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Chapter 5
CASH AND
RECEIVABLES –
Vietnamese accounting
Accounting major
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© 2013 The McGraw-Hill Companies, Inc.

Objectives

Define what are cash and receivables

Account for cash and receivables

Account for allowances for

receivables and uncollectible debts
Present related information in
financial statements
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Contents

5.1 Accounting for Cash

5.2 Accounting for receivables

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Accounting for cash

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Definition
Cash is the company’s most liquid asset.
Examples: currency, balances in current bank account

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Classification
Cash on hand

Cash in bank
Cash in transit

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Cash on hand is cash kept on business premises,

used for immediately payments
• Cash in bank is amount which is deposited into bank
checking account. Checking account is a bank
account that you can take money from at any time.
• Cash in transit is amount that an enterprise has
received and paid into bank, but it has not received
credit advice yet; or amount that an enterprise has
transfer into other parties’ account but the enterprise
has not received debit advice yet.
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Classification

Domestic currency

Foreign currency Monetary gold

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Internal control procedures

• Segregation of duties: those who handle cash

should not be involved in or have access to
accounting records.
• All expenditures should be approved by
authorized person before payments are made.
• Payments by cash (on hand) should be limited.
Company should utilize other method of
payments such as bank transfer, checks.
• Periodic comparing the book balances and
actual cash on hand; periodic reconciliation of
books balances and bank balances. 9

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Cash Account

• 111-Cash on hand, comprises 3 sub-accounts:

1111 (VND)
1112 (Foreign currency)
1113 (Monetary gold)
• 112-Cash in bank, comprises 3 sub-accounts:
1121 (VND)
1122 (Foreign currency)
1123 (Monetary gold)
• 113-Cash in transit, comprises 2 sub-accounts:
1131 (VND) 10

1132 (Foreign currency)

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Accounting for cash

Documents

• Documents for cash receipts:

– Cash receipt: a written document that is produced by a
company each time it receives money.
– Credit advice: a message from your bank telling you that
an amount of money has been added to your bank
account.
• Documents for cash disbursement:
– Payment voucher: document prepared for monetary
payment.
– Debit advice: a message from your bank telling you that
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an amount of money has been deducted from your bank
account
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Illustration-Documents

Đơn vị:…….
Địa chỉ:……
PHIẾU THU Quyển số: 10…..
Ngày ….tháng….năm…. Số:…01/6………..
Nợ:………….
Có:…………
Họ và tên người nộp tiền: Nguyễn Văn Năm
Địa chỉ:………………………………………………………………………..
Lý do nộp: Thu tiền bán hàng
Số tiền: 11.000.000đ. (Viết bằng chữ): Mười một triệu đồng
Kèm theo:…………………01…………………………Chứng từ gốc.
Giám đốc Kế toán trưởng Người nộp tiền Người lập phiếu Thủ quỹ
(Ký, họ tên đóng dấu) (Ký, họ tên) (Ký, họ tên) (Ký, họ tên) (Ký, họ tên)
Đã nhận đủ số tiền: (viết bằng chữ): Mười một triệu đồng.
+ Tỷ giá ngoại tệ (vàng bạc, đá quý…………………………………………
+ Số tiền quy đổi: ……………………………………………………………
(Liên gửi ra ngoài phải đóng dấu)

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Illustration-Documents

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Nguồn: Tài liệu hướng dẫn của Misa
http://www.misa.com.vn/Gi%C3%A1otr%C3%ACnhk%E1%BA%BFto%C3%A1nm%C3%A1ydoanhnghi%E1%BB%87p.aspx

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Nguồn: Tài liệu hướng dẫn của Misa
http://www.misa.com.vn/Gi%C3%A1otr%C3%ACnhk%E1%BA%BFto%C3%A1nm%C3%A1ydoanhnghi%E1%BB%87p.aspx

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Accounting for cash in hand & on bank

111,112
511,515,711 15*, 21*
Cash sales/other Purchase of
revenues assets
341 627,641,642
Loans Payment of
expenses
411
Capital contribution Cash drawings by 411
from owners owner
131,138,141,244
Cash receipt from 341,331,334,338
Repayment of 16
receivables
loans, payables
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Accounting for cash on hand & in bank

Disagreement in cash accounts’ balances
111
3381 1381
Asset in surplus Asset in shortage
awaiting resolution awaiting resolution

