264. “ACCOUNTING FOR SALES AND DETERMINING BUSINESS RESULTS AT NEW AND NICE INTERIOR JOINT STOCK COMPANY”

MINISTRY OF FINANCE
ACADEMY OF FINANCE

----🙣🙣🙣----

NGUYEN THI HUONG
CQ55/21.02 CLC

GRADUATION THESIS
TOPIC:
“ACCOUNTING FOR SALES AND DETERMINING BUSINESS
RESULTS AT NEW AND NICE INTERIOR JOINT STOCK
COMPANY”

Major : Corporate Accounting
Code

: 21

Mentor : PhD. Nguyen Minh Thanh

Hanoi - 2021


Graduation Thesis

Academy Of Finance

DECLARATION
I hereby declare this is my own research. Data, results stated in the
graduation thesis are honestly come from the actual conditon of company.

Student
Nguyen Thi Huong

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TABLE OF CONTENT

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LIST OF DIAGRAMS

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LIST OF IMAGES

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LIST OF TABLES

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LIST OF ABBREVIATIONS
-

Acc

: Account

-

CIT

: Corporate income tax

-

VAT

: Value added tax

-

COGS

: Cost of goods sold

-

FIFO

: First in first out

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PREFACE
1.

The importance of the research topic
In the context of the world economy as well as the Vietnamese economy
is constantly developing today, domestic enterprises always face difficulties
and challenges. Currently, businesses are constantly innovating to optimize
production and business performance. The fact shows that in order to
increase the competitiveness of products in the market, in addition to
improving product quality, diversifying product models and methods of
customer service, it is especially important to pay attention operating
accounting work, especially sales accounting in enterprises in general and in

commercial enterprises in particular.
For businesses in general and commercial enterprises in particular, sales
are considered extremely important. Sales activities are frequently generated
activities, accounting for a large amount of demand for goods management to
be top priority. In a trading company, sale accounting and business
performance determination are an important accounting part to help
managers make the right decisions and bring the best business results.
Starting from that, I would like to select the research topic "Accounting for
sales and determining business results at New and Nice Interior Joint stock
company.

1.

Research purpose
On the basis of theoretical and factual research at New and Nice Interior
Joint stock company, I have a deep understanding of sales accounting and
determining business results, given that Overview of the achievements and
limitations in accounting work in general and revenue accounting and
determining business results in particular.
2. Research Object
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Accounting for sales and determining business results at New and Nice
Interior Joint stock company. Documents collected during the internship at
the unit are basis for determining business results.
3.

Research Methods
Incorporating theory and practice, the concrete method is based on the
theoretical basis of dialectical materialism from theory to practice - from
reality to testing. Moreover, applying some other methods such as
systematization, interpretation, analysis.
5.

The composition of the thesis
My thesis consists of 3 main chapters:
Chapter 1: General theory on accounting for sales and determining

business result in the enterprise.
Chapter 2: Accounting for sales and determining business result in
New and Nice Interior Joint stock company.
Chapter 3: Some suggestions to improve accounting for sales and
determining business result in New and Nice Interior Joint Stock
Company.
I would like to express my sincere thanks to the teachers of accounting
faculty at Academy of Finance, especially the lecturer – Phd Nguyen Minh
Thanh, who kindly guided me to complete this thesis. I also would like to
thank the management and the accounting department of New and Nice
Interior Co., Ltd who helped me with my internship at the company.
Thank you sincerely!

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CHAPTER 1: GENERAL THEORY ON ACCOUNTING FOR
SALES, AND DETERMINING BUSINESS RESULTS IN
ENTERPRISES
1.1. Importance of accounting for sales and determining business
result in the enterprise.

1.1.1. Definition of sales and determining business result.
1.1.1.1.

Definition of sales.

Selling is the process in which the seller transfers the ownership of
goods to the buyer in order to collect money or collect money from the
buyer.
In a commercial enterprise, selling is the last, most important step of the
business process. From an economic perspective, selling is the process in
which the enterprise's goods are converted from a physical form
(commodity) to a monetary form (money). In general and commercial
services enterprises in particular, the sales process has the following main

characteristics:
- There is an exchange agreement between the buyer and the seller. The
seller agrees to sell, the buyer agrees to buy, the buyer pays or accepts to pay.
- There is a change in ownership of goods: the owner loses ownership
and the buyer has ownership of the purchased goods.
- In the process of selling certain goods and getting back from
customers an amount called sales of goods. This is the basis for enterprises to
determine their main business results.
1.1.1.2.

