Chapter 2

Accounting for Cash,

Materials, tools and
Supplies

1
 List of contents

Part 1: Accounting for Cash

1.Accounting for cash on hand
2.Accounting for cash in bank
3.Accounting for cash in transit
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
2
Part 1: Accounting for Cash

1. Accounting for cash on hand

2. Accounting for cash in bank

3. Accounting for cash in transit

3
 1. Cash on hand
 Content:
- This account is used to record revenues, expenses and balance of
the enterprise‘s fund, including: Vietnamese dong, foreign
currencies and monetary gold.
 Rules for accounting:
- When receiving or dispatching cash fund, Cash receipt slips, Cash
payment slips (vourcher) with signatures of payees and payers,
competent 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 4
 1. Cash on hand

Accounting documents:

• Cash payment/Cash receipt vourchers

• Payment request

• Invoices

• …

5
 1. Cash on hand
Accounts used: Acc 111- Cash on hand

ACC 111
Dispatched cash, foreign currency or
Received cash, foreign currency or
monetary gold;
monetary gold;
- Cash, foreign currency or monetary
- Cash, foreign currency or monetary
gold in deficit detected under
gold in excess detected under
verification;
verification;
- Exchange differences - Exchange rate differences -
Differences due to re-evaluation of
- Differences due to re-evaluation of
monetary gold at the reporting time.
monetary gold at the reporting time.

Inventoried cash, foreign currency or

monetary gold at the reporting time;

3 sub-accounts:
+ Acc 1111: VND
+ Acc 1112: Foreign currency 6
+ Acc 1113: Monetary gold
 1. Cash on hand
Basic transactions:
Acc 511,515,711 Acc 1111 Acc 152, 153, 156,
211..
Sales Purchase of materials
Financial income... Goods, Fixed assets
incomein

Acc 131, 136, 138, 141, 244 Acc 331, 333, 334, 338,...

Receiving from dispatching cash

receivables fundfor
topayables
pay
amounts payable
Acc 121, 128, 221, 222, 228 Acc 121, 128, 221, 222, 228

Selling investments Paying cash for

investments

Acc411, 461 Acc 621, 627, 641, 642, 635,

receiving cash from Expenses incurred 811
Investments

Related Ac 3381 Acc 1381 Related

AccAcc
decisions Cash surplus Cash deficit decisions
s no reasons no reasons
With reasons With reasons
7
 2. Cash in bank
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 notes or bank statements enclosed with original
documents (payment order, collection order, depository transfer check,
certified check, etc) shall be recorded to Account 112 "Cash in bank".

 Accounting for cash in bank:

a. Documents used:
•Debit notes ,
•Credit notes
•Bank statements
•Original documents: payment order, collection order, depository transfer
check, certified check, etc… 8
 2. Cash in bank

b. Account used: Acc 112 – Cash in bank

Acc 112

Deposited VND, foreign Withdrawn VND, foreign

currencies or monetary gold;
- Exchange rate differences
- Positive differences due to
re-evaluation of monetary
gold at the reporting time.
currencies or monetary
gold;
- Exchange rate differences
- Negative differences due
to re-evaluation of
monetary gold at the
reporting time.

Actual deposited VND, foreign currencies or

monetary gold at the reporting time.
3 sub accounts:
- Account 1121 – VND:
-Account 1122 – Foreign currency
-Account 1123 – Monetary gold: 9
 2. Cash in bank
c. Basic transations

Acc 511,515,711 Acc 1121 Acc 152, 153, 156,

211..
Sales, financial income Purchase of materials
other income goods, fixed assets

Acc 131, 136, 138, 141, 244 Acc 331, 333, 334, 338, ..

