Accounting for sales and determination of business results at quang ninh cotto company limited

MINISTRY OF FINANCE
ACADEMY OF FINANCE

GRADUATION THESIS

ACCOUNTING FOR SALES AND DETERMINATION OF
BUSINESS RESULTS AT QUANG NINH COTTO COMPANY

LIMITED

Mentor : Tran Thi Ngoc Diep
Student : Pham Minh Anh
Class : 21.02.CLC
Major : Corporate Accounting

HA NOI - 2023

MINISTRY OF FINANCE
ACADEMY OF FINANCE

GRADUATION THESIS

ACCOUNTING FOR SALES AND DETERMINATION OF
BUSINESS RESULTS AT QUANG NINH COTTO COMPANY

LIMITED

Mentor : Tran Thi Ngoc Diep
Student : Pham Minh Anh
Class : 21.02.CLC
Major : Corporate Accounting

Code : 21

HA NOI - 2023

DECLARATION
I hereby declare that this thesis is my own work and effort and that has
not been submitted anywhere for any award. Where other sources of
information have been used, they have been acknowledged.
The data and results described in the thesis are derived from the actual
situation of the practice company.

Hanoi, 2023
Student

Pham Minh Anh

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ACKNOWLEDGEMENT
Firstly, I am deeply indebted to my supervisors Mac Tran Thi Ngoc
Diep, whose help, stimulating suggestions and encouragement helped me all
the time of research for and writing of this thesis.
I also want to thank Quang Ninh Cotto Company Limited 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 former Vice Director and Accounting
Manager as well as all seniors at Quang Ninh Cotto Company Limited who
gave and confirmed this permission and encouraged me to go ahead with my
thesis.
Especially, I would like to give my special thanks to my family whose

patient love enabled me to complete this work.

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TABLE OF CONTENTS
DECLARATION...............................................................................................i
ACKNOWLEDGEMENT................................................................................ii
TABLE OF CONTENTS.................................................................................iii
FLOW CHART...............................................................................................vii
SCREEN........................................................................................................viii
IMAGE.............................................................................................................ix
LIST OF ABBREVIATIONS...........................................................................x
INTRODUCTION.............................................................................................1
2. The purposes of the dissertation....................................................................2
3. The object and scope of the dissertation.......................................................2
4. Research Method...........................................................................................3
5. The structure of the dissertation....................................................................3
CHAPTER I: BASIC THEORY ISSUES ON SALE ACCOUNTING
GOODS AND DETERMINATION OF BUSINESS RESULTS.....................4
1.1. Necessity of organization of sales accounting and determination of
business results in enterprises...........................................................................4
1.1.1. Sales process...........................................................................................4
1.1.2 Sales results..............................................................................................5
1.1.3. Roles and duties of sales accounting and determination of sales results 5
1.2. Sales methods.............................................................................................7
1.2.1. Method of wholesale goods.....................................................................7
1.2.2 Method of retailing goods........................................................................8
1.2.3. Selling agent, consignment.....................................................................9
1.2.4. Selling goods to foreign countries (exporting goods); by two methods: 9

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1.3. Roles and responsibilities of sales accounting and determining sales
results................................................................................................................9
1.3.1. The role of sales accounting and determining sales results in business
management:.....................................................................................................9
1.3.2 Responsibilities of sales accounting and determining sales results.......10
1.4. Accounting methods for sales process and determination of business
results in commercial enterprises....................................................................11
1.4.1. Accounting of sales revenue and sales deductions................................11
1.5. Accounting of selling expenses and administrative expenses..................27
1.5.1 Accounting for other expense................................................................34
1.5.2. Accounting for corporate income tax....................................................35
1.6. Accounting for business result.................................................................38
1.6.1. Definition:.............................................................................................38
1.6.2. Accounting for business result..............................................................38
1.7. Presentation on financial statement..........................................................41
CONCLUSION OF CHAPTER 1...................................................................43
CHAPTER 2: ACTUAL SITUATION OF ACCOUNTING FOR SALES
AND DETERMINATION OF BUSINESS RESULTS QUANG NINH
COTTO COMPANY LIMITED.....................................................................44
2.1. Overview of Quang Ninh Cotto Company Limited.................................44

2.1.1. The formation and development of the company..................................44

2.1.2. Characteristics of production and business organization......................45

2.1.3 Organizational characteristics of accounting work in the company......50
.........................................................................................................................51

2.1.4. Organizational characteristics of accounting work in the company.....52

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2.1.4.2. Introduction of accounting software applied at Quang Ninh Cotto
company limited ...........................................................................................57
2.2. Actual situation of sales accounting and determination of business results
Quang Ninh Cotto company limited...............................................................60
2.2.1. Accounting for sales revenue and revenue deductions.........................60