Definition of business result.

Business results are the final results of business activities arising in
the accounting period, which are the quality criteria for evaluating the

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business performance of enterprises in the accounting period.
Determining business results is the comparison between business
expenses spent and business income earned during the period. If the income is
greater than the cost, it means the sales result is profitable, if the income is

less than the cost, the sale result is at a loss. The determination of business
results is usually conducted at the end of a period (the end of the month, the
end of the quarter, the end of the year), depending on the characteristics and
management requirements of the business.
Methods of sales and payment.
1.1.2.1. Sales methods
1.1.2.

The sale of goods in enterprises can be carried out by the following
methods:


Wholesale method:
Wholesale is the sale of products of an enterprise to other businesses,
stores, agents ... In large quantities for units to continue to sell to other
organizations or to serve other purposes to economic needs. Wholesale of
goods is usually done by two forms:
- The form of wholesale through warehouse: goods are sold to customers
from the enterprise's stockpile and are done in two ways:
+ Form of direct selling: is a form of sale where the enterprise delivers
goods and delivers them directly to customers at a warehouse or a place of
direct storage of the enterprise. Goods are considered to be selling and
forming sales when the customer receives enough goods and signs the invoice
to confirm the goods. Vouchers used: sale invoice or VAT invoice, delivery
slip made by the seller.
+ Form of shipment: in this form, periodically based on economic
contract and delivery plan, the company sends goods to customers and

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delivers them at the place signed in the contract (station, port , the customer's
warehouse, ...).
The goods sent are still owned by the seller. Only when the customer
notices to receive the goods and accepts to pay or pay for the goods
immediately, then the goods transfer of ownership is determined to be sales
and the business is recognized as sales. Shipping costs are borne by the
enterprise or the buyer, depending on the contract signed between the two
parties. Use vouchers: sale invoices or VAT invoices, invoices cum stock
invoice issued by the enterprise.
- Direct wholesale is a form of sale in which the seller buys goods from a
supplier to sell to customers, the goods do not go through the seller's
warehouse. This form also includes many small forms:
+ Wholesale hand delivery (direct wholesale): Commercial enterprises
buy goods from the supplier for direct delivery to the buyer authorized by the
buyer to receive the goods directly at the place agreed by the two parties.
pros. Goods are considered to have been sold when the buyer has fully
received the goods and signed the receipt on the sale vouchers of the
enterprise, and the payment depends on the signed contract between the two
parties.
+ Shipping wholesale directly in the form of shipping: Commercial
enterprises buy goods from the supplier and ship them to sell directly to

buyers by means of transport or outsource. Goods sent for sale still belong to
the enterprise. When the buyer confirms that they have received the goods or
accepts the payment, then it will be determined that they are consumed.
Shipping costs depending on each signed contract can be borne by the seller
or the buyer.


Retail method:

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It is the last stage of transportation of goods from the manufacturing
sector to the consumer sector. At this stage, the goods end of circulation, the
full value and value of use can be realized. Retailers often sell with small
volumes and stable prices. Usually includes:
- Direct cash sales: sales are completed directly with customers.
Customers
pay money, sellers deliver goods to customers.
- Selling by agent mode: Selling businesses sign contracts with agents,
deliver goods to these establishments for sale and pay commissions for selling
them.

- Sales by installment or deferred payment: Sales businesses only collect
a part of the customer's money, the rest will be paid by installments and must
bear a certain amount of interest..
There are also other forms of selling such as selling online, on television
...
1.1.2.2. Payment methods
 Instant payment by cash, bank deposit
Under this method, when the buyer receives the goods from the
business, he will immediately pay the business in cash or in bank deposit.
This method is often used in the case of buyers who are small customers who
buy small quantities or have immediate payment ability at the time of
delivery.


Selling and calculating interest
Under this method, the buyer pays money after receiving the goods for a

certain period of time agreed by both parties, at the end of which time the
buyer will have to pay all the purchased value plus an amount fee is the
interest from this delay.

