Classification of an organization's income

When classifying income, one should proceed from the Accounting Regulations “Income of the Organization” (PBU 9/99).

The income of the organization, depending on its nature, conditions of receipt and areas of activity of the division, is divided into several types.

Income other than income from ordinary activities is considered other income.

Income from ordinary activities is revenue from the sale of products and goods, as well as income related to the performance of work and the provision of services.

Operating income represents either systematic income for a period, usually derived from ownership of the assets of a given organization, or irregular income from the sale of assets of a given organization.

Operating income (in accordance with PBU 9/99 “Income of the organization”) includes:

Receipts related to the provision for a fee for temporary use (temporary possession and use) of the organization’s assets;

Receipts related to the provision for a fee of rights arising from patents for inventions, industrial designs and other types of intellectual property;

Receipts related to participation in the authorized capitals of other organizations (including interest and other income on securities);

Profit received by the organization as a result of joint activities (under a simple partnership agreement);

Proceeds from the sale of fixed assets and other assets other than cash (except foreign currency), products, goods;

Interest received for the provision of an organization's funds for use, as well as interest for the use by a bank of funds located in the organization's account with this bank.

Non-operating income represents irregular income of the period.

The group of non-operating income (in accordance with PBU 9/99 “Income of the organization”) includes:

Fines, penalties, penalties for violation of contract terms;

Assets received free of charge, including under a gift agreement;

Proceeds to compensate for losses caused to the organization;

Profit of previous years identified in the reporting year;

Amounts of accounts payable and depositors for which the statute of limitations has expired;

Exchange differences;

The amount of revaluation of assets (except for non-current assets);

Other non-operating income.

Extraordinary income includes income arising as a consequence of extraordinary circumstances of economic activity (natural disaster, fire, accident, etc.).

Extraordinary income (in accordance with PBU 9/99 “Income of the organization”), in particular, includes: insurance compensation, the cost of material assets remaining from the write-off of assets unsuitable for restoration and further use, etc.

The above classification of income is used in accounting; as for the classification of income for profit tax purposes, one should proceed from Chapter 25 of the Tax Code of the Russian Federation (TC RF). In accordance with Chapter 25 of the Tax Code of the Russian Federation, the income of an enterprise is divided into (table 1):

Table 1. Composition of enterprise income for tax purposes

Type of income	Composition of enterprise income
1. Income from real. goods, property rights	For the purposes of this chapter, sales income is recognized as proceeds from the sale of goods (work, services) both of one’s own production and those previously acquired, proceeds from the sale of property (including securities) and property rights.
2. Non-realization. income	From equity participation in other organizations; From transactions of purchase and sale of foreign currency; occurs when the selling (purchasing) rate is higher (lower) than the official foreign currency exchange rate to the Russian ruble; In the form of fines, penalties and (or) other sanctions for violation of contractual obligations, as well as amounts of compensation for losses or damages; From leasing (subleasing) property; From granting for use rights to the results of intellectual activity and means of individualization equivalent to them; In the form of interest received under loan and credit agreements; In the form of amounts of restored reserves, the costs of the formation of which were accepted as part of expenses; In the form of gratuitously received property or property rights; In the form of income from previous years identified in the reporting (tax) period; In the form of a positive exchange rate difference received from the revaluation of property and claims (liabilities); In the form of a positive difference received from the revaluation of property; In the form of the cost of materials received or other property during dismantling or disassembly during the liquidation of fixed assets being decommissioned; In the form of property (including funds) used for other purposes than for its intended purpose, works, services received as part of charitable activities, etc.

An organization’s income is recognized as an increase in economic benefits as a result of the receipt of assets (cash, other property) and (or) repayment of liabilities, leading to an increase in the capital of this organization, with the exception of contributions from participants (owners of property).”

Receipts from other legal entities and individuals are not recognized as income of the organization:

• * amounts of VAT, excise taxes, sales tax, export duties and other similar mandatory payments;
• * under commission agreements, agency and other similar agreements in favor of the principal, principal, etc.;
• * in advance payment for products, goods, works, services;
• * advances in payment for products, goods, works, services; deposit;
• * as collateral, if the agreement provides for the transfer of the pledged property to the pledgee;
• * to repay a loan provided to the borrower.

The income of the organization, depending on its nature, the conditions for receiving it and the direction of the organization’s activities, are divided into:

• a) income from ordinary activities (revenue from the sale of products and goods; receipts associated with the performance of work, provision of services).
• b) other income (operating income, non-operating income, extraordinary income).

