TOPIC ACCOUNTING FOR SALES AND DETERMINING INCOME SUMMARY AT THE MINH HANH TRADING SERVICE CO , LTD

DUY TAN UNIVERSITY
INTERNATIONAL SCHOOL
---------------------------

UNDERGRADUATE THESIS
TOPIC: ACCOUNTING FOR SALES AND DETERMINING INCOME
SUMMARY AT THE MINH HANH TRADING & SERVICE CO., LTD

STUDENT
MENTOR
CLASS
NUMBER

: HA THI UYEN PHUONG
: MBA. HOANG ANH THU
: K24PSUKKT
: 24202505584

DA NANG , 2022
ABSTRACT


In current competitive market, business activities take place in two phases of buying
and selling. Thus, in business activities, selling is a basic business, business cycle can
only take place smoothly when sales are well organized, increasing profitability.
Through this thesis, I hope to be able to approach and analyze the basic issues
related to accounting for sales and determining business incomes at Minh Hanh
Trading & Service Co., Ltd in a certain period of time.
To go deeper into understanding the issues related to the accounting at Minh
Hanh Trading & Service Co., Ltd I have used the research method:
• Research method, reference: Read, refer, learn the textbooks compiled by

lecturers to teach; research the documents collected during internship in the company
to serve as a theoretical basis for the research topic.
• Methods interview: Used during the internship, helping me answer my
questions and understand better about the accounting work at the Company, thereby
also helping me accumulate practical experience. sacrifice for yourself.
One of the main purposes of the topic is to realize how important of accounting
for sales and income summary, particularly at Minh Hanh Trading & Service Co., Ltd.
This helps me have more overview on the work of accounting for sales and
income summary. Therefore, I can propose solution to improve the consumption
accounting of businesses in particular and to complete my undergraduate thesis.


DISCLAIMER
I certify that the attached thesis is my original work. No other person’s work
has been used without due acknowledgement. Except where I have l clearly stated that
I have used some of the material, it has not been presented by me for examination in
any other course or subject at this or any other institution.
I understand that the work submitted may be reproduced and/or communicated
for the purpose of detecting plagiarism. I understand that should this declaration be
false; I am libel to be penalized under the Duy Tan University regulations.
Signature:__________________________Date: ______________________


ACKNOWLEDGEMENT
First of all, I would like to express the sincerest thanks to all faculty of Duy Tan
University, especially lecturers from Accounting and Auditing Department and
International School Department, who taught and imparted valuable knowledge during
4 years of study and practice at the university.
I sincerely thank Ms. Hoang Anh Thu, who directly guide for giving me
insightful suggestions and feedback for this university graduation thesis. Without her

guidance, I was not be able to complete it.
I would also like to thanks the officers in the accounting department in Minh
Hanh Trading & Service Co., Ltd, who enthusiastically helped me and create
opportunities to further study my topic in the process of implementing this thesis.
However, due to time and knowledge is still limited so this thesis cannot avoid
the shortcomings. I am looking forward to receiving comments and contribution of our
teachers and officer in the business to complete


TABLE OF CONTENTS
ABSTRACT..................................................................................................................i
DISCLAIMER............................................................................................................iii
ACKNOWLEDGEMENT...........................................................................................4
LIST OF ABBREVIATIONS......................................................................................7
LIST OF EXHIBIT......................................................................................................8
LIST OF FIGURES.....................................................................................................9
....................................................................................................................................... 9
RESEARCH PROPOSAL...........................................................................................1
CHAPTER 1: LITERATURE REVIEW ON ACCOUNTING FOR SALES AND
INCOME SUMMARY IN THE COMPANY.............................................................3
1.1. GENERAL OVERVIEW OF ACCOUNTING FOR SALES AND INCOME
SUMMARY............................................................................................................... 3
1.2. ACCOUNTING FOR SALES...........................................................................6
1.2.1.1. Vouchers........................................................................................................... 6
1.2.1.2. Detailed accounting.........................................................................................6
CHAPTER 2: METHODOLOGY OF ACCOUNTING FOR SALE AND
INCOME SUMMARY AT MINH HANH TRADING & SERVICE COMPANY 24
2.1. INTRODUCTION OF MINH HANH . TRADING & SERVICE
COMPANY.............................................................................................................24
2.1.2.3.2 Functions and duties of accounting operations......................................28