2.2.2. Accounting for financial expenses at Quang Ninh Cotto company
limited..............................................................................................................91
2.2.3. Accounting for administrative expenses at Quang Ninh Cotto company
limited..............................................................................................................93
2.2.4 Corporate income tax expense accounting...........................................101
2.2.5. Accounting for corporate income tax..................................................102
2.2.6 Accounting determines business results...............................................104
2.2.7. Presenting sales accounting information and determining business
results at Quang Ninh Cotto Company Limited on financial statements......106
2.3. Assessing the current situation of sales accounting and determining
business results at Quang Ninh Cotto Company Limited.............................110
2.3.1. Advantages..........................................................................................110
2.3.2. Limit....................................................................................................113
CHAPTER 3: SOME SOLUTIONS TO IMPROVE ACCOUNTING FOR
SALES AND DETERMINATION OF BUSINESS RESULTS AT QUANG
NINH COTTO COMPANY LIMITED........................................................115
3.1. Orientation and development strategy at Quang Ninh Cotto Company
Limited..........................................................................................................115
3.1.1. Orientation at Quang Ninh Cotto Company Limited..........................115
3.1.2. Strategy at Quang Ninh Cotto Company Limited...............................116

3.2. Requirements and principles for completing Accounting for sales and
determining sales results at Quang Ninh Cotto Company Limited...............117

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3.2.1. Ensuring the compliance with policies and regimes...........................118
3.2.2. Ensuring the thriftiness and efficiency................................................121
3.2.3. Ensuring to be consistent with the production and business activities
and the development orientation of the enterprise........................................122
3.3. Perfection Principle................................................................................123
3.4. Some solutions to improve sales accounting and determine sales results at
Quang Ninh Cotto Company Limited...........................................................124
3.4. Conditions for implementing the solution..............................................128
3.4.1. From the business side........................................................................128
3.4.2. On the side of the state........................................................................129
3.5. Suggestion to improve the efficiency of management accounting for sales
Quang Ninh Cotto Company Limited...........................................................131
CONCLUSION OF CHAPTER 3.................................................................134
CONCLUSION.............................................................................................135
REFERENCE................................................................................................136

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FLOW CHART
Flow Chart 1.1: accounting entries for sales revenue and revenue deduction 15
Flow Chart 1.2: Accounting entries for cost of goods sold according to
perpetual inventory count................................................................................19
Flow chart 1.3: Cost of goods sold entries......................................................24
Flow chart 1.4: Sales cost accounting entries.................................................32
Flow chart 1.5: Enterprise management expenses entries...............................33

Flow chart 1.6 Accounting entry for other expenses......................................35
Flow chart 1.7: Accounting entries for income tax expense...........................38
Flow chart: 2.1: The company's organizational structure and management...51
Flow chart: 2.2: The accounting apparatus of the company...........................53
Flow chart 2.3: Organizational chart of accounting in the form of General.. .55
Flow chart 2.4: Accounting process................................................................58

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SCREEN
Screen 2.1: Working screen of SHIFT accounting software...........................59
Screen 2.2: Working screen for Account 511.................................................74
Screen 2.3: Supplier trial balance...................................................................76
Screen 2.4: Working screen for General ledger..............................................81
Screen 2.5: Working screen for Account 515.................................................85
Screen 2.6: Working screen for Account 632.................................................91
Screen 2.7: Working screen for account 635..................................................93
Screen 2.8: Working screen for account 642..................................................97
Screen 2.9: Salary payment sheet....................................................................99
Screen 2.10: Table Depreciation of Fixed Assets.........................................101
Screen 2.11: Working screen for account 821..............................................103
Screen 2.12: Working screen for Account 911.............................................107
Screen 2.13: Working screen for Statement of income.................................109

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IMAGE
Image 2.1: VAT Invoice No. 794....................................................................66
Image 2.2 : Receipt No.1012...........................................................................67
Image 2.3 VAT Invoice of Thuy Bao trading and transportation company

limited..............................................................................................................78
Image 2.4: accounting voucher No.201..........................................................84
Image 2.4: Inventory receiving voucher........................................................88
Image 2.5: VAT Invoice No. 128745..............................................................95
Image 2.6: payment voucher...........................................................................96
Image 2.7: closing entry................................................................................106