112 1388
3388
Surplus Shortage

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Question
A company’s opening balance of Account 111 was 80.000.000.
During the period, the following transaction occurred relating to cash
on hand (Unit: VND)
1- Sold goods for cash at a selling price of 18.000.000
(excluding Value-added tax at 10%), cost of goods sold was
15.000.000
2- Deposited 40.000.000 into checking account without
receiving credit advice.
3- Cash advance to an employee for purchase of goods:
10.000.000.
4- Received the credit advice related to transaction 2
5- Paid 6.600.000 for cash (included 10% VAT) for meeting with
customers.
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Required: Prepare journal entries for these transactions.
Post them into T-account of Ledger 111
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• Notes:
• Advance to employee: An asset account used to
record amounts given to an employee with the
expectation of repayment. For example, if an
employee is given money by a company and the
money is expected to be repaid or spent for
company purpose, the amount will be recorded
in this current asset account until it is repaid or
until the expense documentation is provided.
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Accounting for cash in transit

111 113 112

Deposit cash into Already received the
company bank account, credit advice
have not received credit
advice yet
511,711,333,13 331…
1 Received cash from Already received the
selling transaction and debit advice
paid to supplier bank
account , have not
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received debit advice yet
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Accounting for overdraft

Overdraft Loan

Overdraft is an amount of money that a customer is

temporarily allowed to owe to the bank.
Overdraft is treated like a loan (liability).

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Presentation in Financial Statements

A- Assets 100
= Code 111 + 112
I- Cash and cash 110
equivalents
Acc codes:111,112,113
1- Cash 111
2- Cash equivalents 112 Acc codes: 1281,1288…

Cash equivalents include short-term, highly liquid investments

that are readily convertible to known amount of cash and which
are subject to an insignificant risk of changes in value. These
investment must have a maturity date no longer than 3 months
from the date of purchase.
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Presentation in Financial Statements

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ACCOUNTING FOR
RECEIVABLES

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Accounting for receivables

• Definition
Receivables represent a company’s claims to
the future collection of cash, other assets or
services.

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Receivables
Classification
• Short-term receivables: receivables which are
due within 12 months from the last recorded
date, or within one normal operating cycle of the
business, whichever is longer.

• Long-term receivables: receivables which are

due more than 12 months from the last recorded
date, or more than one normal operating cycle,
whichever is longer.
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Receivables
Classification
Note:
• An operating cycle is the elapsed time between
the start of production and the eventual receipt
cash from customers from the sale of the
product.

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Receivables
Rules for accounting
- An enterprise must keep a detailed record on
amounts that each individual customer owns,
their due date, their type of currency and others
depending on enterprise’s management
requirement.
- Trade receivables and non trade receivables
should be differentiated
- At the reporting date, short-term and long-term
receivables should be re-classified based on
the remaining terms. 28

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Receivables
Account codes
• 131: Trade receivables
• 138: Other receivables
• 141: Advances*
• 244: Pledges, mortgages or deposit*

(*) Names of these accounts don’t refer to

“receivables”, but their balances are shown as “ Other
receivables” in Statement of Financial Position. 29

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Trade receivables

– Receivables resulting from the sale of goods and

services on account are called accounts
receivable and often referred to as trade
receivables.

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Trade receivables
Internal control procedures
• Require credit approval prior to shipment
• Segregate duties
• All collections should be properly monitor.
Collections and receivables are to be properly
accumulated, classified and summarized in the
accounts.
• Compare company’s receivable balances with
customers’ figures periodically.

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Trade receivables
Documents
- Sales order
- Sales invoice
- Receipt

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Illustration

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Illustration

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Trade receivables
Account Code 131
• 131 is used to record receivables and payments
of customers, which are related to sales of
finished goods, goods, investment property,
fixed asset, financial investment or services.
• 131 is used to record either as an asset (amount
owed by customers) or a liability (amount which
customers paid in advances)
Receivable Payables
s Acc 131

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ASSET LIABILITY
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Trade receivables
Process

• Customer
2 • Deduction
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pay in • Sales of of • Cash
advance goods/ receivable collection
assets
1 3

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Trade receivables
Chart of account
511 131
(2) Credit sales of goods (1) Cash advances 111,112
33311 from customers
Output VAT
(4)Cash Collection
711
635
(2) Credit sales of
(3) Cash discount
fixed asset
allowed
521
(3)Trade discount allowed,
Sales allowance, sales
returns
37
33311
Output VAT
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Question
Company M has beginning balance of 131: 34.000.000 VND
(Customer A)
1- Sold to customer B at a price of 60.000.000VND(excluding VAT
at 10%) on credit term.
2- Customer C paid in advance 20.000.000VND
3- Received half of customer B’s debt, which is transferred into
bank checking account.
Required: Provide journal entries
Present information relating to account 131 in
statement of financial position
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Other receivables
Account code 138
138-Other receivables are non trade receivables
such as
- Claim for loss or damage to material or goods
- Loans by company to other (without receiving
interest)
- Payment on behalf of other parties that
requires recovery.
- Interest receivables from financing activities
- Asset in shortage, awaiting resolution 39

