Accounting for sales returns by TT 200 & 133 for sell-side, buy-side

Many businesses still have difficulty in identifying consistent account, the time recorded in the same manner, reflected on the financial statements. So master the legal rules, principles of accounting according to the circular 200/133 as well as implement the right process and record the receipt of goods, return is essential to ensure transparency of data, manage cash flow and profit efficiency.

The same Lac Viet Computing learn in detail how accounting, with illustrative examples, as well as note practice, help businesses operate, service delivery, precise to provide optimal business administration.

1. Overview of accounting for sales returns

1.1. Sales returns what is?

Sales returns is the product or service that customers have to buy, but then returned due to error, wrong, wrong parameters contracts expired, or the quality problem. This is a common situation in trade, especially with retail business or provide products, fmcg. Record the receipt of goods return helps regulate inventory, revenue, cost, and prevention recorded a profit “virtual” from the goods does not actually sold.

1.2. Accounting for sales returns is what?

Accounting for sales returns is business accounting is done when customer return the goods purchased. The main goal is to adjust the amounts of revenue, expenses, inventory, and public debt to accounting data reflect true reality. This is not merely recording window, which also helps businesses control cash flow, inventory management efficiency to reduce the risks of legal disputes with customers.

The role of the accounting:

• To ensure the accuracy of accounting data: properly Reflect the business situation, avoid status report revenues and profits is skewed.
• Inventory management – cash flow effect: When goods are returned, the business timely adjust inventory at the same time assess the need to purchase additional words that optimize cash flow.
• Compliance with laws – accounting standards: accounting right circular 200/133 & Decree 70 of bills, vouchers, electronic, help businesses avoid tax risks as well as financial ombudsman.
• Reduce the risk of dispute: When the return comes rebates or incentives, the accounting exactly help business transparent with the customer, limiting the dispute about the amount of payment.
• Support business decisions: data accounted for accurately provide the information base to manage pricing, promotion strategy and plan inventory.

2. Legal regulation of professional sales returns

To ensure accounting data accurately comply with the law, enterprises need to perform accounting for sales returns under the current rules.

2.1. Regulations under circular 200

This is the accounting standards for enterprises to apply accounting Standards in Vietnam (VAS), according to Circular no. 200/2014/TT-BTC. In accordance with the enterprise-scale, medium and large, made to account details.

Legal point should comply with:

• Must have bill/stock returns valid (according to decree 70/2014/ND-CP about electronic invoices and invoices).
• Vouchers need full prescribed.
• Recorded right time of receipt of returned goods to ensure data accurately reflected.

2.2. Regulatory principles according to circular 133

Small & medium business, apply circular 133/2016/TT-BTC. In accordance with the business on a small scale, the number of service restrictions.

Main differences compared to TT200:

• Do not use TK 5212 private record up directly into TK 511 when goods is returned.
• Pen payments remain, including: reduced turnover and warehousing of the goods back, adjust the debt.
• Simple process, easy to apply for small & medium business.

Liability:

• Seller: adjusted revenue, invoice adjustment (if necessary), to comply with the tax regulations as well as electronic invoices according to Decree 123/2020/ND-CP.
• The buy side: adjust The purchase cost and liabilities, store stock from full to collate when check out.

Note: Businesses that need accounting for in full the case of sales returns, including discounting, in order to ensure sales and profits reflect the true fact. At the same time precisely adjusted costs of purchase, debts and input VAT, in particular with commercial enterprises or small-scale production has a frequency of returns high.

3. By accounting for sales returns by TT200 & TT133

When a customer returns goods purchased, the seller (the business) need to make the accounting entries accounting to adjust to the decrease in revenue was recorded earlier as well as the recorded value of goods enter the warehouse.

3.1 accounting adjustments reduced turnover

The adjustment of revenue due to the accounting for sales returns is done differently depending on the mode of accounting that business apply.

• Under circular no. 200/2014/TT-BTC (applicable for medium and large business), the account sales returns are recorded on separate account, helps financial statements present clear, transparent deductions revenue.

Use accounts 5212 help separate revenue, gross (TK 511) from the deductions (TK 5211, 5213), from which the net revenue obviously, adhere to the principle of accrual accounting and easily collate details.

• According to circular 133/2016/TT-BTC (medium sized businesses – small): circular 133 apply rules to simplify accounting, according to which no use account level 21 (521), which recorded directly to the sales account.

Note: If the returned item comes trade discount before that don't burn up the discount on TK 5212. The account other discounts do not belong to the returned goods should keep in TK 531 (according to TT200) or directly into TK 511 (according to TT133) to properly reflect the transactions and real profits.

3.2 accounting entry warehouse return (adjusted price of capital)

In parallel with the adjusted revenue, businesses need to make journal entries to record the goods have been returned to the warehouse.

How to account:

• Debt TK 156/155/152 (inventory/finished products/raw material) – Recorded an increase in value of the property inventory.
• Have TK 632 – cost of goods sold – Complete income (reduced) cost price which had the previously transferred.

