2.2.4.2 The General Ledger of Ac 421................................................163
Table 2.2.4.3 The income statement..............................................................166

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LIST OF ABBREVIATIONS

No
1
2

3
4
5
6

Abbreviation
Ac
COGS
No
HAWOCO
VAT
BSP

Mentor: Tran Thi Ngoc Han

Full phrase
Account
Cost of goods sold
Number
Ha Dong Woollen Joint Stock Company
Value added tax
Business service provider

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INTRODUCTION
1.The importance of the research topic
Nowadays, when the market is getting more competive for enterprises, they
must be flexible and active in their businesses, make as much profits as
possible to survive. However, earning a profit is not easy, a company must
understand the importance of expenses, revenue, income and determination of
business results because, thanks to these information, managers not only can
analyze company’s financial data but also help it grow and increase profits.
It’s the reason why efficient and effective accounting management for
expenses, revenue, income and determination of business results plays an
important role in the company’s success.
Therefore, in this situation, Ha Dong Woollen Joint Stock Company
understands that the vital answer to maintain its current position and to
expand its business is a flexible and effective sales strategy with a wellperformed

accounting

system

for

expenses,

revenue,

income

and

determination of business results. Recognizing the importance of accounting
for expenses, revenue, income and determination of business results, with the
knowledge attained while studying at Academy of Finance, I chose
“Accounting for expenses, revenue, income and determination of business
results at Ha Dong Woollen Joint Stock Company” as my graduation thesis
topic
2. Research purpose
My study has three objectives:
- System and classifications of basic theories on accounting for expenses,
revenue, income and determination of business results at Ha Dong
Woollen Joint Stock Company

Mentor: Tran Thi Ngoc Han

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Graduation thesis

- To research and illustrate the practical status of accounting for
expenses, revenue, income and determination of business results at Ha
Dong Woollen Joint Stock Company
- To estimate and propose some ideas to improve accounting for
expenses, revenue, income and determination of business results at Ha
Dong Woollen Joint Stock Company.

3. Subject and scope of the study:
- Subject of study: My study mainly focuses on revenue, administrative
expenses, some other related expenses and incomes, and net income.
Also, the definitions, accounts used and accounting entries. Besides, it
is also about preparing accounting reports in which net income and
retained earnings are reflected.
- Scope of study: Ha Dong Woollen Joint Stock Company.
- Scope of time: December of 2019.
- Scope of figures: December of 2019.
4. Research Methods
- Observing method: Observing accounting process from collecting
documents to entering them into computer system.
- Interviewing method: Interviewing in order to find out what account's
expectation of their work is, then making a recommendation.
- Researching on company's documents: Carrying out research on
company's doc documents to learn more about which document
facilitating accounting entry
5. Structure of the thesis:
The structure of the thesis is divided into three chapters:

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Graduation thesis

CHAPTER 1: GENERAL THEORY OF ACCOUNTING FOR EXPENSES,
REVENUE, INCOME AND DETERMINATION OF BUSINESS RESULTS IN
THE BUSINESS SERVICE PROVIDER (BSP)
CHAPTER

2:

PRACTICAL

SITUATION

OF

ACCOUNTING

FOR

EXPENSES, REVENUE, INCOME AND DETERMINATION OF BUSINESS
RESULTS AT HA DONG WOOLLEN JOINT STOCK COMPANY
CHAPTER 3: PROPOSALS TO IMPROVE ACCOUNTING FOR EXPENSES,
REVENUE, INCOME AND DETERMINATION OF BUSINESS RESULTS AT
HA DONG WOOLLEN JOINT STOCK COMPANY

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Graduation thesis

CHAPTER 1: GENERAL THEORY OF ACCOUNTING FOR EXPENSES,
REVENUE, INCOME AND DETERMINATION OF BUSINESS RESULTS
IN THE BUSINESS SERVICE PROVIDER
1.1 The necessity and duties of accounting for expenses, revenue, income
and determination of business results in business service provider (BSP)
1.1.1 Definitions of expense, revenue and business results
Expenses are seen as expenses incurred in connection with the operation of an
enterprise to achieve a certain service. Expenses are determined in cash by
living expenses, materialized labor ... on the basis of firm evidence and
documents
Revenue is the gross inflow of economic benefits during the period arising in
the course of the ordinary activities of an entity when those inflows result in
increases in equity, other than increases relating to contributions from equity
participants
Business results are the final results of an enterprise's production and business
activities, expressed in either profit or loss amounts. Business results of an
enterprise include: Results of production and business activities, Results of
financial activities and Results of other activities
When a business process is completed, the enterprise determines its business
results on the basis of comparing the total revenue earned and the total
expenses arising in the business process. Business results may be profitable or
loss; if losses are compensated according to the regime and regulations of
competent authorities; if the profits are distributed for proper use in accordance
with the financial mechanism applied for each type of enterprise
1.1.2 Management requirements of accounting for expense, revenue, income

and business results in business service provider (BSP):

