Account 111 – Cash on hand

 

1. Rules for accounting
2. a) This account is used to record revenues, expenses and balance of the enterprise‘s fund, including: Vietnamese dong, foreign currencies and monetary gold. Only received, dispatched or inventoried cash, foreign currencies, monetary gold shall be recorded to account 111 ―Cash‖. If the receipts are transferred immediately to bank (not through enterprise ‗cash fund), these amounts shall not be recorded to Dr 111 ―cash‖, but recorded to Dr 113 ―cash in transit‖.
3. b) Cash deposits made by other enterprises and individuals shall be managed and recorded similarly to monetary assets of the enterprise.
4. c) When receiving or dispatching cash fund, receipt slips, payment slips with signatures of payees and payers, competent persons are required in accordance with accounting source document. Deposit order and payment order must be attached in special cases.
5. d) The accountant of cash fund must write a Cash daybook and record all day-to-day financial transactions: revenues, expenses, dispatch or receiving of cash funds, foreign currencies and then calculate the fund balance at all times.
6. dd) 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. If there is any difference, the accountant and the cashier must verify them again in order to uncover reasons and propose solutions for the differences.
7. e) When entering into transactions in foreign currencies, the accountant shall convert the foreign currencies into VND according to the following rules:

- Actual exchange rate shall be applied to Dr 1112. If the foreign currencies are withdrawn from banks to pay in the cash fund, the bookkeeping rate of account 1122 shall be applied;

- Weighted average rate shall be applied to Cr 1112

The actual exchange rate shall be determined as prescribed in guidelines for account 413 - Differences between exchange rates and relevant accounts.

1. g) Monetary gold recorded in this account is gold used for value storage, not including the gold recorded to inventory account and used as raw materials for production of goods for sale. The management and use of monetary gold shall comply with regulations of law in force.
2. h) Whenever preparing financial statements as prescribed, the enterprise must re-evaluate the balance of foreign currencies and monetary gold following the rules below:

- The actual exchange rate applied in the re-evaluation of the balance of foreign currencies in cash is the foreign currency-selling rate of the commercial bank where the enterprise regularly enters into transactions (chosen by the enterprise) at the time in which the financial statement is prepared.

- The monetary gold shall be re-evaluated according to the buying prices on the domestic market at the time in which the financial statement is prepared. The buying prices on the domestic market are prices announced by the State bank. In case the State bank fails to announce gold buying-prices, the buying-prices announced by enterprise entitled to trade in gold as prescribed shall be chosen.

 

2. STRUCTURE AND CONTENTS OF ACCOUNT 111 – CASH

 

Debit:

- Received cash, foreign currency or monetary gold;

- Cash, foreign currency or monetary gold in excess detected under verification;

- Exchange differences due to re-evaluation of foreign currency balance at the reporting time (if foreign currency rate rises against VND);

- Differences due to re-evaluation of monetary gold at the reporting time.

Credit:

- Dispatched cash, foreign currency or monetary gold;

- Cash, foreign currency or monetary gold in deficit detected under verification;

- Exchange rate differences due to re-evaluation of foreign currency balance at the reporting time (if foreign currency rate falls against VND);

- Differences due to re-evaluation of monetary gold at the reporting time.

Debit balance:

Inventoried cash, foreign currency or monetary gold at the reporting time;

 

Account 111 – Cash, comprises 3 sub-accounts:

- Account 1111 – VND: reflecting revenues, expenses, balance in VND of the cash fund.

- Account 1112 – Foreign currencies: reflecting revenues, expenses, exchange rate differences and foreign currency balance of cash fund which is converted into VND.

- Account 1113 – Monetary gold reflecting the fluctuation and value of monetary gold of the enterprise‘s fund.

 

3. Method of accounting for several major transactions

3.1. When selling products, goods or providing services for immediate cash, the following accounts shall be recorded:

1. a) With regard to products, goods, investment property subject to VAT, special excise duty, import duty, environmental protection tax, revenues according to the tax-exclusive selling prices shall be recorded as follows (indirect taxes payable must be separated, including VAT payable using subtraction method:

Dr 111 – Cash (total payment)

Cr 511 – Revenues (tax-exclusive prices)

Cr 333 – Taxes and other payables to the State.

