Circular No. 11-TC-CĐKT guides the accounting methods for recording certain expenses arising during the production and business operations of enterprises.

CIRCULAR

Guidelines on accounting methods for certain expenses incurred during production and business operations...
In accordance with the provisions of Circular No. 115-TTg dated December 12, 1963 of the Prime Minister, Circular No. 191-UB-TT-TC dated December 19, 1963 of the State Planning Committee, the Ministry of Finance hereby stipulates below the accounting methods applicable to various industries. For construction projects, separate circulars will be issued for explanation.

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1. Accounting for losses due to natural disasters and fires.

The accountant must base on approved documents regarding the handling of losses, record in the books according to each specific case as follows:

- For fixed assets that are damaged and must be scrapped, after approval from superiors, the accountant must record as in the settlement of fixed assets as prescribed in the accounting regulations, under the accounts "Fixed Assets", "Settlement of Fixed Assets" and "Basic Capital".

- For damaged materials (raw materials, finished products, goods), when calculating the loss reported to superiors for resolution (must account for scrap value recovered from damaged materials to offset the actual cost of the damaged materials), record as follows:

Debit Scrap Value (record the value of recoverable scrap).

Debit Damaged Materials Surplus and Shortage Awaiting Resolution (loss amount proposed to superiors for resolution).

Credit Raw Materials.

Or Finished Products.

(If recording materials at planned prices, adjust to actual prices as prescribed in the accounting regulations).

Goods

- When superiors resolve the issue, based on their decision, transfer the loss from the credit side of the "Damaged Materials Surplus and Shortage Awaiting Resolution" account to the debit side of related accounts, as follows:

If attributed to external causes, debit the "Profit and Loss" account (detail abnormal loss due to natural disasters and fires, for commerce, debit the detail of asset loss).

If attributed to internal causes of the enterprise, debit the "Enterprise Management Expenses" or "Distribution Expenses" accounts.

If the responsible person is ordered to compensate, the compensation amount is recorded on the debit side of the "Other Receivables and Payables" account, the accountant has the responsibility to recover this amount as prescribed in the accounting regulations.

- In losses due to natural disasters and fires, there may also be additional losses from production stoppages and costs to settle the aftermath of natural disasters, accounted for as follows:

Losses from production stoppages, recorded as prescribed in the accounting regulations.

Costs to settle the aftermath of natural disasters, recorded as follows:

Debit Costs Awaiting Allocation.

Credit Cash Fund.

- Settlement with workers and staff.

Depending on the decision of superiors, if attributed to internal causes of the enterprise, these losses will be transferred from the credit side of the aforementioned account (losses from production stoppages or costs awaiting allocation) to the debit side of the "Enterprise Management Expenses" or "Distribution Expenses" accounts; if attributed to external causes beyond the enterprise's control, record on the debit side of the "Profit and Loss" account (explained in the previous section).

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2. Costs and losses from production stoppages.

Accounting for this item must be conducted according to different production scenarios as prescribed in Circular No. 115-TTg.

- Production stoppages planned in advance are recorded as prescribed in the "Advance Expense Provision" account of the accounting regulations. These stoppage costs are provisionally included in the cost price of each period according to the plan.

- Unplanned production stoppages are recorded as prescribed in the "Losses from Production Stoppages" account of the accounting regulations. If caused by the enterprise's shortcomings, transfer these costs from the credit side of the "Losses from Production Stoppages" account to the debit side of related cost and distribution expense accounts. If caused by another agency or unit, the principle is to demand compensation from the responsible unit. The compensation amount must be transferred from the credit side of the "Losses from Production Stoppages" account to the debit side of the "Other Receivables and Payables" account. If there is a national or superior regulation, this amount should be recorded on the debit side of the "Profit and Loss" account (loss from production stoppages).

3. Expenditures for experts.

According to Circular No. 115-TTg, expenditures for experts are recorded as follows:

- Salaries of experts in production enterprises and trading units are covered by the operating budget of the main department. Therefore, enterprises with experts must prepare plans to request operating budget limits. When recording:

Debit Operating Budget Expenditure.

