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List of contents
Chapter 2
Part 1: Accounting for Cash
Accounting for Cash, 1.Accounting for cash on hand
2.Accounting for cash in bank
Materials, tools and 3.Accounting for cash in transit
Supplies Part 2: Accounting for Materials, Tools and Supplies
1.Definitions, classification
2.Measurement of materials, tools and supplies
3.Accounting for materials, tools and supplies
1 2

A1

1. Cash on hand
 Content:
Part 1: Accounting for Cash - This account is used to record revenues, expenses and balance of the
enterprise‘s fund, including: Vietnamese dong, foreign currencies and

1. Accounting for cash on hand monetary gold.

 Rules for accounting:
2. Accounting for cash in bank - When receiving or dispatching cash fund, Cash receipt slips, Cash
payment slips (vourcher) with signatures of payees and payers, competent
3. Accounting for cash in transit persons are required in accordance with accounting source document
- The cashier shall be responsible for management, receiving and dispatch
of the cash fund. The cashier must verify the actual cash balance, then
collate the figures between cash fund book and cash ledger every day
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1. Cash on hand 1. Cash on hand

Accounts used: Acc 111- Cash on hand
ACC 111
Received cash, foreign currency or
Accounting documents: monetary gold;
Cash, foreign currency or monetary
• Cash payment/Cash receipt vourchers gold in excess detected under
verification;
• Payment request Exchange differences
A2 Differences due to re-evaluation of
monetary gold at the reporting time.
• Invoices
Inventoried cash, foreign currency or
monetary gold at the reporting time;
• …
5 6
Dispatched cash, foreign currency or
monetary gold;
Cash, foreign currency or monetary
gold in deficit detected under
verification;
Exchange rate differences
Differences due to re-evaluation of
monetary gold at the reporting time.
3 sub-accounts:
+ Acc 1111: VND
+ Acc 1112: Foreign currency
+ Acc 1113: Monetary gold

1. Cash on hand
Acc 511,515,711 Basic
Acctransactions:
1111 Acc 152, 153, 156,
2. Cash in bank
Sales Purchase of materials
Financial income... Goods, Fixed assets Contents: This account shall be used to record current amounts and increases
and decreases in demand deposits of the enterprise in a bank. Credit notes, debit
Acc 131, 136, 138, 141, 244 Acc 331, 333, 334, 338,...

Receiving from dispatching cash notes or bank statements enclosed with original documents (payment order,
receivables for payables
collection order, depository transfer check, certified check, etc) shall be
Acc 121, 128, 221, 222, 228 Acc 121, 128, 221, 222, 228
Selling investments Paying cash for
recorded to Account 112 "Cash in bank".
investments
a. Documents used:
Acc411, 461 Acc 621, 627, 641, 642, 635, •Debit notes ,
receiving cash from Expenses incurred
Investments •Credit notes
Related Ac 3381 Acc 1381 Related •Bank statements
decisions Cash surplus Cash deficit decisions
no reasons no reasons •Original documents: payment order, collection order, depository transfer
With reasons With reasons
check, certified check, etc…
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2. Cash in bank 2. Cash in bank

c. Basic transations
b. Account used: Acc 112 – Cash in bank Acc 511,515,711 Acc 1121 Acc 152, 153, 156,

Sales, financial income Purchase of materials

Acc 112 other income goods, fixed assets

Deposited VND, foreign currencies Withdrawn VND, foreign Acc 131, 136, 138, 141, 244 Acc 331, 333, 334, 338, ..

or monetary gold; currencies or monetary gold; Receiving from dispatching cash

receivables for payables
- Exchange rate differences - Exchange rate differences -
- Positive differences due to re- Negative differences due to re- Acc 121, 128, 221, 222, 228 Acc 121, 128, 221, 222, 228

evaluation of monetary gold at the evaluation of monetary gold at Selling investments Paying cash for investments

reporting time. the reporting time.

