How to Account for Truck Tires in Transportation Companies?

Mr. Ba, the owner of a small transportation company in Hanoi, has been frowning and lost in thought for days. His wife, noticing his unusual demeanor, asked: “What’s wrong, honey? You look like a deflated balloon.” Mr. Ba sighed: “I’m having a headache dealing with truck tires. I just replaced a set and it cost me a fortune. Now, I’m not sure how to properly account for it.”

Indeed, accounting for truck tire expenses is a problem that puzzles many transportation business owners. So, how should truck tires be accounted for to comply with regulations? This article will help you unravel this complex issue!

The Importance of Proper Truck Tire Accounting

Properly accounting for truck tires not only ensures compliance with regulations but also offers several practical benefits:

• Financial Transparency: It allows businesses to accurately track tire-related expenses, enabling effective financial analysis.
• Cost Optimization: Understanding tire costs helps businesses develop appropriate maintenance and replacement plans, saving operational costs.
• Improved Business Efficiency: Accurate accounting helps businesses calculate transportation costs effectively, increasing their competitiveness in the market.

A truck driving on a highway

Where Should Truck Tires Be Accounted For?

According to financial experts and current regulations, truck tire expenses should be accounted for as direct materials (supplies). Specifically:

• New Tires: Accounted for under account 152 – Raw Materials and Supplies.
• Tire Replacement Costs: Accounted for under account 154 – Tools and Equipment.

Frequently Asked Questions

Can tires purchased but not yet used be expensed?

No. Tires purchased but not yet used are considered inventory and should be accounted for under account 156 – Goods. They can only be expensed when put into use.

Can used tires be expensed?

Yes. The sale of used tires is accounted for under account 511 – Other Income.

Tips for Effective Tire Management and Accounting

To effectively manage and account for tires, businesses should:

• Maintain a Separate Logbook: Keep detailed records of each tire, including serial number, purchase date, mileage, condition, etc.
• Conduct Regular Inspections: Regularly inspect tire condition to detect damage early for timely repair or replacement.
• Choose Quality Tires: High-quality tires have a longer lifespan, saving businesses money in the long run.
• Consult with Experts: Seek advice from financial experts or accountants to ensure accurate and compliant accounting practices.