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Sale installment
The installment payment method is essentially a lending method that,

since the corner and interest payment periods are the same, the amount of
each payment period is the same, the interest is calculated on the principal
balance and the actual number of days of the repayment term.
Financial Accounting for sales and business result in the enterprise.
Financial Accounting for sales revenue in the enterprise
1.2.1.1. Definition of Revenue
1.2.
1.2.1.



According to VAS 01
Revenue and other income: is the total value of economic benefits that
the enterprise gains in the accounting period, which is arising from its normal
production and business activities and other activities, contributing to increase
in equity, excluding capital contribution of shareholders or owners.



According to VAS 14
Revenue is the total value of economic benefits the enterprise receives in
the accounting period, arising from its normal production and business
activities, contributing to increasing equity.



According to Circular 133/2016/TT-BTC
Revenue is an economic benefit gained that increases the equity of the
business except for the additional contribution of the shareholders. Revenue is
recognized at the time the transaction arises, when it is certain that economic
benefits will be received, determined by the fair value of the amounts to be
received, regardless of whether payment has been made or will be made.

1.2.1.2. Classification of revenue
Based on different criteria, revenue can be classified as follows:


Classification of revenue by content, revenue includes:

-

Revenue from sales: is the revenue from the sale of products that enterprises

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produce, sales of purchased goods and sale of investment properties.
-

Revenue from service provision: is the turnover from the performance of
agreed work under a contract in one or more accounting periods such as the
provision of transport, tourism and fixed asset leasing services by the mode of
operating lease, etc.

-

Internal sales turnover: is the turnover of the number of products, goods and
services consumed within the enterprise, which is the economic benefit from
the sale of goods, products and provision of internal services among
dependent units on which the accounting is dependent in the same company
or corporation according to the internal selling price.

-

Revenue from financial activities: is the revenue from interests, royalties,
dividends, divided profits and other financial activities of the enterprise.



Classifying revenue by time criteria, revenue includes:

-

Earned revenue: is the revenue from fulfilling the obligation to transfer
ownership and use right of goods, or to complete the delivery of a service.

-

Unearned revenue: Unearned revenue arises when the company is paid for
money before the completion of the supply of goods and services.
Understanding of the right nature, unearned revenue is a liability of the
company to a customer because it has received money from the customer but
has not yet fulfilled the obligation to transfer ownership and use right of
goods, or to complete all service delivery.



In addition, depending on each specific business, the revenue can be divided
by consumption items, by places of consumption, by amount of consumption
(wholesale sales, retail sales), etc.

1.2.1.3. Revenue recognition
Sales of goods and services are the entire amount earned from goods and
services which are sold by the enterprise.

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According to VAS 14 "Revenue and other income", revenue is
recognized when 5 conditions are satisfied:
-

The business has transferred most of the risks and benefits associated with
ownership of the product or goods to the buyer.

-

The enterprise no longer holds the right to manage goods as the owner of
goods or the control right of goods.

-

The revenue can be measured reliably.

-

The business gains economic benefits from the sale.

-

Identifying the costs associated with the sale.
For products, goods and services which are subject to VAT by the
deduction method, the revenue from goods sold and service rendered is the
VAT-exclusive sale price.
For products, goods and services which are not subject to VAT, or subject
to VAT by the direct method, the revenue from goods sold and service
rendered is the total payment price.

1.2.1.4. Supporting documents
•

VAT invoice or commercial invoice

•

Sales contract

•

Quotation

•

Minutes of acceptance

•

Purchase order

•

Inventory issue note

•

Other documents which relating to providing goods or rendering
services.

1.2.1.5. Accounts Used

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Account 511- Revenue to record revenue from sale of products, goods
and supplying of services in the accounting periods.
This account has some sub- account:
• Account 5111- Goods sale: to record sales and net revenue of goods
those have been sold during the period;
• Account 5112- Finished product sale: to record sales and net
sales revenue of products (finished goods, unfinished goods) self
manufactured by the business; which have been sold during the
period
•

Account 5113- Service sale: to record revenue and net revenue
from services which provided to customers those have been sold during
the period.

•

Account 5118- Other sale
Accounting to Circular No 133/2016:
Account 511
-Indirect taxs payable (VAT, excise
taxes, export taxes…)
-Sales deduction

-Sales of products, goods,
investment
properties
and
service provision of enterprises
-Transferring net revenue to account carried out in the accounting
911 "Determining business results".
period.

