Account 112 – Cash in bank
1. Rules for accounting
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".
a) When receiving documents sent from the bank, the accountant must collate them with enclosed original documents. If there is any difference between figures in enterprise's ledger, in original documents and in the bank‘s documents, the enterprise must notify the bank to collate, verify and promptly handle. At the end of the month, if it fails to uncover the reasons for differences, the accountant shall record according to the bank's figures stated in debit notes, credit notes or bank's statements. The difference (if any) shall be recorded to Dr 138 ―Other receivables‖ (1388) (if the accountant‘s figures are larger than the bank‘s figures) or recorded to Cr 338 ―Other payables‖ (3388) (if the accountant's figures are smaller than the bank‘s figures). In the following month, the reasons shall be kept collating, verifying and uncovering to adjust the figures.
b) With regard to enterprises having dependent accounting organizations or departments, they may open collection-only accounts, payment-only accounts or appropriate payment accounts serving the transactions or payments. The accountant must keep records of every type of deposits in details (VND, foreign currencies).
c) It is required to record particularly the deposits conformable to every account in bank for verification and collation.
d) The bank overdrafts are not recorded as ―-―(negative sign) on bank deposit accounts, they shall be recorded similarly to bank loans.
dd) When entering into transactions in foreign currencies, foreign currencies shall be converted into VND according to the following rules:
- Dr 1122 applies actual exchange rate. If the cash fund is withdrawn to send to banks, they must be converted into VND according to bookkeeping rates of account 1112.
- Cr 1122 applies weighted average rates.
The actual exchange rate shall be determined as prescribed in guidelines for account 413 - Differentials between exchange rates and relevant accounts.
e) Monetary gold recorded in this account is the gold used for value storage, not including the gold recorded to inventory account 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.
g) Whenever preparing financial statements as prescribed, the enterprise must re-evaluate the balance of foreign currency and monetary gold following the rules below:
- The actual exchange rates applied when re-evaluating the balance of cash in bank in foreign currency is the foreign currency-buying rate of the commercial bank where the enterprise opens foreign currency account at the time in which the financial statement is prepared. In case the enterprise has multiple foreign currency accounts in different banks and their buying rates are not considerately different, a buying rate of any bank may be chosen as the basis for re-valuation.
- 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 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.
2. Structure and contents of account 112 – Cash in bank
Debit:
- Deposited VND, foreign currencies or monetary gold;
- Exchange rate differences due to re-evaluation of foreign currency balance at the reporting time (if foreign currency rate rises against VND).
- Positive differences due to re-evaluation of monetary gold at the reporting time.
Credit:
- Withdrawn VND, foreign currencies or monetary gold;
- Exchange rate differences due to re-evaluation of foreign currency balance at the end of accounting period (if foreign currency rate falls against VND);
- Negative differences due to re-evaluation of monetary gold at the reporting time.
Debit balance:
Actual deposited VND, foreign currencies or monetary gold at the reporting time.
Account 112 – Cash in bank, comprises 3 sub-accounts:
- Account 1121 – VND: reflecting deposits, withdrawals and balance in the bank in VND.
- Account 1122 – Foreign currency: reflecting deposits, withdrawals and balance in the bank in foreign currencies converting into VND.
- Account 1123 – Monetary gold: reflecting the fluctuation and value of monetary gold deposited in the bank of the enterprise at the reporting time.
3. Method of accounting for several major transactions
3.1. When selling products, goods or providing services for immediate cash using cash in bank, the following accounts shall be recorded as follow:
a) With regard to products, goods, investment property subject to indirect taxes (VAT, special excise duty, import duty, environmental protection tax), the 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 112 – Cash in bank (total payment)
Cr 511 – Revenues (tax-exclusive prices)
Cr 333 – Taxes and other payables to the State.
b) In case it fails to separate the taxes payable, the accountant shall record the revenue including the taxes payable.
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 by cash in bank from government budget, the following accounts shall be recorded:
Dr 112 – Cash in bank
Cr 333 – Taxes and other payables to the State (3339).
3.3. When generating financial income or other incomes in cash in bank, the following accounts shall be recorded:
Dr 112 – Cash in bank (total payment)
Cr 515 – Financial income (prices excluding VAT)
Cr 711 – Other incomes (prices excluding VAT)
Cr 3331 – VAT payable (33311).
