Account 331 - Trade payables

 

1. Rules for accounting

a) This account is used to record payment of liabilities of an enterprise to the sellers of materials, goods or suppliers of services, sellers of fixed assets, investment properties or financial investment under concluded business contracts. This account is used to record the payment of liabilities to main contractors or sub contractors. The buy in cash shall not be recorded to this account.

b) Liabilities to sellers, providers or contractors shall be kept records in details for every entity. This account also records prepayment to the sellers, providers or contractors but the goods, services or constructions have not been received.

c) The enterprise must keep records of trade payables in details for each type of currency. With regard to trade payables in foreign currencies, the rules below shall be followed:

- When incurring trade payables (Cr 331) in foreign currencies, those payables shall be converted into VND according to actual exchange rates at the incurring time (selling exchange rate of the commercial bank where the enterprise regularly enters into transactions). With regard to prepayment to contractors or sellers, when it is qualified to record assets or expenses, the Cr 331 shall apply specific identification bookkeeping rate for the amounts of prepayment.

- When paying trade payables (Cr 331) in foreign currencies, those payables shall be converted into VND according to specific identification bookkeeping rates for every creditor (if the creditor has multiple transactions the specific identification bookkeeping rate shall be determined according to mobile weight average of such transactions). When entering into a transaction in prepayment to contractors or sellers, the Dr 331 shall be applied actual exchange rates (selling rates of the commercial bank where the enterprise regularly enters into transactions) at the time in which the prepayment given;

- The enterprise must re-evaluate trade payables derived from foreign currencies on the dates on which the financial statements are prepared as prescribed. Actual exchange rates determined when the trade payables are re-evaluated is selling rates of the commercial bank where the enterprise regularly enters into transactions on the date on which the financial statement is prepared. Units in a group shall apply a common rate defined by the parent company (provided that it closes to the actual exchange rates) to re-evaluate trade receivables derived from foreign currencies arising from transactions of internal group.

d) The import trustor shall record the trade payables for imported goods to the import trustee to this account similarly to ordinary trade payables.

dd) At the end of a month, if there has not been invoices of received materials, goods or services, provisional prices may be used for bookkeeping, when those invoices are received, the prices must be adjusted and the seller shall be notified the official prices.

e) When those accounts are accounted in details, if the payment discounts, trade discounts or sales rebates of the seller or the supplier are not recorded in the sales invoices, they must be kept records in details.

 

2. Structure and contents of account 331 – Trade payables

Debit:

- Amounts paid to sellers, suppliers or contractors;

- Prepayment to sellers, suppliers, contractors but materials, goods, services and constructions are not received;

- Amounts of sales approved by sellers;

- Payment discounts and trade discounts which the sellers approve for enterprises to deduct from trade payables;

- Value of materials or goods in shortage or inferior quality which are received back by the sellers.

- Re-evaluation of trade payables in foreign currencies (if the foreign currency rate falls against VND).

Credit:

- Amounts payable to sellers, suppliers or contractors;

- Adjustment of negative difference between provisional price and actual price of amount of materials, goods and services when the invoice or notification of official price is received.

- Re-evaluation of trade payables in foreign currencies (if the foreign currency rate rises against VND).

Credit balance: Outstanding balance payable to sellers, suppliers or contractors.

This account may have a Debit balance. Debit balance (if any) records prepayment to sellers or payment in excess of payables to sellers, according to every specific subject. When preparing the balance sheet, detailed balance of every subject reflected in this account will be taken to record to ―Assets‖ and ―Capital‖ account.

 

3. Method of accounting for several major transactions

3.1. When purchasing materials or goods without payment for inventory using perpetual inventory method or purchasing fixed assets:

a) Domestic purchase:

- If the input VAT is deductible, the following accounts shall be recorded:

Dr 152, 153, 156, 157, 211, 213 (VAT-exclusive prices)

Dr 133 – Deductible VAT (1331)

Cr 331 – Trade payables (total payment).

- If the input VAT is not deductible, the value of materials, goods or fixed assets shall include VAT (total payment).

b) Import:

- Value of imported goods, including special excise tax, export duty or environmental protection tax (if any) shall be recorded as follows:

Dr 152, 153, 156, 157, 211, 213

Cr 331 – Trade payables

Cr 3332 – Special excise tax (if any)

Cr 3333 – Import – export duty (in details, if any)

Cr 33381 - Environmental protection tax

- If the input VAT is deductible, the following accounts shall be recorded:

Dr 133 – Deductible VAT (1331)

Cr 3331 – VAT payables (33312).

3.2. When purchasing materials or goods without payment for inventory using periodical inventory method:

a) Domestic purchase:

- If the input VAT is deductible, the following accounts shall be recorded:

Dr 611 – Purchase (VAT-exclusive prices)

Dr 133 – Deductible VAT

Cr 331 – Trade payables (total payment).

- If the input VAT is not deductible, the value of materials or goods shall include VAT (total payment)

1. Import:

- Value of imported goods, including special excise tax, export duty or environmental protection tax (if any) shall be recorded as follows:

Dr 611 - Purchase

Cr 331 – Trade payables

Cr 3332 – Special excise tax (if any)

Cr 3333 – Import – export duty (in details, if any)

Cr 33381 - Environmental protection tax

- If the input VAT is deductible, the following accounts shall be recorded:

Dr 133 – Deductible VAT (1331)

Cr 3331 – VAT payables (33312).

