Export Sales

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F H G (Querist)
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26 November 2009 Pls give me full explaination of Export Sales Accounting.
What is ARE. Pls Explain it also.

Thanks in advance

fazle_sap_fi@yahoo.in

Zainul Tawawalla

Zainul Tawawalla (Expert)
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26 November 2009 Export sales is accounted in accordance wuth the provision of AS-9 when the risks and rewards pertaining to such sale is transferred. If the goods are sold FOB and all the risk for the goods are passed on the movement the goods are loaded on the vessel, the sale shall be accounted on delievery. If the goods are CIF and the risk remains with the seller till the buyer receives the goods, the same shall be accounted when the confirmation is received from the buyer.

Give the full form of ARE. I am not able to recollect.

AMIT KUMAR CHAUDHARY

AMIT KUMAR CHAUDHARY (Expert)
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26 November 2009 ARE-1 IS A FORM WHICH WE HAVE TO SUBMITTED AT THE TIME OF EXPORT AND ITS STATES THE EXISCE DETAILS AND JURISDICTION DETAILS AND DETAILS OF ITEMS EXPORTED AND ITS STUFFING AND SEALING DETAILS.
YOU CAN SEARCH THE ARE-1 FORMAT FORM GOOGLE. AND ITS HAVE TO BE MADE IN 4 OR 5 COPIES WITH DIFFERENT COLORS MARKING.

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F H G

F H G (Querist)
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27 November 2009 Thanks but from your ans I am not able to understand whole export accounting process and reporting.
So pls give me a link from where I can download a guide for Export Accounting and Reporting.

Dear Zainul can you give me your email ID
I am an SAP FICO Consultant

Thanks in advance

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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24 July 2024 Export sales accounting involves the financial recording and reporting of transactions related to the sale of goods or services to customers located outside the seller's country. Here's a detailed explanation along with the concept of ARE (Application for Removal of Excisable Goods for Export):

### Export Sales Accounting:

1. **Invoice Preparation**: When a business sells goods or services to customers located outside its home country, it prepares an export invoice. This invoice typically includes details such as:
- Description of goods/services.
- Quantity.
- Price (often in foreign currency like USD, EUR).
- Terms of sale (Incoterms specifying responsibilities for shipping, insurance, etc.).
- Details of the buyer (name, address, contact information).
- Any applicable taxes or duties (like IGST for exports from India).

2. **Revenue Recognition**: Revenue from export sales is recognized in the financial statements when goods are shipped or services are performed, depending on the terms of the sales agreement (typically follows accrual accounting principles).

3. **Currency Conversion**: If sales are denominated in foreign currency, businesses may need to convert these amounts into their home currency for accounting purposes. The exchange rate used should be the rate prevailing on the date of the transaction or as per company policy.

4. **Export Documentation**: Depending on the country and specific requirements, exporters may need to prepare additional documents such as:
- **Export License/Permit**: Required for certain types of goods or in specific export scenarios.
- **Customs Declaration**: Documents like the Shipping Bill (in India) or equivalent forms in other countries, declaring the goods being exported.
- **ARE (Application for Removal of Excisable Goods for Export)**: Required in India for claiming excise duty exemption/refund on goods intended for export. More details on ARE below.

5. **Goods Dispatch**: Goods are shipped or dispatched to the foreign buyer as per the agreed Incoterms. The shipping process should be documented, and any transportation costs incurred should be accounted for appropriately.

6. **Tax and Duty Exemption/Refund**: Depending on the country's regulations, exporters may be eligible for tax/duty exemption or refund on goods exported. This process often involves compliance with customs and excise rules, including filing necessary forms like the ARE in India.

### Application for Removal of Excisable Goods for Export (ARE):

- **Definition**: ARE is a form used under the Central Excise rules in India. It is an application filed by the manufacturer or exporter to remove excisable goods from their factory/premises for export purposes.

- **Purpose**: The ARE form is essential for claiming exemption or refund of excise duty paid on goods that are intended for export. It serves as proof that the goods have been removed from the manufacturer's premises and are intended for shipment out of India.

- **Procedure**:
- The exporter or manufacturer must fill out the ARE form with details such as description of goods, quantity, invoice number, and destination details.
- After verification by excise authorities, the goods can be cleared from the factory for export.
- The ARE form is submitted along with other export documentation (like the Shipping Bill) to claim excise duty exemption or refund.

- **Compliance**: It is crucial for exporters to comply with ARE requirements to avoid penalties and to facilitate smooth export operations.

### Conclusion:

Export sales accounting involves meticulous recording and compliance with both domestic and international regulations. Understanding the specific documentation requirements like the ARE form (in India) ensures that exporters can efficiently manage their export transactions and avail benefits such as duty exemption/refund where applicable. Each country may have its own set of rules and forms, so exporters should familiarize themselves with local regulations to ensure compliance and smooth export operations.