2.2. ACCOUNTING METHODS OF SALES AND DETERMINATION OF
BUSINESS RESULTS AT MINH HANH TRADING & SERVICES CO., LTD
.................................................................................................................................. 30
2.2.2. Revenue deduction accounting....................................................................34
2.2.4.2. Accounting for administrative expenses...................................................41
CHAPTER 3: SOME SOLUTIONS TO IMPROVE THE ACCOUNTING FOR
SALES AND INCOME SUMMARY AT THE MINH HANH TRADING &
SERVICE CO.,LTD...................................................................................................61


3.1. SOME GENERAL COMMENTS ON ACCOUNTING FOR SALES AND
INCOME SUMMARY AT AT THE MINH HANH TRADING & SERVICE
CO.,LTD.................................................................................................................. 61
3.2. SOME SUGGESTIONS FOR IMPROVEMENT OF ACCOUNTING FOR
SALES AND INCOME SUMMARY AT THINH HUNG AUTOMOTIVE
COMPANY LIMITED...........................................................................................63
CONCLUSION..........................................................................................................65
BIBLIOGRAPHY & REFERENCES......................................................................66


LIST OF ABBREVIATIONS
VAT

: Value added tax

COGS

: Cost of goods sold

No

: Number


LIST OF EXHIBIT


LIST OF FIGURES


RESEARCH PROPOSAL
1.Reason for choosing a reseach topic
Currently, the world economy in general and Vietnam in particular have changed
a lot, especially after the epidemic period. There are many changes
The change of the economy has a great influence on businesses and vice versa,
the activities of enterprises also have a great influence on the economy.
Any business, whether large or small, operating in the field of production and
trade, must pay attention to the consumption stage. Good sales performance and
defining results are important in determining business performance.
In order to achieve high efficiency in production and business activities of
enterprises, accounting is an important and effective management tool, responsible for
collecting and processing information accurately and transparently. With regard to
product consumption, accountants must closely reflect and monitor the costs and
aggregates related to the consumption to determine reasonable business results.
Through the process of product consumption, business managers can grasp the
situation of products, know the flow of their goods and products, better understand the
needs of the market. Thereby helping them make more informed decisions and make
the right business strategies
Stemming from the above issues, to learn more about consumption accounting
and accounting methods to determine business results at Minh Hanh Trading &

Service Co., Ltd.
2.Research questions
• Systemize the theoretical basis of Accounting for sales and income summary of
the company.
• Find out, analyze current situation of Accounting for sales and income
summary
Comment and propose a number of solutions to contribute to perfecting the
Accounting for sales and income summary
3. Subject and Scope of research
Subject: Consumption accounting and business determination
4.Research methods
• Collecting accounting data of the company

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• Observing, interviewing, learning form staff of accounting department in the
company
• Comparing, analyzing and synthesizing data in the company
• Find out information on newspaper, books, internet, …
• Following to the Circular 133 of the Ministry of Finance
5. Significance of the study:
The thesis has 3 chapters:
Chapter 1: Literature review about Accounting for sales and Income Summary in
the Company
Chapter 2: Methodology of Accounting for sales and Income Summary at Minh
Hanh Trading & Service Co., Ltd.
Chapter 3: Some solutions to improve the Accounting for sales and Income
Summary at Minh Hanh Trading & Service Co., Ltd.