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LIST OF ABBREVIATIONS

Abbreviation Account Full phrase
Acc Corporate income tax
CIT Cost of goods sold
COGS Joint Stock Company
JSC Number
No. Value added tax
VAT Vietnam Dong
VND Goods dispatch notes
GDNs

x

INTRODUCTION

1. The urgency of the subject
In the past few years, with limitless efforts of enterprises and the support of
the State and foreign organizations, our country's economy has made higher
and higher development steps, Vietnam's economy has been increasingly
consolidated. However, recently, when the world economy is in crisis due to

the Covid-19 pandemic, our country is not unaffected. In that circumstance,
along with the consequences of measures to reduce aggregate demand under
the tightening monetary and fiscal policies, it has had a negative impact on
the purchasing power of the market and the economic growth rate. The
number of enterprises shutting down, going bankrupt and being dissolved has
increased rapidly since the end of 2021. Bad debts increased rapidly,
businesses lacked working capital, but banks could not increase credit. Even
with the efforts of the State to encourage business, the economy entered a new
year – 2022 in stagnation, with the growth rate below potential. Bear that in
mind, it is necessary to always have new business strategies and measures to
mobilize and effectively use resources, exploit market opportunities well,
thereby improving business performance, competitiveness, and increasing the
life of enterprises, especially at time of downs right now.
Any business, whether producing or trading, must be interested in the
consumption of its products, goods and services, because this is the output of
the production process or the trading of the enterprise, which is recorded in
the form of sales revenue after this stage. The existence and development of
an enterprise depends greatly on whether the enterprise can sell its products or
not. Consumption of products generates revenue, this revenue must offset
production costs to make a profit, which is the foremost and main goal that

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every business aims for. It is not only the key to determine growth, but it also
determines the competitiveness of enterprises. Only when the product
consumption is done well, the enterprise has revenue, thus creating the
conditions to reproduce, increasing the accumulation source for the business
itself and for the whole society. In order to manage well and do business
effectively, enterprises must know how to use accounting as an important and
indispensable management tool. Especially to well manage the sales of

products and goods, the consumption accounting work must bring into full
play its roles and functions.
To stabilize revenue and business efficiency, managers of every business need
information of the nature of sales management in the accounting department,
as well as to control and organize closely at the company. Consumption
accounting is considered crucial by every business.
Realizing and bearing in mind the importance of revenue accounting and
determining business results for businesses, I have decided to choose and do
research "Accounting revenue and determining business results" at Quang
Ninh Cotto Company Limited to do my graduation thesis.
2. The purposes of the dissertation

Purposes of the research: To gain an in-depth understanding of the
organization of sales accounting and determination of business results, giving
an overview of the achievements and shortcomings in sale accounting work
and determining business results, then make suggestions to improve the
accounting and sales activities and determination of business results at Quang
Ninh Cotto Company Limited.
3. The object and scope of the dissertation

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- Research object: Accounting for sales and determination of business results
at Quang Ninh Cotto Company Limited.
- Research scope:
+ About the content: Focusing on researching the actual situation of the sales
accounting and determining business results at Quang Ninh Cotto Company
Limited from the perspective of financial accounting
+ About space: Research at Quang Ninh Cotto Company Limited located in
Quang Ninh City.

+ About time: Researching theoretical issues and surveying current situation
documents at Quang Ninh Cotto Company Limited in 2022, 2023.
4. Research Method

Research is based on the methodological basis of dialectical materialism and
historical materialism. Specific research methods include using a combination
of theoretical research, practical surveys, interviews, expert consultation,
statistical data, analysis, and comparison to collect information data and
document processing (collecting primary and secondary documents,
synthesizing and processing collected documents using descriptive statistics,
qualitative analysis, and comparing the actual situation to the theoretical basis
to deduce, infer, and present research findings.
5. The structure of the dissertation

In addition to the introduction and conclusion, the dissertation consists of
three chapters:
Chapter 1: Basic theory issues on sale accounting goods and
determination of business results
Chapter 2: Actual situation of accounting for sales and determination of
business results at Quang Ninh Cotto Company Limited

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Chapter 3: Several solutions to improve accounting for sales and
determination of business results at Quang Ninh Cotto Company Limited

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CHAPTER I: BASIC THEORY ISSUES ON SALE ACCOUNTING
GOODS AND DETERMINATION OF BUSINESS RESULTS

1.1. Necessity of organization of sales accounting and determination of business
results in enterprises.

Today, in the competitive free market economy, the business environment is
extremely exciting and complex. The competition between economic sectors is very
fierce, every business wants to be first in the race for profits. Because profit is the
highest goal of any business, it reflects the business performance of the business,
and is also a condition that ensures business maintenance and development. To do
so, not only depends on the management level of the business owner, accounting
work also occupies an important position, especially sales accounting and
determining business results.
1.1.1. Sales process

Selling is the last step in the business process of commercial enterprises. It is
the transfer of ownership of goods to customers, businesses collect money or have
the right to collect money. Through sales, the capital of a commercial enterprise is
transformed from the form of goods in kind to the form of monetary value, the
enterprise can recover the capital spent, cover the costs, and generate profits for the
purpose also they continue to invest in business expansion.