Income from ordinary activities may include income directly related to the main statutory activities of the enterprise and may include:

• * revenue from the sale of products, goods, work and services;
• * revenue from provision for a fee for temporary use (temporary possession and use) of its assets under a lease agreement, if this type of activity is considered the main one (rent);
• * proceeds from the provision for a fee for temporary use of rights arising from patents for inventions, industrial designs and other types of intellectual property, if this type of activity is considered the main one (license payments (including royalties) for the use of intellectual property);
• * income from participation in the authorized capital of other organizations, if this is a statutory activity.

Income received by an organization from provision for a fee for temporary use (temporary possession and use) of its assets, rights arising from patents for inventions, industrial designs and other types of intellectual property, and from participation in the authorized capital of other organizations, when this is not the subject of activities of the organization are classified as operating income.

Operating income is:

• * receipts associated with the provision for a fee for temporary use (temporary possession and use) of the organization’s assets;
• * revenues associated with the provision for a fee of rights arising from patents for inventions, industrial designs and other types of intellectual property;
• * income related to participation in the authorized capitals of other organizations (including interest and other income on securities);
• * profit received by the organization as a result of joint activities (under a simple partnership agreement);
• * proceeds from the sale of fixed assets and other assets other than cash (except foreign currency), products, goods;
• * interest received for providing the organization’s funds for use, as well as interest for the bank’s use of funds held in the organization’s account with this bank;
• * others.

In organizations whose subject of activity is the provision for a fee for the temporary use of their assets under a lease agreement, the provision for a fee of rights arising from patents for inventions, industrial designs and other types of intellectual property, participation in the authorized capital of other organizations, revenue is considered to be receipts, receipts which are associated with these types of activities. Income received by the organization from these types of activities, when this is not the subject of the organization’s activities, is classified as operating income.

Non-operating income is:

• * fines, penalties, penalties for violation of contract terms;
• * assets received free of charge, including under a gift agreement;
• * proceeds to compensate for losses caused to the organization;
• * profit of previous years identified in the reporting year;
• * amounts of accounts payable and depositors for which the statute of limitations has expired;
• * exchange differences;
• * amount of revaluation of assets;
• * other non-operating income.

Extraordinary income - income arising as a consequence of extraordinary circumstances of economic activity (natural disaster, fire, accident, etc.): insurance compensation, the cost of material assets remaining from the write-off of assets unsuitable for restoration and further use, etc.

Integrated, all arising income is distinguished as:

• * related to the production and sale of goods (works, services);
• * non-realization, i.e. not related to the main activity;
• * not taken into account for tax purposes.

The amount of income is determined on the basis of primary documents on the sale of goods (works, services) and the amounts of indirect taxes (VAT, excise taxes) presented by the taxpayer to the buyer of goods and allocated in invoices are excluded from them.

Income that is not taken into account when determining the taxable base increases the organization's assets without a corresponding increase in the tax base. These include:

• * property and property rights received in the form of a deposit, pledge as security for obligations;
• * property received as contributions to the authorized capital;
• * expenses for the acquisition and creation of fixed assets;
• * repayment of loans, collateral;
• * gratuitous transfer of property in the form of gratuitous assistance, in the manner established by the Federal Law “On gratuitous assistance (assistance) in the Russian Federation”;
• * funds received by the commission agent in favor of the principal or other principal;
• * property received by organizations as part of targeted financing;
• * funds received under loan and credit agreements;
• * some other receipts.

The list of operating, non-operating and extraordinary income from an economic point of view coincides with the list of these incomes in PBU 9/99 “Income of the organization”.

Based on reporting periods, income is divided into:

• * income of this reporting period;
• * deferred income (income of future reporting periods).

The first group includes income arising from the conduct of business activities in a given reporting period and recognized in the calculation of profits and losses for this period.

Deferred income is received in a given reporting period, but participates in the formation of profit for subsequent reporting periods. For example, rent received in advance, revenue from the sale of monthly and quarterly tickets to passengers, etc.

Revenue recognition

Revenue is recognized under the following conditions:

• 1) the organization has the right to receive this revenue arising from a specific agreement or confirmed in another appropriate manner;
• 2) the amount of revenue can be determined;
• 3) there is confidence in increasing economic benefits as a result of a specific operation;
• 4) the right of ownership (possession, use, disposal) of the product (goods) has passed to the buyer or the work has been accepted by the customer (service provided);
• 5) the expenses that have been incurred or will be incurred in connection with this operation can be determined.

If at least one of the above conditions is not met in relation to cash or other assets received by the organization as payment, then it is not revenue that is recognized, but accounts payable.

To recognize revenue from the provision of temporary use of one’s assets for a fee and from participation in the authorized capitals of other organizations, conditions 1), 2) and 3) must be simultaneously met.

Revenue from the inclusion of work, provision of services, sale of products with a long manufacturing cycle can be recognized as the work, service, product is ready or upon completion of the work, provision of the service, or production of products in general.