Receiving from dispatching cash

receivables fundfor
topayables
pay
amounts payable
Acc 121, 128, 221, 222, 228 Acc 121, 128, 221, 222, 228

Selling investments Paying cash for investments

Acc 411, Acc 621, 627, 641, 642, 635, 811

461
Contributions from owners Expenses incurred

Acc 1121 Acc 3388

bank's error
3381
accountant‘s figures are
1381
Acc 1388
accountant‘s figures are
Acc 1121
bank's error

Acc 511, 515, 711 larger than the bank‘s small than the bank‘s Acc 511, 515, 711
figures figures
company's company's error
error
10
 3. Cash in transit
 Contents: :
Cash in transit includes VND and foreign currencies which
are transited in following cases:
- Collecting cash or checks then paying directly in a bank;
- Making postal remittance in order to pay other enterprises;
- Collecting revenues from good sales then transferring to
Treasuries to pay taxes (payment collected from purchaser
shall be transferred to State Treasury by the enterprise).
Accounting for cash in transit
a. Documents used:
• Cash receipt slips/vourcher,
• Cash payment slips/vourcher
• Credit note. 11
 3. Cash in transit
b. Accounts used: Account 113 – Cash in transit

Acc 113

- Cash paid to a bank or -The amounts of money

transferred to a bank by transferred to account 112
post, but the credit note – Cash in bank, or relevant
has not been received; accounts;
- Exchange rate - Exchange rate
differences. differences.

The amounts of money in

transit at the reporting
time
Sub accounts:
+ Acc 1131: VND
+ Acc 1132: Foreign currency
12
 2. Cash in transit
c. Basic transactions
Acc 111 Acc 113 Acc 112
dispatching cash to deposit in
bank‘s accounts credit note is received
but the credit note of bank has
not been received

tr cho Acc 112

Pay to creditors,
Acc 331
cash in transit has been transferred
to creditors
but the credit note of bank has
not been received
Acc 511

collecting money from good sales

transferring to the bank

Acc 131, 138

Collecting from customers

13
 Chapter 2

2.2. Materials, Tools

7/28/2023 14
Accounting Faculty, Academy of Finance
 Research contents
1. materials & tools accounting works;
2. materials & tools classification and
measurement;
3. Detail materials & tools accounting;
4. General materials & tools accounting;
5. Depreciation and amortisation;
6. Ledger used;
7. Disclosure
7/28/2023 15
Accounting Faculty, Academy of Finance
2.2. Raw materials & Tools accounting
2.2.1. Raw materials & Tools accounting functions
(refer VAS 02)
2.2.1.1. Definitions, characteristics
Raw materials & Tools are parts of Inventories
What is Inventory?
Refer VAS 02
2.2.1.2. Management demand
- In purchasing
- In storage
- In using
2.2.1.3. Raw materials & Tools accounting functions
16
1. Definition (Material, Tools and supplies)
2. Classification (Classified criteria)
3. Measurement

17
2.2.2. classification and measurement
2.2.2.1. classification Each company use many
kinds of materials and
* The necessary of classification tools

* classification Each kind have their own

characteristics and
- Base on corporate governance demand functions

Others
Direct Materials
materials and
Indirect Replaced
materials Fuels supplies equipment
for capital
investment
Identify needed storage level for each kind of materials/tools
Role:
Manage materials/tools
18
2.2.2.1. Reclassification
a. Materials reclassification
- Base on origin of materials/tools
 Purchase from suppliers
 Self - produced
=> Function?
- Base on using purposes and using place
 For production
 For administration, selling…
 Function?

- Base on other criteria: … Refer textbook

19
2.2.2.1. classification
b. Tools classification
1. Base on regulations in force 2. Base on management demand
The scaffolding, formwork, tools, and accounting demand
jigs used for construction  Tools and supplies
manufacturing  Reusable packaging materials
Types of packaging enclosed  Instruments for renting
with goods charged separately,
but their value is depreciated 3. Base on allocation methods
during preservation of goods in  Allocate 1 time
transit and storage in the  Allocate many times
warehouses
Tools or supplies made of glass,
porcelain, ceramic
Management facilities, office
supplies
Clothing, footwear designed
20
exclusively for work, etc
2.2.2.2. Measurement

Definition?