Acc 411, Acc 621, 627, 641, 642, 635, 811
Actual deposited VND, foreign 461
Contributions from owners Expenses incurred
currencies or monetary gold at the
reporting time.
Acc 1121 Acc 3388 Acc 1388 Acc 1121
3 sub accounts: bank's error accountant‘s figures are accountant‘s figures are bank's error
- Account 1121 – VND: larger than the bank‘s small than the bank‘s Acc 511, 515, 711
Acc 511, 515, 711
-Account 1122 – Foreign currency company's company's error
-Account 1123 – Monetary gold:
9 10

3. Cash in transit 3. Cash in transit

b. Accounts used: Account 113 – Cash in transit
 Contents: :
Cash in transit includes VND and foreign currencies which are transited in Acc 113
following cases:
- Collecting cash or checks then paying directly in a bank; - Cash paid to a bank or -The amounts of money
- Making postal remittance in order to pay other enterprises; transferred to a bank by post, transferred to account 112 – Cash
- Collecting revenues from good sales then transferring to Treasuries to pay taxes but the credit note has not been in bank, or relevant accounts;
(payment collected from purchaser shall be transferred to State Treasury by the received; - Exchange rate differences.
enterprise). - Exchange rate differences.
 Documents used:
• Cash receipt slips/voucher, The amounts of money in transit
at the reporting time
• Cash payment slips/voucher
Sub accounts:
• Credit note.
+ Acc 1131: VND
• Statements from banks, post ofices, financial institutions,...
+ Acc 1132: Foreign currency
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2. Cash in transit
c. Basic transactions
Part 2: Accounting for Materials, Tools and
Acc 111 Acc 113 Acc 112
dispatching cash to deposit in
bank‘s accounts credit note is received Supplies
but the credit note of bank has
not been received

Acc 112 Acc 331

Pay to creditors,
cash in transit has been transferred
to creditors
1.Definitions, classification
but the credit note of bank has
not been received
Acc 511
2.Measurement of materials, tools and supplies
collecting money from good sales

transferring to the bank

Acc 131, 138 3.Accounting for materials, tools and supplies

Collecting from customers

13 14

1. Definitions Classification of materials

• Based on management needs
Materials
Main raw materials
Unfinished goods consumed by a Subordinate materials
manufacturer in providing finished goods. Fuels
Classified as inventory in the current assets Spare parts
section of an entity’s balance sheet Materials and equipments for capital
construction
Other materials
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Classification of materials Tools

• Based on origin of materials/tools
Purchase from suppliers Tools and supplies are assets which do not
Self – produced meet the recognition criteria for fixed assets in
… terms of their value or usage time
• Based on different purposes of materials used
 For production
For administration, selling
…
• Other bases…

17 18

Classification of Tools, Supplies

1. Based on regulations in force
 The scaffolding, formwork,
tools, jigs used for construction
manufacturing
 Types of packaging enclosed
with goods charged separately,
but their value is depreciated
during preservation of goods in
transit and storage in the
warehouses
 Tools or supplies made of glass,
porcelain, ceramic
 Management facilities, office
supplies
 Clothing, footwear designed
exclusively for work, etc
2. Based on accounting demand 2. Measurement of materials and tools
 Tools and supplies
 Reusable packaging materials
 Instruments for renting
 Equipment and spare parts 2.1 Perpetual vs. periodic inventory
accounting system
3. Based on allocation methods
 Allocated for 1 time 2.2 Principles of valuing materials and tools
 Allocated for many times
2.3 Initial Measurement
2.4 Inventory costing methods
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2.1 Perpetual vs. Periodic Methods of Accounting
Perpetual Method
•Inventory records are updated after each purchase or
sale
• Inventory accounts are used to record the balance and
the moving of goods
• Costs of goods sold/used are calculated based on units
of goods sold/used and unit cost assigned to those units
21
2.1 Perpetual vs. Periodic Methods of Accounting
Periodic Method
• Inventory records are updated periodically based on
physical inventory counts
•Inventory accounts are only used to reflect the balance of
goods, the moving of goods during the period is recorded
in purchase account
• Costs of goods sold/used are calculated by taking cost of
goods available for sale/use less cost of ending inventory
•Cost of ending inventory are determined by taking the
units of ending inventory (found by physical count) and
unit cost assigned to those units 22