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CHAPTER 1: LITERATURE REVIEW ON ACCOUNTING FOR SALES
AND INCOME SUMMARY IN THE COMPANY
1.1. GENERAL OVERVIEW OF ACCOUNTING FOR SALES AND
INCOME SUMMARY
1.1.1. Definition for revenue
1.1.1.1. Definition for revenue
Revenue means the total value of economic benefits gained by an enterprise in an
accounting period, which arise from the enterprise’s normal production and business
operations, contributing to increasing the owner’s capital. (Bộ Tài Chính , 2001)
1.1.1.2. Conditions for recognizing sales and service provision
• The enterprise has transferred the majority of risks and benefits associated with
the right own the products or goods to the buyer.
• The enterprise no longer holds the right to manage the goods as the goods
owner, or the right to control the goods.
• Turnover has been determined with relative certainly.
• The enterprise has gained or will gain economic benefits from the good sale
transaction.
• It is possible to determine the costs related to the goods sale transaction. (Bộ
Tài Chính , 2001)
1.1.2. Definition for revenue deduction
1.1.2.1. Definition for trade discounts
A trade discount means a reduction of the listed price granted by the selling
enterprises to the buyers of large volumes of goods.
(Bộ Tài Chính , 2001)
1.1.2.2. Definition for sales return
Sales return means a price reduction granted to the buyers due to the goods’
inferior quality, wrong specifications or old-fashionable.

(Bộ Tài Chính , 2001)

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1.1.2.3. Definition for sales allowance
Sales allowance means the volume of goods sold already determined as
consumed, but then returned by the buyers who declined making payment therefor.
(Bộ Tài Chính , 2001)
1.1.3. Definition for net sales
Net sales are determined under the agreement between the enterprise and the
buyer or the asset user. It is determined as the reasonable value of received or
receivable amounts minus (-) trade discount, sales return and allowance. (Bộ Tài
Chính , 2001)
1.1.4. Definition for income summary
An income summary is a temporary account into which the balances of the
revenue and expense accounts are transferred at the end of the accounting period. The
net amount in the income summary account is the profit or loss for that period. (Bộ
Tài Chính , 2001)
1.1.5. The method of sales in business
1.1.5.1. Direct consumption method
Direct consumption method is a method of delivering goods to buyers directly
at warehouse, at stalls or at production departments. Goods when delivered to buyers
are officially considered as consumption and the selling unit loses ownership of these
goods.
(Warrent, C.S., Reeve, J.M., & Duchac, J.E., 2018)
1.1.5.2. Consumption waiting for approval method
The seller delivers the goods to the buyer according to the location stated in the
contract. Goods sent remain owned by the unit, only when the money is received or
the purchaser accepts (has been checked and handed over), the number of goods

accepted would be officially considered as consumption.
(Warrent, C.S., Reeve, J.M., & Duchac, J.E., 2018)

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1.1.5.3. Wholesaler shipping method
Wholesaler shipping method is straight, not through warehouse: this method
only applies to commercial enterprises. Purchased goods are not warehoused and
directly transferred to the buyer. The trading company must make payment with both
the seller and the buyer or only as an intermediary to enjoy the commission.
(Warrent, C.S., Reeve, J.M., & Duchac, J.E., 2018)
1.1.5.4. Consignment sales method
Consignment sales method, the agent: The seller shall deliver goods to agents
and individuals acting as agents. The number of goods sent to the agent is still owned
by the unit, only when receiving the notice of the agent (or beyond the prescribed time
limit), the number of goods sent to the agent is officially considered as consumption.
Under this method, shippers must pay commissions to agents (including selling
expenses) and agents enjoy commissions (calculated into turnover).
(Warrent, C.S., Reeve, J.M., & Duchac, J.E., 2018)
1.1.5.5. Installment sale method
Installment sale method: This method when the goods are delivered to the
buyer, the amount of the delivered goods is considered for consumption, the sales
revenue is calculated according to the immediate pay sale price, the customer only
pays a part of the purchase amount to receive the goods and the rest is paid on
installment for a period of time and bear interest as specified in the contract. Interest
due to deferred payment or installment will be included in financial income.
(Warrent, C.S., Reeve, J.M., & Duchac, J.E., 2018)
1.1.5.6 The task of the sales and determine the business results
• Fully and timely record the volume of finished products, goods sold and

internal consumption, correctly calculate the cost of goods sold, cost of sale and other
expenses in order to correctly determine the result of the sale. goods of the business.
• Provide timely information about the sales situation to serve the leaders and
executives of the commercial business activities.
• Checking and monitoring sales accounting progress, profit planning, identifying
sales results for financial reporting and business management.