If the amount of revenue from the sale of products (works, services) cannot be determined, then it is taken into account in the amount of recognized expenses for the production of these products, performance of work, provision of services, which will subsequently be reimbursed to the organization.

Other revenues are recognized in the following order:

• * fines, penalties, penalties - in the reporting period in which the court made a decision to collect them or they were recognized as a debtor;
• * the amount of accounts payable and depository debt for which the statute of limitations has expired - in the reporting period in which the statute of limitations expired;
• * the amount of revaluation of assets - in the reporting period to which the date of revaluation relates;
• * other receipts - as they are formed (identified).

Income Disclosure

In accordance with PBU 9/99, at least the following information is subject to disclosure as part of information about the organization’s accounting policies in the financial statements:

• a) on the procedure for recognizing the organization’s revenue;
• b) on the method of determining the readiness of work, services, products, revenue from the implementation, provision, sale of which is recognized as readiness.

For revenue received as a result of the execution of contracts providing for the fulfillment of obligations in non-monetary means, the following information must be disclosed:

• * the total number of organizations with which these contracts have been concluded, indicating the organizations that account for the bulk of such revenue;
• * share of revenue received under these agreements with related organizations;
• * method of determining the cost of products (goods) transferred by the organization.

Other income of the organization for the reporting period that is not credited to the profit and loss account is subject to disclosure in the financial statements separately.

The construction of accounting should ensure the possibility of disclosing information about the organization’s income in the context of current, investment and financial activities.

Accounting for deferred income

To account for income received in the reporting period, but relating to future periods, use passive account 98 “Deferred Income. It is intended to summarize information about income received (accrued) in the reporting period, but relating to future reporting periods, as well as upcoming receipts of debt for shortages identified in the reporting period for previous years, and the differences between the amount to be recovered from the guilty parties and the value of the valuables accepted for accounting when shortages and damage are identified.

The following subaccounts can be opened to account 98 “Deferred income”:

• 98-1 "Income received for future periods";
• 98-2 "Gratuitous receipts";
• 98-3 “Upcoming receipts of debts for shortfalls identified in previous years”;
• 98-4 “The difference between the amount to be recovered from the guilty parties and the book value for shortages of valuables”, etc.

Subaccount 98-1 takes into account income received in the reporting period, but relating to future reporting periods - rent and apartment payments, utility bills, use of communication facilities, etc. The amounts of income received or accrued are reflected on the credit of account 98, subaccount 1 , and the debit of cash and settlement accounts; write-off of income for expenses of the current reporting period - by debiting subaccount 98-1 and crediting the corresponding cash or current accounts.

Subaccount 98-2 takes into account the value of assets received free of charge. Assets received free of charge are reflected at market value in the debit of property accounting accounts (08 “Investments in non-current assets”, 10 “Materials”, etc.) from the credit of subaccount 98-2. The amount of budget funds allocated to a commercial organization to finance expenses is recorded as a credit to subaccount 98-2 and a debit to account 86 “Targeted financing”.

The amounts recorded on the credit of account 98 are debited to this account from the credit of account 91 “Other income and expenses”:

for fixed assets received free of charge - as depreciation is calculated;

for other material assets received free of charge - as they are written off for production or upon sale.

Subaccount 98-3 takes into account upcoming receipts and debts for shortfalls identified in previous years. For the loan, subaccount 98-3 reflects the amounts of shortfalls identified in the reporting year for previous years, recognized by guilty persons or awarded for recovery from them by judicial authorities, in correspondence with account 94 “Shortages from loss and damage to valuables.” At the same time, account 94 is credited with these amounts and account 73 “Settlements with personnel for other operations” and subaccount 2 “Settlements for compensation of material damage” are debited.

As the debt for shortfalls is repaid, subaccount 73-2 is credited and accounts for cash or other property are debited. At the same time, the paid debt is reflected in the debit of account 98, subaccount 3, and the credit of account 91 “Other income and expenses”.

In subaccount 98-4, the difference between the amount recovered from the guilty parties for missing valuables and their accounting value is taken into account. The identified difference is reflected in the credit of account 98, subaccount 4, and the debit of account 73, subaccount 2. When repaying the debt for the identified difference, subaccount 73-2 is credited and the accounts for cash or other property are debited. At the same time, the repaid part of the difference is written off to the debit of subaccount 98-4 and the credit of account 91.

The concept of an organization’s expenses, their characteristics

Expenses of an organization are recognized as a decrease in economic benefits as a result of the disposal of assets and (or) the occurrence of liabilities leading to a decrease in the capital of this organization, with the exception of a decrease in contributions by decision of participants (owners of property).

Costs associated with capital and financial investments and non-production costs are not considered expenses of the organization.