2.2 Principles of valuing materials and tools

• Cost: Inventories (materials and tools)

“So inventories are carried at the lower of cost and
are determined at cost net realizable value” –VAS 02
• Prudence: Where the net realizable value
is lower than cost, inventories are
measured at the net realizable value
• Consistency: Inventory costing methods
should be applied consistently

23 24

Net realizable value
Net realizable value is the estimated selling
price in the ordinary course of business less
the estimated costs of completion and the
estimated costs necessary to make the sale
25
Initial measurement
• Materials and tools are initially measured at
cost
– The cost of purchase of materials and tools
comprise the purchase price, non – reimbursable
taxes and duties, and transportation, handling and
other costs directly attributable to the purchase.
– Trade discounts and purchase returns and
allowances are deducted from the costs of
purchase
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Initial measurement
• Materials and tools are initially measured at
cost
– The cost of inventories should comprise all
costs of purchase, costs of conversion and other
costs incurred in bringing inventories to their
present location and condition
26
Non- reimbursable taxes and duties
• Customs duties
• Excise duties
• VAT (in case the entity calculating VAT
under direct method or the inventories are
used for activities free from VAT)
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Trade discounts Purchases Returns and Allowances

A trade discount is the decrease of A purchases return involves actually

the quoted price offered to the buyer returning merchandise that is
for their large orders damaged or does not meet the
specifications of the order.

When the defective or incorrect

merchandise is kept by the buyer and
the vendor makes a price adjustment,
this is a purchases allowance.
29 30

Cost of Goods Purchased Cost of Goods Purchased

 Cost of inventory purchased (invoice price-
excluded VAT): Purchased 100 units of materials A on credit
from Alden Company: 22,000,000 dong,
Less: including 2,000,000 dong of VAT.
Purchase returns and allowances Transportation costs paid by cash: 500,000
Trade discounts dong. All materials are brought to the store.
Plus: What is the cost of this amount of materials at
Non-refundable taxes and duties time of recognition?
Transportation, handling costs…
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Cost of materials/tools received in stock Inventory costing methods

 Inventory from self-manufacturing • Used for calculating the value of materials and
Actual cost =
Actual cost of
+ Processing cost tools at the time of being issued from the store
issuing materials
 Inventory from hiring others to process for the company • Three costing methods available
– Specific identification
Actual cost of Expenses for
Directly attributable
Actual cost = issuing + hiring other to +
cost
– Weighted average cost (AVCO)
materials process
– First – in, first- out (FIFO)
 Other cases: pls refer to textbook

33 34

Specific Identification Method Weighted average method

Being used mainly for items of inventory that The weighted average method assumes that the
differ from unit to unit, such as used cars goods available for sale/use have the same
This method tracks the actual physical flow of (average) cost per unit.
the good. Each item of inventory is marked, Under this method, the cost of goods available
tagged or coded with its “specific” unit cost for sale/use is allocated on the basis of the
This method is possible when a business has a weighted – average unit cost.
limited variety of high-unit-cost items that can
be clearly identified
Example 35 36
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Weighted average method Weighted average method

Cost of
Cost of goods
beginning + purchased
Cost of Units of Weighted- goods
Weighted
goods = goods * average -average =
sold/used sold/used unit cost unit cost Units of Units of
beginning + goods
goods purchased

37 38

Inventory Cost Flow Assumptions First – in, first - out

The FIFO method assumes that the earliest
Purchased goods purchased are the first to be sold/used.
Sold
goods goods Under this method, the costs of the earliest
goods purchased are the first to be recognized as
cost of goods sold/used