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In order to carry out the business process effectively and fulfill the set
business targets, the enterprise must meet the basic requirements on
management of accounting for expense, revenue, income and determine
business results as follows:
 Managing the movement of each type of services in terms of
quantity, quality and value
 Learning, exploiting and expanding markets, applying appropriate
service methods and having promotion policies to continuously
increase service sales, reduce expenses
 Having strict management of administrative expenses, business
management costs, financial operation expenses and other expenses
incurred in the business process to maximize profits.
1.1.3 The necessity and duties of accounting for expense, revenue, income
and business results determination in business service provider (BSP)
1.1.3.1 The necessity of accounting for expense, revenue, income and business
results determination in business service provider (BSP)
Revenue plays a very important role not only for the existence and

development of the business service provider itself but also for the overall
development of the whole economy, especially the market economy. To
achieve higher and higher profits, businesses must develop their own business
plans, which must fully and accurately calculate the expense, revenue and
business results achieved. Organizing accounting of expenses, revenue, income
and determining business results is an important tool in the effective
management and administration of business activities in the business process.
Accounting information of expenses, revenue, income and determination
of business results provide business managers with an understanding of the
enterprise's revenue performance situation in terms of type, quantity, quality,
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price, payment term; check the implementation of cost estimates of provision,
administrative expenses, financial operations and other expenses and determine
the business results of the unit. On that basis, the company can orient measures
for business activities in the next period, perfect business activities, save costs
as well as increase revenue.
Information of accounting expenses, revenue, income and determining
business results to help the authorities of the State (Tax authorities, functional
agencies, statistical offices, ...) to check and monitor the situation and fulfilling
the obligations to the State, thereby issuing appropriate policies to

comprehensively develop the national economy
Accounting

information

about

expenses,

revenue,

income

and

determination of business results provided is the concern of those who have
direct interests related to the business situation of enterprises such as investors,
suppliers, creditors, ... That is the basis for these subjects to capture the
business situation of the business, promptly make business decisions that are
most beneficial to themselves
The above analysis shows that accounting for expense, revenue, income
and determining business results plays a very important role in collecting,
processing and providing information to those who need to use information,
helping these individuals make business decisions in an appropriate and timely
manner. Therefore, the organization of accounting of expenses, revenue,
income and determining business results scientifically and reasonably is
extremely necessary and of great significance in providing timely economic
information, contributing to fully promoting the role of general accounting in
financial economic management in enterprises
1.1.3.2 The duties of accounting for expense, revenue, income and business

results determination in business service provider (BSP)
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For enterprises in general as well as business service providers in
particular, recording provision contract revenue and determining business
results is an important and vital issue for enterprises. Through the accounting
of expense, revenue, income and determination of business results, enterprises
can monitor accurately and fully the efficiency of the operation process from
which to make timely economic decisions to ensure the exist and develop
stably for the business
For the economy in general, the determination of business results of
enterprises is the basis for generating revenue for the State Budget. On the
other hand, in the current period, attracting investment capital through the
stock market is more common, the determination of business results of
enterprises becomes even more important because the business results are
mostly decided large extent of attracting investment capital from entities in the
economy
For the above reasons, enterprises need to determine the role and duties in
expense, revenue, income accounting and determine the business results as
follows:
 Basing on the characteristics of business production and

management requirements to correctly determine the revenue
accounting objects, select the proper methods and conditions for
recording revenue so that it is suitable for the enterprise
 Organizing accounting documents and systems of accounting books
in accordance with the principles of accounting standards and
regulations to meet the requirements of receipt, processing and
systematization of revenue information and determination business
results of the enterprise

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 Organizing an accounting system scientifically and reasonably on
the basis of clearly assigning the responsibilities of each employee,
each accounting department, especially the expense, revenue,
income accounting and business results department
 Organizing the preparation and analysis of revenue accounting
reports, determine business results, providing necessary information
to help business managers make decisions quickly to perfect
business operation
1.2 Accounting for expenses, revenue, income and determination of
business results in business service provider (BSP)

1.2.1 Accounting for expense in business service provider (BSP)
1.2.1.1 Accounting for cost of goods sold (COGS)
The cost of goods sold (COGS) also referred to as cost of services, is how
much it costs to produce your services.
Companies in the business service provider , do not need inventory to deliver
their services. Instead, their costs involved with providing these services are
accounted for in the cost of services, also known as the cost of revenue,
account. they do not have any direct materials costs.
Their direct labor costs are the salaries paid to the professionals delivering the
services, wages for part-time or freelance professionals and the costs of
delivering the services.

 Supporting documents
- Minutes of acceptance
- Other documents which relating to rendering of services
- Pay roll…..

