Accounting profit and loss is the process of recognition and synthesis revenue and expenses during the period to determine the business results (profit or loss) of the enterprise. The data then be transferred through account 911 to report the results of business operations, serves evaluate the effectiveness, governance and tax obligations.
Master the principles, methods and processes, the transfer of interest holes in circular 200/133 is necessary for business management, cost control, cash flow and ensure financial reporting transparency.
The same Lac Viet learn in detail how to set up accounting the profit and loss early in the year, end of the year, principles of account, and follow the accounting standards in Vietnam.
1. Accounting profit and loss is what? Role in business
Accounting profit is the accounting process recorded, synthesized, as well as reflects the entire trading results of the business in a period, including revenue, cost and profit incurred. This is important tool to help organizations and businesses are to find out information about accounting the profit and loss can assess performance, determine profitability to governance decisions based on accurate data.
The role of accounting the profit and loss including:
- Evaluate business performance: Business, understand profit fact, define the array any business bringing high-value and the array would need to optimize costs.
- Support cost management: Helps in tracking the expenses were incurred, costs not allocated with the pen the transfer pnl beginning of the year or end of the year according to circular 133.
- Decision support: From the results of the pnl leaders have the facility to financial planning, cash flow projections, and given the strategic decisions.
- Legal compliance: fully recognize revenue, expense, gain or loss to help ensure compliance with accounting standards and tax obligations.
2. The method of accounting the profit and loss popular
The organizations and enterprises are to find out information about accounting the profit and loss. The table below sum up the method of accounting profits and losses downloads, compare the advantages and disadvantages and apply to each method:
| Criteria | Direct method | Indirect method |
| Way | Recorded direct revenue & cost to TK trading results. | Starting from accounting profit, adjusted for expenses not incurred cash, the revenue has not collected the money to reflect cash flow. |
| Advantages | Simple, easy to follow, quickly. | Fully reflect cash flow, support a forecast profit and loss, as well as liquidity management. |
| Cons | Does not reflect cash flow, difficulty, cost analysis according to the project/product. | Complex, requires data complete and accurate, need accounting system general good. |
| Applicable objects | Small business, medium (TT133) | Medium business & large (TT200) |
The organizations and enterprises are to find out information about accounting need to consider the suitable methods to optimize accounting pnl beginning of the year/end of the year, the transfer pnl 911 and the shipping interest, anal, 421.
3. Instructions on how accounting profit the first year and last year
This is grounds for reporting the results of operations, business service management to strategic decisions.
3.1. Accounting for the transfer pnl beginning of the year
Balance transfer of profit or loss has not distributed from the previous period to start any new guarantees report early years accurately reflect the equity and financial situation. Ensure data show the accurate, reflecting the true equity, accounting support, tracking, control the flow of money as well as cost allocation.
Principle:
- Consistency: maintain data consistency between the reported financial year ago and balances, beginning of period new (balance TK 421 end of the previous year equal to the balance of TK 421 beginning of the year).
- Compliance: Use the pen to calculate the shipping rate for year circular 133 (or TT 200 for large businesses) to ensure compliance with accounting standards in Vietnam.
How accounting profit and loss hasn distribution:
| Case | Content accounting | The account |
| Businesses are undistributed earnings (balance Have TK 421) | The transfer of undistributed earnings from years ago to the beginning of the year. |
|
| Business has accumulated losses (Debt balances TK 421) | The transfer of accumulated losses from years ago to the beginning of the year. |
|
Use TK 911 in the pen math beginning of the year is not correct, because TK 911 is account intermediate used to determine the results of business in the states must have a 0 balance at the end of the period. Pen math beginning of the year is just restoring the balance of TK 421.
Note: accounting entries the beginning of the year is the balance transfer, the end period of the previous year and only made on 01/01 following year (or the first day of the new accounting) if the business needs re-adjustment of the initial states.