Implementation adjustments, revenue, and price of capital helps to reflect the correct net sales and gross profit, only the transaction has completed. At the same time, adjust inventory joints fact to manage resources effectively.

4. How accounting return the purchased goods to the supplier

When a business detects goods do not reach the quality, the wrong way rules or excess and decided to pay back to the supplier, the accountant must perform the adjustments and reduce public debt to pay, as well as exclude the value of inventory related.

4.1 Business accounting adjustments reduce the debt – reducing the cost of purchase

Accounting for sales returns reflect the buyer is a provider approved deduct the amount of payments to be paid, at the same time exclude the value of goods paid out of the warehouse.

Note: With the method of the value credited TK 156/155/152 must match the value of Debt when entering the warehouse. With inventory periodically, business end adjustment through your account or associated costs, not directly into TK 156.

4.2 accounting adjustment of public debt when paid in advance (refundable)

In case the buyer has paid the whole or part of the money for the goods to the supplier before return the item, supplier will make a refund of the amount corresponding to the value of the returned goods.

Refund help balance the payment account and adjust the balance of accounts payable (TK 331) about the accuracy, avoid errors in the recorded public debt or deficiency of cash/bank deposits.

5. For example, accounting and sales returns

Hypothetical situation: company A (seller) sold to company B (buyer) 200 products X with the sale price before tax is 50.000 VND/product.

• Capital price of product X is 40,000 VND/product.
• VAT: 10%.
• Services rendered: company B is 100 defective product returned to company A.

Accounting at company A (seller)

Company A conducted the journal entries to reduce turnover, reduce receivables and re-enter the inventory number of rows is returned.

Table 1: Reduced turnover – VAT (Recorded the reduction obligation to pay/refund for customers to adjust sales tax, VAT output related according to information from 200)

• Debt TK 5212 (sales returns): 5,000,000 VND => (100 sp x 50.000 VNĐ) – reduced revenue
• Debt TK 33311 (output VAT): 500.000 VNĐ => (vnd 5,000,000 x 10%) – Reduction of the Tax payable
• Have TK 13 (to customer): 5,000,000 VND => Reduce receivables company B (or burn refund if already paid)

(If applicable circular 133 {DN, small & medium}: accounting up directly into TK 511 instead of TK 5212.)

• Debt TK 511: 5,000,000 VND
• Debt TK 33311: 500.000 VNĐ
• Have TK 131: 5.500.000 VNĐ

Table 2: re-Enter the warehouse, the returned item – discounted capital (return eligible to enter the warehouse are recorded into account inventory and reduce cost of goods sold was noted earlier.)

• Debt TK 156 (cargo):4.000.000 VNĐ => (100 sp x 40.000 VNĐ) – Recorded an increase in inventory value
• Have TK 632 (cost of sales): 4.000.000 VNĐ =>reduced cost of goods sold has the transfer

Accounting in company B (buyer)

Company B proceed with the accounting entries to reduce the public debt to pay, reducing the input VAT has been deducted and adjust to reduce inventory (reason for the return).

• Table 1: Reduction of public debt to pay – taxes, VAT input (Recorded obliged to return the goods to the supplier to adjust the reduced input Tax withheld when making a purchase.)

• • Debt TK 331 (Must be paid by the seller): 5.500.000 => Reduced payment obligations for company A (including tax)
  • Have TK 156 (cargo): 5.500.000 => (100 sp x 50.000 VNĐ) – Reduced inventory value
  • Have TK 1331 (Tax VAT is deducted): 500.000 => (vnd 5,000,000 x 10%) – Reduced input Tax withheld
• Pen payment 2: If company B has to pay to the company A pre-paid goods (If The company is A refund of cash or bank transfer to company B.)
  • Debt TK 111/112 (Cash/TGNH): 5.500.000 VNĐ => Increase cash/money sent by The company A return
  • Have TK 131 (other receivables): 5.500.000 VNĐ => reduced accounts receivable from company A

Note: table 2 is done only if there has been arising payment/refund reality. If unpaid, just make accounting entries 1 to adjust the public debt (TK 331).

6. Process of accounting for sales returns

Process of accounting for sales returns not only in the record books, but also as a tool to help businesses control closely revenue, inventory and public debt, limiting the risk of dispute and ensure compliance with laws, including Decree 70 of electronic invoices. The implementation process includes the following steps:

Step 1: Get the returned item from customers.

When customers return the goods, the first step is most important is to receive and check the returned goods. The accounting department in collaboration with the warehouse needed to carry out the specific steps below:

• Confirmation number – type of returned goods: by the way, check out the actual number, reconcile invoices, warehouse, contract of sale, the recorded full information on each product, to sorting by status: intact, damaged, technical error or too-term use.
• Test conditions of delivery: specify the returned goods with discount, promotional, or the conditions of contract, special, precisely defined portion of the revenue decline and the cost of the discount arising at the same time reconciling invoices, warehouse, as well as relevant documents to ensure legal compliance accounting for sales returns according to the decree 70 of electronic invoices.
• Assess the condition of the returned goods: Identify goods intact into the treasury to selling to adjust inventory, the price of capital, while the error or damage should own recorded to handle, including discounts, destroy, or return to the supplier if appropriate.