3.4. When dispatching cash fund to deposit in bank‘s accounts, the following accounts shall be recorded:
Dr 112 – Cash in bank
Cr 111 - Cash
3.5. When receiving an advance or any customer pays debts using wire transfer, according to the credit note of the bank, the following accounts shall be recorded:
Dr 112 – Cash in bank
Cr 131 – Customers receivable
Cr 113 – Cash in transit
3.6. When recovering amounts receivables, granting loans, making deposits by cash in bank; receiving deposits in cash from other enterprises, the following accounts shall be recorded:
Dr 112 – Cash in bank (1121, 1122)
Cr 128, 131, 136, 141, 244, 344.
3.7. When selling short-term or long-term investment by cash in bank, the difference between collected amount of money and cost price of investment (according to weighted average method) shall be recorded to financial income or financial expenses as follows:
Dr 112 – Cash in bank (1121, 1122)
Dr 635 - Financial expenses
Cr 121 - Trading securities (cost price)
Cr 221, 222, 228 (cost price)
Cr 515 – Financial income.
3.8. When receiving stakes in cash of owners, the following accounts shall be recorded:
Dr 112 – Cash in bank
Cr 411 – Owner's invested equity.
3.9. 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 112 – Cash in bank
Cr 338 – Others payable.
3.10. When withdrawing cash in bank to pay in cash fund then crediting to bank‘s accounts or depositing, the following accounts shall be recorded:
Cr 111 - Cash
Dr 244 - Pledge, mortgage, deposits.
Cr 112 – Cash in bank.
3.11. When buying securities, granting loans or investing in subsidiary companies or joint-venture companies by cash in bank, the following accounts shall be recorded:
Dr 121, 128, 221, 222, 228
Cr 112 – Cash in bank.
3.12. When buying inventory (using regularly declared method), buying fixed assets, spending on capital investment by cash in bank, 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 112 – Cash in bank.
- If input VAT is not eligible for deduction, the buying price including VAT shall be recorded as follow:
3.13. When buying inventory by cash in bank (using periodically declared method), if input VAT is eligible for deduction, the following accounts shall be recorded:
Dr 611 – Good purchases (6111, 6112)
Dr 133 – Deductible VAT (1331)
Cr 112 – Cash in bank.
If input VAT is not eligible for deduction, the buying price including VAT shall be recorded.
3.14. When buying raw materials immediately used in business by cash in bank, 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 112 – Cash in bank.
If input VAT is not eligible for deduction, the cost including VAT shall be recorded.
3.15. When paying amounts payable, the following accounts shall be recorded:
Dr 331, 333, 334, 335, 336, 338, 341
Cr 112 – Cash in bank.
3.14. When paying financial expenses or other expenses, the following accounts shall be recorded:
Dr 635, 811, etc.
Dr 133 – Deductible VAT (if any)
Cr 112 – Cash in bank.
3.17. When paying stakes or dividends or profits to contributing partners, paying welfare fund by cash in bank, the following accounts shall be recorded:
Dr 411 - Owner‘s equity.
Dr 421 - Unallocated post-tax profits
Dr 353 - Welfare fund
Cr 112 – Cash in bank.
3.18. When paying commercial discounts, sales rebates or sales returns accounts, the following accounts shall be recorded:
Dr 521 – Revenue deductions
Dr 3331- – VAT payable (33311).
Cr 112 – Cash in bank.
3.19. Accounting contract of resale of Government bonds: in accordance with Account 171 – Trading in Government bonds.
3.20. Foreign currency related-transactions: the accounting methods applying to foreign currency-related transactions by cash in bank shall be carried out similarly to those in cash (refer to account 111).
3.21. Accounting for re-evaluation of monetary gold
- If the re-evaluation price of monetary gold generates profits, the following accounts shall be recorded:
Dr 1123 – Monetary gold (according to domestic buying prices)
Cr 515 – Financial income.
- If the re-evaluation price of monetary gold generates losses, the following accounts shall be recorded:
Dr 635 - Financial expenses
Cr 1123 – Monetary gold (according to domestic buying prices).