What account 9410 is for
Once products are ready, they have to be delivered to the customer, advertised, and the salespeople have to be kept on. These expenses are not part of the production process itself, but without selling there would be no income either. To see them separately from other expenses, a separate account has been opened: 9410 "Selling expenses". Looking at this account, a manager answers the question "how much did we spend on selling?" with a single figure.
Account type
In the chart of accounts, group 9400 is of type T (transit). Under para. 3 of NAS No. 21, transit accounts are used during the reporting period and have no balance at the end of the period. Group 9400 collects period expenses (para. 406), so as expenses accumulate, the amount on the debit of 9410 grows.
Group and sub-accounts
Under para. 406, group 9400 "Period expenses" contains three accounts:
| Account | What is recorded |
|---|---|
| 9410 "Selling expenses" | Expenses connected with selling |
| 9420 "Administrative expenses" | Management expenses |
| 9430 "Other operating expenses" | The remaining operating expenses |
The chart does not show a separate sub-account for 9410 itself.
What is recorded on the debit side
Under para. 407, 9410 records the expenses of selling products: delivery to the consumer, loading onto transport, and also the expenses of employees and departments engaged in marketing. The main rows of the table in para. 412:
- transport expenses for dispatching products — Cr 6990 (row 1);
- advertising and marketing services received from outside — Cr 6010 (row 2);
- depreciation of fixed assets used in the selling process — Cr 0211-0299 (row 3);
- amortisation of intangible assets used in the selling process — Cr 0510-0590 (row 4).
This account also has other rows that appear in other tables; those above are its main rows.
What is recorded on the credit side
At the end of the reporting period the balance of 9410 is closed to 9910 (para. 408; para. 412, row 25: Dr 9910 Cr 9410-9430). That is, the credit side holds the closing entry.
What to watch out for
- Draw the boundary clearly. Delivering products to the customer is 9410, running the company is 9420. So that the same expense does not land on two accounts, it is good for the company to draw up in its accounting policy a list of "what counts as selling" (practical advice).
- Allocate depreciation too. Depreciation of fixed assets used in the selling process is recorded to 9410, while that of fixed assets of management significance goes to 9420 (para. 412, rows 3 and 6). Note on the inventory card where the equipment is used (practical advice).
- No balance should remain at the end of the period. 9410 is a transit account: after closing, its balance must fall to zero (practical advice: check the account card after closing).
Main journal entries 5
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 |
|---|---|---|---|
| Transport expenses for dispatching products | 9410 | 6990 | NAS No. 21, para. 412, row 1 |
| Advertising and marketing services received from outside | 9410 | 6010 | NAS No. 21, para. 412, row 2 |
| Depreciation of fixed assets used in the selling process | 9410 | 0211–0299 | NAS No. 21, para. 412, row 3 (in the table: 0211-0299) |
| Amortisation of intangible assets used in the selling process | 9410 | 0510–0590 | NAS No. 21, para. 412, row 4 |
| At the end of the reporting period the period expense accounts closed (9410 is included in this row) | 9910 | 9410–9430 | NAS No. 21, para. 412, row 25 |
Example
"Bulung'ur Uy Jihozlari" LLC (a fictional furniture shop) recorded the following selling expenses during the month (amounts are for illustration only):
| No. | Transaction | Dr | Cr | Amount, soums |
|---|---|---|---|---|
| 1 | Transport expense for sending furniture to customers | 9410 | 6990 | 3,200,000 |
| 2 | Advertising service received from outside | 9410 | 6010 | 2,500,000 |
| 3 | Depreciation of equipment in the showroom | 9410 | 0211-0299 | 1,800,000 |
| 4 | Amortisation of sales software (intangible asset) | 9410 | 0510-0590 | 400,000 |
| 5 | Account 9410 closed at the end of the period | 9910 | 9410 | 7,900,000 |
Sources of the entries: 1 — para. 412, row 1; 2 — row 2; 3 — row 3; 4 — row 4; 5 — row 25 (9910 — 9410-9430, the 9410 part of the row).
Calculation for 9410:
| Indicator | Amount, soums |
|---|---|
| Debit turnover (1–4) | 3,200,000 + 2,500,000 + 1,800,000 + 400,000 = 7,900,000 |
| Credit turnover (5) | 7,900,000 |
| Balance | 0 |
The balance is zero: this is how a transit account should look at the end of the period. 7,900,000 soums moved to the debit of 9910 and reduced the final financial result (example prepared by the author).