1. b) In case it fails to separate the taxes payable, the taxes payable must be included in the revenues. Tax liabilities and the decrease in revenues shall be recorded as follows:

Dr 511 – Revenues

Cr 333 – Taxes and other payables to the State.

3.2 When receiving payments of allowance or subsidy in cash from government budget, the following accounts shall be recorded:

Dr 111 - Cash

Cr 333 – Taxes and other payables to the State (3339).

3.3. When generating financial income or other incomes in cash, the following accounts shall be recorded:

Dr 111 – Cash (total payment)

Cr 515 – Financial income (prices excluding VAT)

Cr 711 – Other incomes (prices excluding VAT)

Cr 3331 – VAT payable (33311).

3.4. When withdrawing cash in bank to pay in cash fund; applying for long-term or short-term loans in cash (VND or foreign currency according to actual exchange rates), the following accounts shall be recorded:

Dr 111 – Cash (1111, 1112)

Cr 112 – Cash in bank (1121, 1122)

Cr 341 - Financial loan and financial lease liabilities (3411).

3.5. When recovering amounts receivables, granting loans, making deposits in cash; receiving deposits in cash from other enterprises, the following accounts shall be recorded:

Dr 111 – Cash (1111, 1112)

Cr 128, 131, 136, 138, 141, 244, 344.

3.6. When selling short-term or long-term investment and collect cash, the accountant shall record the difference between collected amount of money and cost price of investment (according to weighted average method) to financial income or financial expenses, the following accounts shall be recorded:

Dr 111 – Cash (1111, 1112)

Dr 635 - Financial expenses

Cr 121 – Trading securities (cost price)

Cr 221, 222, 228 (cost price)

Cr 515 – Financial income.

3.7. When receiving stakes in cash of owners, the following accounts shall be recorded:

Dr 111 - Cash

Cr 411 – Owner's invested equity.

3.8. When receiving money of contracting parties of Business Cooperation Contract (BCC) without establishment of legal entity to cover general operation, the following accounts shall be recorded:

Dr 111 - Cash

Cr 338 - Other payables.

3.9. When dispatching cash fund then crediting to bank‘s accounts or depositing, the following accounts shall be recorded:

Dr 112 – Cash in bank

Dr 244 – Pledge, mortgage or deposit

Cr 111 – Cash.

3.10. When dispatching cash fund to buy securities, granting loans or investing in subsidiary companies or joint-venture companies, the following accounts shall be recorded:

Dr 121, 128, 221, 222, 228

Cr 111 – Cash.

3.11. When dispatching cash fund to buy inventory (using regularly declared method), buying fixed assets, spending on capital investment, the following accounts shall be recorded:

- If input VAT is eligible for deduction, the buying price excluding VAT shall be recorded as follows:

Dr 151, 152, 153, 156, 157, 211, 213, 241

Dr 133 – Deductible VAT (1331)

Cr 111 – Cash.

- If input VAT is not eligible for deduction, the buying price including VAT shall be recorded as follow:

3.12. When dispatching cash fund to buy inventory (using periodically declared method), if input VAT is eligible for deduction, the following accounts shall be recorded:

Dr 611 – Good purchase (6111, 6112)

Dr 133 – Deductible VAT (1331)

Cr 111 – Cash.

If input VAT is not eligible for deduction, the buying price including VAT shall be recorded as follows:

3.13. When buying raw materials immediately used in business in cash, if input VAT is eligible for deduction, the following accounts shall be recorded:

Dr 621, 623, 627, 641, 642, etc.

Dr 133 – Deductible VAT (1331)

Cr 111 – Cash.

If input VAT is not eligible for deduction, the costs including VAT shall be recorded.

3.14. When dispatching cash fund to pay amounts payable, the following accounts shall be recorded:

Dr 331, 333, 334, 335, 336, 338, 341

Cr 111 – Cash.

3.15. When dispatching cash fund for financial activities or other activities, the following accounts shall be recorded:

Dr 635, 811, etc.

Dr 133 – Deductible VAT (if any)

Cr 111 – Cash.

3.16. If the cash deficit is detected under verification without reasons, the following accounts shall be recorded:

Dr 138 – Other receivables (1381)

Cr 111 – Cash.