The organization's expenses, depending on their nature, conditions of implementation and direction of the organization's activities, are divided into the following types:

• * expenses for ordinary activities;
• * other expenses, which, in turn, are divided into:
• - operating expenses,
• - non-operating expenses,
• - extraordinary expenses.

Other expenses are not included in production cost accounts. Ultimately, they are reflected in accounts 91 “Other income and expenses” and 99 “Profits and losses”.

Expenses for ordinary activities are expenses associated with the manufacture and sale of products, performance of work and provision of services, as well as the purchase and sale of goods:

• * costs directly related to the production of products (works, services);
• * costs of preparation for production of products;
• * costs of servicing the main production process;
• * production management costs;
• * costs of personnel training and environmental protection measures;
• * costs of contributions to state extra-budgetary funds;
• * costs for the restoration of fixed assets and intangible assets in the form of depreciation;
• * taxes, fees and mandatory deductions made at the expense of production costs in accordance with the law;
• * commercial and administrative expenses.

In organizations whose subject of activity is the provision for a fee for temporary use of their assets under a lease agreement and rights arising from patents for inventions, industrial designs and other types of intellectual property, as well as participation in the authorized capital of other organizations, expenses for ordinary activities are considered expenses, the implementation of which is associated with these types of activities. If these types of activities are not the subject of the organization’s activities, then the costs of carrying out these types of activities are classified as operating expenses.

Classification of an organization's income

Definition 1

Income of the organization an increase in various economic benefits is recognized due to the receipt of cash, other property or the repayment of various types of obligations, which leads to an increase in the capital of the organization.

All income is classified:

• on income from ordinary activities;
• for other income.

Picture 1.

Income from ordinary activities includes:

• revenue from sales of products and goods;
• receipts arising from the performance of work or provision of services.

Other income includes:

• payment for temporary use of the organization’s assets;
• payment for patents for inventions and other intellectual property;
• income due to participation in the authorized capital of third-party organizations;
• profit received by the organization as a result of joint activities;
• proceeds from the sale of fixed assets and other assets;
• interest receivable for providing the company's funds for use, interest for the bank's use of money in the company's account.
• fines, penalties and penalties for violation of contractual terms;
• assets that are received free of charge;
• receipts in the form of compensation for losses caused to the organization;
• profit of previous years identified in the reporting year;
• accounts payable and depositor's debts with expired statute of limitations;
• exchange differences;
• revaluation of assets, except non-current ones;
• receipts as a result of force majeure circumstances of the enterprise’s economic activity.

Figure 2.

Income is also classified depending on the organization’s activities:

• income from core activities in the form of revenue from the sale of products, works or services;
• income from investment activities in the form of financial results from the sale of non-current assets and securities;
• income from financial activities in the form of results from the placement of bonds and shares of the company.

Figure 3.

Proceeds from the sale of products, goods, works and services are the main source of financial flows of the enterprise. Entering the company's accounts, sales proceeds are distributed according to the areas of consumed means of production and form gross and net income. Sales revenue must necessarily cover all the organization’s costs and bring a corresponding profit. The receipt of revenue into the organization’s cash accounts completes the turnover of funds. The subsequent use of the received funds is the beginning of a new cycle. In parallel, net income is distributed in the interests of the company, the state, individuals and other interested parties.

Figure 4.

Income from the sale of property

Note 1

In addition to income from the sale of finished products, work or services, income from the sale of property, including fixed assets, is important for the organization. Income from the sale of property is included in other income.

In cases where a company recognizes the rental or leasing of its own property as its main activity, rent and leasing payments will be revenue from its main activity. In other cases, the receipt of a result from the sale of property or rent is recognized as revenue from investment activities.

Financial activities generate revenue for the company in the form of share premiums or funds from the placement of shares and bonds.

For accounting purposes, receipts from third-party legal entities or individuals are not considered enterprise income, in particular:

• value added tax, excise taxes, export duties and other similar payments;
• receipts from commission, agency and similar agreements;
• funds received as advance payment for goods, products, works or services;
• advances to pay for products, goods, works, services;
• deposit received;
• property that has been pledged;
• funds received from a borrower to repay a loan or loan.

The procedure for generating income in commercial organizations is established in the accounting standard PBU 9/99. The provisions of this standard apply to all commercial organizations, with the exception of credit and insurance organizations.

All income of the organization received as a result of its activities is divided into income from ordinary activities and other income.

Organizations are given the right to independently divide their income into the specified types. In this case, the main criterion for division is the systematic receipt of income. If we extend the recommendations of the provisions of Art. 265 of the Tax Code of the Russian Federation on accounting of the economic activities of an organization, then when carrying out activities on a systematic basis, income and expenses from this activity should be classified as income and expenses from ordinary activities. If the operations carried out by the organization are not carried out constantly, but are temporary in nature, then income and expenses on them should be classified as other. Taking into account the specifics of their activities, organizations should develop a classification of income received and record it in their accounting policies.

