Things to know about rounding numbers in accounting
The following article from S4B Vietna, will guide readers about the principles of rounding numbers in accounting, and how to round numbers when writing VAT invoices, sales invoices… According to the regulations on rounding numbers in Decree 174/2016/ND-CP of the Vietnamese Government.
1. Principles on abbreviated currency units and rounding numbers in accounting
a. Abbreviated currency units
– Accounting units in the business sector when preparing consolidated financial statements, consolidated financial statements from the financial statements of subsidiaries, affiliated accounting units or superior accounting units in the state accounting sector when preparing consolidated financial statements, annual budget settlement reports from financial statements, budget settlement reports of subordinate units, if any:
- At least 1 indicator on the report has 9 digits or more, the abbreviated currency unit of thousand dong (1,000 dong) can be used,
- From 12 digits or more, the abbreviated currency unit of million dong (1,000,000 dong) can be used,
- From 15 digits or more, the abbreviated currency unit of billion dong (1,000,000,000 dong) can be used.
– When publicly disclosing financial statements and budget settlement reports, accounting units are allowed to use the abbreviated currency unit as prescribed in Clause 4.
– When using the abbreviated currency unit, accounting units are allowed to round numbers by: The digit after the abbreviated currency unit digit, if it is 5 or more, is increased by 1 unit; if it is less than 5, it is not counted.
References:
- Article 10, Accounting Law No. 88/2015/QH13, effective January 1, 2017
- Article 4, Decree 174/2016/ND-CP, effective January 1, 2017
Rounding in Financial Statements
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b. Rounding numbers in accounting
According to Clause 6, Article 4 of Decree 174/2016/ND-CP, when using the abbreviated currency unit, the accounting unit is allowed to round the number by: The digit after the abbreviated currency unit if equal to 5 or more is increased by 1 unit; if less than 5, it is not counted. Thus, we can understand that:
- The odd number after the unit has a value >= 5, then add 1 unit (round up)
- The odd number after the unit has a value <5 is not counted (removed)
For example:
Suppose you have an invoice with a value of: 25,561.78 VND. When rounded to 25,562 VND. If you have a value of 9,692 VND. Then do not round to 9.7 VND. But keep the original value of 9,692 VND.
2. Principles of rounding numbers when writing value-added invoices
a. Regulations on numbers on value-added invoices
At point b, clause 13, Article 10, Decree No. 123/2020/ND-CP stipulates:
“The numbers displayed on the invoice are Arabic numerals: 0, 1, 2, 3, 4, 5, 6, 7, 8, 9. The seller has the option: after the thousand, million, billion, thousand billion, million billion, billion billion digits, a dot (.), if there are numbers after the unit digit, a comma (,) must be placed after the unit digit or a natural number separator, a comma (,) must be used after the thousand, million, billion, thousand billion, million billion, billion billion digits and a dot (.) must be used after the unit digit on the accounting document”.
b. Regulations on accounting currency recorded on invoices and indicators on invoices
– At point c, clause 13, Article 10 of Decree No. 123/2020/ND-CP clearly states:
The currency recorded on the invoice is Vietnamese Dong, the national symbol is “đ”.
– The value-added tax invoice includes the following indicators:
- Quantity;
- Unit price of goods and services;
- Amount excluding VAT;
- Value-added tax rate;
- Total amount of VAT according to each tax rate;
- Total amount of VAT;
- Total payment including VAT.
Accountants need to pay attention to the regulations on rounding numbers for the following currency indicators: Unit price, Amount excluding VAT, VAT amount, Total payment including VAT.
Rounding for accounting accuracy
c. Regarding rounding numbers in case of writing invoices in foreign currencies
At Point c, Clause 13, Article 10 of Decree No. 123/2020/ND-CP stipulates:
- In case economic and financial transactions arise in foreign currencies according to the provisions of the law on foreign exchange, the unit price, total amount, total amount of value added tax according to each tax rate, total amount of value added tax, total amount of payment shall be recorded in foreign currencies, the currency unit shall be recorded in the name of the foreign currency. The seller shall also show on the invoice the foreign currency exchange rate with Vietnamese Dong according to the exchange rate prescribed by the Law on Tax Administration and implementing documents.
- Foreign currency code according to international standards (for example: 13,800.25 USD – Thirteen thousand eight hundred US dollars and twenty-five cents, for example: 5,000.50 EUR – Five thousand euros and fifty cents).
- In case of selling goods in foreign currency according to the provisions of the law on foreign exchange and paying tax in foreign currency, the total payment amount shown on the invoice is in foreign currency, not converted to Vietnamese Dong.
The above is an article on the issue of rounding numbers in accounting so that you can understand it easily. If you need to use the accounting consulting service or need further advice on this matter, please contact us
S4B Vietnam
- Address: Unit 602A, Tower A, Handi Resco Office Building. 521 Kim Ma Street, BaDinh District, Hanoi
- Tel: + 84 24 3974 4181
- Email: service@s4b.com.vn
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