Example

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Perpetual Inventory Costs

Inventory Cost Flow Assumptions
Inventory cost data to demonstrate
FIFO Perpetual Systems
Purchased
Item 127B Units Cost Price
goods
Jan. 1 Inventory 10 $20
4CostSale
of 7 $30
10 Purchase
Mdse. Sold 8 21
22 Sale 4 31
28 Sale 2 32
30 Purchase 10 22
Sold
goods
Example
41 42

FIFO Perpetual Inventory Account

Item 127B

Purchases Cost of Mdse. Sold Inventory Balance

Unit Total Unit Total Unit Total

Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200

The firm begins the year with 10

units of Item 127B on hand at a
total cost of $200.

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FIFO Perpetual Inventory Account FIFO Perpetual Inventory Account

Item 127B
Inventory cost data to demonstrate
Purchases Cost of Mdse. Sold Inventory Balance
FIFO Perpetual Systems
Unit Total Unit Total Unit Total
Item 127B Units Cost Price
Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 Inventory 10 $20
Jan. 1 10 20 200
4CostSale
of 7 $30 4 7 20 140 3 20 60
10 Purchase
Mdse. Sold 8 21
22 Sale 4 31
28 Sale 2 32 The sale of 7 units leaves a
30 Purchase 10 22 balance of 3 units.

On January 4, 7 units of Item On January 4, 7 units of Item

127B are sold at $30 each. 45
127B are sold at $30 each. 46

FIFO Perpetual Inventory Account FIFO Perpetual Inventory Account

Item 127B
Inventory cost data to demonstrate
Purchases Cost of Mdse. Sold Inventory Balance
FIFO Perpetual Systems
Unit Total Unit Total Unit Total
Item 127B Units Cost Price
Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 Inventory 10 $20
Jan. 1 10 20 200
4CostSale
of 7 $30 4 7 20 140 3 20 60
Mdse.Purchase
10 Sold 8 21 10 8 21 168 3 20 60
22 Sale 4 31 8 21 168
28 Sale 2 32
30 Purchase 10 22 Because the purchase price of $21 is
different than the cost of the previous 3
On January 10, the firm purchased units On
on hand, the inventory
January balance of
10, the firm
eight units at $21 each. 11 units is accounted for separately.
47 purchased eight units at $21 each. 48
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FIFO Perpetual Inventory Account FIFO Perpetual Inventory Account

Item 127B
Inventory cost data to demonstrate
Purchases
On January 22, the Cost of Mdse. Sold Inventory Balance
FIFO Perpetual Systems
Unit
firm sold
Date Qty. Cost
fourTotal
unitsQty. Unit
Cost Cost
Total
Cost Qty.
Unit Total
Cost Cost
Item 127B Units Cost Price

Jan. 1
for $31 each. 10 20 200
Jan. 1 Inventory 10 $20
4 7 20 140 3 20 60
4CostSale
of 7 $30
10 8 21 168 3 20 60 10 Purchase
Mdse. Sold 8 21
8 21 168 22 Sale 4 31
22 3 20 60 28 Sale 2 32
1 21 21 7 21 147
30 Purchase 10 22

Of the four units sold, three are

On January 22, the firm sold
from the first units in (fifo) at a
cost of $20. 49
four units for $31 each. 50

FIFO Perpetual Inventory Account FIFO Perpetual Inventory Account

Item 127B
Inventory cost data to demonstrate
Purchases Cost of Mdse. Sold Inventory Balance
FIFO Perpetual Systems
Unit Total Unit Total Unit Total
Item 127B Units Cost Price
Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 Inventory 10 $20
Jan. 1 10 20 200
4CostSale
of 7 $30 4 7 20 140 3 20 60
Mdse.Purchase
10 Sold 8 21 10 8 21 168 3 20 60
22 Sale 4 31 8 21 168
28 Sale 2 32 22 3 20 60
1 21 21 7 21 147
30 Purchase 10 22
28 2 21 42 5 21 105

