Account 161 – Non-business expenditures

1. Rules for accounting

a) This account is recorded to expenditures for non-business activities or projects (hereinafter referred to as non-business expenditures to perform economical, political or social tasks assigned by the State or superior enterprise other than business activities and for non-profit purposes. The non-business expenditures shall be covered by non-business or project funding granted by government budget or superior enterprise, or non-refundable grants. This account is used in enterprises having non-business activities or project activities (hereinafter referred to as non-business activities) which are covered by government budget or superior enterprises or received non-refundable grants, or the enterprises are permitted to collect non-business receipts to cover those expenses.

b) It is required to keep records of non-business expenditures according to every source of funding, fiscal year and governmental budgetary classification.

c) The non-business expenditures must be recorded in conformity with budget estimates and between accounting records and documents and financial statements.

d) This account shall record annual non-business expenditures of the enterprise, including both regular and irregular non-business expenditures as prescribed in financial regime in force.

dd) At the end of fiscal year, if the balance sheet is not approved, total non-business expenditures within the year shall be transferred from Cr 1612 "Current non-business expenditures‖ to Dr 1611 ―Brought forward non-business expenditures‖ for observation until the balance sheet is approved.

2. Structure and contents of account 161 – Non-business expenditures

Debit: Actual non-business expenditures incurred.

Credit:

- Non-business expenditures which are not recorded and required to be recovered;

- Non-business expenditures which are recorded and covered by non-business funds.

Debit balance: Non-business expenditures which are not recorded.

Account 161 – Non-business expenditures comprise 2 sub-accounts:

- Account 1611 – Brought forward non-business expenditures: recording non-business expenditures which are covered by non-business funds of the preceding year and not recorded.

- Account 1612 – Current non-business expenditures: recording non-business expenditures of current year.

3. Method of accounting for several major transactions:

a) When providing non-business expenditures uncovered by non-business funds, the following accounts shall be recorded:

Dr 161 – Non-business expenditures (1612)

Cr 111, 112, etc.

b) Salaries and other payables to employees of the enterprise, sellers or service providers shall be recorded as follows:

Dr 161 – Non-business expenditures (1612)

Cr 334 – Payables to employees

Cr 331 – Trade payables.

c) When dispatching raw materials, tools or supplies inventory for non-business activities, the following accounts shall be recorded:

Dr 161 – Non-business expenditures (1612)

Cr 152 – Raw materials

Cr 153 – Tools and supplies

d) When receiving funding from superior enterprises or withdrawing non-business expenditure estimates to pay for non-business activities, the following accounts shall be recorded:

Dr 161 – Non-business expenditures (1612)

Cr 461 – Non-business funds source.

If the non-business expenditure estimates are withdrawn, the enterprise must keep track of those expenditures in conformity with characteristics of the enterprise, etc.

dd) When transferring major repairs of fixed assets for non-business activities, the following accounts shall be recorded:

Dr 161 – Non-business expenditures (1612)

Cr 241 – Construction in progress (2413 – Major repairs of fixed assets).

e) When purchasing fixed assets or investing in capital investment for non-business activities covered by non-business funds:

- In case of purchasing fixed assets or finishing construction put into operation, the following accounts shall be recorded:

Dr 211 – Tangible fixed assets

Cr 111, 112, 331, 241, 461, etc.

- And the following accounts shall be recorded:

Dr 161 – Non-business expenditures (1612)

Cr 466 – Non-business funds used for fixed assets acquisitions.

When withdrawing non-business expenditure estimates for purchases of fixed assets, the enterprise must keep appropriate records.

g) When deducting social insurance, health insurance, unemployment insurance or union funds for non-business activities of the enterprise, the following accounts shall be recorded:

Dr 161 – Non-business expenditures (1612)

Cr 338 – Other payables or receivables (3382, 3383, 3384, 3386).

h) At the end of fiscal year, if the financial report is not approved, the debit balances 1612 "Current non-business expenditures‖ shall be transferred to ―Brought forward non-business expenditures‖; the following accounts shall be recorded:

Dr 1611 – Brought forward non-business expenditures

Cr 1612 – Current non-business expenditures.

i) When the financial report is approved, non-business expenditures covered by non-business funds shall be recorded as follows:

Dr 461 – Non-business funds source (4611 – Brought forward non-business funds source)

Cr 161 – Non-business expenditures (1611 – Brought forward non-business expenditures).

k) Non-business expenditures paid in contrary to regulations which are not approved by the competent agency and required to be recovered shall be recorded as follows:

Dr 138 – Other receivables (1388)

Cr 161 – Non-business expenditures (1611 – Brought forward non-business expenditures).

Source: Circular 200