Credit Operating Budget Disbursement.

- Salaries of personnel serving the daily needs of experts are also funded from the operating budget. When recording:

Debit Operating Budget Expenditure.

Credit Payment to Workers and Staff.

(Accounting for transactions between working capital and operating budget limits must follow the provisions of Circular No. 10-TC-CĐKT dated April 18, 1962 of the Ministry of Finance).

- Salaries of interpreters who belong to the enterprise are recorded:

Debit Enterprise Management (or Distribution Expenses).

- Expenditures for tea, cigarettes when experts come to work are credited to relevant accounts, debited to "Enterprise Management Expenses" or "Distribution Expenses" (administrative management expenses).

(Accounting for transactions between working capital and operating budget limits must follow the provisions of Circular No. 10-TC-CĐKT dated April 18, 1962 of the Ministry of Finance).

4. Expenditures for technical improvements and product trials.

Accounting for this item must strictly follow the provisions of Circular No. 131-TTg dated April 4, 1957 of the Prime Minister. Note the following items:

- Expenditures increasing the quantity and value of fixed assets... must be based on approved plans, or funded from dedicated operating budgets... to organize accounting records according to the prescribed methods in the accounting regulations.

- Expenditures for other organizational and technical measures not increasing fixed assets must be aggregated in the "Costs Awaiting Allocation" account and gradually allocated to monthly cost prices over the specified period (one or two years).

- Expenditures for new product trials must be recorded as prescribed in the accounting regulations (for example, for industrial production enterprises, see the explanation in Account 045 "Main Production").

5. Expenditures for training cadres.

Accounting for this item is as follows:

Account for this item as follows:

- Expenses for training staff at units expanding and modernizing through the installation of new equipment shall be covered by basic construction funds if such units apply the professional accounting system of their industry to reflect basic construction (the "Basic Construction Allocation and Distribution" index within the business production accounting system). The training expenses will be recorded on the debit side of the account "Purchases of Fixed Assets and Uncompleted Basic Construction Projects" and credited to relevant accounts. When this expense is approved and recorded:

Debit Basic Construction Allocation and Distribution

Credit Purchases of Fixed Assets and Uncompleted Basic Construction Projects.

(In cases where basic construction expansion units adopt a complete basic construction system, they must follow the explanations provided by the Ministry of Finance specifically for the basic construction sector).

- If a factory undertaking its own training within the factory and with training targets included in the national economic plan, the factory must request the Ministry to allocate a quota of public service funds. Accounting for training expenses must follow the regulations set out in the two accounts "Public Service Expenditure" and "Public Service Allocation".

- If training costs or technical skill enhancement for workers and employees during production and business operations to replace elderly or physically weak workers, or to supplement training for individual equipment operators not listed in the factory's separate plan and approved by superiors, then:

For manufacturing factories, these expenses should not be recorded under the "Factory Management Costs" account (item 8 of Table 15 of Industrial Construction, the "Factory Management Fee" section has been removed) but should be recorded under a separate item in the "Non-production Costs" account. This account and in the consumption table, an additional row must be added under the "Non-production Costs" index. For example, in Table 21 of Industrial Construction Consumption, this additional row would be as follows: Non-production costs (row 7), which includes: Consumption costs (row 8) and below row 8, training costs, and technical skill enhancement costs.

For commercial trading units, training costs or technical skill enhancement for workers and employees must be recorded under "Distribution Costs". In the distribution cost table, it must be recorded as a separate index under point "Sanitation Costs" and above point "Other Costs" in Section 2 "Costs for Storage, Purchase, and Consumption of Goods".

6. Cultural expenditure.

- Expenditure on building and equipping cultural facilities; if allocated a basic construction budget quota, it must be based on the scale of the project to propose approval from superiors or organize accounting according to the basic construction accounting system along with the professional system of the industry to record.

- If a unit engaged in production and business uses the enterprise fund to build and equip, it must reduce the amount deducted from the "Enterprise Fund" account and report to the Construction Bank director and management. There are two possible scenarios for handling the quota:

If the Construction Bank stipulates that the enterprise fund deductions must be deposited with the Construction Bank for direct management of expenditures, all expenses must be settled through the Construction Bank.