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After the sales results are available, the accountant will analyze and evaluate the
sales results of the business in general and of each item, each department in particular;
identify and calculate.
(Warrent, C.S., Reeve, J.M., & Duchac, J.E., 2018)
1.2. ACCOUNTING FOR SALES
1.2.1. Accounting for revenue from the sales and providing service
1.2.1.1. Vouchers
• Sales invoice
• VAT invoice
• Economic contractions, purchase order, receipt of delivery.
• Payment voucher: Receipt, Check, Credit note
1.2.1.2. Detailed accounting
a. Detail books
Form sales details open for the subsidiary ledger account No 511 -Sales revenue:

Exhibit 1 1Sales Subsidiary Ledger of Account No 511

b. Recording method

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• Column A: To write the date which an accountant writes into the book
• Column B, C: To write the number sign and date of the document which used to
write into the book
• Column D: To write the content of the accounting event accrued
• Column E: To write the contrast account
• Column 1, 2, 3: To write the quantity, unit price, total price of the product
which supplied by the business
• Column 4: To write VAT accounted base on the sales of the business
• Column 5: To write the sales deduction like: Trade discounts, sales return and
allowance
• After adding “The number accrued”, counting “Net sales” then write into the
column 3. [Column 3 = Column 3 – (Column 4 + Column 5)]. “Cost of goods sold”:
Write the cost of goods sold of the product which sold/provided.
• “Gross margin” = “Net sales” – “Cost of goods sold”
(Trịnh Đức Vinh Và Cộng Sự , 2016)
1.2.1.3. General accounting
a. Account used
Accounting for revenue from the sales and providing service uses Account No
511 – Sales Revenue.
Structure and content of Account No 511:
DEBIT
• Indirect taxes payable
• Sales returns transfer end-of-period
• Sales allowances transfer end-of-period
• Trade discounts transfer end-of-period
• Sales transfer to Account No 911

CREDIT

• Sales of goods, products, property investment and provides services of the
business done in the period.
Account No 511 no balance
Account No 511 has four accounts level 2:

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• Account No 5111 – Sale of goods
• Account No 5112 – Finished product sales
• Account No 5113 – Services revenue
• Account No 5118 – Other sales revenue
(Trịnh Đức Vinh Và Cộng Sự , 2016)
b. Accounting method
Following the Circulars 133/2016/TT-BTC

Figures 1 1Accounting for sales

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1.2.2. Accounting for cost of goods sold
1.2.2.1. Vouchers
• Inventory delivery voucher
• VAT invoice: Used when the goods shipped straight from suppliers

Exhibit 1 2 Sales Subsidiary Ledger of Account No 632
b. Recording method
• Column A: To write the date which an accountant writes into the book
• Column B, C: To write the number sign and date of the document which used to

write into the book
• D: To write the content of the accounting event accrued
• Column E: To write the contrast account
• Column 1: To write the total amount of the accounting event accrued
• From column 2 to column 8: Based on the content of the accounting event
accrued to write into each suitable expense column to satisfy the request of each
account of the business
• The row of “Ending inventory” determined following:
Ending inventory = Beginning inventory + Debit accrued – Credit accrued
(Trịnh Đức Vinh Và Cộng Sự , 2016)

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1.2.2.2 General accounting
a. Account used
Accounting for Cost of goods sold uses account No 632 - Cost of goods sold
(COGS). Structure and content of account No 632:
DEBIT
• COGS during the period
• Costs of raw materials, labor costs in excess of normal levels and manufacture
overhead expenses fixed non-allocated are included in the COGS in the period
• Loses of inventory after deducting the compensation due to personal
responsibility
• Provision for devaluation of inventory
• Cost of construction and homemade fixed assets exceeding the normal level is
not included in the original cost of self-constructed and self-made tangible fixed assets
CREDIT
• Transfer the cost of products, goods and services sold during the period to
Account No 911