1.2.1.6. Accounting for some major transactions

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Diagram 1. 1 - Accounting for Sales of goods and services

Note:
(1)

Revenue from sales of goods and services

(2)

Output VAT

(3)

Excise duty, export tax, VAT according to direct method

(4)

Closing entry

1.2.1.7. Presentation on financial statement
+ The presentation of accounting for revenue is showing on in code 01:
Revenue from sale of goods and rendering services
+ To prepare the “Revenue from sale of goods and rendering services”
for a fiscal year, the accountants bas on the following data: Previous year’s
income statement; Data on accounting books of account 511
+ Accountants base on the actual revenue earned in the period of the
revenue to prepare the “Revenue from sale of goods and rendering services”
in the column “Current year”- This amount is the one to be transferred from
acc 511 to acc 911 at the end of period. In the column “Previous years”,
accountants base on the previous year’s income statement.
1.2.2.

Financial Accounting for Revenue deductions

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1.2.2.1. Revenue deductions
Trade discounts, sales allowance, sales returns, excise taxes, export
duties, and value added taxes paid by the direct method are deducted from the
initial turnover for recognition of net income, which serves as a basis for
calculating business results in the accounting period.
Trade discounts:



A trade discount is the amount by which a seller reduces the retail price
of a product when it sells to a customer buying in large quantities. The
discount may arise on the volume of each shipment that the customer has
purchased, and may also arise on the total cumulative purchase volume over a
specified period of time depending on the seller's trade discount policy.
Sales allowance:



A sales allowance is a deduction for buyers of all or a part of inferior
goods, out-of-specification or outdated tastes. So the trade discount or the
sales allowance is a discount for the buyer, but arises in two completely
different cases.
Sales returns:



Sale return is the value of goods sold, determined to be consumed, which
are returned by customers and refused to be paid for several reasons such as:
violation of commitment; violation of economic contracts; lost, shoddy goods,
inferior goods; etc. When the enterprise recognizes the value of returned
goods, it is necessary to record a decrease in the cost of goods sold in the
period.
1.2.2.2. Supporting document
•

Sales allowance minutes

•

Payment slip.

•

Debt notices.

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Other original documents ...

1.2.2.3. Account Used
According to Circular 133/2016/TT-TCT, Vietnamese accounting
system uses account 511, Revenue deductions are recorded in the
debit side of account 511
1.2.2.4. Accounting for some major transactions
Acc 111, 112

Acc 511

Acc 911

Amount has been paid
Transfer revenue in the period

Acc 3331

Acc 131

If any
Amount has not paid

* COGS of returned goods
Acc 632

Acc 155, 156

Acc 111, 112

Acc 6421

Other related expenses

Diagram 1.2 - Accounting for Revenue deductions
1.2.2.5. Presentation on financial statement
+ The presentation of accounting for revenue is showing on in code 02:
Deduction

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+To prepare the “Deduction” for a fiscal year, accountants based on the
following data: Previous year’s income statement; Data on accounting books
of account 511
+Accountants base on the accumulated data which is araising in the debit
of account 511 in this period to prepare the column” Current years”. In the
column “Previous years”, accountants base on the previous year’s income
statement.
Financial Accounting for Cost of goods sold
1.2.3.1. The concept of cost of goods sold and inventory costing method
- The concept of cost of goods sold: Cost of goods sold is the total business
1.2.3.

costs related to the sale process, including the cost of inventory, selling
expenses and administration expenses.
- The inventory costing method:
 In case of goods purchased for immediate sale, not through warehouse
Cost of
goods sold



=

Actual purchase price of goods
purchased from a supplier

+

Cost related to the
purchase process

In case of issued goods for sale

Cost of
goods sold

=

Actual purchase price
of goods sold

+

Purchase charge
allocated to goods sold

- Actual purchase price of goods sold include the purchase price payable to
the seller and import tax (if any). In cases where an enterprise buys goods for
resale but the goods have to be processed or preliminarily processed, the
purchase value shall include processing and preliminary processing costs.
- Purchase charge allocated to goods sold includes costs directly related to
the purchasing process such as: transportation, loading and unloading costs;

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rent of warehouse and yard; natural losses in the norm arising through the
purchasing process…
- Purchase charge apportionment to goods sold at the end of the period
according to the following formula:
Unallocated
purchase charge