If permitted, the enterprise can deposit the deduction amount in the State Bank and withdraw the quota gradually according to the plan.

In cases where construction is funded by the enterprise fund simultaneously with a portion of the state-allocated basic construction budget quota, after exhausting the enterprise fund deduction, the remaining amount can be covered by the state-provided basic construction budget.

- Expenditures for purchasing necessary items for artistic and sports activities, wages, travel expenses during competitions, salaries of specialized staff for mass cultural work, and supplementary education teachers' salaries shall be borne by the trade union or the organizing body of the competition.

7. Welfare expenditure.

Specific accounting methods for canteens, kindergartens, and housing are as follows:

a) Canteen:

Transfer the canteen to collective welfare status, the State has many provisions: Directive No. 127-TTg dated April 1, 1961, Circular No. 115-TTg dated December 12, 1963 of the Prime Minister, Joint Circular No. 16-TT-LB dated November 12, 1961... accounting must strictly comply with the contents prescribed in these documents.

- For canteens managed by the commercial sector, the factory advances and settles the subsidy of 1đ80 per person as stipulated by the State and Circular No. 07-TC-TVHC dated April 3, 1962 of the Ministry of Finance.

When temporarily advancing:

Debit Other Receivables and Payables

Credit Bank Deposits

Debit Retained Earnings

Credit Other Receivables and Payables

- For self-managed factory canteens, the factory's accounting related to the canteen is as follows:

The accountant must know the number of people eating regularly at the canteen to calculate the advance payment needed for the canteen's monthly expenses (at the standard rate of 1đ80 per person).

Daily recording of canteen expenses such as food purchases, utensils, paying salaries, and social insurance contributions for staff is handled by the canteen manager. Collecting employee contributions and deducting 5% from the contribution amount is also handled by the canteen manager. At the end of the month, the canteen manager must report to the factory's accounting department the number of people who ate in the month, providing a detailed report on income and expenditure, accompanied by necessary vouchers as required by the accounting department.

The factory's chief accountant is responsible for regular inspections and assisting the canteen manager in timely, comprehensive, and clear recording of income and expenditure, approving the manager's monthly report on the number of state employees served by the canteen (note to calculate the total number of regular diners in the month), the number of representatives from other agencies and units working in the factory served by the canteen...

The factory's accounting department records in the accounting books as follows:

During the month when advancing the subsidy amount to the canteen.

Debit Advance Payments for Settlement

- Settlement with workers and staff.

At the end of the month, after reviewing the report of the canteen manager, record the following based on the specific situation:

The canteen subsidy is provided according to the standard of 1đ80 per person;

Debit other deductions (details of canteen subsidies);

Credit advance payment settlement;

The canteen serves representatives from other agencies;

Debit enterprise management fee (or circulation fee);

Credit advance payment settlement;

At the end of the month, if the "Advance Payment Settlement" account has a credit balance, the accountant must immediately settle this amount with the canteen and record it as follows:

Debit Advance Payments for Settlement

Credit cash in hand;

If at the end of the month the "Advance Payment Settlement" account has a debit balance, then reduce the excess advance payment of the previous month from the advance payment for the next month. In cases where the canteen needs to spend a large amount on regular maintenance, affecting the meal level of employees, the accountant should report to the leadership to consider this case, possibly transferring part of the maintenance costs to the enterprise fund. Record the case as follows:

Debit enterprise fund,

Credit advance payment settlement;

b) Kindergarten.

The organization and management of kindergartens are supervised by the General Federation of Trade Unions, and the income and expenditure records of kindergartens are kept by the kindergarten itself according to the regulations of the General Federation of Trade Unions. In cases where the regular maintenance costs of kindergartens are high, affecting the expenses of kindergartens, part of these costs can be included in the enterprise fund. In such cases, the following entries will be made:

Debit enterprise fund

Credit cash in hand;

c) Housing.

The accountant must use the "non-core business revenue and expenditure account" (housing sub-account) to record all revenues and expenditures related to housing.