On January 28, the firm On January 28, the firm

sold two units at $32. 51 sold two units at $32. 52
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FIFO Perpetual Inventory Account FIFO Perpetual Inventory Account

Item 127B
Inventory cost data to demonstrate
Purchases Cost of Mdse. Sold Inventory Balance
FIFO Perpetual Systems
Unit Total Unit Total Unit Total
Item 127B Units Cost Price
Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 Inventory 10 $20
Jan. 1 10 20 200
4CostSale
of 7 $30 4 On January 30, purchased
7 20 140 3 20 60
10 Purchase
Mdse. Sold 8 21 10 8ten additional
21 168 units of Item 3 20 60
22 Sale 4 31 127B at $22 each. 8 21 168
28 Sale 2 32 22 3 20 60
1 21 21 7 21 147
30 Purchase 10 22
28 2 21 42 5 21 105
30 10 22 220 5 21 105
10 22 220
On January 30, purchased ten additional Totals 18 $388 13 $263 15 $325
units of Item 127B at $22 each. 53 54

FIFO Perpetual Inventory Account

Item 127B

Purchases Cost of Mdse. Sold Inventory Balance

Unit Total Unit Total Unit Total

Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200 Fifo
4 7 20 140 3 20 60
10 8 21 168 3 20 60 Periodic
8 21 168
22 3 20 60
1 21 21 7 21 147
28 2 21 42 5 21 105
30 10 22 220 5 21 105
10 22 220
Totals 18 $388 13 $263 15 $325
55 56
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Fifo Periodic Fifo Periodic

200 units @ $9 Jan. 1 Beginning 200 units @ $9 = $1,800 Jan. 1
Inventory
300 units @ $10 Mar. 10 Purchase 300 units @ $10 = 3,000 Mar. 10

400 units @ $11 Sept. 21 Purchase 400 units @ $11 = 4,400 Sept. 21

100 units @ $12 Nov. 18 Purchase 100 units @ $12 = 1,200 Nov. 18
1,000 units available 1,000 units available $10,400
for sale during for sale during
year year Cost of merchandise
57 58
available for sale

Fifo Periodic Fifo Periodic

A physical count on
December 31 reveals that Soldunits
200 these@200
$9 = $$1,800
0 Jan. 1
ending units of inventory is
Soldunits
300 these@300
$10 = 3,0000 Mar. 10
300.
Sold
400 units
200 200 of
@these
$11 = 4,400
2,200 Sept. 21
The cost of the ending inventory is found
by taking the unit cost of the most recent 100 units @ $12 = 1,200 Nov. 18
purchased and working backward until all
1,000 units available $10,400
$ 3,400
units of inventory are costed
for sale during
59
year Ending inventory 60
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Summary of Fifo Periodic

Fifo Periodic Cost of
Merchandise Merchandise
Available Sold
Purchases for Sale
Cost of merchandise available for sale $10,400 Jan. 1
200 units at $9 $1,800
Less ending inventory 3,400 $7,000
700 units
Mar. 10
Cost of merchandise sold $ 7,000 300 units at $10 $3,000
Sep. 21
400 units at $11 $4,400
Merchandise
Nov. 18
100 units at $12 $1,200 Inventory
$2,200 200 units at $11
1,000 units $10,400
$1,200 100 units at $12

$3,400 300 units

61 62

Average Cost Periodic Average Cost Periodic

Jan. 1 Beginning 200 units @ $9 = $ 1,800

200 units @ $9
Inventory
300 units @ $10 = $ 3,000
300 units @ $10 Mar. 10 Purchase

Sept. 21 Purchase 400 units @ $11 = $ 4,400

400 units @ $11
100 units @ $11 = $ 1,200
100 units @ $12 Nov. 18 Purchase
1,000 units available $10,400 Cost of
1,000 units available merchandise
for sale during
for sale during available for sale
year
year 63 sale 64
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Average Cost Periodic Average Cost Periodic

