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Accounting interprets and analyses the information obtained from the inter-organizational accounting, evaluates potential changes affecting the results of the company's economy, the choice of alternatives in decision-making processes and projects consequences of the decision into the budget of the accounting entity. Besides accounting, it also incorporates the budgeting, calculation system, information for the responsible accounting and the information for decision-making processes in the sphere of investment, prices, assortment structure, etc. The basic roles of accounting consist of the provision of information:
For financial accounting
For common control of costs
About costs, revenues and rent ability of outputs, namely for the internal management, price control and formation of prices,
About costs and revenues of inter-company units from the aspect of their responsibility.
The intra organizational accounting should provide for the financial accounting:
Data about the change in the state of supplies produced by the own activity
Data about own costs of the activated own outputs
Data about appraising of supplies and other outputs achieved by the own activity
Data about the temporal distinction of costs(revenues) and about the formation of reserves.
The tax accounting is functioning on equal principles, such as financial accounting, but it respects limitation conditions of the law of income tax for the sphere of costs. The exact wording is incorporated in the law No 595/2003 in the Collection of Laws about tax incomes, which follows from alterations and supplements executed by a law No 43/2004 of the Collection of Laws, law No 177/2004, law No 191/2004, law No 391/2004, law No 538/2004, law No 539/2004, law No 659/2004, law No 68/2005, law No 314/2005, law No 534/2005 and law No 660/2005.
Between the financial and tax accounting the relatively low number of differences exist and, therefore, companies systematically perform the clearance of financial accounts during the bookkeeping period and at the end of this period transform the summarized information in accordance with the law No 595/2003 of the Collection of Laws about income taxes in the version of later amendments. This information is designed for external users, but it is employed also for internal needs of the company.
The qualitative requirements for the accounting information
The fundamental qualitative requirements for the accounting information from the aspect of users needs include:
The usefulness of the information is judged from the aspect of its significance and declarative ability. The information is considered significant if its absence has a negative influence on the user's decision. The understandability of the information lies in the possibility to understand its content by a person who has the sufficient knowledge of business and other activities in the company. The comparability of the information is based on the fact that the accounting unit did not change applied accounting methods and accounting principles during the accounting period. The information is reliable if it gives users a guarantee of credible, complete and early description of the corporate transactions and economic events. Adhering to accounting in the respective period, by considering potential risks and losses during the accounting period, etc, ensures the credible description of facts. The completeness of the information represents recording of all events and economic operations, which relate to the given problem from the factual and temporal point of view. The punctuality of the information is associated with its usability regarding the given decision-making process, inasmuch as the information delivered too late can be out-of-date from the aspect of its application in making the relationship.
The relationship among components of the accounting system
Accounting is based on the period reporting of financial data. The basic accounting cycle includes:
Recording business transactions
Posting debits and credits to a general ledger
Making adjustments to the general ledger
Closing the books
Preparing financial statements
Harmonization of accounting
In the Slovak Republic, accounting is at present strongly influenced by a dynamically changeable legislation. It is impossible for this discipline to avoid the around-proceeding changes arising from the continual development of the entrepreneurial and competitive environment, increasingly expanding globalization of business, growth of supranational corporations, integration into the European Union, etc. Current world-wide trends observed in the financial management of enterprises call for certain legislative steps and changes leading to various discussions about the accounting law or its amendments and regulations.
Modern trends point to the important task of ensuring the approximation and correspondence of the generally valid accounting rules, statements, principles and procedures applied in various countries in the world. The approximation should proceed to such a degree that the submitted statements might be understandable to every adequately educated user. The main objective is to compare data with the sufficient redeemable power of the final accounts of various companies and also to compile correctly the consolidated accounts of supranational groups.
Differences in the national accounting principles are economically relevant with regard to the growing economic globalization. The management overpasses state borders and proceeds on a
Worldwide scale - it undergoes the internationalization. The globalization leads to the development of the international financial management which lays down the new tasks on accounting, especially the requirement for the approximation of accounting rules and procedures of different countries that can be fulfilled in the form of harmonization (achievement of comparability) or standardization (unification).
The Slovak Republic as a member state of the European Union (EU) has its legal accounting regulation in harmony with guidelines of the EU Council regulating the accounting field. In 2002, the EU Parliament and Council issued a decree No 1606/2002 about the application of international accounting standards, which claimed the proper implementation of IAS into our legal regulation. From the worldwide aspect the harmonization of accounting is directed to the international accounting regulation which is based on the convergence of two principal world theoretical approaches to accounting: IAS/IFRS and US GAAP.
Harmonization of the accounting in all over the world, with a view to provide transparent and comparable information in the financial statements is one of the leading paradigms of contemporary accounting. In all countries, it does require a rigid application of the true and fair vies principle . The goal of the international harmonization of accounting is to achieve the international comparability of two or more national accounting systems through the adjustment of international accounting directions and thereby to achieve also their annual financial statements. The greatest benefit that would flow from harmonization would be the comparability of international financial information. Such comparability would eliminate the current misunderstanding about the reliability of foreign financial statements and would remove one of the most important impediments to the flow of international investment. Harmonization would save time and money that is currently spent to consolidate divergent financial information when more than one set of reports is required to comply with the different national laws or practice.
The process is directed to the elimination of several differences existing in the access of national accounting systems to individual items of the annual financial statement. Both harmonizing accounting systems will approximate each other by their contents, which will enlarge the space for concurrent common international accounting procedures.
The role of the harmonization is to ensure the international compatibility of information revealing the financial situation and economic results of entrepreneurial subjects, no matter whether they are individual enterprises or their organizational and economic groupings.
The Restaurant Profit and Loss (P&L) Statement
A restaurant's profit and loss statement, or P&L, is much like an income statement for the restaurant. This document serves as a report to summarize income, expenses and inventory, illustrating a restaurant's total profits and losses over a period of time.
Also called labor cost, this is one of the most important expenses in your restaurant. Part of your business's income must go to salaries and hourly wages in order to provide paychecks for your employees. This is considered a controllable cost, however, since the manager can determine how many hourly employees to schedule, and can manipulate the number of people on a shift at any time. The trick is to balance labor in order to provide great customer service without scheduling more workers than you need.
Known as occupancy costs, rent or mortgage, property taxes, water and sewer taxes, gas and electric, insurance, and repairs all fall under the restaurant owner's responsibility. These are typically known as fixed expenses since restaurant owners usually have to pay a steady amount on these costs every month.
When to Prepare a P&L Report
It is best to prepare a P&L each week if possible. This makes it easier to track numbers and compare reports from month to month and even year to year.1 The main reason for the P&L report is simply to track these profits and expenses to see how well your business is doing. When you know the numbers and trends, you know what changes you can make to improve your business profits.
The success of managing business finances is based essentially on the knowledge of the economic characteristics and mutual relations ongoing in the company. An integral part of these relations are also business finances and accounting. Accounting is an inevitable part of the enterprise activities because it gives a global picture of the course and results of the economic activity, reveals existing problems and provides the background data for decision-making processes in every enterprise. Business finances are the system of monetary relations, into which enters the corporation on acquiring financial sources, on their placing and binding in individual property components with the aim to exploit productively the property and to distribute the results achieved.