Features of accounting and taxation of certain income and expenses of an enterprise when forming the financial result

Accounting for income and expenses

Note 1
It should be noted that Order of the Ministry of Finance of the Russian Federation No. 116n dated September 18, 2006 changed the procedure for classifying income and expenses in accounting.

Today, income and expenses are divided into two groups:

income and expenses from ordinary activities,
other income and expenses.

Previously, other income and expenses were divided into:

operating rooms;
non-operating;
emergency.

Non-operating and operating income and expenses were previously recorded in account 91 “Other income and expenses”, and extraordinary ones, respectively, in account 99 “Profit and Loss”. The order of the Ministry of Finance removed the division of other income and expenses of an enterprise into operating, emergency and non-operating.

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Today, accounting for other income and expenses is carried out in accordance with the following regulations:

PBU 9/99 “Income of the organization”,
PBU 10/99 “Expenses of the organization”,
Chart of accounts,
Regulations on the composition of costs for the production and sale of products included in the cost of production and on the rules for the formation of financial results taken into account when taxing profits.

To account for other income and expenses, account 91 “Other income and expenses” is intended, to which, according to the instructions to the Chart of Accounts, sub-accounts can be opened:

Subaccount 1 “Other income” – for accounting for receipts of assets recognized as other income (except for extraordinary ones);
Subaccount 2 “Other expenses” – for accounting for other expenses (except for extraordinary ones);
Subaccount 9 “Balance of other income and expenses” - to identify the balance of other income and expenses for the reporting month.

Throughout the year, entries are made cumulatively on the credit of account 91.1 “Other income” and the debit of account 91.2 “Other expenses”. The balance of other expenses is calculated monthly and for the month by comparing the turnover on the credit of account 91.1 and the turnover on the debit of account 91.2. At the end of each month, the calculated balance must be written off from account 91.9 to account 99 “Profit and Loss”.

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Operating expenses and income arise when performing the following business transactions: leasing property, selling property, participating in joint activities. Non-operating expenses and income arise as a result of facts of economic activity that are practically unrelated to the activities of the enterprise: exchange rate differences or deductions to reserves.

Analytical accounting for subaccounts opened to 91 accounts “Other income and expenses” must be maintained for each type of other expenses and income. If the activity of providing the assets of an enterprise for temporary use for a fee is not the main activity of the enterprise, then the amounts of income and expenses from the rental of property are recognized as other operating income or expenses.

Net Operating Income - Formula

As can be seen from the contents of the lists, income and expenses practically coincide in their economic purpose. In this regard, the ratio of operating expenses to operating income is used when calculating profit for other facts of business activity. Separate accounting allows you to determine net operating income:

Net operating income is: The amount of VA (the actual amount of gross income) – the amount of OP (operating expenses excluding depreciation).

The indicator characterizes the amount of net profit from the use of property, contributions to the authorized capital, investments in securities, and other types of income. It is economically important to calculate the NIR for the current period. But a one-time positive result is not a guarantee of profit in future periods.

The ratio of operating expenses to the company's sales revenue will help to calculate the operating expense ratio, which characterizes the dynamics of the profitability of overall activities. The lower the value obtained, the more profit the company has for the reporting period. The higher the coefficient, the more significant the business costs to maintain its livelihoods.

KOR (OER) = OR / Total income

An enterprise can establish formulas for calculating operating income and operating expenses independently, adhering to the legislative norms of PBU 9/99 and 10/99. It is recommended to measure performance indicators on the basis of financial (accounting) reporting data. Calculations are made for a period - month/quarter or for the reporting year.

Expense accounting

Definition 1

Income or expenses resulting from the provision for a fee of rights arising from various types of intellectual property are recognized as other operating income (expenses).

The rights to use an object of industrial property are transferred to a third party under a license agreement registered with the patent office.

If participation in the authorized capital of third-party companies is not the main activity of the enterprise, then such income is recognized as operating income. These include: dividends on shares, as well as income from equity participation in the authorized funds of other companies. Such income is recorded as the amount is declared by the company paying the income.

Receipts (expenses) associated with the sale and other write-off of assets other than cash in rubles include revenue received from the sale of fixed assets, materials, currency, securities, intangible assets, accounts receivable, the cost of inventory items remaining after liquidation fixed assets. These receipts are reflected in the credit of subaccount 91.1 “Other income”.

Expenses of this type include:

residual value of intangible assets and fixed assets;
cost of materials and other write-off assets;
costs for disposal and dismantling of written-off property;
other expenses resulting from the sale, write-off and disposal of assets.