• The reversal of provision for devaluation of inventories at the end of the fiscal
year

• Value of returned goods sold
• The trade discount, sales discount received after the purchase has been

consumed
• The refund of accrued expenses for estate goods is determined to be sold. It will
be refunded when selling goods
Account No 632 has no closing balance
(Trịnh Đức Vinh Và Cộng Sự , 2016)
b. Accounting method
Following the Circulars 133/2016/TT-BTC

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Figures 1 2 : Accounting for cost of goods sold
1.2.3. Accounting for Operating expenses
1.2.3.1. Vouchers
• Payment table
• Allocation table wages and social insurance
• Depreciation Expense related to Selling Department & Administrative
Department
• VAT invoice
• Inventory delivery voucher

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1.2.3.2. Detailed accounting
a. Detail books
Accountants use the book model same like the accounting for the cost of goods
sold.
b. Recording method
Similarly, the accounting method of the accounting for the cost of goods sold.
Structure and content of account No 642:
1.2.3.3. General accounting
a. Account used
Accounting for business expenses uses account No 642 - Operating Expenses.
DEBIT
• Administration and business costs incurred in the period
• Provisions for bad debts and payable provisions
CREDIT
• The amount recorded to reduce the cost of business administration
• Reversal of provisions for doubtful debts and provisions for payables
• Transfer administrative expenses to Account No 911 "determine business
results"
Account No 642 has no balance
Account No 642 – Operating expenses has two accounts level 2:
• Account No 6421: Selling Expenses
• Account No 6422: Administrative Expenses
(Trịnh Đức Vinh Và Cộng Sự , 2016)
b. Accounting method
Following the Circulars 133/2016/TT-BTC

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Figures 1 3 Accounting for Operating expenses

1.2.4. Accounting for financial expenses
1.2.4.1. Vouchers
• Debit Note
• Notice of interest payable
1.2.4.2. Detailed accounting
a. Detail books
The form opens for subsidiary Ledger of account No 635- Financial activities
expenses:

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Exhibit 1 4 : Subsidiary Ledger of Account No 635
b. Recording method
• Column A: To write the date which an accountant writes into the book
• Column B, C: To write the number sign and date of the document which used to
write into the book
• Column D: To write the content of the accounting event accrued
• Column E: To write the contrast account
• Column 1,2: To write the amount that accrued of the accounting event into debit
or credit
• Column 3,4: To write the debit or credit balance after finish each accounting
event

• The row of “Beginning inventory” is the number amount in the “Ending

inventory” of the last period
(Trịnh Đức Vinh Và Cộng Sự , 2016)
1.2.4.3. General accounting
a. Accounting used

Accounting for financial expenses uses Account No 635 – Financial activities
expenses.
Structure and content of Account No 635:

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DEBIT
• Interests expenses, interests on deferred payment, interests financial leasing,
property lease
• Loss of selling foreign currencies
• Discount payment for buyers
• Losses due to liquidation and sale of investments
• Loss of exchange rate arising in the period, foreign exchange losses due to the
year-end re-evaluation of monetary items in foreign currencies
• Number of provisions for devaluation of trading securities, provision for loss of
investment in other units
• Expenses of other financial investment activities
CREDIT
• Refunding provision for devaluation of trading securities, provision for loss of
investment in other units
• Amounts recorded to reduce financial expenses
• At the end of period, transfer all financial activities expenses incurred in the
period to determine business results
Account No 635 has no closing balance
(Trịnh Đức Vinh Và Cộng Sự , 2016)
b. Accounting method

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Following the Circulars 133/2016/TT-BTC

Figures 1 4 Accounting for financial expenses
1.2.5. Accounting for financial incomes
1.2.5.1. Vouchers
• Receipts of interest payment
• Credit note
1.2.5.2. Detailed accounting
a. Detail books
Detail book form open for Account No 515 – Financial income is similar to the
detail book of Account No 635 – Financial activities expenses.
b. Recording method
Accounting method of Account No 515 – Financial activities income is similar to
Account No 635 – Financial activities expenses.

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