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Learning objectives
Chapter 6 After finishing this chapter, the learners should be able to:
● Explain the basic principles of recording, measuring, and presenting revenues, expenses and business

Revenues, expenses, business results determination on financial statements.

● Understand and organize accounting documents and accounting books for revenues, expenses and
business results determination.
result determination ● Apply chart of accounts to record transactions for revenues, expenses and business results
determination.
● Explain information of revenues, expenses and business results determination on financial
statements.
Tran Thanh Thuy Ngoc

Legal Concept and

documents basic principles
We will talk about this first. We will talk about this second.

Recording transactions
for revenues, expenses

CONTENT
Accounting
documents and business results
determination.
Legal documents
Then, we will talk about this.
After that we will talk about this.

Presenting revenues, expenses and

business results determination on
financial statements
Finally, we will talk about this.
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Legal documents
Concept and basic
● VAS 01 – General standard

● VAS 14 – Revenues and other income

principles
● VAS 21 – Presentation of financial statements

● Circular 200/2014/TT-BTC

Concept
Recognition
● Revenue is the gross inflow of economic benefits during the period: ● VAS 14: Revenue arising from the sale of goods should be recognized when all of the
+ Arising from the normal operation of an entity following criteria have been satisfied:
+ Contributing to increasing equity excluding capital contributions + The seller has transferred to the buyer the significant risks and rewards of
from shareholders or owners. ownership
● Expense is the gross outflow of economic benefits during the period: + The seller no longer holds the rights to manage goods as owners or loses control
over the goods
+ In the form of disbursements, asset deductions or incurring debts + The amount of revenue can be measured reliably
+ Decreasing in equity excluding distribution to shareholders or + The seller has received or will receive economic benefits from the sale transaction
owners. + The costs incurred or to be incurred in respect of the transaction can be measured
reliably
● Expenses should be recognized and recorded in the same accounting period as the
revenues they are associated with.

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Measurement Case 1
● VAS 14: Revenue should be measured at the fair value of the ● The business rewards excellent employees with its merchandise of
consideration received or receivable less revenue reductions. 150.000.000 VND, 10% VAT. The goods has cost of 95 million VND.
● Fair value is the estimated price at which an asset is bought or sold ● The business uses merchandise as fixed assets. The selling price of
when both the buyer and seller freely agree on a price. goods is 220 million VND, including 10% VAT. The cost of
● Fair value excludes indirect taxes, such as VAT, excise tax, export duty, merchandise is 165 million VND
environmental protection tax. Required: Determine sales revenue for each transaction.

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Use goods to pay employees' salaries Conditional discount – Discount with

and for internal consumption payment
● In case of using goods to pay salaries or bonuses to employees, ● In case customers receive discount when purchasing goods from
business records revenues similar to sales transactions. business (such as buying 2 get 1 free), the nature of the transaction is
● In case of internal consumption goods, revenue is not required to be a sales allowance. The free products given to customers are called
recognized. The cost of merchandise is included in selling expenses, discount but their substance are sales because customers will not get
general and administrative expenses, related assets.. them if they do not buy goods.
● In this case, the cost of the free product is recorded as cost of goods
sold and their fair value is recognized as sales revenue.

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Case 2
Minh Nhien company has sales policy: buy 1 get 1 free. During the
Unconditional discount – Discount
period, there were transactions as follows: without payment
Minh Nhien sold 5 boxes of cakes to customer with selling price of
500.000 VND/box, excluding 10% VAT, received in cash in banks. ● Unconditional discounts are discounts offered without the customers
According to sales policy, Minh Nhien gave 5 boxes free to customer. that benefit from the discount have to meet certain conditions.
The cost of cake is 220.000/box. ● This case does not generate revenue, cost of promotional goods is
Requirement: Determine revenue and cost of goods sold of Minh recorded as selling expenses.
Nhien in the sales transaction.

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Case 3 Revenue reductions

Minh Nhien company conducts a promotion campaign as follows: It ● Trade discounts
gives 500 units of goods free to customers. The goods has market price ● Sales allowances
of 15.000 VND per unit and cost of 10.000 VND per unit. Determine ● Sales returns
revenues and cost of goods sold for Minh Nhien in the transaction.