These expenses are reflected in the debit of account 91.2 “Other expenses”.

The enterprise's income received from participation in joint activities is classified as other operating income. The profit that the enterprise received as a result of the joint activity is reflected in accounting on the basis of the protocol for the distribution of profit and other documents received from the company keeping records of the joint activity.

The amounts of interest received, as well as interest receivable, are indicated on the credit of account 91.1 “Other income” in correspondence with the cash accounts. In the “Profit and Loss Statement” these amounts are reflected as “Interest receivable”.

Interest paid by an enterprise for the provision of loans and borrowings represents the cost of paying interest for the use of loans and credits. The accrual of interest on loans and credits that are not related to the acquisition of property is done in the debit of account 91.2 “Other expenses”.

The costs associated with paying for services provided by credit institutions include the costs of purchasing and selling currency, cash management services and other services.

Expenses related to payment for services of a credit institution are recorded in the debit of account 91.2 “Other expenses” in correspondence with accounts 51 and 52.

The amounts of penalties, fines, and penalties are reflected in accounting, provided that they are recognized by the debtor or awarded by the court. The accrued amounts of fines are reflected in the credit of account 91.1 “Other income” in correspondence with the accounting accounts of settlements and cash. Free receipt of intangible assets, fixed assets, materials and other assets is reflected as deferred income. These receipts are included in non-operating income as depreciation is accrued or production costs or selling expenses are written off.

What do operating expenses include?

All indirect expenses of the enterprise are recognized as operating expenses. Previously, there was a classification of costs into non-operating, operating and emergency. With the entry into force of Order 116n, such division was abolished, but it is possible if necessary at the request of the enterprise. A complete list of the main operating expenses is contained in paragraph 11 of Chapter III of PBU 10/99.

Operating expenses include the following costs:

Representation of assets, including property, enterprises for temporary paid use or ownership.
Submission for paid use of patent rights to intellectual property for various purposes.
Participation in the authorized capital of other companies.
Payment of cash settlements to credit institutions.
Payment of interest on borrowed obligations of various types.
Costs of disposal, sale, or other write-off of assets, property, goods, finished products of an enterprise, with the exception of Russian funds.
Creation of valuation reserves by the enterprise, including for doubtful debts, for depreciation of securities, etc.

The listed types of costs are included in operating expenses if they do not relate to the main activities of the enterprise. Otherwise, such costs are subject to inclusion in ordinary expenses.

Other income

Note 2

Non-operating income includes and is accounted for in the credit of account 91.1 “Other income”, amounts of proceeds awarded by the court or found guilty as compensation for damage caused.

Profit from previous years, identified in the reporting year, is one of the types of non-operating expenses, which is associated with the correction of errors of previous periods. Errors in accounting made in previous reporting periods must be corrected by the enterprise in the reporting period when the errors were identified.

Also, the composition of non-operating income under the credit of account 91.1 “Other income” records the amounts of written off accounts payable with an expired statute of limitations.

The composition of non-operating income under the loan of subaccount 91.1 “Other income” includes positive exchange differences. Positive exchange rate differences are formed when the exchange rate of a currency rises against the ruble for foreign currency funds that are in foreign currency accounts and in the cash register, for receivables denominated in foreign currency, and for accounts payable when the exchange rate decreases.

Other income recognized as non-operating income includes positive amount differences, surplus property that was identified during inventory and other income.

Acceptance for accounting of surplus property that was identified during inventory at market value, taking into account depreciation, is reflected by the posting:

Debit 01 “Fixed assets”, 10 “Materials”, 50 “Cash”, 41 “Goods”, 43 “Finished products”
Credit 91-1 “Other income”.

The restoration of the reserve for a decrease in the value of inventory items at the beginning of the period following the period in which the reserve was formed is reflected by the entry:

Debit 14 “Reserves for reduction in the value of material assets”
Credit 91.1 “Other income”.

When securities are written off from the balance sheet of an enterprise, as well as when their market value increases, for which reserves were previously created, the following is recorded:

Debit 59 “Provisions for impairment of investments in securities”
Credit 91.1 “Other income”.

The addition of unused reserves for debts to the profit of the reporting period following the period of their creation is reflected by the entry:

Debit 63 “Provisions for doubtful debts”
Credit 91.1 “Other income”.

Fines, penalties, penalties for violation of the terms of contracts, paid or recognized for payment, are reflected in the entry of the debtor enterprise at the time the court awards sanctions or recognizes the debtor:

Debit 91.2 “Other expenses”
Credit 60 “Settlements with suppliers and contractors”, 62 “Settlements with buyers and customers”.

