graduation thesis accounting for revenue and evaluating business results at catel company limited

3.1 The principle for improving Accounting system in Catel Company Limited ...105 3.2 Some suggestions for improvement of accounting for revenue and business result in Catel Company Limi

ACCOUNTING FOR REVENUE AND EVALUATING BUSINESS RESULTS ATCATEL COMPANY LIMITED

HA NOI – 2021

I hereby declare that this thesis is my own work and effort and that has notbeen submitted anywhere for any award Where other sources of information havebeen used, they have been acknowledged.

The data and results described in the thesis are derived from the actualsituation of the practice company.

Hanoi, 2021

Le Minh Khoi

2

1.1.3 Characteristics and importance of revenue and business result 11

1.2 Accounting for revenue and business result in a commercial company111.2.1 Methods of sales and payment 11

1.2.2 Accounting for revenue in commercial companies 13

1.2.3 Accounting for revenue deduction 18

1.2.4 Accounting for cost of goods sold 21

1.2.5 Accounting for selling expenses and administrative expenses 28

1.2.6 Accounting for financial income and financial expenses 34

1.2.7 Accounting for other income and other expenses 40

1.2.8 Accounting for corporate income tax 45

1.2.9 Accounting for business result 48

1.3 Accounting for revenue and business result in application with

accounting software 51

1.4 Presentation on F.S 53

1.4.1Presentation Acc 511 on financial statement 53

1.4.2Presentation Acc 632 on financial statement 53

1.4.3Presentation Acc 642 on financial statement 54

1.4.4Presentation Acc 515 and Acc 635 on financial statement 54

1.4.5Presentation Acc 711 and Acc 811 on financial statement 54

1.4.6Presentation Acc 821 on financial statement 55

Conclude of Chapter 1: GENERAL THEORY ON ACCOUNTING FOR

REVENUE AND BUSINESS RESULT 55

CHAPTER 2: ACCOUNTING FOR REVENUE AND BUSINESS RESULT IN

CATEL COMPANY LIMITED2.1 Overview about Catel Company Limited .57

2.1.1 Introduction of The Establishment and development of Catel CompanyLimited .57

2.1.2 Organizations in Catel Company Limited 60

2.1.3 Accounting organization in Catel Company Limited 61

2.2 Accounting for revenue and business result in Catel Company Limited 67

2.2.1Accounting for revenue 67

2.2.2 Accounting for cost of goods sold 78

2.2.3 Accounting for selling and administrative expenses 83

2.2.4 Accounting for financial income 90

2.2.5 Accounting for Financial expenses 94

2.2.6 Accounting for other income and other expense 95

2.2.7 Accounting for corporate income tax 95

In which: 95

2.2.8 Accounting for business results 96

2.2.9 Presentation on Financial Statement 99

2.3.1 Some evaluations of Accounting system in Catel Company Limited 102

3.1 The principle for improving Accounting system in Catel Company Limited .105

3.2 Some suggestions for improvement of accounting for revenue and business result in Catel Company Limited 106

3.3 Requirements for improving Accounting system in Catel Company Limited .107 CONCLUDE 108

LIST OF ABBREVIATIONS

VAS Vietnam accounting standard

VAT Value – added tax

C/O Certificate of origin C/I Certificate of Inspection

PKC “Phieu ket chuyen” – Transfer notes

CIT

1 Rationale of choosing the topic

Along with the development of the world economy, in order to survive and develop,businesses must conduct production and business activities effectively but the finaleffect must be reflected through the target of total profit from business operationsand its rate To achieve the above purpose, the sales revenue must be greater thanthe expense (including cost of goods sold, cost of sale, and management expense).So, sales revenue and sales results are two sides of a problem, they have aproportional relationship with each other in which revenue is the prerequisite andfinal decision of the business In business activities, in addition to purchasinginputs, producing or purchasing to create products, enterprises must sell to collectmoney to create their revenue This is an important part of the enterprise's survival.In order to catch this part, students should have an understanding of the process oforganizing accounting activities in small and medium-sized enterprises, how todetermine revenues, expenses and production and business results of each type.From the importance of the above issue, through the internship period CatelCompany Limited, with the help of the Board of Management, Finance -Accounting Department, together the careful guidance of MSC Pham Phuong Anh,I would like to do a research about the topic: “Revenue- expenses and determiningbusiness results at Catel Company Limited”.