When paying salaries, social insurance contributions, electricity and water bills, regular maintenance, purchasing equipment... record as follows:

Debit non-core business revenue and expenditure account (housing sub-account).

- Settlement with workers and staff.

Payment to employees.

When collecting rent from employees:

Debit Other Receivables and Payables

Credit non-core business revenue and expenditure account (housing sub-account).

When the annual settlement report is approved, transfer the difference between expenditures and income of housing as follows:

Debit previous year's profit or loss (profit or loss outside core business).

Credit non-core business revenue and expenditure account (housing sub-account).

d) Some points to note when accounting for items related to canteens, kindergartens, and housing.

The monthly depreciation of canteens, kindergartens, and housing is included in the cost price and circulation fees, recorded as follows:

Debit enterprise management fee (or circulation fee).

Credit capital depreciation.

(The depreciation mentioned above includes basic depreciation and major repairs, with basic depreciation being paid as prescribed, and major repair depreciation being transferred to the general enterprise repair fund).

The wages of staff in the canteen and kindergarten are paid from the income of the canteen and kindergarten, therefore, the social insurance contributions are directly settled by the canteen and kindergarten with the Social Insurance Board of the enterprise.

8. Items belonging to the social fund.

a) Social insurance.

Accounting for social insurance must be based on the provisions of Decree 218-CP dated December 27, 1961 of the Council of Ministers, Decree 39-CP dated March 22, 1962 of the Prime Minister, Circular 017-TT-LB dated June 9, 1962 of the Ministry of Finance and the General Federation of Trade Unions.

The specific method of accounting for this item is as follows:

During the month, when expenses related to social insurance are paid, they should be recorded as a prepayment for social insurance:

Debit advance payment settlement.

Credit cash in hand

Bank deposit.

At the end of the month, based on the actual amount paid, calculate 4.7% of that amount and record it as a credit to the "Social Fund" account and debit to the cost accounts (or circulation fees) and related accounts. For example, for an industrial enterprise, record as follows:

Debit 047 auxiliary production.

Debit 051 workshop expenses.

Credit 094 social fund.

Prepayments to the Social Insurance Board and the social insurance contributions must be settled in the same month. If the contributions exceed the prepayment, the enterprise must pay the difference. Conversely, if the prepayment exceeds the contributions, the Social Insurance Board of the enterprise must report to the management authority and return the excess to the enterprise. Specifically, record the two cases as follows:

If the contributions included in the cost or circulation fees exceed the prepayment for the social insurance fund in the month, transfer the entire prepayment from the credit side of the "advance payment settlement" account to the debit side of the "social fund" account. The excess contributions must be paid to the management authority, when paid, record as follows:

Debit social fund.

Credit bank deposit.

If the prepayment to the Social Insurance Board exceeds the contributions calculated in the cost or circulation fees at the end of the month, record with the debit side of the "social fund" and the "advance payment settlement" account, but only record the amount equal to the contributions included in the cost or circulation fees in the month. In this case, the "Advance Payment Settlement" account has a debit balance. When receiving the refund from the Social Insurance Management Authority, record as follows:

Debit bank deposit.

Credit advance payment settlement;

b) Social assistance, health and hygiene.

Social assistance expenses include two categories: assistance for families with three or more children (those eligible for assistance) and assistance for families in difficulty.

For child assistance, the accountant must coordinate with the labor organization department to accurately grasp the monthly child assistance amount to be disbursed according to regulations. This amount is deducted from the profit submitted to the budget, recorded as follows:

Debit other deductions (details of child assistance).

- Settlement with workers and staff.

Credit bank deposit.

For assistance to families in difficulty, the Ministry of Finance will consult with relevant authorities to implement in accordance with the spirit of Directive 115-TTg and will provide guidance later.

Expenses related to health and hygiene need to be distinguished:

Costs included in the cost price for the factory hospital and clinic, such as wages and social insurance contributions of medical personnel, purchase of medical equipment, ordinary medicines (emergency medicines, preventive and curative medicines), medicine and nutritional supplements according to prescriptions from doctors of the hospital and clinic... expenses for medicines and nutritional supplements for employees treated under outpatient care are also included in the cost price and circulation fees. When recording these expenses, enter as follows:

Debit enterprise management fee (or circulation fee).