A. Principles
Principles

Historical cost Prudence Consistency Material

21
2.2.2.2. Measurement

B. Actual cost of materials/tools received in stock

Due to resources, accountants calculate actual cost
differently
 Purchasing materials/tools
 Self-making materials/tools
 Being contributed as capital
 Being granted/transfered
 Being donated/presented
 ….

22
2.2.2.2. Measurement
B. Actual cost of materials/tools received in stock (continue)

 1st case: purchasing from suppliers

Import tax,
Directly
Actual Invoice special Discount if
= + + attributable -
cost price consumption any
exp
tax if any
NOTE:
- Invoice price is identify in different cases as follow:
+ deductable VAT
+ non-deductable VAT
- Directly attributable exp includes: transportation fee, handling
fee, storage fee,…
23
B. Actual cost of materials/tools received in stock (continue)

 2nd case: self-make

Actual cost of issuing Processing

Actual cost = +
materials cost

 3rd case: outsourcing

Actual cost of
Directly attributable
Actual cost = issuing + Outsourcing exp +
cost
materials

 Other cases: pls refer to textbook

24
2.2.2.2. Measurement
C. Actual cost of issued materials/tools
According to VAS 02:
 Specific costing method
 Average costing method
• Cumulative weighted average costing method / WA costing
method at ending inventory
• Weighted average method after receiving inventory
 First in, first out method (FIFO)
 Last in, first out method (LIFO)
According to Cir. 200, we do not use LIFO anymore

25
C. Actual cost of issued materials/tools
 Specific costing method
Base on issued quantity and loads of materials/tools to
calculate actual cost

Actual cost = issued quantity x unit cost (for each load)

- Requirement:managing materials/tools in loads about their

value and quantity

- Advantage: Precise
- Disadvantage: complicated

- This method is only suitable for companies which have just

a few kinds of materials/tools and these can be recognised
easily in form of each load 26
C. Actual cost of issued materials/tools

 Average costing method

Cumulative weighted average costing method: Actual cost
depends on issued quantity and average unit cost calculated for
the whole financial period

Actual cost = Issued quantity x Average unit cost

Beginning Actual cost of

+
inventory cost receipt in period

Average unit cost =

Beginning Actual quantity of
+
inventory quantity receipt in period

27
C. Actual cost of issued materials/tools

Average costing method (continue)

Weighted average method after receiving raw materials

Actual cost of Actual cost of

inventory before the i + inventory in the i
receipt receipt
Average unit
=
cost Quantity of
Quantity of inventory
+ inventory in the i
before the i receipt
receipt

Avarage unit cost is calculated for each kind (or group) of

inventory

28
C. Actual cost of issued materials/tools
 FIFO method
This bases on an assumption that first receipt
would be issued first, thus receipt unit cost is equal to
issue unit cost. Value of closing inventory is calculated
base on final receipts

Actual cost = issued quantity x unit cost (for each load)

29
C. Actual cost of issued materials/tools

NOTE:
- The enterprise can choose a suitable method with it’s
business characteristics and must apply the chosen method
throughout the accounting period
- Identify the impacts of each method when commercial price
experiences fluctuation.

30
2.2.3. Detail accounting for Materials/Tools

2.2.3.1. Supporting documents

• Inventory receiving voucher (Form 01-VT)

• Inventory issuing voucher (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

31
2.2.3.2. Detail accounting methods

* Detail accouting methods (refer textbook page 89-90)

For each method, we should understand:

* Content:
Advantage

* Disadvantage
Judgement:
Using conditions

32
2.2.3.2. Detail accounting methods
a. Parallel processing warehouse
card
* Content:
- In warehouse:

- In accounting department:
+ accountants record quantity and value of inventory in “detail
warehouse card”, base on receiving and issuing vouchers
+ At the end of each month, accountants prepare “general account
of inout – output – inventory”

33
2.2.3.2. Detail accounting methods
a. Parallel processing warehouse
card
- Reconciliation:
+ accountants reconcile with stockkeepers per day
+ at the end of each month, detail accountants reconcile(***)
with
general accountants
* Evaluation:
- Advantage: simple