Income from ordinary activities is revenue from the sale of products and goods, receipts from the performance of work or the provision of services.

If an organization has a subject of activity different from those listed and is engaged in providing its assets for temporary use for a fee (for example, under a lease, rental or use agreement, including intangible assets) or participates in the authorized capital of other organizations, then revenue is considered to be proceeds from these types of activities. Income received by the organization from these types of activities, when this is not the subject of the main activity, is classified as other income.

The organization's income from ordinary activities is revenue. Information about it is reflected in the credit of account 90 “Sales” on an accrual basis from the beginning of the calendar period.

Revenue is accepted for accounting in an amount calculated in monetary terms equal to the amount of receipts of cash and other property and (or) the amount of accounts receivable. The amount of revenue is determined based on the price specified in the contract, taking into account all discounts and mark-ups provided. If the price is not specified in the contract, revenue is determined at the price at which, in comparable circumstances, the organization determines the revenue of products shipped, work performed or services rendered.

When selling products, performing work or providing services on the terms of a commercial loan, the proceeds are taken into account together with the amount of accrued interest, i.e. in the full amount of receivables.

It should be noted that in accounting, income (revenue) can only be recognized if certain conditions are met. The opposite is no less important: if an organization has certain conditions, then it must record the receipt of income in accounting. These conditions are:

• 1) the organization has the right to receive revenue arising from a specific agreement or confirmed in another appropriate manner;
• 2) the amount of revenue can be determined;
• 3) there is confidence that as a result of a specific transaction there will be an increase in the economic benefits of the organization. Such assurance exists when the entity has received or will receive an asset in payment;
• 4) ownership of the product (goods) has passed from the organization to the buyer or the work (service) has been accepted by the customer;
• 5) the expenses that have been incurred or will be incurred in connection with this operation can be determined.

If at least one of the listed conditions is not met in relation to cash or other assets received by the organization as payment, then the organization’s accounting records recognize not revenue, but accounts payable.

To recognize in accounting revenue from the provision for a fee for temporary use of one’s assets in the form of rights to intellectual property and from participation in the authorized capital of other organizations, it is sufficient to simultaneously comply with the conditions listed in paragraphs 1, 2 and 3.

For the correct calculation of income (revenue), the date of its recognition is important. In accounting, the principle of temporary certainty of the facts of economic activity (accrual method) applies, according to which income should be reflected at the moment of transfer of ownership of the shipped product, work performed or service rendered, regardless of the fact of payment. However, this is a general rule. At the same time, when performing work with a long production cycle, revenue can be reflected in accounting as individual types of work are ready or in general, upon completion of all work.

If it is impossible to determine the amount of revenue from the sale of products, performance of work or provision of services, it is taken into account in the amount of expenses recognized in accounting for the manufacture of these products, performance of work, provision of services, which will subsequently be reimbursed to the organization.

Other income are:

• - receipts related to the provision for temporary use of the organization’s assets, including intangible ones, for a fee; arising with the provision of rights for the use of inventions, industrial designs and other types of intellectual property for a fee;
• - income related to participation in the authorized capital of other organizations (including interest and other income on securities), if this is not the main activity;
• - profit received by the organization as a result of joint activities (under a simple partnership agreement);
• - proceeds from the sale of fixed assets and other assets;
• - interest received for the provision of an organization’s funds for use, as well as interest for the bank’s use of funds held in the organization’s account with this bank. In this case, interest is accrued for each expired reporting period in accordance with the terms of the agreement;
• - fines, penalties, penalties received for violation of the terms of contracts, as well as proceeds in compensation for losses caused to the organization are reflected in accounting in the amounts and in the reporting period in which the court decided to collect them or they were recognized as debtors;
• - assets received free of charge, including under a gift agreement. These assets are accepted for accounting at market value. The market value of assets received free of charge is determined by the organization on the basis of prices in force on the date of their acceptance for this or a similar type of asset. Price data must be confirmed by documents or through an examination;
• - profit of previous years identified in the reporting year;
• - amounts of accounts payable and depositors for which the statute of limitations has expired (must be included in the organization’s income in the amount in which this debt was reflected in the accounting records and in the reporting period in which the statute of limitations expired);
• - exchange differences;
• - amounts of revaluation of assets (only for financial investments);
• - Other income.

Others also include income from the consequences of emergency circumstances of economic activity, such as natural disasters, fires, accidents, nationalization, etc. Other income arising under such circumstances includes the cost of material assets remaining from the write-off of assets unsuitable for restoration and further use, etc. These and other receipts are accepted for accounting in actual amounts. Information on other income is reflected in the credit of account 91 “Other income and expenses”.

