I. Scope of accounting
The accounts receivable account accounts for the commercial bills received by enterprises for the sale of commodities and the provision of labor services, including bank acceptance bills and commercial acceptance bills.
Accounts receivable accounts for the amount receivable by an enterprise for business activities such as the sale of goods and the provision of labor services. There is a difference between accounts receivable and contract assets, and accounts receivable are claims receivable over time.
The contract asset is not an unconditional right to receive money, which is subject to conditions other than the passage of time (e.g., the performance of other performance obligations in the contract) in order to receive the corresponding contract consideration.
2. Provision for bad debts
Notes receivable and accounts receivable are financial assets, and it is necessary to consider the expected credit situation, and then accrue bad debts or reverse bad debts.
For example, Midea's accounting policy discloses that for notes receivable and receivables financing classified into portfolios, the Group calculates expected credit losses based on historical credit loss experience, current conditions and forecasts of future economic conditions, and through default risk exposure and expected credit loss ratio over the entire duration.
Originally, the debit side of bad debts was an asset impairment loss, but after the implementation of the new financial instruments standard, a different account was replaced by a credit impairment loss.
The above figure shows the provision for bad debts of accounts receivable disclosed by Midea Group.
III. Major tax differences
(i) Inconsistent timing of revenue recognition
As a result of the implementation of the new revenue standard, the new revenue standard recognizes revenue according to the five-step method, and there is also a principle of accounting revenue recognition that the amount is likely to flow in, and the amount cannot be recognized if it is not possible to flow in.
In the tax law turnover tax, especially the VAT recognition of taxable liability is another set of rules.
On the day of receipt of the sales payment or the receipt of the receipt of the sales payment or the receipt of the receipt of the sales payment as provided for in Article 38 of the Detailed Rules for the Implementation of the Provisional Regulations on Value-added as stipulated in Article 19, Paragraph 1 (1) of the Regulations, the details are as follows:
(1) Selling goods by direct payment, regardless of whether the goods are issued or not, is the day on which the sales money is received or the voucher for the sales payment is obtained;
……
(4) The sale of goods by way of advance receipt is the day on which the goods are issued, but the production and sale of large machinery and equipment, ships, aircraft and other goods with a production period of more than 12 months shall be the day on which the advance payment or the date of receipt agreed in the written contract is received;
……
(ii) Provision for bad debts
The Enterprise Income Tax Law stipulates that unapproved preparations cannot be deducted before tax. Bad debts can only be deducted when they actually occur.
Notice of the Ministry of Finance and the State Administration of Taxation on the Pre-tax Deduction Policy for Enterprise Asset Losses (CS [2009] No. 57) 4. If the receivables and prepaid accounts of an enterprise other than loan claims meet one of the following conditions, the unrecoverable receivables and prepayments recognized after deducting the recoverable amount can be deducted as bad debt losses when calculating the taxable income:
(1) The debtor is declared bankrupt, closed, dissolved, or revoked in accordance with law, or its business license is cancelled or revoked in accordance with law, and its liquidated assets are insufficient to pay off;
(2) The debtor dies, or is declared missing or dead in accordance with law, and his property or inheritance is insufficient to pay off;
(3) The debtor has not paid off the debts for more than 3 years after the due date, and there is conclusive evidence to prove that it is unable to pay off the debts;
(4) After reaching a debt restructuring agreement with the debtor or approving the bankruptcy reorganization plan by the court, it cannot be recovered;
(5) It cannot be recovered due to force majeure such as natural disasters and wars;
(6) Other conditions stipulated by the competent departments of finance and taxation under the State Council.
Accounts receivable can only be deducted before tax if one of the above conditions is met.
Fourth, major tax audits
(1) Long-term accounting
Accounts receivable - Yongkang ** Co., Ltd. credit balance of 12,785.00 yuan, long-term hanging, and the product has been issued in 2014, the corresponding cost has been carried forward, and the undeclared operating income is 10,927.35 yuan.
(ii) Uncarried income
Your company's sales proceeds have been collected, included in the accounts receivable credit, and the uncarried sales revenue is calculated for output tax. According to Article 38 of the Detailed Rules for the Implementation of the Provisional Regulations of the People's Republic of China on Value-Added Tax: (1) The sale of goods by direct payment, regardless of whether the goods are issued or not, is the day on which the sales money is received or the proof of claim for sales money is obtained.