- Disadvantage: accountants and stockkeepers do the same work

=> waste
- Using condition: accounting with the technological support

34
2.2.3.2. Detail accounting methods
a. Parallel processing warehouse
card

Warehouse card
(***)
Inventory receiving Inventory issuing
voucher voucher
Detail accounting
ledgers

NOTE:
general account of inout
– output – inventory daily record
record at the end of
month
General ledgers daily reconciliation
reconcile at the end
35 of
 2.2.4. General accounting

2.2.4.1. Differences between perpetual inventory system

and periodic inventory system
2.2.4.2. Inventory accounting in case enterprises use
perpetual inventory system.
2.2.4.3. Inventory accounting in case enterprises use
periodic inventory system.

36
 2.2.4. General accounting
2.2.4.1. Differences between perpetual inventory system and periodic
inventory system
a. perpetual inventory system characteristics
- Under the perpetual inventory system, an entity continually updates
its inventory records to account for additions to and subtractions from
inventory

- Calculating actual cost of issuing materials/tools as

follow:
Actual cost of issuing= Issuing quantity x unit cost

- Calculating actual cost of closing materials/tools as

follow:
Actual cost = Actual Actual - Actual
+
of closing cost of cost of cost of
inventory opening receipt issuing 37
inventory
2.2.4. General accounting
2.2.4.1. Differences between perpetual inventory system and periodic
inventory system
b. periodic inventory system characteristics
- The periodic inventory system only updates the ending
inventory balance in the general ledger when you conduct a physical
inventory count

- Increase or decrease in materials/tools is recorded in acc 611

- Acc 151, 152,153, 156 reflects opening balance and closing balance

- Calculating actual cost of issuing inventory bases on

inventory stocktake result at the end of period
Actual cost Actual cost Actual cost
Actual cost of
of issuing = of opening + receipt - of closing
balance balance
38
2.2.4.2. Inventory accouning based on perpetual accounting
a. Accounting used system
***
Acc152, 153, 151,..
* Acc 152 – Raw materials
- Content: record current cost or increase or decrease in cost of
all component parts currently in enterprise‘s stock
Acc 152 structure

- Increase in - Decrease in
actual cost: actual cost:

+ receive + issue
+ Adj + Adj
Actual cost of ending
raw materials (***)
Sub acc inventory
may be used to record detail for each kind of
39
materials
2.2.4.2. Inventory accouning based on perpetual accounting
system
a. Account used

* Acc 153 - Tools

- Structure: similar to acc 152

Acc 1531- Tools and supplies;

4 sub Acc 1532- Reusable packaging materi

accounts:
Acc 1533- Instruments for renting.

Acc 1534- Equipment and spare parts

for replacement.

40
2.2.4.2. Inventory accouning based on perpetual accounting
system
a. Account used
* Acc 151 – Goods in transit
- Content:
record value of goods, materials (raw materials, materials, tools; goods)
purchased under ownership of the enterprise which are on the way of
delivery, in ports, depot, bonded warehouses or have arrived at the
enterprise but they are pending acc
Structure storing
151
Value of goods or materials
Value of goods or
purchased in transit which are
materials purchased in
stored or delivered to customers
transit

Value of goods or materials

purchased in transit (not
stored in the enterprise's
warehouse)
Other related acc: Acc111, Acc112, Acc141, Acc411, Acc621,
Acc627, Acc 641, ...and Acc331. 41
2.2.4.2. Inventory accouning based on perpetual accounting
system
b. Receiving inventory

Inventory resourses:

- Purchasing

- Self-making; hiring external service

- Receiving inventory as capital investment

- Being granted or transferred
- Being donated/presented

42
2.2.4.2. Inventory accounting based on perpetual accouting
system
b. Receiving inventory

b.1. Purchasing (***)

*Case1: receiving inventory and invoice at the same
time
*Case 2: received inventory but not receive inv. yet
*Case 3: Inventory in transit