Cost of Merchandise
Available for Sale
= Average Unit Cost Cost of merchandise available for sale $10,400
Units Available for Sale
During Year Less ending inventory ($10.40 x 300) 3,120
Cost of merchandise sold $ 7,280
$10,400
= $10.40 per Unit To verify this
1,000 Units
amount, multiply
700 units sold
times $10.40 to get
the same $7,280.
65 66

3. Accounting for materials and tools 3.1 Source documents

3.1 Source documents
3.2 Detail accounting for materials and tools
3.3 General accounting for materials and tools
3.3.1 Perpetual accounting system applied
3.3.2 Periodic accounting system applied
67
• Inventory receiving report (Form 01-VT)
• Inventory issuing report (Form 02-VT)
• Inventory inspection report (Form 03-VT)
• Inventory report (Form 04-VT)
• Inventory stocktake report (Form 05-VT)
• Inventory purchasing list (Form 06-VT)
• Allocation table (Form 07-VT)
• Commercial invoice
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3.1 Source documents 3.1 Source documents

Receiving Materials received are Receiving
Report Report Invoice
No. 196 inspected by the No. 196
Receiving Department.
Once inspected, a
receiving report is The receiving report and the invoice are used
prepared showing the to record the receipt of the merchandise and
quantity received and to control the payment.
its condition. Sample:

69 70

3.2 Detail accounting 3.2 Detail accounting

Parallel processing warehouse card
Warehouse card

Detail accouting methods (refered in the Inventory receiving Inventory issuing

voucher voucher
textbook, pages from 89-90)
Detail accounting
ledgers

NOTE:
General report of input –
output in inventory daily record
record at the end of month
daily reconciliation
71 General ledgers
reconcile at the end of 72
month
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3.3 General accounting for materials and tools

3.3 General accounting for materials and tools 3.3.1 Perpetual accounting system applied
• Accounts used

3.3.1 Perpetual accounting system applied  Acc 151 - Goods in transit

 Acc 152 – Materials
 Acc 153 – Tools and supplies
3.3.2 Periodic accounting system applied
 Acc 133 – Deductible VAT
 Acc 331 – Account payable
 Acc 111, 112 – Cash on hand, in bank
 Acc 621,627,641,642 – Expenses
 Acc 242 – Prepaid expenses
74
73
…

Account 151 “Goods in transit” Account 152 + 153 “Materials”

Cost of materials increased by Cost of materials decreased by

Value of goods owned by the Value of goods in transit which is
entity in transit at the end of the received by the entity  Receiving (from purchase,  Issuing for use in business
period production…) activities…
 Revaluation  Deducting purchase returns
and allowances, trade
 Stock- taking
discounts
 Revaluation
Balance
 Stock – taking

Balance: cost of materials

at a point of time
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3.3.1 Perpetual accounting system applied

Common transactions
a. Materials and tools received by purchase
• Goods in transit
b. Materials issued for use in business activities
c. Tools issued for use in business activities
a. Increases in Materials, tools and Supplies
a.1. Materials and tools received by purchase
*Case1: receiving inventory and invoice at the same time
*Case 2: received inventory but not received invoices yet
*Case 3: Inventory in transit
(Value of inventory purchased under ownership of the enterprise
which are on the way of delivery, in ports, bonded warehouses or
have arrived at the enterprise but they are pending storing)

*Case 4: Discounts
* Case 5: Checking inventory

77 Refered in the textbook page 92-93 78

a. Increases in Materials, tools and Supplies a. Increases in Materials, tools and Supplies
* The 1st case : received inventory and invoice at the same time *The 2nd case: inventory received but the invoice is not received yet

