What are 05 functions of currency? Is the unit of account used for recording entries into accounting books required to be the Vietnamese dong?

What are 05 functions of currency?

Currency is a legal means of payment used to exchange goods and services within a region, country, or economy. The currency has 05 specific functions as follows:

(1) Medium of Circulation: Currency is used for buying, selling, and exchanging goods and services without the need to exchange goods directly with each other. The function of the medium of circulation is expressed through the structure of goods - money - goods. This structure means that the seller delivers goods to the buyer and receives money, which is then used to purchase other goods.

(2) Measure of Value: Currency is used to measure the value of goods and services.

(3) Means of Storing Value: Currency is used to store the value of goods and services.

(4) Means of Payment: Currency is used to settle debts, and obligations fulfill the role of a means of payment; it does not act as an intermediary in circulation but as a supplementary component. The process of currency circulation operates independently without depending on the process of exchanging goods.

(5) World Currency: Currency is used in international trade transactions outside the territory of Vietnam. For example, Vietnam uses the Vietnamese dong for transactions with other countries but may also use the US dollar or euro.

Additionally, currency serves as a means to expand and develop international relations. Therefore, it can be said that currency is indispensable in the circulation of goods as well as the operation of the economy.

Note: The above content is for reference only!

What are 05 functions of currency? Is the unit of account used for recording entries into accounting books required to be the Vietnamese dong? (Image from the Internet)

Is the unit of account used for recording entries into accounting books required to be the Vietnamese dong?

Based on Article 7 of Circular 111/2021/TT-BTC, it is stipulated as follows:

Currency Unit in Tax Accounting

1. The currency unit in tax accounting is the Vietnamese dong, used to record tax accounting books, prepare, and present tax accounting reports.

2. In the case where the tax authority during the execution of tax management duties for taxpayers who declare and pay taxes in foreign currency according to the Law on Tax Administration and guiding documents, must convert into Vietnamese dong when collecting input information for tax accounting to record tax accounting books, prepare, and present tax accounting reports in Vietnamese dong. Specifically, as follows:

a) The exchange rate for the amount payable when taxpayers declare taxes in foreign currency is the exchange rate determined by the Ministry of Finance (State Treasury) at the time of accounting.

b) The exchange rate for the amount collected when taxpayers pay taxes in foreign currency is the exchange rate on the accounting document transmitted by the State Treasury to the tax authority.

c) The exchange rate for surplus payment in foreign currency processed for offsetting the state budget or refunded by the state budget to Vietnamese dong is the exchange rate prescribed at point a.5 clause 1 Article 25 and clause 4 Article 46 of Circular No. 80/2021/TT-BTC dated September 29, 2021, by the Ministry of Finance guiding the implementation of certain provisions of the Law on Tax Administration and Decree No. 126/2020/ND-CP dated October 19, 2020, of the Government of Vietnam.

Thus, the currency unit in tax accounting must be the Vietnamese dong.

In the case where the tax authority during the execution of tax management duties for taxpayers who declare and pay taxes in foreign currency according to the Law on Tax Administration and guiding documents, must convert into Vietnamese dong when collecting input information for tax accounting to record tax accounting books, prepare, and present tax accounting reports in Vietnamese dong.

What are regulations on the preparation of tax accounting reports in Vietnam?

Based on clause 3 Article 6 of Circular 111/2021/TT-BTC, it is stipulated as follows:

Contents of Tax Accounting

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3. The preparation of tax accounting reports is the work of tax accountants performed automatically by the Tax Accounting Subsystem or by officials doing tax accounting work to aggregate the tax management results of tax authorities at all levels (including taxes to be collected, collected, still to be collected, to be refunded, refunded, still to be refunded, exempted, reduced, deferred, canceled) as prescribed in Section 4, Chapter II of this Circular.

4. Storing and providing tax accounting information and documents are the work of tax accountants performed according to the provisions of Article 9 of this Circular.

Thus, the preparation of tax accounting reports is the work of tax accountants performed automatically by the Tax Accounting Subsystem or by officials doing tax accounting work to aggregate the tax management results of tax authorities at all levels (including taxes to be collected, collected, still to be collected, to be refunded, refunded, still to be refunded, exempted, reduced, deferred, canceled) as prescribed in Section 4, Chapter 2 of Circular 111/2021/TT-BTC.