Credit cash in hand;

Bank deposit.

Depending on the decision of superiors, if attributed to internal causes of the enterprise, these losses will be transferred from the credit side of the aforementioned account (losses from production stoppages or costs awaiting allocation) to the debit side of the "Enterprise Management Expenses" or "Distribution Expenses" accounts; if attributed to external causes beyond the enterprise's control, record on the debit side of the "Profit and Loss" account (explained in the previous section).

The following medical and hygiene expenses shall be deductible from profit tax payments: hospitalization fees paid for workers and staff hospitalized (excluding food costs at the usual rate normally borne by workers and staff), and medicine costs for cadres, workers, and staff living collectively (at a standard of VND 0.25 per child per month).

When these expenses are recorded.

Capital deduction (other deductions - details: medical and hygiene expenses).

Credit cash in hand;

Credit bank deposit.

When the annual settlement report is approved.

Debt to be settled with the state budget.

For enterprises that have planned losses, when the annual settlement report is approved, the "capital deduction" account (other deductions are transferred to relevant accounts as explained in accounting regulations).

- For enterprise hospitals permitted to organize their own expenditure and distribution, such units shall be considered independent public service units unrelated to production and business capital. The State will approve and allocate separate public service funding limits for these units as with hospitals currently managed by the Ministry of Health.

To ensure benefits for cadres, workers, and staff in canteens, kindergartens, Party, Youth Union, and Trade Union departments, expenditures on social allowances and medical and hygiene expenses are regulated as follows:

- Regarding child allowances for staff in the canteen department, which are paid by the enterprise and deducted from profit tax payments. Child allowances for the kindergarten, Party, Youth Union, and Trade Union departments where salaries are paid are also responsible for paying child allowances.

- Medical and hygiene expenses for workers and staff in the aforementioned departments shall be enjoyed according to the general standard as workers and staff within the enterprise. Specifically, the cost of purchasing medicine and supplementary expenses based on prescriptions, and common medicines provided to workers and staff in these departments shall be recorded in production costs (or circulation fees), hospitalization fees, and medicine costs for collective cadres shall be deductible from profit tax payments.

9. Expenditures on the Party, Trade Union, and Youth Labor Union at the grassroots level:

- Expenditures on purchasing fixed assets to equip the aforementioned organizations must be accounted for according to fixed asset accounting regulations; the enterprise must depreciate and record it in "Enterprise Management Fees" or "Circulation Fees". Major repair costs for these fixed assets must be funded from the enterprise's repair fund like other fixed assets.

- Costs for purchasing work equipment (not fixed assets) and regular maintenance of fixed assets for the aforementioned organizations, the enterprise records debt in the "Enterprise Management" or "Circulation Fees" account and credits the related account.

- Expenditures on wages, training costs for cadres, meetings, office supplies, and other social benefits (excluding hardship allowances and medical and hygiene expenses) are not covered by the enterprise but are the responsibility of the funds of the aforementioned organizations.

10. Expenditures on military training.

It is necessary to distinguish between:

- Expenditures on wages and all training costs for civilian defense forces during the annual compulsory period stipulated by the State, including the purchase of wooden guns, fake grenades... shall be recorded in the "Enterprise Management Fees" or "Circulation Fees" account and credited to the related account.

- Expenditures on wages for reserve military personnel during the annual compulsory period. Record:

Capital deduction (other deductions - training costs for reserve military personnel).

(Accounting for transactions between working capital and operating budget limits must follow the provisions of Circular No. 10-TC-CĐKT dated April 18, 1962 of the Ministry of Finance).

- Expenditures on weapons and ammunition used for training; expenditures on wages and training costs for civilian defense forces and reserve military personnel beyond the stipulated compulsory period shall not be covered by the enterprise but by the national defense fund (central or local).