- Accountant has the receiving report only

- If input VAT is deductible, the following entries:
Acc 152,153
- if the Invoice has been received for the month : Recorded as the 1st case
Acc 111, 112, 141, 331,....
VAT excluded
from cost - At the end of the month, if the Invoice has not been received:
Acc 133 Recorded by the estimated price
Total value Deductible VAT Acc 331 Acc 152,153
The estimated price

- If the input VAT is not deductible, cost of inventory includes - Next month, if the Invoice has been received
VAT Making the adjustment based on the Invoice price
Acc 111, 112, 141, 331,....
Acc 152,153

Total value 79
Referred on the lecture notes 80
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a. Increases in Materials, tools and Supplies a. Increases in Materials, tools and Supplies
*The 3rd case: Inventory in transit Example:
- the Invoice has been received but inventory has not received • Purchased 100 units of materials A on credit
- Within a month, if the inventory has been received: recorded as the 1st case from Alden Company: 22,000,000 dong,
- At the end of the month, if the inventory has not been received, recorded as including 2,000,000 dong of VAT.
“goods in transit” Transportation costs paid by cash: 500,000
Acc 152, 153, 621…
Acc 111, 112, 141, 331,....
Acc 151 dong. All materials are brought to the store
Invoice price (2) Cost of inventory (both receiving notes and invoice are
Acc 133
received by accountant)
Total value deductible VAT
• Using the perpetual system of accounting,
provide the journal entry for the above
- Next month, if the inventory has been received, transactions
recorded as the decrease in “Goods in transit” account. 81 82

a. Increases in Materials, tools and Supplies a. Increases in Materials, tools and Supplies
Goods in transit
Goods in transit
• Source documents: purchase invoices only • Whenever the accountant receives the
• Journal entry (made at the end of the period receiving note of this purchase, then the
- perpetual method): following journal entry is made (perpetual
– Dr acc 151 – Value of materials and tools in method):
transit – Dr acc 152, 153 – Value of materials and tools
– Dr acc 133 – deductible VAT (if any) received
• Cr acc 331 – total amount payable • Cr acc 151 – value of materials and tools in
transit

83 84
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a. Increases in Materials, tools and Supplies a. Increases in Materials, tools and Supplies
Goods in transit - Example *The 4th case: Discounts incurred
Trade discounts (quantity, purchase): allowed by the seller to the buyer on
• Purchased 100 units of materials A on credit the large quantity of goods as announced, excluded from cost of inventory
from Alden Company: 22,000,000 dong,
including 2,000,000 dong of VAT according Payment discounts (Settlement, cash): allowed if the customer pays
before the due date, recorded as Financial imcome
to the invoice dated Sep 15. At the end of the
Acc 152, 153
month, the accountant has not received the Acc 111, 112, 331
Trade discounts
receiving note of this purchase. Suppose
VAT is deductible. Acc 515
Payment discounts
Total
• Using the perpetual system of accounting, discount

provide the journal entry for the above Acc 133

VAT
transactions 85
86

b. Receiving inventory a. Increases in Materials, tools and Supplies

* The 5 th case: Stock taking (physical inventory counts)
* The 5 th case: Stock taking (physical inventory counts)  If surplus incurred:

+ The reason of measuring equipments

+ The reason of suppliers’ mistakes
* Surplus + On investigation Acc 152, 153
Cases * Lower than Acc 331
deficiency quotas Receiving all to warehouse
* Shortage
Acc 338(1) (1)
Purchase for
surplus’differences
* Higher than (2a) Acc 133 Acc 133
deficiency quotas
Acc 152, 153 Surplus
Return to suppliers
(2b)
88
87
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a. Increases in Materials, tools and Supplies

a. Increases in Materials, tools and Supplies
* Case No 5: checking inventory
Shortage:
+ Lower than deficiency quotas a.2. Production
+ Higher than deficiency quotas
Acc 152, 153, 133 a.3. Investments
Acc 331
Actual cost a.4. Gifts
Acc 138(1)
a.5. Donation
Suppliers’ mistakes