The sale process is considered completed when two conditions are met:
- Delivery to the buyer.
- Buyer pays or accepts payment.

That is, the sale only occurs when the goods are delivered, money is received
or the buyer accepts to pay. These two jobs can happen at the same time, but are
mostly separate. Goods can be delivered first, money received later or receive
money first and then deliver later. That leads to the fact that sales revenue and cash
from sales are not concurrent.

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When making the exchange of money, the business must spend expenses
called selling expenses. Cash from sales is called sales revenue.

Funded sales represent the entire purchase amount that the buyer paid for the
business.

Distinguishing sales revenue and cash from sales to help businesses determine
the exact time to end the sales process, help the management department find a
reasonable and effective payment methods, actively use of capital to bring the
biggest profit for the business.
1.1.2 Sales results

Business results are the final results of business and other activities of an
enterprise after a certain period of time, expressed as a total profit or loss.

Determining business results is the comparison of expenses spent and income
achieved in the whole business process. If the income is greater than the expenses,
the business makes the profit, otherwise, the business suffers a loss. The
determination of business results is usually carried out at the end of an accounting
period of a month, quarter, or year, depending on business characteristics and
management requirements of each enterprise.

Gain (loss) Net sales Cost of Financial Financial Selling

from ordinary = revenue - good + income - operating - expense

business sold expenses

activitiesordin

ary business

activities

Net sales = Sales – Deductions.
1.1.3. Roles and duties of sales accounting and determination of sales results
1.1.3.1. The role of sales accounting and determining sales results

Selling is not by itself a process of production and business, but it is a
necessary stage of social reproduction. The end result of commerce is measured by
the flow of goods, which depends on sales process. The more goods a business can

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sell, the more powerful it becomes. Thus, sale is a decisive factor for the existence
and development of businesses.

Through the market, sales contribute to regulating the balance between
production and consumption, between goods and money in circulation, between
consumer demand and ability to pay.

Sales is the basis of revenue, profit and income generation to cover expenses,
preserve and develop business capital through sales methods suitable to customer’s
requirements.

Simultaneously with the consumption of goods, determining the correct
business results is the basis for evaluating the final efficiency of business activities

in a certain period of the enterprise. Accurately determining business results helps
businesses determine business directions for the next period, and at the same time
provides data to interested parties, attracts investment in the business and helps the
business maintain its reputation on the market.

So, sales play an extremely important role in making profits of businesses in
particular, and in the development of the country's general economy. Therefore, the
organization of sales and accounting of the sales process at the enterprise is
extremely necessary. Sales accounting and determining business results are good to
ensure accurate information is provided to business managers and stakeholders,
helping businesses ensure the existence and its development.
1.1.3.2. Duties of sales accounting and determining sales results

Sales accountants need to ensure the following tasks:
- Record and reflect promptly, fully and accurately the sales situation of the
enterprise in the whole period in terms of both value and quantity of goods sold in
total and on each item, not the sales location, each sales methods.
- Calculate and accurately reflect the total payment price of goods sold, including
sales revenue, output VAT of each group of items, and each invoice.
- Accurately determine the actual purchase price of the goods sold, and at the same
time allocate purchasing costs to the consumed goods to determine the sales results.

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- Check and urge the collection and management of money, manage debtors, track
details of customers and outstanding amounts. Urging and inspecting to ensure
sufficient and timely collection of sales proceeds to avoid unreasonable capital
appropriation.
- Provide necessary information about the sales situation, serving the direction and
operation of the business.

- Advise leaders on solutions to promote the sales process.
1.2. Sales methods
1.2.1. Method of wholesale goods
- It is a method of selling goods to commercial units, manufacturing enterprises, etc.
to sell or to process and sell.
- Features:

+ Goods are still in the field of circulation, not yet in the field of consumption.
+ Prices are sold in batches or sold in bulk.
+ Price fluctuates depending on sales volume and payment method.
* Warehouse wholesale method: is a wholesale method in which the goods sold
must be exported from the enterprise's warehouse.
- Wholesale through the warehouse in the form of direct delivery: the buyer sends a
representative to the warehouse of the enterprise to receive the goods. Enterprises
export goods to sell and deliver them directly to buyers. After the buyer's
representative receives the goods, pays the money or accepts the debt, the goods are
determined to be sold.
- Wholesale through warehouses in the form of delivery: based on signed contracts
or orders, enterprises export goods, use their own means of transport or outsource,
and deliver goods to the buyer's warehouse or the buyer's location specified in the
contract. Reconciliation and sale still belong to the ownership of the enterprise, only
when the buyer confirms, pays or accepts payment, the transferred goods will be
considered as sold, the seller loses ownership of the goods. Shipping costs are
agreed upon by both parties in the contract.

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