9 things to keep in mind when preparing annual financial statements

Financial reporting season is approaching, in order to reduce the risk of entanglement for this important product of the business. VISION makes some important notes in the process of preparing financial statements at the end of 2019 as follows:

1. Expenses of 2019 are paid at the beginning of 2020 => must be recorded in expenses in 2019.

– According to the principles and provisions of the Law on CIT, expenses incurred in any year must be recorded in the taxable income of that year. Expenses such as salary, telephone, internet, etc. incurred in December 2019 must be recorded in the expenses of December 2019, although payment will not be made until January 2020.

– Bonuses for employees in 2019 (if any) paid in 2020 must be recognized as expenses in 2019.

– Expenses of 2019 that do not have enough invoices must be deducted in advance to ensure the appropriateness of revenue and expenses.

2. Perform year-end inventory of assets.

Assets including: NVL, HH, CCDC,… must be inventoryed and made an inventory record by December 31, 2019. Differences, if any, must be dealt with and recorded in the 2019 financial statements.

3. Perform year-end debt reconciliation.

Liabilities include receivables (131), payables (331), loans (341) and advances (141), receivables (138), other payables (3388),… Accounting A reconciliation record must be made for each certified entity and signed on the debt reconciliation record. This not only ensures the certainty of liabilities, and also avoids missing expenses/revenues during the year.

4. Perform year-end cash inventory.

There must be a record of the fund inventory as of December 31, 2019, a statement of the whole year arising and the closing balance of bank accounts.

5. Compare tax debts with tax authorities, social insurance debts with social insurance agencies.

Accountants need to contact these authorities to confirm the certainty of tax and social insurance payments.

6. If the salary in December 2019 is paid in January 2020, this income is the employee’s 2020 PIT taxable income.

According to the PIT law, the time to calculate PIT from wages is the PAYMENT TIME. Therefore, in December 2019, employees are paid in January 2020, PIT is declared in January 2020 and shown on PIT finalization 2020.

7. Salary in 2019 shall be paid no later than March 30, 2020.

Salary arrears in 2019 over 90 days (unpaid until March 30, 2020) according to the provisions of the CIT law are not recorded in the deductible expenses of 2019.

8. Making advance of expenses, making provision for devaluation of inventory, investments, bad debts.

Small and medium-sized enterprises due to the characteristics and scale of operation will rarely appear in these cases. However, accountants need to learn and pay special attention to the changes of these expenses in order to comply with the provisions of law when required.

9. Realize the allocation of VAT for taxable and non-taxable activities according to the annual turnover rate.

The VAT Law stipulates that input VAT shared for taxable outputs and non-taxable outputs shall be calculated and distributed according to each tax declaration period (month/quarter) in accordance with the revenue ratio of the month/quarter. that quarter. At the end of the year, the accountant must recalculate the shared VAT amount to be deducted according to the ratio (taxable revenue for the whole year / total revenue for the whole year), adjust the difference at the last VAT declaration period (December 12). 2019) or the fourth quarter of 2019