3.17. If the cash excess is detected under verification without reasons, the following accounts shall be recorded:

Dr 111 - Cash

Cr 338 - Other payables (3381).

3.18. Accounting contract of resale of Government bonds: in accordance with Account 171 – Trading in Government bonds.

3.19. Foreign currency related-transactions in cash.

1. a) When buying goods or services in foreign currencies in cash.

- If losses on exchange rates are generated, the following accounts shall be recorded:

Dr 151,152,153,156,157,211,213,241, 623, 627, 641, 642, 133, etc. (according to actual exchange rates on the transaction date)

Dr 635 - Financial expenses (losses on exchange rates)

Cr 111 (1112) (according to bookkeeping rates).

- If profits on exchange rates are generated, the following accounts shall be recorded: 0}

Dr 151,152,153,156,157,211,213,241, 623, 627, 641, 642, 133, etc. (according to actual exchange rates on the transaction date)

Cr 111 (1112) (according to bookkeeping rates).

Cr 515 – Financial income (profits on exchange rates).

1. b) When paying debts payable in foreign currencies:

- If losses on exchange rates are generated, the following accounts shall be recorded:

Dr 331, 335, 336, 338, 341, etc. (according to bookkeeping rates).

Dr 635 - Financial expenses (loss of exchange rate)

Cr 111 (1112) (according to bookkeeping rates).

- If profits on exchange rates are generated, the following accounts shall be recorded:

Dr 331, 336, 341, etc. (according to bookkeeping rates).

Cr 515 – Financial income (profits on exchange rates).

Cr 111 (1112) (according to bookkeeping rates).

- When paying advances in foreign currencies to sellers, the Debit account – Trade payables shall apply actual exchange rates at the prepayment time, the following accounts shall be recorded:

Dr 331 – Trade payables (actual exchange rates)

Dr 635 - Financial expenses (losses on exchange rates)

Cr 111 (1112) (according to bookkeeping rates).

Cr 515 – Financial income (profits on exchange rates).

1. c) When generating revenues or other incomes in foreign currencies in cash, the following accounts shall be recorded:

Dr 111 (1112) (actual exchange rates)

Cr 511, 515, 711, etc. (actual exchange rates).

1. d) When collecting debts receivables in foreign currencies:

- If losses on exchange rates are generated, the following accounts shall be recorded:

Dr 111 (1112) (according to actual exchange rates on the transaction dates)

Dr 635 - Financial expenses (losses on exchange rates)

Cr 131, 136, 138, etc. (according to bookkeeping rates).

- If profits on exchange rates are generated, the following accounts shall be recorded:

Dr 111 (1112) (according to actual exchange rates on the transaction dates)

Cr 515 – Financial income (profits on exchange rates).

Cr 131, 136, 138, etc. (according to bookkeeping rates).

- When paying advances in foreign currency to sellers, the Credit account – Trade receivables shall apply actual exchange rates at the pre-receipt time, the following accounts shall be recorded:

Dr 111 (1112) (actual exchange rates at the pre-receipt time)

Cr 111 (1112) (actual exchange rates at the pre-receipt time)

3.20. The actual exchange rates (selling rates of banks) shall be used to re-evaluate foreign currencies in cash at the time in which the financial statements are prepared:

- If the foreign currency rate rises against VND, the profits on exchange rate shall be recorded as follows:

Dr 111 (1112)

Cr 413 - Exchange differences (4131).

- If the foreign currency rate falls against VND, the losses on exchange rates shall be recorded as follows:

Dr 413 - Exchange differences (4131)

Cr 111 (1112).

- After balancing profits or losses on exchange rates generating due to re-verification, the differences in profits or losses shall be transferred to financial income (if profits are larger than losses) or to financial expenses (if profits are smaller than losses).

3.21. Re-evaluation of monetary gold

- If re-evaluated value of monetary gold generates profits, financial income shall be recorded as follows:

Dr 1113 – Monetary gold (according to domestic buying prices)

Cr 515 – Financial income.

- If re-evaluated value of monetary gold generates losses, financial income shall be recorded as follows:

Dr 635 - Financial expenses

Cr 1113 – Monetary gold (according to domestic buying prices)