What are regulations on Account 701 – Revenues generated from credit operations of non-bank credit institutions in Vietnam?

Pursuant to Article 49 of the Circular 05/2019/TT-BTC (takes effect from 01/04/2019) stipulating regulations on Account 701 – Revenues generated from credit operations of non-bank credit institutions in Vietnam as follows:

1. Accounting principles:

a. This account shall be designed for reflecting interest and similar revenues, including: Deposit interest receipts, loan interest receipts, receipts of interest earned from debt trading activities and other receipts from credit operations in accordance with laws.

- Deposit interest receipts, including receipts from deposits that microfinance institutions make at the State Bank or at domestic credit institutions (if any);

- Loan interest receipts: including receipts from interest on loans in Vietnamese dong granted to domestic economic organizations and individuals (even including cases in which microfinance institutions directly lend funds and entrust loans);

- Other receipts from credit operations: Including other receipts from credit transactions of microfinance institutions, which are other than those stated above.

b. Recording of revenues from credit operations shall be subject to regulations set out in the current financial system.

c. Recording entries in this account must adhere to the Vietnamese Accounting Standard No. 14 – “Sales and other income”.

d. The following entries shall not be recorded in this account:

- Proceeds from liquidation and disposal of fixed assets;

- Written-off debts that are now recovered;

- Receipts from imposition of penalties; insurance covers;

- Receipts from receiving non-refundable aids;

- Other receipts.

2. Components and contents of this account:

Debit side:

- Deductions from revenues generated from credit operations;

- Carry-forward of net revenues generated from credit operations to the account 001 “Determination of business results”.

Credit side: Revenues from credit operations earned within an accounting period.

The Account 701 shall not have the balances at the end of an accounting period.

Above are regulations on Account 701 – Revenues generated from credit operations of non-bank credit institutions in Vietnam.

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