Different Accounting Treatments As Sales Behavior

The tax law stipulates eight kinds of sales practices:

(1) deliver goods to others for sale;

(2) sale of consignment goods;

(3) taxpayers who have more than two institutions and carry out unified accounting shall transfer goods from one organization to other institutions for sale, except that the relevant institutions are located in the same county (city).

(4) the goods that are produced or commissioned are used for non taxable items;

(5) invest the goods produced, commissioned, processed or purchased for investment to other units or individual operators.

(6) distributing goods produced, commissioned, processed or purchased to shareholders or investors;

(7) the goods produced or commissioned are used for collective welfare or personal consumption ;

(8) the goods that are produced, commissioned, processed or purchased will be presented to others free of charge. Although these eight acts belong to the scope of the value-added tax, but because of the difference in the sales revenue recognition, the calculation method of income tax is different. It can be divided into taxable sales class and accounting sales class for accounting treatment.

Calculation of value added tax

Taxable sales includes four types of sales practices:

(1) the goods that are produced or commissioned are used for non taxable items;

(2) invest the goods produced, commissioned, processed or purchased for investment to other units or individual operators.

(3) the goods produced and commissioned are used for collective welfare;

(4) the goods that are produced, commissioned, processed or purchased will be presented to others free of charge.

When the above four taxable sales actions occur, the enterprise is an internal carry over relationship, there is no sales behavior, and does not conform to the sign of the establishment of the sales. The enterprise will not increase the cash flow because of the above actions, nor will it increase the operating profit of the enterprise. Therefore, the accountant does not deal with the sale, but it is carried forward at the cost. However, according to the tax law, it should be calculated and paid all kinds of taxes and fees as the sales behavior.

Accounting sales also include four types of sales practices:

(1) deliver goods to others Consignment ;

(2) sale of consignment goods;

(3) distributing goods produced, commissioned, processed or purchased to shareholders or investors;

(4) the goods produced and commissioned are used for personal consumption.

When the above four accounting sales behaviors occur, the accountant shall make sales treatment, calculate the sales revenue, and pay the added value tax according to the tax law.

The following is an example to illustrate the similarities and differences between the two kinds of business processes.

An enterprise has a batch of self produced products, the cost of the product is 1 million 200 thousand yuan, and the selling price is 1 million 600 thousand yuan, assuming that the products are used separately.

(1) foreign investment;

(2) allocated to shareholders. In the two case, accounting treatment should be:

1. the batch products are used. Outbound investment When it belongs to taxable sales business, its accounting treatment is:

Borrowing: long-term equity investment 1472000

Loan: finished product 1200000

Payable tax - payable VAT (output tax) 272000 (1600000 x 17%).

2. when the finished product is distributed to shareholders, it belongs to the accounting sales business. Its accounting treatment is:

Borrowing: Profit Distribution -- dividend payable 1872000

Loan: main business income 1600000

Payable tax - payable VAT (output tax) 272000 (1600000 x 17%).

From the above examples, we can see that taxable sales and accounting sales are the same in calculating the value added tax, that is, they are all taxed according to the sales revenue, but taxable sales classes, such as the first case, are carried forward according to the cost of finished goods and do not confirm the sales revenue, while the accounting sales category, such as the second case, must confirm the sales revenue of products.

Calculation of income tax

In the process of taxable sales, it is carried out according to the cost of finished goods and the sales revenue is not calculated. Therefore, when calculating the taxable income, we should adjust the accounting profits. For example, the accounting income should be added to 1 million 600 thousand yuan of product sales revenue to calculate taxable income.

In the process of accounting sales, because the accounting profit has already included 1 million 600 thousand yuan of product sales revenue, there is no need to adjust the taxable income again.

To sum up, whether it is taxable sales or accounting sales, the final amount of VAT and income tax payment is the same, which prevents enterprises from evading taxes by various names and ensures that the state's tax revenue is fully stored.