Account 521 - Revenue deductions
1. Accounting Principles
a) This account is used to record the deducted adjusted amounts in revenue from sales and service provisions incurred in the period, including: trade discounts, sales returns and allowances. This account does not record the taxes deducted in revenue such as output VAT payable under subtraction method.
b) The decrease adjustment of revenue shall be as follows: - Trade discounts, sales returns and allowances incurred in the same period of consumption of products, goods and services are adjusted a decrease in revenue in the incurring period ;
- In case products, goods and services are sold from the previous periods, until the next period are incurred trade discounts, sales returns and allowances, enterprises record a decrease in revenue under the principles:
If the products, goods or services are sold from the previous period, until the next period must be discounted, discounted to trade, returned but are incurred prior to the issuance of financial statements, accountants consider this as an adjustment event occurring after the date of balance sheet and record a decrease in revenue, on the financial statements of the reporting period (the previous period).
In case products, goods and services must be discounted to trade, returned after the release of financial statements, enterprises record a decrease in revenue of incurring period (the next period).
c) Trade discount payable means enterprises sell goods with price lower than the listed price with a large volume. The seller performs accounting for trade discount according to the following principles:
- In case the VAT invoice or bill of sale shows trade discounts to buyers that are the deduction from the amount payable by the buyer (the selling price recorded in the invoice is the price
deducted trade discount), enterprises (sellers) do not use this account, revenue from sales price is recorded according to the price deducted trade discount (net revenue).
- Accountants must monitor separately the trade discounts that enterprises pay to the buyer but have not yet been recorded as the deduction from the amount payable on the bill. In this case, the seller records the initial revenue at cost excluding trade discount (gross revenue). Trade discounts that must be monitored separately on this account often arise in cases :
The trade discount that buyers enjoy is higher than the amount of sales recorded in invoice at the last time. This case may arise because buyers must buy goods many times to be entitled to discounted goods volume and the trade discounts shall only be determined in the final purchase;
Manufacturers at the end of period may determine the goods volume consumed by distributors (such as supermarkets) which is a basis to determine the trade discounts payable on sales or the number of products sold.
d) Sales allowance is the deduction to the buyer because products, goods are bad, degraded or improper as prescribed in economic contracts. The seller performs accounting for sale allowance according to the following principles:
- In case the VAT invoice or bill of sale shows sales allowances to buyers that are the deduction from the amount payable by the buyer (the selling price recorded in the invoice is the discounted price), enterprises (sellers) do not use this account, revenue from sales is recorded according to the discounted price (net revenue).
- Only deductions due to approval of discount after sales( recorded revenue) and issuing invoices (discounts outside invoice) due to bad and degraded goods are recorded in this account...
dd) For sales returns, this account is used to record the value of products, goods returned due to : Violation of commitment, violations of economic contracts, bad, degraded , wrong category or improper goods. e) Accountants must monitor in detail trade discounts, sales returns and allowances for each customer and each type of goods sold, such as: sales (products, goods), service provisions. At the end of period, transferring all to account 511 - "Revenues from sales and service provisions" to determine the net revenue of products, goods and services actually earned in the reporting period.

2. Structure and contents of account 521 – Revenue deductions
Debit side :
- Trade discount accepted to settle for customers.
- Sales allowances agreed for buyers;
- Revenues sales returns of which buyers are refunded or which are deducted from accounts receivable of customers about sold products, goods volume
Credit side : At the end of account period, transferring the total trade discount, sales allowance, revenues of sales returns to account 511 - ―Revenue from sales and service provisions‖ to determine net sales of the reported period.
Account 521 - Revenue deductions do not have ending balance.
Account 521 comprises 3 sub-accounts
- Account 5211 – Trade discount: This account is used to record the trade discounts for buyers who buy merchandises in great volume which have not been recorded on the invoice when selling goods or providing service during the period.
- Account 5212 - Sales returns: This account is used to record the revenue of products, goods and services returned by the buyers during the period.
- Account 5213 - sales allowances: This account is used to record the sales allowances for the purchaser because products, goods, services provided have poor quality which have not been recorded in the invoice when selling products, goods and providing services during the period.

3. Method of accounting for several major transactions
Recording trade discounts, sales allowances actually incurred in the period, record:
- In case sales allowances, trade discounts are subject to VAT under credit-invoice method, and enterprises pay VAT under credit-invoice method, record :
Dr 521 – Revenue deductions (5211, 5213)
3331 - Payable VAT (reduced output VAT)
Cr 111,112,131,...
- In case sales allowances, trade discounts are not subject to VAT or subject to VAT under subtraction method, then sales allowances for buyers are recorded :
Dr 521 – Revenue deductions (5211, 5213)
Cr 111, 112, 131,...
b) Accounting for sales returns
- When enterprises receive products, goods returned, accountants record costs price of sales returns
In case enterprises apply perpetual inventory method, record:
Dr 154 – Unfinished production, business cost
Dr 155 - Finished goods
Dr 156 - Merchandises
Cr 632 - Cost of goods sold
In case enterprises apply periodical inventory method, record:
Dr 611 - Purchases (for goods)
Dr 631 - Cost of production (for products)
Cr 632 - Cost of goods sold
- Settlement for buyers of amounts of sales returns:
If products, goods are subject to VAT under credit-invoice method and enterprises pay VAT under credit-invoice method, record:
Dr 531 - Sales returns (price net of VAT)
Dr 3331 - VAT payable (33311) (VAT of sales returns)
Cr 111, 112, 131,...
If product, goods are not subject to VAT or are subject to VAT under subtraction method, amounts paid for buyer of sales returns shall be recorded a:
Dr 5212 - Sales returns
Cr 111, 112, 131,...
- Expenses incurred in relation to sales returns (if any), record:
Dr 641 - Selling expenses
Cr 111, 112, 141, 334,...
c) At the end of the accounting period, transferring the total revenue deductions in the period to account 511 - "Revenues from sales and service provisions", record :
Dr 511 – Turnover from sale and service provision
Cr 521 – Deductible turnovers.

Source: Circular 200, Article 81