What account 9010 is for
When a workshop, a flour mill or a garment factory sells products it has made itself, the revenue from that sale is collected in sub-account 9010 "Revenue from sale of finished products". Paragraph 379 of the Instructions lists five sub-accounts in group 9000, and three of them are chosen according to what was sold:
| What was sold | Sub-account |
|---|---|
| Finished products of our own manufacture | 9010 "Revenue from sale of finished products" |
| Goods | 9020 "Revenue from sale of goods" |
| Work performed or services rendered | 9030 "Revenue from performance of work and rendering of services" |
The other two, 9040 "Returns of goods (products) sold" and 9050 "Discounts granted to buyers and customers", are accounts that reduce revenue (more on them below).
A transit account: what that means
In the chart of accounts, group 9000 has type "T" (transit). Under paragraph 3 of NAS No. 21, transit accounts are temporary income and expense accounts that have no balance at the end of the reporting period. Applied to 9010:
- during the period every sale is recorded on the credit of 9010 and revenue builds up;
- at period end the accumulated amount is transferred to 9910 "Final financial result (profit or loss)" (para. 380);
- after that 9010 has no balance, and the new period starts from zero.
Under the same paragraph, the balance sheet shows permanent accounts; 9010, however, is not a permanent account but a transit one.
What goes to the credit side
Under paragraph 380, the credit of 9010 records revenue from the main activity; the corresponding account is a receivables account (the buyer's debt) or a cash account. The same paragraph contains one more important point: these accounts show the net proceeds from sales. The cases recorded on the credit of 9010 under the table in paragraph 383 (all credit rows of the table):
- products shipped to the buyer and a settlement document issued (row 1);
- products sold for cash (row 2);
- products sold to the organisation's own employee (row 3);
- dividends paid in products rather than money (row 4);
- agency fee accrued on intermediary transactions (row 5);
- products sold to a subsidiary or associate (row 6);
- revenue received in earlier periods but relating to this period transferred from 6230 (row 7).
What goes to the debit side
Day-to-day sales are not recorded on the debit of 9010. Under the table in paragraph 383, the debit side is used only in closing entries at period end:
- the amount of returned products is transferred from 9040 to 9010 (row 10);
- the amount of discounts granted is transferred from 9050 to 9010 (row 11);
- the remaining net amount is closed to 9910 (row 12).
Points to watch
- VAT is not part of 9010. Row 1 of the table in paragraph 383 gives the amount "excluding VAT and excise taxes". Under paragraph 378, VAT and excise tax on sales are recorded on the debit of the buyer's debt account or the cash account and on the credit of group 6400. On shipment to the buyer this is Dr 4010 Cr 6410 (para. 275, row 2).
- Cost is recorded separately. Under paragraph 378, income and expenses are kept in separate accounts for the financial result. The cost of finished products sold is not deducted from 9010: it is recorded as Dr 9110 "Cost of finished products sold" Cr 2810 — 2830 (para. 390, row 1).
- Returns and discounts are not deducted from 9010 directly. Under paragraphs 381 and 382, 9040 and 9050 are contra-liability accounts for this group: their debit turnover reduces revenue. During the period they are collected separately, and at period end they are closed to 9010 (para. 383, rows 10 and 11). This way, during the period gross sales (9010) and the amounts deducted from them (9040, 9050) are visible separately (practical tip).
- Revenue received in advance. Under paragraph 380, revenue received in earlier periods but relating to the current period passes through 6230 "Other deferred income": in the period when the products are handed over, Dr 6230 Cr 9010 is recorded (para. 383, row 7; para. 265).
- Analytical accounting. Under the end of paragraph 382, analytical accounting for group 9000 is kept separately for each type of product; if needed, it may also be kept by region and by other segments required for management. For example, if a bakery opens separate analytical accounts for "bread", "buns" and "cakes", it immediately sees which product brings in the most revenue (practical tip).
- If a balance remains at period end (practical tip). 9010 is a transit account, and under paragraph 3 it should have no balance at period end. If a balance still shows after closing, either the closing entry was not made or closing 9040/9050 was forgotten: check the closing entries again.
Main journal entries 10
Debit and credit are as in the model table of Appendix 2 to NAS No. 21. The transaction text briefly restates the table row.
| Transaction | Debit | Credit | Source |
|---|---|---|---|
| Products shipped to the buyer; the amount in the settlement document (excluding VAT and excise tax) recorded as revenue | 4010, 4020 | 9010, 9020, 9030 | NAS No. 21, para. 383, row 1 |
| Products sold for cash | 5010, 5020 | 9010, 9020, 9030 | NAS No. 21, para. 383, row 2 |
| Products sold to an employee of the organisation | 4790 | 9010, 9020, 9030 | NAS No. 21, para. 383, row 3 |
| Dividends paid in products | 6610 | 9010, 9020, 9030 | NAS No. 21, para. 383, row 4 |
| Amount of the agency fee on intermediary transactions | 4010 | 9010 | NAS No. 21, para. 383, row 5 |
| Products sold to a subsidiary or associate | 4120 | 9010, 9020, 9030 | NAS No. 21, para. 383, row 6 |
| Deferred income added to sales when the period it relates to arrived | 6230 | 9010, 9020, 9030 | NAS No. 21, para. 383, row 7 |
| Returned products account (9040) closed at period end | 9010, 9020 | 9040 | NAS No. 21, para. 383, row 10 |
| Discounts granted account (9050) closed at period end | 9010, 9020, 9030 | 9050 | NAS No. 21, para. 383, row 11 |
| Revenue from main activities closed to the final financial result at period end | 9010, 9020, 9030 | 9910 | NAS No. 21, para. 383, row 12 |
Example
"Pistazor qandolat" LLC (a fictional company) makes pistachio biscuits. During the reporting period it shipped products to two buyers; one box of biscuits sold for 50,000 soums excluding VAT, and the cost of one box is 32,000 soums. VAT is 12%.
| No. | Transaction | Dr | Cr | Amount, soums |
|---|---|---|---|---|
| 1 | 900 boxes shipped to the "Shirinkent" shop (900 × 50,000) | 4010 | 9010 | 45,000,000 |
| 2 | VAT on this sale (45,000,000 × 12%) | 4010 | 6410 | 5,400,000 |
| 3 | 400 boxes shipped to the "Oqtosh savdo" supermarket (400 × 50,000) | 4010 | 9010 | 20,000,000 |
| 4 | VAT on this sale (20,000,000 × 12%) | 4010 | 6410 | 2,400,000 |
| 5 | Cost of the 1,300 boxes sold written off (1,300 × 32,000) | 9110 | 2810 | 41,600,000 |
| 6 | 9010 closed at period end | 9010 | 9910 | 65,000,000 |
| 7 | 9110 closed at period end | 9910 | 9110 | 41,600,000 |
Sources of the entries: 1, 3 — para. 383, row 1; 2, 4 — para. 275, row 2; 5 — para. 390, row 1; 6 — para. 383, row 12; 7 — para. 436, row 2.
Account 9010:
| Item | Amount, soums |
|---|---|
| Opening balance | 0 |
| Credit turnover (1, 3) | 65,000,000 |
| Debit turnover (6) | 65,000,000 |
| Closing balance | 0 |
Note: the buyers' total debt (4010) is 72,800,000 soums, yet only 65,000,000 soums went to 9010. The difference of 7,800,000 soums is VAT: it is not the company's revenue but its debt to the budget (6410).
Gross profit: 65,000,000 − 41,600,000 = 23,400,000 soums. This amount becomes visible when revenue (credit) and cost (debit) meet side by side in 9910 (example prepared by the author).