Acc 138(8)
…
compensation
+ If Higher than
deficiency quotas, reasons Acc 632
can be identified Recorded in cost of good sold
immediately, no need to
89 90
record on Acc 138(1)

Acc154 Acc152,153 b. Issuing of inventory

(2) Production
Purposes for issuing ???
Acc411 - For production - For investment
- For consumption - For loans
(3) Investments
b1. Issuing materials

Acc711
* For production
(4,5) Gifts, donations,…
* For consumption
* For investment

* Other purposes (referred in notes)

…
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Acc621,627,641,642
Acc152 b1. Materials issued for use in business activities
(1) For business activities
Example
Acc154
(2) For outcourcing agrement • Issuing 15,000,000 dong for direct use in
production, 2,000,000 for use in sales
Acc632
department
(3) For sale
• Journal entry (perpetual method) :
Acc711
Acc222
(4) Differences (4) Investment
Acc811

Related
(5) Others Acc…

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b2. Tools issued for use in business activities b2. Tools issued for use in business activities
Example
• Source documents: Goods issuing notes • Issuing 100 tools with the value of
• Journal entry (perpetual method) : 15,000,000 dong for use in production
– Dr acc 627,641,642… – cost of tools issued – if department. These tools have the useful life
it is small of 12 months
– Dr acc 242 – if it is quite large and needed to • Provide the journal entry for the above
allocate for more than 1 period transaction if
• Cr acc 153 – Cost of materials issued – The accounting period is 1 month
– The accounting period is 1 year

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b3. Issuing tools General accouting for both receiving and issuing (perpetual system)
Instrument for renting
Acc 111, 112, 141, 331,.... Acc 152,153 Acc 621
Acc153(3) Acc 242 Acc 133
Acc 627 Issuing for production
Total Deductible

Payment VAT
Issue tools Allocation of value Issuing for selling, Acc 627, 641, 642
Receiving Inventory
administrative activities,
Acc 3333 construction
Receive tools Import tax Acc 242
Issuing tools, Periodically
Acc 151 allocate
Acc111,112,131 Receiving “goods in
allocate many
Acc511 times
transit” from last month
Acc 632, 157
Income received Acc 411 Receiving inventory as Issuing for consumption
capital investment
Acc 154
Issuing for others to produce
Acc154 Self – make, hire others for the company (outsourcing
to make, out-sourced agrement) Acc 811
materials Acc 222
Acc3331
Investment Diffenrence
Acc 222 Receive investment in
other entities
Acc 711
Diffenrence
Acc ... Acc 136, 138
97
For loans....
98

Account 151, 152, 153

3.3 General accounting for materials and tools
3.3.2 Periodic accounting system applied
• Accounts used Value of goods in transit, Transferring the beginning
materials, tools and supplies at balance to acc 611
the end of the period transferred
 Acc 151 - Goods in transit from acc 611

 Acc 152 – Materials

 Acc 153 – Tools and supplies
 Acc 611 – Purchase
…

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General accounting for receiving and issuing (periodic

Account 611 “Purchase” system)

 Receiving the beginning  Transferring materials, tools

balance of acc 151,152,153 inventory, goods in transit at the Acc 151,152,153,.. Acc 611
Acc 151,152,153…
end of the period to 152, 153,151
 Cost of materials, tools Transfer OB Transfer CB
increased during the period Cost of materials and tools Acc 133
used for different purposes Acc 111,112,331,.. VAT Acc 111,112,331,..

during the period Total Discounts

payment

Acc 621, 627,..

Acc 333
Issue for production
Import tax

Acc ,..
Acc 411
…................................
Receive as capital
Acc 6111: Materials and tools purchase investment
Subsidiary accounts: Acc 711
Donated/presented
Acc 222,..
Issue for investment
Acc 6112: Goods purchase
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…

Chapter 2

The end

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