 Account used
Account 632 – “Cost of goods sold”.
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This account is used to record the cost of services
Diagram 1.2.1.1 Accounting entries – Ac 632: Cost of goods sold
Ac 2141, 2147

Ac 632

Depreciation of fixed assets

Ac 911

Transfer COGS to Ac 911

Which are all used for leasing
Ac 3341
Wages, salaries are paid
to deliver the services

1.2.1.2 Accounting for selling expenses
Selling expenses are the costs which are incurred by the sales department of an
organization for providing services; this is mainly related to distributing,
marketing & selling… This cost is not directly related to the production or
manufacturing of any delivery of any services so it is categorized as an indirect
cost

 Supporting documents
VAT invoice, Payment slip, Advance payment list, Timesheets, Payroll,
Payment table, Timesheet overtime, Overtime pay table, Timesheet
overtime, Other related documents

 Account used

Account used 641- Selling expenses to record the Selling expenses incurred
during the accounting period. Accounting entries to record any Selling
expenses incurred for the period

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Diagram 1.2.1.2: Accounting entries of Ac 641 – Selling expenses
Ac 641

Ac 334, 338
(1)

Ac 111, 112
(6)

Ac 214

Ac 352
(2)
(7)

Ac 352
Ac 911

(3)
(8)
Ac 331, 131
(4)
Ac 133

Ac 242, 335
(5)

Explanation
(1) Salary and deductions from salaries of salespeople
(2) Depreciation of fixed assets used for sales department
(3) Allowances for contract repayment has great risks, other payable
provisions
(4) Expenses for services purchased from outside, other expenses in
cash
(5) Prepaid expenses
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(6) The money collected from cost reduction
(7) Refunding provisions for payables
(8) At the end of the accounting period, transferring of selling expenses,
incurred in the accounting period to Ac 911
1.2.1.3 Accounting for administrative expenses
Administrative expenses represent the necessary costs to maintain a
company's daily operations and administer its business, but these costs are not
directly attributable to the production of goods and services.
They include non-sales personnel salaries, supplies, and other operating costs
necessary to the overall administration of the business. Administrative
expenses are commonly considered “overhead” expenses, and include rent,
utilities, telephone, travel and supplies. Repairs and improvement expenses
incurred for either equipment or property may also be deducted as an
expenses. However, this is only for expenses to maintain property or
equipment such as roof repairs, repainting and other maintenance. Major
overhauls of equipment or maintenance that extend the life of the asset must
be capitalized (that is, depreciated over the asset’s useful life and not deducted
from income as an expense)
 Supporting documents
VAT invoice, Payment slip, Advance payment list, Timesheets, Payroll,
Payment table, Timesheet overtime, Overtime pay table, Timesheet overtime,
Other related documents
 Account used
Account used 642- Administrative expense to record the Administrative
expenses incurred during the accounting period. Accounting entries to record
any Administrative Expenses incurred for the period.

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Diagram 1.2.1.3 Accounting entries of Ac 642 – Administrative expense

Ac 642

Ac 334, 338
(1)

Ac 111, 112
(6)

Ac 214

Ac 352
(2)
(7)

Ac 352
Ac 911

(3)
(8)

331, 131
(4)
Ac 133

Ac 242, 335
(5)

Explanation
(1) Salary and deductions from salaries of business management costs
(2) Depreciation of fixed assets used for business management
(3) Allowances for contract repayment has great risks, other payable
provisions
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(4) Expenses for services purchased from outside, other expenses in cash
(5) Prepaid expenses
(6) The money collected from cost reduction
(7) Refunding provisions for payables
(8) At the end of the accounting period, transferring of administrative,
incurred in the accounting period to Ac 911
1.2.1.4 Accounting for financial expense

Financial expenses are expenses related to activities for equity mobilization,
financial investments, borrowings and other financial activities of the
business. Financial expenses consist of :
- Expenses related to financial investments such as: loss from
investments,
other expenses which are not capitalized in the investments.
- Borrowing expenses such as: Interest, other management fees.
- Expenses related to foreign currencies transaction, loss from
foreign
exchange rate difference…
- Provision for price decrease of financial investments
- Cash discounts: Discount Allowed
- Other expenses related to financial activities
 Supporting documents
Debit note, Receipts and vouchers, Other original documents related
 Account Used
Under Vietnam accounting system use account 635- Financial expenses is
used to record the financial expenses incurred during the accounting
period.

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Diagram 1.2.1.4: Accounting entries of Ac 635 – Financial expenses
Ac 635

Ac 413
(1)
Ac 121, 228

Ac 911
(7)

(2)

(3a)

111, 112

(3b)

111, 112, 331
(4)

111, 112, 335, 242
(5)

131, 136, 138
111, 122
(6a)
(6b)

Explanation
(1) Handling exchange rate losses due to revaluation of end-of-year
foreign
currency items into financial expenses
(2) Loss of selling investments
(3a) Investment proceeds from investments
(3b) Cost of sale of investments
(4) Discount payment for buyers
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