2 Aims of the study

Through studying this topic, we can evaluate the organization, revenuemanagement, expenses, and business results of enterprises in services enterprises ingeneral and Catel Company Limited in particular and consider the implementationof the accounting system of the enterprise Is that accounting system different fromwhat we were learned in university? Thereby, the advantages and disadvantages ofthe accounting system can be drawn, and some recommendations are proposed to

contribute to the improvement of the accounting system in determining business results for the enterprise.

3 The subject and scope of the study

Accounting for revenue, expenses, and business results from the perspective of financial accounting at Catel Company Limited in 2021

- Scope of the study: Catel Company Limited- Scope of time: the year 2021

- Scope of figures: the year 2021

4 Research methods

To complete this thesis, I used the following research methods:

-Research and reference materials: Read, refer to the curriculum compiled byteachers, books, good essays of senior students at the university library to have abasis for the research topic.

- Interview method: I applied this method during the internship period It helps meanswer questions and have a better understanding of accounting work at thecompany It also helps me to gain practical experience for myself.

- Data collection and processing method: Applied to collect company data, then alldata will be processed and selected to put into the thesis accurately, scientifically,giving readers the most effective information.

- Statistical method: Based on statistics to analyze, compare and contrast from it topoint out the points and disadvantages in the business in order to find out the causesand solutions, therefore apply remedies to the company in general and theaccounting work, determine business results in particular.

Structure of thesis

The content of the thesis consists of 3 chapters:

Chapter I: General theory of accounting for revenue, expenses and business results

in enterprises.

Chapter II: Practical situation of accounting for revenue, expenses and business

results at Catel Company Limited

Chapter III: Solutions to improve accounting for revenue, expenses and business

results at Catel Company Limited

Due to limited time and ability, my writing could not avoid mistakes I look forwardto receiving the reviews, comments and direct advice from MSC Pham PhuongAnh, other teachers in Accounting Department, my mentors and my friends toimprove my writing.

Thank you sincerely!

CHAPTER 1: GENERAL THEORY ON ACCOUNTING FOR REVENUE AND BUSINESS RESULT IN ENTERPRISES1.1

Importance of accounting for revenue and business result in acommercial company

1.1.1 Definition of revenue and business results

Income is defined in the Framework for the Preparation and Presentation ofFinancial Statements (also defined in the VAS01- the general standard) as increasesin economic benefits during the accounting period in the form of inflows orenhancements of assets or decreases of liabilities that result in increases in equity,other than those relating to contributions from equity participants Incomeencompasses both revenue and gains Revenue is income that arises in the course ofordinary activities of an entity and is referred to by a variety of different namesincluding sales, service delivery fees, interest, dividends, and royalties:

(a) Sales: Sales of products made by the enterprise and sale of purchased goods;(b) Service delivery: Performance of the agreed contractual work in one or more accounting periods;

(c) Interests, royalties, dividends, and shared profits.

Revenue is the gross inflow of economic benefits during the period arising in thecourse of the ordinary activities of an entity when those inflows result in increasesin equity, other than increases relating to contributions from equity participants.(VAS 14 - Revenue and other incomes).

Revenue is recognized when it is probable that future economic benefits will flow tothe entity and these benefits can be measured reliably.

- Non-operating revenues are earned from some side activity, including incomefrom financial activities and other income.

• Income from financial activities included: interest, rental income, income fromsecurities investment and trading activities, income from transfer or lease ofinfrastructure, interest difference due to the sale of foreign currencies, interest ratedifference,…

• Other income is the revenue from unusual activities that does occur often:liquidation of fixed assets, bad debts written off have now been recovered, reversingprovision for devaluation of inventories,…

1.1.3 Characteristics and importance of revenue and business result

Revenue is the most fundamental metric for any company, a crucial part of financialstatement analysis Revenue is known as the top line because it appears first on acompany's income statement Net income, also known as the bottom line, isrevenues minus expenses There is a profit when revenues exceed expenses Toincrease profit, and hence earnings per share for its shareholders, a companyincreases revenues and/or reduces expenses Investors often consider a company'srevenue and net income separately to determine the health of a business.

Besides, if carried out effectively, these above professions will put a handinto increasing the accounting productivity in general Thanks to that, accountinginformation will be helpful for directors and managers in making sound decisions,which will raise the business profitability

a) Direct sales

Direct sales is the method of delivery to the buyer directly at the warehouse

of the enterprise Goods when delivered to customers must be paid or agreed to pay.After this package of goods is brought out of stock, the seller company will lose theownership power of such goods This method includes wholesales and retail sales.