*Case 4: Directly attributable exp

*Case 5: Discounts

* Case 6: Checking inventory

Refer textbook page 92-93

43
b. Receiving inventory

* Case1: receiving inventory and invoice at the same

time
Accountants receive Inv. and receiving voucher at the same
- time
If input VAT is deductible, the following accounts shall be
recorded Acc 152,153
Acc 111, 112, 141, 331,....
cost without
VAT

Acc 133
TOTAL Deductable VAT

PAYMENT

- If the input VAT is not deductible, cost of raw

materials shall include VAT
Acc 111, 112, 141, 331,....
Acc 152,153

Total payment 44
 b. Receiving inventory
*Case 2: received inventory but not receive inv. yet
- Accountants only have receiving
voucher Why not receive Inv yet ???
- The voucher shall be archived in a separate dossier: “Goods
without Inv”
- Within a month, if the Inv has been received : Record as case
1
- At the end of the month, if the Inv has not been received:
Record by notional price
Acc Acc
331 152,153
notional price

- Next month, if the Ivv has been received

Raise adj based on Inv price
Refer textbook

45
b. Receiving inventory SĐ 2.7
* Case 3: Inventory in transit
- the Inv has been received but raw materials have not received
- Inv shall be archived in a separate dossier: “Goods in transit”
- Within a month, if the raw materials have been received: record as
case 1 end of the month, if the raw materials have not been received,
- At the
record as “goods in transit”

Acc 151 Acc 152, 153,

Acc 111, 112, 141, 621…
331,.... Inv price
(2) Actual cost of
inventory
Acc 133
Total deductable VAT
payment

- Next month, if the raw materials have been

received, record a decrease in “Goods in transit” 46
b. Receiving inventory

* Case 4: directly attributable exp

Exp such as: transportation fee, handling fee,

storage fee…

These exp is calculated as part of actual cost of

inventory
Acc 111, 112, 141, 331,.... Acc 152,153

Exp

47
b. Receiving inventory

*Case 5: Discounts

Quantity discount: The discount allowed by the seller to the buyer

on the amount crossing minimum target sales. Reduce actual cost
of inventorydiscount: The discount is only taken if the customer
Settlement
pays within a certain amount of time. Record as Financial
imcome
Acc 152,
153 Acc 111, 112, 331
Discount

Acc
515 Settlement
Total
discount
discount

Acc
133 VAT

48
b. Receiving inventory

* Case 6: checking inventory

* Surplus
Cases * Lower than
deficiency
* Shortage quotas

* Higher than
deficiency
quotas

49
b. Receiving inventory
* Case 6: checking inventory
 If surplus:

+ due to difference caused by measuring equipments

+ Due to suppliers’ mistakes

+ Not identify reasons yet

Acc 152, 153
Acc 331
Receiving all to warehouse

Acc (1)
Purchase for 338(1)
surplus (2a)
Acc 133 Acc 133

Acc 152, 153 Surplus

Return to suppliers
50
(2b)
b. Receiving inventory
* Case 6: checking inventory
Shortage:
+ If cost of inventories in deficiency is under deficiency quotas
+ If cost of inventories in deficiency is over deficiency
quotas Acc 152, 153, 133
Acc 331
Actual cost

Acc
138(1)
Suppliers make mistakes

Acc
138(8)
compensation
+ In case of over
deficiency quotas and
reasons can be Acc
identified immediately, Record in cost of good sold 632
51
no need to record on
b. Receiving inventory

b.2. Self - make

b.3. Capital investment

b.4. Granted

b.5. donated

52
 Acc154 Acc152,15
3
(2) Self make, hiring others to make

Acc411

(3) Invested by inventory;

granted

Acc222
(4) Receive investment in other
entities

Acc711

(5) donated, presented

Acc621,627...