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Trade discounts Case 4

Trade discounts mean enterprises sell goods with price lower than the Business sells goods to customer for 100 million VND on credit, 10%
listed price with a large volume. VAT. The business has shipped the goods to the buyer and the buyer has
● In case trade discounts that are the deducted from the invoice amount accepted to pay. Due to purchase with large volumes, the customer takes
(the selling price recorded in the invoice is net of trade discounts), advantage of 2% trade discounts.
enterprises (sellers) do not record trade discount, sales revenue is Requirement: Determine net sales. How to prepare VAT invoice for the
recorded as net of trade discount (net sales). sales transaction?
● Trade discounts are recorded if they have not yet been deducted from
the invoice amount. In this case, the seller records sales revenue as full
amount excluding trade discount (gross sales)

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Case 5 Sales allowances

According to the sales policy, in the month, business will grant 3% ● A sales allowance refers to a reduction in the price provided to a
discount on sales for customers if sales volume is 250 million VND. The customer due to poor quality goods, defective or obsolete goods.
information of customer A as follows: ● In case sales allowances that are the deducted from the invoice
April 7: Customer A purchases goods of 100 million VND, 10% VAT. amount (the selling price recorded in the invoice is net of trade sales
April 12: Customer A purchases goods of 160 million VND, 10% VAT. allowance), enterprises (sellers) do not record sales allowance, sales
Because total purchases in period of customer A satisfies discount revenue is recorded as net of sales allowance (net sales).
policy, A takes advantage of trade discount determined in the final ● Sales allowances are recorded if they occur after sales (sales have been
purchase. already recorded) and the issuance of an invoice due to poor quality
Requirement: Determine gross sales and net sales. goods, defective or obsolete goods.

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Sales returns
● Sales returns are products that customers have bought and then return
to the business and do not accept payment.

Accounting documents

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Accounting documents
Revenues: Expenses:
● VAT invoice ● Delivery goods note
● Delivery goods note ● Payroll sheet Recording transactions
● Sales contract ● Fixed asset depreciation allocation
● Loan contract ● VAT invoice
● Receipt, Credit note ● Tax return, tax receipt
● Minutes of liquidation of fixed ● Payment, Debit note
assets…. ● Sales contract…
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Recording transactions
Sales and operating expenses
● Accounts

● Recording some major transactions

Sales and operating Financial revenue Other income and Business result
expenses and financial expense other expenses determination

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Accounts Accounts

Account 511 – Sales revenue Account 632 – Cost of goods sold

• Revenue reductions: trade discounts, sales Revenues from sales during period • Cost of goods sold during period Transferring cost of goods sold at the
returns and allowances • Allowance for inventory end of period
• Transferring net sales at the end of period • Waste, loss of inventory after excluding
compensation received from responsible
individuals
• Costs of raw materials, labor costs in
excess of normal level, and fixed overhead
unallocated.

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Direct sales
Journalizing transactions ● Sold finished goods, merchandise direct to customers:
+ Record sales revenue:
● Direct sales
Dr 111, 112, 131: Total payment
● Goods on consignment Cr 511: Selling price excluding VAT
Cr 3331: output VAT
● Conditional discount
+ Record cost of goods sold:
● Unconditional discount Dr 632
Cr 155, 156
● Pay salaries, bonuses to employees by goods
● Use goods for internal consumption
● Revenue deductions
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Goods on consignment Case 6

● Deliver finished goods, merchandise to consignee:
Dr 157 Opening balances in January/N of Minh Nhien Joint Stock Company:
Cr 155, 156 Finished goods A: 200.000.000 VND (1.000 kg), merchandise B: 300.000.000 VND (500
units). There are following transactions during January/N:
When goods consigned to agents are sold:
1. Received finished goods A from production: 3.000 kg at cost of 210.000 VND/kg
+ Record sales revenue: similar to direct sales
2. Sold 1.500 kg of finished goods A for 350.000 VND/kg cash in bank, VAT was
+ Record cost of goods on consignment: 10%.
Dr 632 3. Delivered 1.200 kg of finished goods A to a customer in Tra Vinh. The selling price
Cr 157 excluding 10% VAT was 380.000 VND/kg. Goods was still on the way to customers.
+ Commission payable for consignee: 4. Sold 250 units of goods B for 1.300.000 VND/unit to Hoang Hon company on
Dr 641 credit
Dr 133 Required: Journalize the transactions using perpetual inventory system, deduction VAT
Cr 111, 112, 131… method and FIFO method.

