Account 642 - General administration expenses
1. Accounting Principles
This account used to record overhead costs of business including salary expenses of business‘ administrative staffs (salary, wages, subsidies,...); social insurance, medical insurance, labor union expenses, unemployment insurance of administrative staff, expenses of office materials, labor instruments, depreciation of fixed assets used for administration, lease rent, licence tax, provision for bad debts, outsourced services (electricity, water, telephone, fax, assets warranty, fire and explosive accidents,...) other cash expenses (expenses of entertainment, customer conference...) .
b) General administration expenses that are not considered as business income tax expense under the provisions of the tax Law but have full invoices and have accounted in accordance with accounting policy shall not be recorded a decrease in accounting costs but only adjusted in final business income tax declaration to increase the business income tax payable.
c) Account 642 is opened in details according to specific items of expenses as regulated. Depending on management requirement of industry, account 642 can be opened additionally several sub accounts to record expenses items of business General administration expenses. At end of period, accountants closes out General administration expenses to Dr 911 ―Income Summary‖.

2. Structure and contents of account 642 - General administration expenses
Debit side :
- General administration expenses actually incurred in period;
- Provision for bad debts, provisions for payables (positive difference between provision for this period and unspent provision for last period);
Credit side :
- Items reduced general administration expenses;
- Returning provision for bad debts, provisions for payables (negative difference between provision for this period and unspent provision for last period);
- Transferring general administration expenses to account 911 ―Income Summary‖.
Account 642 does not have ending balance.
Account 642 - General administration expenses, comprises 8 sub - accounts:
- Account 6421 - Expenses of administrative staffs: Recording payables for administrative staffs, such as: salaries, subsidies, social insurance, medical insurance, labor union expenses, unemployment insurance of board of directors, administrative staffs in business departments.
- Account 6422 - expenses of administrative materials: Recording expenses of materials delivered for use in business management, such as stationery products,... materials use for repairing fixed assets), instruments, tools,... (price is plus VAT or net of VAT).
- Account 6423 - Expenses of office requisites: Used for management works (price are plus VAT or net of VAT)
- Account 6424 - Depreciation expenses of fixed assets: Recording depreciation expenses of fixed assets collectively used for business, such as: offices of departments, warehouses, architectures, means of transportation and transmittance, machinery and equipment used for management in office...
- Account 6425 - Tax, duties, fees: Recording expenses of tax, duties and fees, such as: license tax, lease rent,... and other duties and fees.
- Account 6426 - Provisions: Recording provision for bad debts, provision for payables which are charged to costs of production and trade of business.
- Account 6427 - Expenses of outsourced services: Recording expenses of outsourced services served for firm management works; purchases and use of technical documents, patents, (having not enough requisition to be recorded a fixed assets) computed by amortizing method to General administration expenses, fixed assets lease, charges paid for subs contractors.
- Account 6428 - Other explicit expenses: Recording other expenses belong to business overhead cost, in addition to above mentioned expenses, such as: expenses of conference, expenses of entertainment, traveling expenses, expenses for finale laborers...