What does operating income include?

Similar to expenses, operating income is classified as such if it is not related to the main work of the enterprise. Otherwise, they must be reflected in account 90 and accounted for as revenue from ordinary activities. A complete list of types of income from other operations is contained in paragraph 7 of PBU 9/99.

Operating income consists of income:

From paid representation to time-limited use of enterprise assets.
From paid representation of patent rights to various types of intellectual property.
In connection with participation in the authorized capitals of other companies, including interest and income from investments in bonds and securities.
From participation in simple partnership agreements.
From the sale of property, assets of the organization, goods or manufactured products.
Interest received on loans and borrowings.
Accrued penalties for violation of contractual terms.
From assets received free of charge.
Profit of previous periods.
Compensation for losses caused to the enterprise.
Amounts of accrued exchange rate differences.
Amounts of accounts payable that have already expired.
Amounts of recognized income from revaluation of assets.
Other types.

Composition of expenses

Operating expenses are the opposite of capital expenses and the direct costs of making goods.

Operating expenses include costs that are aimed at:

Formation of reserves;
Payment of bank commissions;
Participation in the capital of other companies;
Providing rental use of your assets;
Sales or write-off of goods for other reasons;
Granting temporary use of copyrights.

Income composition

Operating income is recognized as such if it is not received from the main activity of the company. In the opposite situation, they need to be accounted for in account No. 90, as profit from standard activities.

Other operating income includes income from:

From OS objects received free of charge;
From providing assets for rental use;
From implementation;
Income of previous periods;
Accounts payable for which the statute of limitations has expired;
Interest received from loans provided;
Compensation for damage caused to the company;
Amounts of profit from additional valuation of fixed assets;
From participation in the capital of simple partnerships;
Other.

Accounting and management of operating expenses

How expenses are accounted for

All operating expenses must be taken into account and, if necessary, reduced without losing the quality of the enterprise. In addition, they must be planned in advance for such cases as downtime of the enterprise, due to holidays or lack of activity, for the period of occurrence of circumstances independent of the enterprise, for example, fire, force majeure and others.

Among the popular methods for optimizing costs is reducing the wage fund by reducing the number of employees, but such a decision can negatively affect the quality and quantity of products produced.

As a result, there are delays in the delivery of products, and as a result, losses occur for the company.

Factors Affecting Operating Expense Ratio

Main factors influencing the profitability of an enterprise

In order to operate efficiently, it is necessary to optimize non-operating expenses - this is the main goal of the management team. When they decrease, the rate of development of productivity and profitability of the enterprise is observed. There are several factors influencing the level of costs, and they are divided into internal and external.

External factors

External factors influencing the amount of operating expenses do not depend on the will and activity of the company and include:

Inflation. The higher its level, the more companies incur additional expenses - this includes paying salaries and bonuses, interest on loans to banks, transportation or services of third-party companies;
Increase in tax rates for extra-budgetary expenses. Deductions take up a significant percentage of the company's expenses and an increase in their rates significantly affects the growth of expenses.

Internal factors

Internal ones include:

Volume of production and sales of finished goods. Despite the fact that increasing production capacity requires additional expenses, production costs can be significantly reduced due to the constant number of service personnel. For example, a mechanic was servicing one machine, when there were 3 of them, and the mechanic’s salary was the same, three machines were already being serviced, and there were more products, which meant their cost was lower.
Duration of the production cycle. With its reduction, the level of investment costs, cash transactions, costs of storing products is reduced, the costs of accounts receivable, and the costs of paying employees and managers are reduced.
Labor productivity indicator per one workplace. The higher this value, the lower the amount for operational settlements with employees.
Technical condition of fixed assets at the enterprise. The more worn out the equipment is, the more money is required for depreciation. As a result, the question arises about the effectiveness of purchasing new machines.
The amount of own working capital. The higher the percentage of equity capital used in the company's activities, the less the need for borrowed capital, which means there is a decrease in servicing loans and borrowings.

conclusions

Comparison of cost levels by company

Operating expenses are expenses of an enterprise that are not related to the main activity, but they are necessary because they support the life of the company.

Their accounting and regulation is mandatory; this process makes it possible to optimize the amount of expenses or completely get rid of them. By optimizing transaction costs, the company's productivity level can be increased.

For optimization, a comparative method is used, as a result of which the effective coefficient is determined.
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