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Conditional discount Unconditional discount

● Record cost of goods sold of promotional finished goods or ● Do not record sales revenue, cost of promotional goods is recorded
merchandise: as selling expense:
Dr 632 Dr 641
Cr 155, 156 Cr 155, 156
● Record sales of promotional goods on the basis of allocating the
proceeds to both goods sold and promotional goods
Dr 111, 112, 131
Cr 511
Cr 3331

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Case 7 Pay salaries, bonuses to employees by goods

Use information of case 2 to journalize the transaction. ● Record sales revenues:
Minh Nhien company has sales policy: buy 1 get 1 free. During the Dr 334, 353
period, there were transactions as follows: Sold 5 boxes of cakes to Cr 511
customer with selling price of 500.000 VND/box, including 10% VAT, Cr 3331
received in cash in banks. According to sales policy, Minh Nhien gave 5 ● Record cost of goods sold:
free boxes of cakes to customer. The cost of cake is 320.000/box. Dr 632
Cr 155, 156

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Use goods for internal consumption Sales deductions

● Use finished goods or merchandise for production and business ● Record trade discounts, sales allowances incurred after sales:
purposes or for the next production process (internal circulation) Dr 521
Dr 621, 627, 641, 642, 154… Dr 3331
Cr 155, 156 Cr 111, 112, 131
● Receive products, goods returned:
+ Reduce cost of goods sold:
Dr 155, 156
Cr 632
+ Record sales returns:
Dr 521 (5212)
Dr 3331
Cr 111, 112, 131
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Case 8 Case 9
Use information of case 4 to journalize the transaction. Use information of case 5 to journalize the transaction.
Business sells goods to customer for 100 million VND on credit, 10% According to the sales policy, in the month, business will grant 3%
VAT. The business has shipped the goods to the buyer and the buyer has discount on sales for customers if sales volume is 250 million VND. The
accepted to pay. Due to purchase with large volumes, the customer takes information of customer A as follows:
advantage of 2% trade discounts. April 7: Customer A purchases goods of 100 million VND, 10% VAT.
April 12: Customer A purchases goods of 160 million VND, 10% VAT.
Because total purchases in period of customer A satisfies discount
policy, A takes advantage of trade discount determined in the final
purchase.

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Accounting principles
● Financial revenues include:
Financial revenue and financial expense - Interests: interests on loans, interests on cash in banks, on credit sales,
installment sales, earnings from investment bond, notes, cash discounts
● Accounting principles earned from purchase;
- Distributed dividends and earnings in stage after the date of investment;
● Accounts used - Revenues from buying or selling activities of short or long-term securities;
Interest of transfer of capital when liquidating contributed capital in joint
● Recording some major transactions venture, in associate companies, in subsidiary companies and other capital
investments;
- Revenues from other investment activities;
- Gains on exchange rates, including gains from selling foreign currencies;
- Revenues from other financial activities.
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Accounting principles Accounts

● Financial expenses include:
- Expenses of lending and borrowing, Account 515 – Financial revenue
- Costs of capital contributed to joint venture, associates, subsidiary Transferring financial revenues at the end Financial revenues during period
companies of period
- Losses from short-term security transfer
- Expenses of security selling transaction;
- Allowance for business security decrease, for losses from investment in
other businesses
- Losses incurred when selling foreign currency, losses from exchange
rate...

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Accounts Journalizing transactions

● Received dividends, profits from investment activities
Dr 111, 112, 138
Cr 515
Account 635 – Financial expenses ● Received loan interests, interest on deposits, interest on credit,
Financial expenses during period Transferring financial expenses at the installment
end of period Dr 138
Dr 121, 128: If interest is added to principal
Cr 515
● Received early settlement discount form supplier:
Dr 111, 112, 331
Cr 515

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Journalizing transactions Journalizing transactions

● Gain from selling business securities, liquidating and selling ● Costs relating to selling security activity, lending capital, foreign currency
investment in subsidiary companies, joint venture or allied companies sales:
Dr 111, 112, 131: Selling price Dr 635
Cr 121, 221, 222, 228: Book value Cr 111, 112, 141,..
● Loss from selling business securities, liquidating and selling investment in
Cr 515: Gain
subsidiary companies, joint venture or allied companies:
Dr 111, 112, 131: Selling price
Dr 635: Loss
Cr 121, 221, 222, 228: Book value
● Early settlement discount given to customers:
Dr 635
Cr 111, 112, 131
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Journalizing transactions
Set up or revert allowances for decreases in business security price,
●
loss from investment in other entities:
Other income and other expenses
Dr 632
● Accounting principles
Cr 229 (2291, 2292)
Or Dr 229 (2291, 2292)
● Accounts used
Cr 635
● Paid loan interests or accrued interest:
● Journalizing transactions
Dr 635
Cr 112, 335

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Accounting principles Accounting principles

Other income refers to the revenues generated from non-core business Other expenses include:
activities: ● Expenses from long-term asset disposal
● Proceeds from long-term asset disposal ● Losses from differential in revaluating inventories and fixed assets
● Collecting contractual fine from customer contributed in subsidiary companies, joint ventures, associates and
● Collecting compensation of third parties in order to make up lost other long - term investments;
assets ● Fine payable from economic contract breach, administrative
● Collecting doubtful debts which have been written off violations;
● Collecting liabilities which creditors are not determined ● Other expenses.
● Collecting reduced and refundable taxes;
● Other income.