3.2. Accounting profit last year
Synthesis of the entire revenue and expenses during the period to determine the business results, from which the switch to the account equity. This step is important to report the results of business activities provides information management for leadership.
Principle:
- Synthesis of the entire balance of the sales account (511, 515, 711) and cost (632, 641, 642, 811, 911).
- Use TK 911 (defined business outcome) as the account intermediate to compare the total revenue and total cost.
- The final data (profit/loss) from TK 911 to TK 421 (profits not distributed).
How accounting profit last year:
After you've made the entry to transfer detailed revenue and cost at TK 911, the accountant will perform journal entries end:
| Case | Pen last payment | The account |
| Business Interest | The transfer part of the interest, net rental TK 421. (TK 911 blowjob) |
|
| Business with Holes | Transfer the net loss to TK 421. (TK 911 outstanding Debt) |
|
Assess the effectiveness each array of business activities is a basis to the budget the following year, cash flow projections and investment decisions, while ensuring compliance with accounting standards as well as tax obligations, reduce legal risks.
Note: Before making journal this, need to make accounting entries filed Corporate income Tax (CIT) if there is interest: Debt TK 8211 / Have TK 3334 and then Debt TK 911 / Have TK 8211 (to transfer the costs of corporate INCOME tax).
4. Process accounting profit and loss in business
Accounting profit and loss to help businesses identify business results in the states, as the basis of cost control, performance evaluation, operation and service of the management and financial decisions.
Step 1: collect & check stock from books
This is the platform to ensure the accuracy and legitimacy of data pre-recorded.
- Collect the full set: accounting needs to collect 100% invoice sales (revenue) coupons import/export warehouse, payment receipt/authorization details, the pay table with the economic contracts incurred during the period.
- Check the legality and validity:
- Legal: vouchers must be strictly regulated by law on form (electronic invoice valid digital signature...).
- Valid: content must be complete, accurate and properly reflect the business, economic, signed and full approval of the stakeholders.
- For horizontal projection: compare the total revenue/expense on books with the original documents to ensure no missing or duplicate items.
Thoroughly tested to help businesses avoid the risk of tax authorities exclude costs, is not valid when the settlement, from which minimize the amount of corporate INCOME tax payable whitewash.
Step 2: recognize revenue & expense detail
After the documents are verified, the accountant made the account and credited to the account related to the gain or loss, time tracking details on each cost centers (departments, projects) in order to control costs and improve the efficiency of use of funds.
- Revenue
- TK 511 (Sales): recognition of sales revenue.
- TK 515 (financial operations): Interest on bank deposits.
- TK 711 (other income): income from liquidation of assets,...
- Cost
- TK 632 (Price of capital): the Recorded cost of goods sold.
- TK 641 (Sales): wage Costs, advertising costs.
- TK 642 (Manager DN): depreciation Expense,
- TK 811 (other Costs): Costs, penalties for breach of contract,...
The accounting entries are recorded in detail during the accounting period is the basis to perform accounting the profit and loss end of the period under TT133/TT200 by summing the balance of the account revenue and costs.
Step 3: synthesis report profits and losses for the period
This is the center where business results are determined via account intermediate TK 911 (identified business results).
| Content | Profession | Accounting |
| Make pen payment transfer revenue – cost | Transfer revenue |
|
| The shipping costs |
|
|
| Define business results (profit and loss) | If there is Interest: (Ass TK 911 > outstanding debt TK 911) |
|
| If there are Holes: (outstanding debt TK 911 > Blowjob TK 911) |
|
Profit and loss statement for the period (resulting from the pen are the shipping rates, anal, 911) in order to understand the business situation, identifies the array profitability and the cost need control to make timely decisions.
Step 4: analyze results & decisions
Results from reported accounting profits and losses not just numbers but also the basis for strategic decisions.
- Analysis of the main indicators (KPIs):
- Gross profit margin: analyze the profitability of each product or department to determine the source of business income, adjusted selling price.