3.3. If the enterprise carries out capital investment under contract awarding and receives completed construction from the contractor, according to awarding contract and transfer note of completed construction:

- If the input VAT is deductible, the following accounts shall be recorded:

Dr 241 – Construction in progress (VAT-exclusive prices)

Dr 133 – Deductible VAT

Cr 331 – Trade payables (total payment).

- If the input VAT is not deductible, the value of capital investment shall include VAT (total payment)

3.4. When paying advance or paying trade payables to sellers, providers or contractors, the following accounts shall be recorded:

Dr 331 – Trade payables

Cr 111, 112, 341, etc.

- When paying to the contractor in foreign currencies, those payables shall be converted into VND according to actual exchange rates at the incurring time (selling exchange rate of the commercial bank where the enterprise regularly enters into transactions).

- When paying an advance to the contractor in foreign currency, the value of capital investment shall be recorded corresponding to the amount of advance according to actual exchange rates at the time in which the advance is given. The outstanding balance payable of capital investment (after deducted from the advance) shall be recorded to actual exchange rates at the incurring time.

Dr 331 – Trade payables (actual exchange rates)

Dr 635 – Financial expenses (if the actual exchange rate is smaller than bookkeeping rate of the cash account)

Cr 111, 112, etc. (bookkeeping rate)

Cr 515 – Financial income (if the actual exchange rate is greater than bookkeeping rate of the cash account)

3.5. When receiving back the advance from the seller because the seller fails to sell goods or provide services, the following accounts shall be recorded:

Dr 111, 112, etc.

Cr 331 – Trade payables.

3.6. When receiving services rendered (expenses incurred from goods transportation, electricity, water, telephone, auditing, consultancy, advertisement and other services) from suppliers:

- If the input VAT is deductible, the following accounts shall be recorded:

Dr 156 – Goods (1562)

Dr 241 – Construction in progress

Dr 242 – Prepaid expenses

Dr 623, 627, 641, 642, 635, 811

Dr 133 – Deductible VAT (1331) (if any)

Cr 331 – Trade payables (total payment).

- If the input VAT is not deductible, the value of services shall include VAT (total payment)

3.7. When receiving payment discounts on sale of materials or goods due to prepayment and deducting trade payables, the following accounts shall be recorded:

Dr 331 – Trade payables

Cr 515 – Financial income.

3.8. When purchased materials and goods are returned or eligible for sales rebates because they do not meet specification and quality, they shall be deducted from trade payables and the following accounts shall be recorded:

Dr 331 – Trade payables

Cr 133 – Deductible VAT (1331) (if any)

Cr 152, 153, 156, 611, etc.

3.9. In case liabilities paid to sellers (creditors) who were not found out or they did not call loans, the debts shall be recorded as an increase in enterprises‘ income as follows:

Dr 331 – Trade payables

Cr 711 – Other income.

3.10. When determining value of construction volume payables to subcontractors, according to the contract signed between main contractor and sub contractor, invoices, voucher of project price, acceptance report of completed construction volume and sub bidding contract, the following accounts shall be recorded:

Dr 632 – Costs of goods sold (VAT-exclusive prices)

Dr 133 – Deductible VAT (1331)

Cr 331 – Trade payables (total payables to the subcontractor, including input VAT).

3.11. Enterprises which are commission agents for sale at fixed prices.

- When receiving goods for wholesale, the enterprise shall report them in the financial statement.

- When receiving wholesale goods, the following accounts shall be recorded:

Dr 111, 112, 131, etc. (total payment)

Cr 331 – Trade payables (agency prices + taxes).

And the enterprise shall report sold goods for wholesale in the financial statement.

- When determining commission earned by the agent who is charged to commission revenue for wholesale, the following accounts shall be recorded:

Dr 331 – Trade payables

Cr 511 – Revenues

Cr 3331 – VAT payables (if any).

- When paying to consignor, the following accounts shall be recorded:

Dr 331 – Trade payables (selling prices - taxes).

Cr 111, 112, etc.

3.12. Accounting for trade payables at the import trustor:

- When prepaying an amount for import entrustment contract to the import trustee to open L/C, etc, the following accounts shall be recorded according to relevant documents:

Dr 331 – Trade payables (every trustee in details)

Cr 111, 112, etc.

- When receiving import entrustment goods delivered by the trustee, it shall follow procedures for ordinary imported goods.

- When paying for imported goods and directly-attributable expenses incurred from imported goods to the trustee, the following accounts shall be recorded according to relevant documents:

Dr 331 – Trade payables (every trustee in details)

Cr 111, 112, etc.

- Import entrustment fees paid to the trustee shall be recorded to value of imported goods; the following accounts shall be recorded according to relevant documents:

Dr 151, 152, 156, 211, etc.

Dr 133 – Deductible VAT

Cr 331- – Trade payables (every trustee in details)

- The payment of tax liability for imported goods shall comply with regulations of account 333 – Taxes and other payables to the State.

- The trustee may not use this account to record payment of entrustment but record to account 138 and 338.

3.13. When preparing a financial statement, the outstanding trade payables in foreign currency shall be evaluated according to actual exchange rates on the date on which the financial statement is prepared:

- If the foreign currency rate falls against VND, the following accounts shall be recorded:

Dr 331 – Trade payables

Cr 413 – Exchange rate differences (4131).

- If the foreign currency rate rises against VND, the following accounts shall be recorded:

Dr 413 – Exchange rate differences (4131).

Cr 331 – Trade payables.

Source: Circular 200