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Accounts Accounts

Account 711 – Other income

Transferring other income at the end of Other income during period Account 811 – Other expenses
period
Other expenses during period Transferring Other expenses at the
end of period

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Journalizing transactions Journalizing transactions

● Record other income from long-term asset disposal ● Other expenses incurred when revaluating inventories, fixed assets
Dr 111, 112, 131,... invested in subsidiary companies, joint-venture, associates
Cr 711 Dr 221, 222, 228: Revaluation amount
Cr 3331 Dr 811: Difference between cost and revaluation amount
Decrease long-term asset disposed: Cr 152, 153, 155, 156: Cost
Dr 214: Accumulated depreciation Or
Dr 811: Book value Dr 221, 222, 228: Revaluation amount
Cr 211, 213: Cost Dr 214: Accumulated depreciation
Expenses from long-term asset disposal: Dr 811: Difference between book value and revaluation amount
Dr 811 Cr 211, 213: Cost
Dr 133
Cr 111, 112, 331…
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Journalizing transactions Journalizing transactions

● Other income incurred when revaluating inventories, fixed assets ● Fines from economic contract breach, administrative violations…
invested in subsidiary companies, joint-venture, associates Dr 811
Dr 221, 222, 228: Revaluation amount Cr 111, 112…
Cr 711: Difference between revaluation amount and cost ● Receive amounts compensated by a third party, collect doubtful debts
Cr 152, 153, 155, 156: Cost that have been written off
Or Dr 111, 112…
Dr 221, 222, 228: Revaluation amount Cr 711
Dr 214: Accumulated depreciation
Cr 711: Difference between revaluation amount and book value
Cr 211, 213: Cost

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Accounting principles
Results of operating activities of business include: Results from
Business result determination operating activities, results from financial activities and results from
other activities
● Accounting principles
● Results from operating activities = Net sales – Cost of goods sold –
Selling expenses – General and administrative expenses
● Accounts
● Results from financial activities = Financial revenues – Financial
expenses
● Journalizing transactions
● Results from other activities = Other income – Other expenses

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Journalizing transactions
Accounts ● Transfer net sales, financial revenues, other income to Account 911:
Account 911 – Income summary Dr 511, 515, 711
- Costs of goods sold are transferred - Net sales are transferred; Cr 911
- Selling expenses; General and - Financial revenues are transferred; ● Transfer costs of goods sold, selling expenses, general and administrative expenses,
administration expenses are transferred - Other Income, are transferred financial expenses, other expenses, and CIT expenses to Account 911:
- Financial expenses are transferred - Transfer net loss. Dr 911
- Other expenses and corporate income tax Cr 632, 641, 642, 635, 811, 821
expenses are transferred; ● Transfer net profit:
- Transfer net profit. Dr 911
Cr 421
● Transfer net loss:
Dr 421
Cr 911

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Case 10 Case 10
Minh Nhien company using moving average method has the information ● Dec 18, delivered 1.000 units of product M to company Y. Company
about finished goods in December, year N as follows (unit: 1,000 VND): Y has not received them yet.
Beginning balance of Account 155: 500.000 (product M 5.000 units) ● Dec 19, company Y received the goods but only accepted 800 units
Transactions occur during the period: and returned 200 units due to they did not meet requirements. Minh
● Dec 6, received 5.000 units M from production of 90/unit. Nhien has restored the returned goods.
● Dec 10, sold 6.000 units M on credit to company X. According to the ● Dec 22, company X paid balance due by bank transfer less cash
contract, if payment is made within 15 days, X will receive a 2% discount.
discount Requirement: Journalize the transactions, assuming selling price of
● Dec 11, company X complained about 1.000 units M bought on Dec product M is 120/unit, VAT is 10% and prepare P&L to gross profit
10 due to poor quality. Minh Nhien agreed to reduce the price by 10% line.
for the quantity of poor quality.

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THANK YOU!
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