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Other receivables
Account code 1381
1381
111,15* 111,1388,334,632
Detection of shortage in Resolved the shortage
cash/inventories, without
knowing reason
211
Detection of shortage
in Fixed asset
214

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Other receivables
Account code 1388
1381 1388 111.112
Claim on asset shortage Received cash

111.112,15* 334
Loans by company, Collection of claim by
without receiving interest deducting from payroll

515
Receivables from
financial activities
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Other receivables
Account code 141 & 244
141: Advances: An asset account used to
record amounts given to an employee with the
expectation of repayment
141 152,
111
Cash advance to 156…
Payment for materials,
employees for company goods using cash
purposes advance to employees

112,334
Reimburse to company
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Other receivables
Account code 141 & 244
• 244: Pledges, mortgages or deposit: an asset
that company used as security for contract
compliance (for example security for payment of
loan contract)
244 111,112,15*,21*
111,112,15*,21*
Making pledges, Recovering of pledges,
deposits or mortgages deposits or mortgages

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Allowance for doubtful debts

There may be some receivables which

2293
the business thinks might not be paid,
these are known as doubtful debts.

At the reporting date, allowances are

made for future bad debts (doubtful
debts/uncollectible accounts receivables)
=> Allowance for doubtful debts

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Allowance for doubtful debts

Allowance for doubtful debts are made at the

reporting date, when:
– There are overdue debt that has been
unsuccessfully to collect for many times.
– Debtors declare bankruptcy/ are filing for
dissolution/are missing or fleeing.

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Allowance for doubtful debts

Account code: 2293
2293

Decrease of allowance Increase of allowance

Balance

2293 is a contra-asset account. A contra-asset 46

account is expected to have a credit balance
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Allowance for doubtful debts

• When a business first set up an allowance for

receivables, the full amount of the allowance
should be debited to expense.
• In subsequent year, adjustment may be need to
the amount of the allowance. The procedure is
as follows:
– Calculate the new allowance required
– Compare it with the existing balance on the allowance
account
– Calculate the increase or decrease required. 47

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Allowance for doubtful debts

Journal entries
• In the first year
2293- 642-
Allowance for Administration
doubtful debt expense
Set up an
allowance

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Allowance for doubtful debts

Journal entries
In subsequent years
If a lower allowance is required

2293 642
If a higher allowance is
required

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Write off uncollectible debts

• Whenever an account receivable from a specific

customer is determined to be uncollectible, it no
longer qualifies as an asset and should be
written off.
• The write off an account receivable is to reduce
131,138, 128,of244
the balance the customer’s account642
to zero
Write off receivables (which haven’t
been made allowance for)
Write off receivables (which 2293
have been made allowance for) 50

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Recovery of uncollectible debts

711- Other income 111, 112

Collection of debts that

previously have been written off

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Question
Beginning balance : (Unit: VND)
131 control account (Debit bal.): 200.000.000
(Personal account balance: Customer M: 140.000.000, Customer N: 6
0.000.000)
2293 (allowance for customer M’s debt): 40.000.000.
1. Customer M went bankrupt, the company has collected
60.000.000 cash in bank. The remaining balance was
written off
2. Customer P paid in advance: 70.000.000
3. At the end of the year, the company thinks that an
allowance of 20.000.000 should be made for customer N’s
debt.
Require: Prepare journal entries 52
What figure for trade receivables will appear in
statement of financial position?

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Presentation in financial statements

A- Current Assets 100 = Code 131 +132 +…
III- Short-term receivables 130
Debit bal. of 131(short-term)
1- Trade receivables 131
6 – Other short-term rec. 136 Acc code 1388,141, 244…
7- Allowance for short term 137
doubtful debt(*) Acc code 2293 (short-term)
A- Non-current assets 200
= Code 211 + 211 +…
III- Long-term receivables 210
1- Long-term trade 211
Debit bal. of 131(long-term)
receivables
6- Other long-term rec. 219 Acc code 1388,141, 244…
7- Allowance for long-term 219 53
doubtful debt(*) Acc code 2293 (long-term)

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