Wholesale of goods is a form of sale to commercial units, productionenterprises The characteristics of wholesale goods are that the goods are still inthe field of circulation, not yet entered the consumer sector Therefore, the value anduse value of the goods have not been realized Wholesale goods are usually sold inbatches or sold in bulk Selling price fluctuates depending on the quantity of goodssold and the payment method In wholesale usually includes two methods:- The method of wholesale goods through the warehouse: Wholesale of goodsthrough the warehouse is the method of wholesaling goods in which the sold goodsmust be exported from the storage of the enterprise.

- Direct shipping wholesale method: According to this method, the commercialenterprise, after purchasing the goods, receives the purchased goods, does not bringit to the warehouse but sells it directly to the buyer.

Retail sale:

Retail is a method of selling directly to consumers and economic organizationsof the nature of consumption Retailers usually sell in small volumes, changeaccording to customers' requirements, with stable selling prices Other methods:Sales through agents, consignment Sales with deferred payment, installmentpayment,

b) Sales through agents (Consignment sales)

It is the method of delivery through the channel of agents Different from direct sales, after the package of goods is brought out of stock, it still belongs to thecompany and is not considered to be in consumption phase The company only

records sales revenue when the agent reports to sell such goods When goods are sold, the company must pay commissions for the agent which is considered as a

- The package of goods on consignment is paid via bank.

1.2.2 Accounting for revenue in commercial companies

1.2.2.1 Supporting documents

Organization of accounting vouchers:

Accounting with the function of helping business owners in organizingaccounting and statistics to provide sufficient and timely information on economic-financial activities of the business Therefore, it is necessary to organize salesaccounting and determine the sales results in accordance with the currentaccounting regime The chief accountant should guide the accountants in usinginvoices and documents, including:

- VAT invoice- Acceptance certificate

- Receipt, Payment slip- Debit notices- Order, price quotes- Contracts

- Other relevant documents- Credit notices of banks

- Account 5113 - Service provision turnover: This account is used to reflect theturnover and net turnover of the completed service volume, provided to customersand is determined to be sold in a period This account is mainly used for servicessuch as transportation, post office, tourism, public services, scientific and technicalservices, accounting and auditing services, etc.

- Account 5118 - Other revenues: This account is used to reflect the turnover from

sale, liquidation of investment properties, subsidies and subsidies of the State…

Diagram 1.1: Order of accounting for sales revenueAccount 511

- Indirect taxes payable (VAT, specialconsumption, export, and environmentalprotection);

- Sales of goods returned are carriedforward at the end of the period;

- Sales discount at the end of the period;

- Trade discounts carried over at the end ofthe period;

- Transfer net revenue to 911account "Determination of businessresults".

- Sales of products, goods,investment properties and serviceprovision of the enterprise in theaccounting period.

Revenue closing entry Sales revenue

Acc 3331

Output VAT1.2.2.3 Method of accounting for several major transactions

Diagram 1.1: Order of accounting for sales revenue

(1) Dividends and interests in the period divided to the enterprise after the first day

(2) Assigning and recovering financial investments

(3) Securities conversion

(4) Settlement discount received(5) Selling foreign currencies

(6) Interest on selling investments

(7) Gradual allocation of interest due to sales on deferred or interest payments(8) Exchange rate gains due to the revaluation of foreign currency balances at theend of the period

(9) Transfer of financial income to determine results

Acc (5a)

Diagram 1.9: Chart of Account 635

Acc 2291, 2292

Acc 121, 228(3)

Acc 152, 156, 211, 242(8a)

(1) Refund the difference of provision for devaluation of securities investment and loss of investment in other entities

(2) Handling exchange rate losses due to revaluation of end-of-year foreign currency items into financial expenses

(3) Making provision for devaluation of securities and provision for loss of investments in other entities

(4) Loss of selling investments

(5a) Investment proceeds from investments

(5b) Cost of sale of investments

(6) Settlement discount allowed for buyers

(7) Loan interest payable, distribution of interest on deferred or installment payment

(8) Foreign currency selling profits (8a), losses (8b)(9a) Buy goods and services in foreign currency

(9b) Exchange rate loss

(10a) Payment of debts in foreign currency(10b) Exchange rate loss

(11) Transfer of financial income to determine results

1.2.7 Accounting for other income and other expenses

Other income is income other than sale income of the enterprise arising in the

accounting period.

- Income from sale or liquidation of fixed assets;

- The difference between the fair value of the assets divided from the BCC is higherthan the cost of the construction of the jointly controlled asset;

- Interest difference due to reassessment of materials, goods and fixed assetscontributed as capital to joint ventures, investments in associates, and other long-term investments;

- Income from property sale and leaseback operations;