Topic 2. Expenses and income of organizations

1. Cost classification

2. Expense planning

3. Classification of enterprise income

4. The concept of sales revenue

5. Planning of income from sales. Directions for using proceeds from sales

Cost classification

In the process of carrying out production, economic and financial activities, enterprises incur certain expenses.

Under expenses The enterprise recognizes a decrease in economic benefits as a result of the disposal of cash, other property and (or) the emergence of liabilities, leading to a decrease in capital.

For the purpose of cost management, various cost classifiers are used. Let's consider some of them necessary for organizing a cost management and planning system.

All cash costs of an enterprise according to economic content are grouped according to three criteria:

1. expenses associated with making a profit ,

2. expenses not related to profit making ,

3. forced expenses .

Costs associated with making a profit include

· costs of production and sales of products (works, services)

· investments

Costs of production and sales of products(works, services) are expenses associated with the creation of goods (products, works, services), as a result of the sale of which the enterprise will receive a financial result in the form of profit or loss.

Investments- these are capital investments aimed at expanding the volume of own production, as well as generating income in the financial and stock markets.

Expenses not related to profit making, these are expenditures on consumption, social support for workers, charity and other humanitarian purposes. Such expenses support the public reputation of the enterprise, contribute to the creation of a favorable social climate in the team and, ultimately, contribute to increased productivity and quality of work.

Forced expenses – These are taxes and tax payments, social security contributions, expenses for compulsory personal and property insurance, the creation of mandatory reserves, and economic sanctions.

When preparing the Profit and Loss Statement expenses are classified into:

· expenses for ordinary activities

· operating expenses

· non-operating expenses

Expenses for ordinary activities are expenses associated with the manufacture and sale of products, the acquisition and sale of goods, as well as expenses the implementation of which is associated with the performance of work and the provision of services. This also includes administrative and commercial expenses.

Operating expenses are:

expenses associated with the provision of temporary use (temporary possession and use) of the organization’s assets for a fee;

costs associated with the provision for a fee of rights arising from patents for inventions, industrial designs and other types of intellectual property;

expenses associated with participation in the authorized capitals of other organizations;

expenses associated with the sale, disposal and other write-off of fixed assets, other assets other than cash (except foreign currency), goods, products;

interest paid by an organization for providing it with funds (credits, borrowings) for use;

expenses related to payment for services provided by credit institutions;

other operating expenses.

Non-operating expenses are:

fines, penalties, penalties for violation of contract terms;

compensation for losses caused by the organization;

losses of previous years recognized in the reporting year;

amounts of receivables for which the statute of limitations has expired, and other debts that are unrealistic for collection;

exchange differences;

the amount of depreciation of assets (except for non-current assets);

other non-operating expenses.

Non-operating expenses include extraordinary expenses that arise as a consequence of extraordinary circumstances of economic activity (natural disaster, fire, accident, nationalization of property, etc.).

According to the sign uniformity core activity costs are grouped by element :

· material costs

· labor costs

· contributions for social needs (social tax)

· depreciation

· other costs

1. Material costs- these are the costs:

* for the purchase of raw materials and materials used in the production of goods (performance of work, provision of services) and for economic needs;

* for containers and packaging materials;

* for the purchase of components and semi-finished products from third-party manufacturers;

* for the purchase of fuel, water and energy of all types spent on technological purposes,

* for the purchase of production works and services performed by third-party contractors, including transport;

2. Labor costs represent any accruals to employees in cash and in kind, incentive accruals and allowances, compensation accruals related to working hours or working conditions, bonuses and one-time incentive accruals, expenses associated with the maintenance of these employees, provided for by the legislation of the Republic of Belarus, employment agreements (contracts) ) and (or) collective agreements.

3. Contributions for social needs - mandatory deductions in the amount of 34% to the Social Security Fund are made by the enterprise from all types of remuneration, regardless of the source of payments, except for those for which contributions are not charged.

4. Depreciation of fixed assets and intangible assets - the amount of depreciation charges for fixed assets and intangible assets used in business activities.

5.Other costs:

*taxes and fees to the budget, except for local taxes, which are paid from the profits remaining at the disposal of the enterprise;

* insurance premiums for types of compulsory insurance of property and cargo;

* interest on loans, except interest on overdue and deferred loans;

* payment for services of computer centers and banks related to servicing the enterprise;

* payment to third-party organizations for fire and security guards; payment for training and retraining of personnel; payment for consulting, information and audit services within the established standards;

* rent, leasing payments;

Relative to production volume:

· permanent

· variables

Permanent are called costs, the value of which does not depend on the volume of production. They are possible even when the enterprise is idle or has just been organized. Such costs include, for example, rent for leased fixed assets, depreciation of own fixed assets, salaries of administration and service personnel, utilities, postal and telegraph services, taxes and others.