(6) Issue for production, but not used

yet, thus receiving to warehouse
… 53
c. Issuing inventory
Purposes for issuing ???
- For production - For investment
- For consumption - For loans

c1. Issuing materials

* For production (**)

* For consumption (**)
* For investment (**)

* Other purposes (refer textbook) (**)

54
 Acc621,627,641,642
Acc152
(1) For business
activities
Acc154
(2) For producing by other
entities

Acc632,157
(3) For consumption

Acc711
Acc222

(4) Differences (4) Investment

Acc811

AccLQ…
(5) Others

55
c2. Issuing tools

allocate of tools’ value into using departments

1 time
Allocation methods

More than 1 time

Content (*)
Allocation 1 time
Using conditions

Content (*)
Allocation more
than 1 time
Using conditions
56
c2. Issuing tools SĐ 2.11
* Allocation 1 time

Content:

- Calculate actual cost of issuing tools then allocate

this value into exp of using departments

- recording:
Acc 153
Acc 627, 641, 642…

Tools’ value

57
c2. Issuing tools
* Allocation more than 1 time
- Content
+ When issuing
+ When tools are damaged
Calculate the remaining value needed to be allocated

Actual cost of
remaining tools which are Gaining from
value not allocated waste,
compensations…
Acc1388,152
Acc 242

when there is damage

Acc153
Acc627,641,642
Issuing tools If any
Periodically
allocate
58
c2. Issuing tools
(2) Instrument for
renting Acc153(3) Acc 242
Acc 627

Issue tools Allcation renting

value
Receive tools

Acc111,112,131
Acc511

Income from being

rented

Acc3331

59
 General accouting for both receiving and issuing (perpetual acc system)

Acc 111, 112, 141, 331,.... Acc 152,153 Acc

Acc 621
Issuing for production
Total 133
Deductable

Payment VAT
Issue for selling, Acc 627, 641,
Receiving Inventory 642
administrative activities,
Acc 3333 construction
Import tax Acc 242
Issue tools, Periodically
Acc 151 allocate
allocate many
Receiving “goods in
times
transit” from last
month Acc 632, 157
Acc 411 Receiving inventory as Issue for consumption
capital investment
Acc 154
Issue for others to
Acc154 Self – make, hire other produce for the
to make company Acc 811
Acc 222
Investment Diffenrence
Acc 222 Receive investment in
other entities
Acc 711
Diffenrence
Acc ... Acc 136, 138
For loans....
60
2.2.4.3. Inventory accounting based on periodic accounting
system
a. Acc used
- Acc 151,152, 153,

reflects opening balance and closing balance

Acc 152, 153,
151 Transfer of actual cost of
Transfer of actual cost of
ending inventory beginning inventory

Actual cost of ending inventory

- Acc 611- purchase

+ Content:
Record increase/decrease of actual cost of inventory during the period
Structure Acc611: 61
2.2.4.3. Inventory accounting based on periodic accounting
system
a. Acc used
Acc 611: Purchases
* Transferring original price of * Transferring original price of merchandises,
merchandises, raw materials, materials, raw materials, materials, instruments and
instruments and tools in store at beginning tools in store at the end of period;
period ; * Original price of merchandises, raw
* Original price of merchandises, raw materials, materials, instruments, tools
materials, materials, instruments, tools dispatched for used during the period or
purchased during the period original price of goods delivered for sale

-Acc 6111: Purchases of

2 sub acc: raw materials, materials

- Acc 6112: Purchase of

merchandises
Other related acc:
62
Acc111, 112, 141, 128, 222, 242, 621, 627, 641, 642,
 Inventory acc for both receiving and
issuing based on periodic acc system

Acc
Acc 611
Acc 151,152,153…
151,152,153,..
Transfer opening Transfer
balance closing balance
Acc
133 Acc 111,112,331,..
Acc 111,112,331,.. VAT

Total Discount
payment

Acc 621, 627,..

Acc 333
Issue for production
Import tax

Acc ,..
Acc 411
…................................
Receive as capital
investment
Acc 711 Acc 222,..
Donated/presented
Issue for investment

63
…
2.2.5. General ledgers

Refer textbook

64
2.2.6. Disclosure

* BS
* Note

65