Purchase
charge
apportionment

=

to goods sold

Purchase charge
+

incurred in

at the beginning
Quantity

period
Quantity

(amount) of

(amount) of

beginning balance

+

Quantity
x

goods purchased

inventory

(amount)
of goods
sold

in period

Thus:
Purchase charge

Unallocated

Purchase

apportionment to

purchase

charge

ending balance

=

inventory

charge at the
beginning

+

incurred
in period

Purchase charge
–

apportionment
to goods sold

- According to the previous Decision No. 48/2006 / QD – BTC, the purchase
price of goods sold is calculated according to 1 of 4 methods: The weighted
average cost method; First-in, first-out method (FIFO); Last-in, first-out
(LIFO), Specific identification method. However, according to the current
Circular No. 133/2016 / TT – BTC, there are only 3 methods: The weighted
average cost method; First-in, first-out method (FIFO); and Specific



identification method.
The weight average cost method
The weighted average method assumes that the goods available for
sale/use have the same (average) cost per unit. Under this method, the cost of
of goods available for sale/use is allocated on the basis of the weighted –
average unit cost.

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Cost of goods
sold/used
Inside:

Academy Of Finance
Unts of goods

=

x

sold/used
Costs of

Weighted – average
unit cost

=

beginning goods
Units of

Weighted – average
unit cost

+

Costs of goods
purchased
Units of goods

+
beginning goods
purchased
- Advantages: Easy to apply, objective, not as subject to income
manipulation, and Provides income tax minimization during rising prices
- Disadvantages: Recent costs reflected in COGS, older costs reflected in


Inventory
First-in, first-out method
The FIFO method assumes that the earliest goods purchased are the first
to be sold/used. Under this method, the costs of the earliest goods purchased

are the first to be recognized as cost of goods sold/used.

- Advantages: Attempts to approximate physical flow of goods, and Ending
inventory close to current cost
- Disadvantages: Current costs not matched to current revenues
Oldest cost of goods are used with current sale price
In times of rapidly increasing prices, leads to gross profit and net income
distortions


Specification method
Being used mainly for items of inventory that differ from unit to unit,
such as used cars. This method tracks the actual physical flow of the good.
Each item of inventory is marked, tagged or coded with its “specific” unit
cost. This method is possible when a business has a limited variety of highunit-cost items that can be clearly identified.

- Advantages: Matches actual costs with revenue
- Disadvantages: May be costly to implement and maintain

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May lead to income manipulation
1.2.3.2. Supporting document
•

Invoices

•

Minutes of acceptance

•

Purchase orders…

•

Inventory issue note

•

Other documents which relating to rendering of services.

1.2.3.3. Account Used
Account 632 – “Cost of goods sold”.
This account is used to record the cost of goods sold and services.
1.2.3.4. Accounting for some major transactions
• If the company applies perpetual method
Acc 155, 156, 157
COGS

Acc 632

Acc 155, 156, 157

Cost of goods returned

Acc 627, 241, …

Acc 911

Other costs
Transfer expenses in the period

Diagram 1.3 - Accounting for COGS (perpetual method)
•

If the company applies periodic method

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Acc 155, 156, 157

Acc 632

Acc 155, 156, 157

Transfer opening balance
Transfer ending balance

Acc 631

Acc 911

Cost of finished
Transfer
goodsexpenses in the period

Acc 611
Cost of merchandise goods sold

Diagram 1. 4- Accounting for COGS (prepdic method)
1.2.4.

Financial Accounting for selling expenses and administrative

expenses
1.2.4.1. Financial Accounting for selling expnenses
1.2.4.1.1. Content of selling expenses
Selling expenses are a part of period cost, selling expenses are expenses
spent on selling goods in the accounting period.
Selling expenses include expenses incurred during the process of

selling goods/services, including offering, introduction and advertising
expenses, commissions, warranty expenses (except construction), storage,
packaging and delivery expenses, payment for sales persons (salaries and
allowances, etc.), social insurance, health insurance, trade union fees,
unemployment insurance, occupational accident insurance for sales persons;
costs of working materials and depreciation of fixed assets of sales
departments; external services (electricity, water, telephone, fax, etc.); other
cash expenses.
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