3. Method of accounting for several major transactions
Salaries, wages, subsidies and other payables for administrative staff, appropriation of social insurance, medical insurance, labor union expenses, unemployment insurance, other support (life insurance, voluntary pension insurance...) of administrative staff, record:
Dr 642 - General administration expenses (6421)
Cr 334, 338.
Value of materials delivered for use or purchased for immediately used in business administrative, such as: gasoline, oil, grease for cars and trucks, materials used to repair common fixed assets of business, record:
Dr 642 - General administration expenses (6422)
Dr 133 - Deductible VAT (1331) (If any)
Cr 152 - Raw materials, materials
Cr 111, 112, 242, 331,...
Value of tools, supplies in offices delivered for used or purchased for immediately used (not stored) for administrative staffs, are charged directly to business General administration expenses, record:
Dr 642 - General administration expenses (6423)
Dr 133 - Deductible VAT (If any)
Cr 153 - Instruments, tools
Cr 111, 112, 331,...
Fixed asset depreciation used for general administration of business, such as: Housing, Architecture works, warehouses, transmission devices,... record:
Dr 642 - General administration expenses (6424)
Cr 214 - Accumulated Depreciation
License Tax, land rent..payable for government, record :
Dr 642 - General administration expenses (6425)
Cr 333 - Tax and payables for government
Traffic fees, fees of bridge, ferry passing:
Dr 642 - General administration expenses (6425)
Cr 111, 112,....
Accounting for provision for uncollectible receivables when making financial statement :
- If the provision for uncollectible receivables set up this period is bigger than that of previous period, accountants additionally set up the difference, record :
Dr 642 - General administration expenses (6426)
Cr 229 - Provision for asset losses (2293).
- If the provision for uncollectible receivables set up this period is lower than that of previous period, accountants return the difference, record :
Dr 229 - Provision for asset losses (2293).
Cr 642 - General administration expenses (6426)
- Determining the overdue time of debts receivable determined to be uncollectible for which provisions must be set up shall be based on the time of principal repayment under the original sale contract, not be taken into account the debt rescheduling between the parties.
- Enterprises setting up provision for loan, deposit, advances ... are entitled to receive the same as for the receivables in accordance with the law.
When creating payables provision for expenses of restructuring business, payables provision, for high risk contracts and other payables provision (Excluding payables provision for warranty of products, goods, constructions), record:
Dr 642 - General administration expenses
Cr 352 - Provision for payables.
In case provisions for payables in this period is smaller than unspent payable provision for last period, then the difference will be returned to decrease expenses, record:
Dr 352 - Provision for payables.
Cr 642 - General administration expenses.
Expenses of telephone, electricity and water outsourced, one-time repair expenses of fixed assets with small value, record:
Dr 642 - General administration expenses (6427)
Dr 133 - Deductible VAT (If any)
Cr 111, 112, 331, 335,...
For costs of repairing fixed assets serving management
a) In case of using method of previously deducting great costs of repairs of fixed assets:
- When previously deducting great repair costs of fixed assets from selling expense, record :
Dr 642 - General administration expenses
Cr 335 - Accrued expenses (if the repairs are carried out in the period but have not yet accepted or had invoice).
Cr 352 - Provisions payable (If units previously deduct repair cost of fixed assets according to technical or period maintenance requirements)
- When repair cost is higher than actually incurred fixed assets, record :
Dr 335, 352.
Dr 133 - Deductible VAT
Cr 331, 241, 111, 112, 152,...
b) If the repair costs of fixed assets arising once have great value and are related to management department in many periods, periodically accountants include in general administrative each part of great repair costs incurred, record:
Dr 642 - General administration expenses
Cr 242 - Prepaid expenses.
Expenses incurred from conference, entertainment, expenses for female laborers, for research, training, fees of participating associations and other expenses, record:
Dr 642 - General administration expenses (6428)
Dr 133 - Deductible VAT(If any)
Cr 111, 112, 331,...
Input VAT which not deducted must be charged to General administration expenses, record:
Dr 642 - General administration expenses
Cr 133 - Deductible VAT (1331, 1332).
In case products, goods for internal consumption are used for management purpose, record :
Dr 642 - General administration expenses
Cr 155, 156 (production cost or cost price of goods).
If declaring VAT for products, goods for internal consumption (the value declared shall comply with regulations of law on taxation), record :
Dr 133 - Deductible VAT
Cr 3331 - VAT payable.
When incurring decreases in General administration expenses, record:
Dr 111, 112,...
Cr 642 - General administration expenses.
For 100%-state-owned enterprises transferred to joint-stock companies, accountants handle uncollectible debts receivable when determining the value of the enterprises as follows:
a) For the debts receivable which have sufficient proof as prescribed of uncollection, accountants base on relevant documents such as debt remission decisions, decisions on indemnity for organizations and individuals, record:
Dr 111, 112, 331, 334 (indemnity of organizations and individuals)
Dr 229 - Provision for asset losses (2293) (provision set up)
Dr 642 – General administration expense (included in the cost)
Cr 131, 138,...
b) For the overdue receivables sold to the debt and asset trading corporate of enterprises under agreed price, depending on actual cases, accountants record a follows:
In case overdue receivables are not set up provisions for bad debts, record :
Dr 111, 112 (according to the agreed price)
Dr 642 – General administration expense (the remaining losses part)
Cr 131, 138,...
In case uncollectible receivables are set up provision but it is not enough to offset the losses, when selling debt receivables, the remaining losses are accounted for in general administration expense, record :
Dr 111, 112 (according to the agreed price)
Dr 229 - Provision for asset losses (2293) (parts set up provisioning for such overdue loans)
Dr 642 – General management expense (the remaining losses part)
Cr 131, 138...
- For amounts paid out, spent on donations and on workers who lost their jobs before the decision on equitization of enterprises and handled as uncollectible receivables by enterprise value decision agencies, record :
Dr 111, 112, 334 (indemnity of organizations and individuals)
Dr 642 - General administration expenses
Cr 353 – bonus and welfare fund
Accounting for allocation of business advantages arising from the equitization
The business advantage arising from the equitization of state-owned enterprises is recorded in account 242 - Prepaid expenses and gradually allocated within 3 years, record:
Dr 642 - General administration expenses
Cr 242 - Prepaid expenses.
At end of account period, posting General administration expenses to account 911 to determine operating results in the period, record:
Dr 911 - Income Summary
Cr 642 - General administration expenses.

Source: Circular 200, Article 92