Variables costs depend on output: they increase with increasing output, and decrease with decreasing output. These are the costs of raw materials, materials, components and semi-finished products, fuel and energy for technological purposes, wages of key workers, costs of repair and maintenance of equipment.

According to the method of attribution to the cost of objects:

· straight;

· indirect.

In the accounting system, direct expenses include expenses that can be directly, according to the primary document, attributed to the cost of a unit of a product (for example, the materials from which specific products are made). Indirect costs include expenses that cannot be correlated with specific types of products at the time of their occurrence. Such expenses are pre-accumulated in separate accounts, then, at the end of the reporting period, they are distributed between types of products in proportion to the selected base (for example, the basic wages of workers, or direct material costs).

By degree of homogeneity costs are divided into:

· elemental

· complex

Elemental expenses are a set of expenses of one type without taking into account where these expenses arose - in the main production, in the field of supply, sales or management. For example, all material costs, all labor costs, all depreciation

Complex costs indicate where costs arise and the reason for their occurrence. For example, the costs of maintaining and operating equipment include material costs (spare parts, auxiliary materials), salaries of repairmen, adjusters, accruals on their salaries), general production and general business expenses also include material costs, wages, depreciation and other costs.

There are other classifiers that help the manager and financial manager manage costs consciously and in a timely manner.

Expense planning

Planning of costs for production and sales of products is carried out using various methods, which depend on general economic conditions, the size of the enterprise, and the scale of its activities.

When accounting for costs in the context of fixed and variable costs, planning is carried out in relation to variable costs. The planned amount of variable costs (C) is determined as the product of unit costs per unit of production (N) by the planned volume of output in physical terms (B):

C = N x V

If at the time of planning it is possible to rely on the actual data of the reporting period, then the planned amount of variable costs is calculated as follows:

Where Sf is the actual amount of variable costs in the reporting period;

Vpl – planned output volume in physical terms;

Vf – actual volume of output in the reporting period in physical terms.

Planning uses the method of forming a planned cost based on cost estimates. The estimate is prepared by cost elements. For each element, developments are carried out and costs are planned based on production needs, taking into account the use of cost reduction factors.

The totality of costs by element forms gross costs (total production costs). These costs exclude costs written off to non-production accounts. These are costs associated with maintaining the farm or performing and providing services that are separately reimbursed above the price of marketable products.

The cost is influenced by various factors. If material costs have a large share in the cost structure, then production material-intensive and in cost management you should focus your efforts on reducing material costs. If wages with deductions to the Social Security Fund occupy the largest share in the cost, this is - labor-intensive production and should be engaged in increasing labor productivity, which will lead to a specific reduction in cost. If depreciation of fixed assets makes up a significant share in the cost structure, then this production is capital-intensive. It is necessary to study the degree of efficiency of use of fixed assets, the utilization of production capacities and take measures to improve the use of existing fixed assets. Then the share of depreciation per unit of production will decrease and the cost will decrease.

The cost of finished products is influenced by changes in balances work in progress And deferred expenses, as well as the creation reserves for upcoming expenses and payments.

This influence is as follows.

1. Work in progress (WP) - this is the name of products whose manufacturing process has not yet been completed. When planning the cost of production in the planned period, it is taken into account that at the beginning of the planned year the enterprise has balances of work in progress (input balances), since in mass serial production it is unlikely that all products will be completely manufactured by December 31. Therefore, the costs accumulated in work in progress, which have not yet become finished products, are transferred to the next year in order to turn into finished products (output balances) in the new period. But at the end of the planning period, a so-called “backlog” should be provided, when part of the costs will be transferred to the next period as work in progress, which will soon become finished products. Thus, continuity of production and shipment of finished products is maintained.

The production of finished products at cost is calculated using the formula:

GP output = Input NP balances + Gross costs – Output NP balances

GP output = Gross costs - (Input balances - Input balances)

If the input balances of work in progress at the beginning of the year are less than the output balances at the end of the year, then the balance in the “Work in Process” account will decrease and this difference will fall on the cost of finished goods, increasing it.

If the input balances of work in progress at the beginning of the year are greater than the output balances at the end of the year, then the balance in the “Work in Process” account will increase and this difference does not fall on the cost of finished goods, reducing it.