11. Other expenditures.

- If an enterprise hosts foreign delegations requiring significant expenses or gifts as requested by the organizing agency, the agency organizing the event shall bear the costs. If only normal reception and expenses according to standards are involved, record:

Enterprise management fees (or Circulation Fees).

- Settlement with workers and staff.

- Auxiliary materials.

- Expenditures on making models or exhibitions during holidays such as May 1st, September 2nd... according to the State's policy or the requirements of the exhibition organizing agency requesting the enterprise's participation, including internal exhibitions, shall be recorded in production costs and circulation fees. Record:

Debit enterprise management fee (or circulation fee).

- Settlement with workers and staff.

- Auxiliary materials.

- Expenditures on union dues deductible from profit tax payments. Record specifically as follows:

Capital deduction (other deductions, union dues).

Bank deposits.

- Wages, travel expenses, and transportation costs for workers and officials during sudden business trips shall be borne by the agency dispatching them. Except for trips to combat floods and storms, which can be recorded in "Enterprise Management Fees" or "Circulation Fees".

12. Uniform provisions on the content and methods of accounting for certain accounts.

Implementing Circular No. 115-TTg, the content and methods of accounting for certain accounts needing modification are as follows:

a) Account "Settlement with Workers and Staff"

This account reflects wage settlements with workers and staff belonging to the enterprise's planned payroll fund and wages paid from other funds but managed by the enterprise (including both permanent and temporary workers).

This account has two debit details:

1. Wages from the planned payroll fund.

2. Wages from other funds.

Relevant sectors shall base on Circular No. 1649-UB-VP dated October 26, 1963 of the State Planning Commission, considering the characteristics of their workers and staff, and specify the wages that need to be accounted for under planned wages or wages from other funds directly managed by the enterprise.

Regarding wage payment vouchers and detailed ledgers, accountants need to unify with statistics and planning to reflect appropriately to meet the requirements of analyzing these two sectors.

b) Account "Capital Deduction"

Implementing Circular No. 115-TTg and previous related regulations, the Ministry of Finance specifies the accounting content of this account as follows:

The "Capital Deduction" account has 8 sub-accounts:

1. Previous year's enterprise fund deduction.

2. Current year's enterprise fund deduction.

3. Previous year's profit tax payment.

4. Current year's profit tax payment.

5. Previous year's profit distribution.

6. Current year's profit distribution.

7. Previous year's other deductions.

8. Current year's other deductions.

- Four sub-items: transferring the enterprise fund from the previous year, interest rate on budget surplus from the previous year, tax paid to the state budget from the previous year, tax paid to the state budget this year; content and accounting methods as prescribed by the accounting regulations.

Two sub-items for distributing profits from the previous year and this year specifically for units that have implemented state-owned revenue collection, used for accounting profit distribution according to the state-owned revenue collection system (the content and details of this item will be explained separately for each industry).

- Two sub-items for other deductions from the previous year and this year used for accounting the following deductions and subtracted from the net profit before tax at year-end:

. Union dues payment.

. Training costs for military personnel during their service obligation.

. Subsidies for collective dining halls.

. Social assistance.

. Health and sanitation expenses.

. Fixed interest payments to private owners (if applicable).

Accounting books must be opened with sub-items and detailed accounts as mentioned above, in addition, due to the requirements of accounting reports, the following details need separate columns for distinction:

- Subsidy items divided into:

. Child subsidies.

. Subsidies for families in difficulty.

- Health and sanitation expense items:

. Hospitalization fees, drug costs, and nutritional supplements paid to hospitals.

. Drug costs for children of officials living collectively.

When the final report of the previous year is approved, the following deduction accounts shall be transferred:

. Loss of profit interest.

Credit enterprise fund from the previous year, credit profit distribution from the previous year (account "capital reserve").

. For enterprises with profits owed to the state budget.

Credit tax paid to the state budget from the previous year, other deductions from the previous year (account "capital reserve").

. For enterprises receiving loss compensation.

Debit loss compensation.

Credit other deductions from the previous year (account "capital reserve").

It is recommended that industries study and guide enterprises in implementing this circular, if there are any obstacles, industries should discuss with the Ministry of Finance to resolve them.