- Expense ratio: compare the account of expenses incurred fact (especially cost management) to plan, find out the account exceeds the budget to cut.
- Strategic decisions: based on balances TK 421 (retained earnings) (after payment of the corporate INCOME tax), business decision to allocate capital, established the fund, plans to pay dividends to shareholders or offset accumulated losses from previous years.
Step 5: collate, check back to avoid errors
Before closing the window to submit the report, should perform the final check to ensure accuracy for accounting the profit and loss 911 and transfer pnl beginning of the year/end of the year to TK 421.
| Content for reference | Purpose |
| Reconcile cash book/Bank | Check out the income and expenditure account, cash/deposits have joints with books (TK 111, 112) and the voucher has not. |
| Debt comparison | Balance confirmation TK 131 (receivable), TK 331 (pay) has matched a record for lighting public debt of the customer/supplier. |
| Check prepaid expenses | Ensure the expenses pending allocation (TK 242) were allocated into the cost in the states (TK 641, 642) in the correct time. |
| Check out pen math 911 | Confirmed after the transfer, the balances of the revenue accounts (5xx, 7xx) and Cost (6xx, 8xx) equal to 0. |
| Check out TK 421 | Ensure final balance of TK 421 on the balance sheet with profit after tax has not distributed on the reported results of business activities. |
Check and compare thorough help minimize the risk of false numbers in financial reports, ensuring the results transfer interest the correct hole, support, corporate governance effectively meet the requirements of the audit.
5. Risks when accounting the profit and loss & how to avoid them
False data in the accounting gain or loss can affect financial statements. Identify early and apply suitable control help accounting accuracy and proper implementation of accounting the profit and loss.
The common error:
- Revenue recognition the wrong states: That report business results don't reflect the true fact, directly affect the profit/loss TK 911 and the decisions of management.
- Costs not allocated properly: Expenses incurred but not yet allocated the right project, department or accounting period will distort actual profit, causing difficulty in determining accounting profit and loss 421 accurate.
- No test data collated: the Lack of cross-check of data between the banks and the debt easily cause errors, skewing results business and influence pens calculate the profit/loss according to TT 133/200.
How to avoid:
- The set up process, internal control: With the verification steps vouchers and collated data to help early detection of errors, ensure accounting entries the transfer profit/loss the beginning and end of the year exactly.
- Use accounting software professional: LV-DX Accounting support auto recognition, synthesis, and transfer revenue – cost to TK 911/421, reduce errors and optimize the performance of management.
- Check and compare which states: Made collation of data between windows funds, banks, public debt and account trading results help detect the revenue/expense not recorded, make sure the transfer profits and losses, and accounting TK 421 right circular 133/200.
6. Management of efficient accounting with accounting software Accnet ERP
Software Accnet ERP provides comprehensive solution to help businesses effectively manage business accounting profits and losses, reduce risk and improve the efficiency of financial management:
- Automation of accounting profit and loss: application software system for automatic recognition and transfer revenue, costs into account business results help determine the gain or loss exactly according to each states and significantly reduced the processing time for accounting.
- Report intuitive, quick analysis: provide reporting system synthesis, intuitive on business results, allowing the analysis of profits and losses under each department, project, or product, to support the management decision-making, timely and accurate.
- Support cost control and forecasting profit and loss: tracking software fluctuations in cost, timely warning of the account exceeds the threshold and support forecast profits and losses in the future and help business proactive financial control.
- Compliance with accounting standards and legal: software support accounting as prescribed in circular no. 200/2014/TT-BTC and circular 133/2016/TT-BTC, ensure financial reporting transparency, accuracy and consistency.
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Accounting profit and loss beginning of the year/end of the year are key to help enterprises aggregate, analyze and evaluate business results correctly. Comply with the principle method of the same process under the accounting standards in Vietnam not only ensure financial reporting transparency that also support control costs, manage cash flow effectively.