1) NP balances – input - 100 rubles

Gross costs - 1000 rubles

Remaining NP - weekend - 120 rubles

Finished products = 100 + 1000 – 120 = 980 rubles

(at cost)

2). NP balances – input - 100 rubles

Gross costs - 1000 rubles

Remaining NP - weekend - 70 rubles

Finished products = 100 + 1000 – 70 = 1030 rubles

(at cost)

The same examples can be solved in another way:

The difference between input and output balances is the change in balance.

In the first example, the change is (+20) rubles, in the second example (-30) rubles.

Hence:

GP output = Gross costs – Change in PP balance

1) Finished products = 1000 – (120-100) = 1000 – (+20) = 980 rubles

(at cost)

2) Finished products = 1000 – (70-100) = 1000 – (-30) = 1030 rubles

(at cost)

Changes in balances of deferred expenses have a similar effect on the cost of finished products.

2) Deferred expenses (FPR) are expenses that the enterprise incurs in a given period, but which will be included in the cost in the following periods - in those to which they relate in relation to the production process. For example, rent paid in December for the 1st quarter of the next year should be included in the cost price next year, and in the period when rent is paid at the enterprise, the balance in the “Deferred Expenses” account will increase. But in the first quarter of next year, the balance in the “Deferred Expenses” account will decrease and the costs will be included in the cost of products produced in the first quarter.

If the input balances of the BPO are greater than the output balances of the BPO, then the balance in the “Deferred Expenses” account will increase, and the costs will remain in this account and will not be included in the cost of finished products.

If the input balances of the BPO are less than the output balances of the BPO, then the balance in the “Deferred expenses” account will decrease, and the costs written off from this account will be included in the cost of finished products.

Thus:

GP output = Gross costs – change in PP balance – change in BPO balance

To the data of the previous examples we will add the change in the balance of deferred expenses

1) Remaining RBP input - 25 rubles

RBP weekend balances – 35 rubles

Finished products = 1000 – (120-100) – (35 – 25) = 1000 – (+20) – (+10) = 990 rub.

(at cost)

2) Remaining RBP input - 25 rubles

RBP weekend balances – 15 rubles

Finished products = 1000 – (70-100) – (15 – 25) = 1000 – (-30) – (-10) = 1040 rub.

(at cost)

3) Creating reserves for upcoming expenses and payments increases the cost, since these reserves are created to cover expenses that are usually included in the cost. Thus, reserves are created for upcoming major repairs of fixed assets, for payment of upcoming vacations to workers, for seasonal purchases of goods and seasonal expenses. When planning costs for the year as a whole, the creation of reserves for upcoming expenses and payments has virtually no effect on the cost value, since these reserves must be used within one financial year. But when planning quarterly or monthly, their creation and use can affect the cost of finished products within each quarter or month.

Cost is the monetary expression of an enterprise's costs for the production of products (works, services), including direct labor costs (wages), raw materials, materials, as well as overhead costs associated directly with the transformation of raw materials and supplies into finished products. There is a distinction between production cost and total cost. Production costs include gross costs taking into account changes in work in progress balances, deferred expenses and reserves for future expenses and payments. Total cost consists of production cost, selling expenses and administrative expenses. In accordance with the chosen accounting policy method, administrative expenses may be included in production costs. However, it is preferable to form production costs only from variable costs, keeping separate records of fixed costs.

Classification of enterprise income

Under income enterprise implies an increase in economic benefits as a result of the receipt of cash, other property and (or) repayment of obligations, leading to an increase in capital.

Income, as well as expenses, are divided into:

a) income from ordinary activities;

b) operating income;

c) non-operating income;

d) extraordinary income.

Income from ordinary activities is revenue from the sale of products and goods, receipts associated with the performance of work, provision of services

Operating income are:

Receipts related to the provision for temporary possession and use of the organization’s assets for a fee;

Receipts related to the provision for a fee of rights arising from patents for inventions, industrial designs and other types of intellectual property;

Receipts related to participation in the authorized capitals of other organizations (including interest and other income on securities);

Profit received by the organization as a result of joint activities (under a simple partnership agreement);

Proceeds from the sale of fixed assets and other assets other than cash (except foreign currency), products, goods;

Interest received for the provision of an organization's funds for use, as well as interest for the bank's use of funds held in the organization's account with this bank.

Non-operating income are:

Fines, penalties, penalties for violation of contract terms;

Assets received free of charge, including under a gift agreement;

Proceeds to compensate for losses caused to the organization;

Profit of previous years identified in the reporting year;

Amounts of accounts payable and depositors for which the statute of limitations has expired;

Exchange differences;

The amount of revaluation of assets (except for non-current assets);

Other non-operating income.

Other non-operating income includes h extraordinary income , arising as a consequence of emergency circumstances of economic activity (natural disaster, fire, accident, nationalization, etc.): insurance compensation, the cost of material assets remaining from the write-off of assets unsuitable for restoration and further use, etc.