This step helps the business determine the exact number and value of goods, avoid recorded “virtual goods” falsify sales as well as inventory, at the same time provide the basis for the write-down in revenues, adjusted debt, enter the warehouse and the cost of the discount

Step 2: inventory quantity, quality goods.

After receiving the returned goods from customer, the next step is detailed inventory quantity, as well as assess the quality of goods to ensure accounting data reflect reality as the basis for the accounting entries accounting. Parts warehouse in collaboration with the accountant should perform the specific steps:

• Determine the exact number of products returned against the bill initially, the warehouse and the contract of sale.
• Recorded the full information of each product as product code, product name, amount, price, unit, at the same time classification of goods returned by status: intact, damaged, technical error or too-term use.
• Check out the quality of the goods to determine the material can enter the warehouse sale next, adjust inventory and price capital, or have to handle such special discount sale, destroy, or return the supplier.

Inventory and help the business determine the correct inventory fact, timely detect damaged or bugs to the project dealt with accordingly. At the same time, this is the basis to perform the write-down in revenues, adjusted debt, warehousing and recorded cost of the discount (if have), ensuring data inventory and profits reflect the true fact.

Step 3: collate invoices, and vouchers.

After the inventory, the business needs for projectors invoice with the relevant documents to ensure service delivery is done legally and complying with the law. The accounting department to check the original invoice, accounting for sales returns according to the decree 70 (about bill electronic) juxtaposed with warehouse, contract of sale, coupons, discount if any.

This step ensures business compliance with the provisions of the bill as well as electronic vouchers reduce the risk of dispute with customers or the tax authority. At the same time, the data stock from the full precision as the basis for the accounting entries accounting of revenue, expenses and inventory, which helps financial statements properly reflect the business reality.

Step 4: accounting into the accounting books.

When data has been inventoried and collated, business conduct recognized in bookkeeping:

Accounting exactly reflect the sales, inventory and public debt, from which support financial analysis, evaluate the profitability and cash flow management efficiency. At the same time, compliance with accounting standards will reduce the risk of errors, limited to the dispute and ensure business operations transparent.

Step 5: store vouchers in full.

The last step is to store the entire stock from related to ensure transparency and ease for reference in the future. Businesses need to keep invoices, returns, contracts, memorandum of inventory with the evidence from other related.

The full archive help increase transparency, reduce the risk of legal disputes with customers. At the same time, support the administration department in the analysis of sales, inventory, profit as well as business efficiency, create a basis of reliable data to make decisions quickly and accurately.

7. Note when deploying services sales returns

Before deploying accounting for sales returns, businesses should note the basic rules to ensure accurate data, compliance with the law in order to optimize the accounting process.

• Apply the right accounting standards: Businesses need to choose the right method of accounting according to the scale. With TT 200, using TK 5212 to record sales returns and the transfer end to TK 511. With TT, 133, reduced directly TK 511 to reflect actual revenue.
• Control of documents full: store invoices, returns, contracts, as well as record inventory to cater for projected tax inspection. This helps businesses comply with the law reduce the risk of dispute with customers or suppliers.
• Use accounting software automation: The software helps to record sales returns precise, automatic adjustment, revenue, inventory, and the liabilities of each transaction. At the same time, provide analysis reports to help management, profit, inventory, cash flow effectively.

Apply the right standards, control of documents, as well as utilize accounting software to help businesses manage sales, inventory and debt efficiency, reduce legal risks increase transparency in business administration.

8. The optimal way of business accounting software-LV-DX Accounting

For accounting business sales returns, handling tools, books or Excel is often time consuming, easy to errors and difficult to control the adjustment of sales, warehousing or discount. LV-DX Accounting provides accounting solutions, comprehensive help automate the process of accounting, ensure the accurate data and optimal operating time.

• Automation service sales returns: LV-DX Accounting recorded automatically in the service delivery, reduction in revenues, adjusted debt, warehousing as well as cost discount, help accounting test data fast and accurate.
• Data management concentration: all information, goods, returned goods, discount and inventory stored on the electronic platform security, easy lookup to ensure compliance with the Decree 70.
• Optimal process – decision: The software automatically transfer balances, update inventory as well as sales, provide reliable data to manage costs, inventory and profitability.
• Convenience – flexible: access Support on web/mobile, help management accountants perform accounting anytime, anywhere, suitable business many branches or working environment, flexible.

When deploying LV-DX Accounting, business minimize the risks of errors in accounting, time-saving operation at the same time increase transparency in financial management. This is the ideal solution for organizations that want to optimize the process of accounting for sales returns, as well as management accounting data comprehensive. To experience directly and find out details, visit: LV-DX Accounting.

Accounting for sales returns are pivotal to help businesses accurately reflect revenue, expenses, inventory and public debt, from which manage cash flow with profit efficiency. When done properly process circular 200/133, combined storage full voucher valid business not only minimize risk of legal disputes with customers, but also create a solid base for the business decisions, adjust inventory, pricing policy, as well as sales plan reasonable.