It is mentioned that the company is engaged in re-export trade business, purchasing from abroad and selling directly to other overseas customers without passing through China. The company is unsure whether to include re-export trade income in operating revenue, other business revenue, or other accounts. The best answer indicates that if re-export trade is the company's main operating business, it should generally be included in "operating revenue," which complies with accounting principles and financial and tax treatment requirements. If it occurs occasionally, it can also be considered to be included in "other business revenue."
Which Accounting Accounts Are Involved in Export Freight Forwarding?
Resolved
I just started working in corporate finance, and the company is involved in export freight forwarding business. I'm not sure which accounting accounts to use. For expenses like booking fees, customs declaration fees, and document fees paid to freight forwarding companies, which accounts should they be recorded under? Also, for freight collected by the freight forwarding company from customers, how should it be recorded? I hope a professional can help clarify this so I can clearly understand the accounting treatment in this area.
Trade Expert Insights Answers
Regarding the accounting accounts involved in export freight forwarding business, they are mainly determined by the nature and purpose of the expenses. Booking fees, customs declaration fees, document fees, etc., paid to freight forwarding companies can usually be recorded under the "Sales Expenses" account. This is because these expenses are incurred for selling goods and are indirect costs incurred to ensure the smooth export of goods. If the company's business division is more detailed, secondary detailed sub-accounts can also be set up under "Sales Expenses," such as "Sales Expenses - Export Freight Miscellaneous Fees" for accounting.
Freight collected by the freight forwarding company from customers should be recognized as the company's main business revenue and recorded under the "Main Business Revenue - Freight Income" account. If there are other related service revenues, corresponding detailed sub-accounts can be set up. In summary, accurate accounting requires combining the company's actual situation and accounting standards to ensure the truthfulness and accuracy of financial data.
Booking fees and customs declaration fees, if specifically incurred for a particular batch of export goods, can also be directly recorded as part of the cost of that batch of goods, i.e., "Inventory - Export Goods (Freight and Miscellaneous Expenses)," and eventually transferred to cost of main business operations upon sale of the goods.
When the freight forwarding company receives freight from customers, if it's a prepayment, it can be recorded as "Advances from Customers," and then transferred from "Advances from Customers" to "Main Business Revenue - Freight Income" when revenue is actually recognized.
For some small, frequently occurring expenses in export freight forwarding business that are difficult to accurately allocate to specific goods, recording them under "Administrative Expenses" is also feasible, but accounting treatment consistency must be maintained.
If freight forwarding expenses related to export tax refunds are involved, under compliant circumstances, they might also need to be accounted for separately in order to accurately calculate the tax refund amount. For specifics, you can consult the local tax authorities.
When recording freight collected by the freight forwarding company from customers, remember to consider Value-Added Tax (VAT). If it is a general taxpayer, the recognized revenue is the ex-tax amount, and the output VAT should be recorded under "Taxes Payable - VAT Payable (Output VAT)."
If the company is engaged in both export freight forwarding and domestic freight forwarding, it is recommended to set up separate accounting accounts to facilitate accounting and statistics of income and expenses for different businesses.
For subcontracting fees and other expenses paid by the freight forwarding company to other partners, they are usually recorded under "Cost of Main Business Operations" and accounted for corresponding to revenue.
When export freight forwarding business involves exchange rate fluctuations, related freight income or expense expenditures must be converted at the exchange rate according to regulations, and the resulting exchange gains or losses should be recorded under the "Financial Expenses - Exchange Gains/Losses" account.