From 2013 to October 2015, a total of 3,582,600 yuan of sales were collected, 3,062,051.28 yuan of sales revenue should be increased, and 520,548.72 yuan of value-added tax should be paid. Thereinto:
(1) In 2013, the income was increased by 982,905.98 yuan, and the value-added tax was paid by 167,094.02 yuan.
(2) In 2014, the income was increased by 1,297,094.02 yuan, and the value-added tax was paid by 220,505.98 yuan.
(3) From January to October 2015, the income was increased by 782,051.28 yuan, and the value-added tax was paid by 132,948.72 yuan.
The above total should be paid VAT of 1,158,229.55 yuan.
(iii) Direct unrecognized revenue
By looking through the accounting books of the enterprise, the goods delivery list, etc., it was found that your unit has undercounted sales revenue. In the process of the transaction, the sales of goods did not issue VAT invoices, and the payment received was not included in the sales revenue, but the method of "debit: bank deposit credit: accounts receivable" was used to keep accounts, as follows: On March 26, 2020, the payment of 89,200 yuan was received from Hunan ** Flower Cannon Factory, and the voucher has been recorded on March 29, 2020, and the sales revenue excluding tax is 89,200÷1.13=78,938.05 yuan, and the output tax of VAT is undercounted 78,938.05×13%=10261.95 yuan.
(iv) Advance receivables are posted and no revenue is recognized
During 2018, your unit obtained a tax-included sales income of RMB 2,860,200.00 from the sale of equipment by way of advance receipt, and the above-mentioned goods have been shipped, and the total payment received is RMB 2,618,000.00, and the payment for goods has not been received at RMB 242,200.00.
Among them: 103,800.00 yuan has not been carried forward and declared on the credit side of accounts receivable, 2,756,400.00 yuan has not been accounted for in the account books, and value-added tax, enterprise income tax and urban maintenance and construction tax have not been declared and paid, resulting in an underpayment of value-added tax of 394,510.35 yuan, urban maintenance and construction tax of 27,615.72 yuan and enterprise income tax of 2,071.57 yuan.
The above illegal facts are proved by the following evidence: (1) the relevant account books, accounting vouchers and the "Purchase and Sale Contract" provided by your unit; (2) The statistical table of income provided by your unit, (3) the "Explanation of the Situation" provided by your unit and the "Inquiry Record" of relevant personnel;( 4) the 2018 tax return of your unit and other materials, (5) the bank account and capital transaction information of your unit and related personnel, etc.
(5) False invoicing receivables and payables
On November 7, 2019, the unit obtained 26 special VAT invoices issued by Haimen ** Building Materials Co., Ltd., with an invoice amount of 25,449,260.20 yuan, a tax amount of 3,308,403.80 yuan, and a total price and tax of 28757664 yuan.
The above 26 invoices were recorded in the No. 9 voucher in November 2019, and the input tax credit of 3,308,403.80 yuan was declared in the same month, and the main business cost was carried forward and 25,449,260.20 yuan was deducted before the enterprise income tax of the current year.
On November 7, 2019, your unit issued 26 special VAT invoices to Haimen ** Metal Products Co., Ltd., with an invoice amount of 25,449,260.20 yuan, a tax amount of 3,308,403.80 yuan, and a total price and tax of 28757664 yuan.
The above 26 invoices were recorded in November 2019 as No. 10 voucher included in the "main business income" of 25,449,260.20 yuan, and the tax payable - VAT payable (output tax) was confirmed to be 3,308,403.80 yuan.
After the investigation of the relevant personnel of your unit, the above-mentioned purchase and sale business involves the capital flow through the "accounts receivable" account, the current month to hedge the accounts receivable and payable of the above two units, there is no actual capital flow and goods flow, belongs to the closed-loop mutual issuance of false VAT special invoices, in violation of the "People's Republic of China Invoice Management Measures" (State Council Order No. 587) Article 22, characterized as false invoices.
(6) False invoicing and inflated performance
None of the above-mentioned invoices received and re-issued by your company have any real business. Most of the circulating funds for obtaining invoices and invoicing are offset by accounts receivable and accounts payable. If your unit inflates its performance and issues special VAT invoices in a circular manner without real business, it is a false issuance of special VAT invoices.
- Source: HuanRui Finance and Taxation Law
- Author: Dong Lei
- Graphic editor: Mulin Financial News
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