Consider this text as a language course. At the top it’s best to grasp talking Romanian accounting. I’ll attempt to flip it from a fairly boring and technical language into a straightforward to observe technique of staying up to the mark.
I’ll assist you get solutions to some primary questions associated to understanding what the accounting numbers imply in Romanian. The tutorial is about studying one of the crucial primary accounting outputs – the top of month trial stability.
Accounting provides solutions to many questions, however the essential ones are:
• What is my turnover?
• Is the enterprise making revenue?
• How a lot cash do I’ve?
• How a lot cash do I’ve to pay in the quick run?
• How a lot cash do I stand to obtain in the close to time period?
If you’re doing enterprise in Romania or you’re contemplating doing enterprise in Romania, it might in all probability be a clever factor to have the ability to reply these primary questions and perceive how your online business is performing.
Financial statements are ready in Romania solely twice a yr, so if you wish to have well timed info, it’s best to be taught to learn a trial stability. A trial stability is ready on the finish of every month, however be warned – accounting is simply one other type of finding out historical past so what you get at any time is at finest the final month’s figures.
The Romanian format of the trial stability normally has 4 columns, every divided into 2 sections: Debit and Credit. Think of it in the next means, the balances on the debit aspect present the corporate property, which means the issues the corporate spent its cash on, whereas the balances on the credit score aspect present the place the corporate bought its cash from.
The first 2 columns of the trial stability mirror the preliminary balances of your organization’s accounts, the subsequent 2 columns the month-to-month actions, the subsequent 2 mirror the yr up to now actions together with the preliminary balances whereas the final 2 columns present the ending balances of your organization’s accounts.
The trial stability is a set of all of the accounts used for recording the enterprise transactions, divided into lessons. In Romania, every account is given a quantity and it isn’t unusual for accountants to talk solely in phrases of the account numbers, making your life extra sophisticated.
However, if you understand a number of numbers, you possibly can kind it out ultimately. I’ll level out the numbers that finest reply the important thing questions.
Accounts beginning with the quantity 7 level out revenues and accounts beginning with quantity 70 level out gross sales, so if you wish to know your complete gross sales sum up the accounts beginning with 70 and this needs to be your turnover. So we will tick query no. 1.
One essential side in regards to the Romanian accounting laws is that we transfer the bills and revenues to revenue and loss on the finish of every month, so a Romanian trial stability won’t ever present balances for the expense and income accounts, that’s class 6 and seven accounts. If it does, which means you both have an incomplete or an incorrect trial stability.
Now, for query no. 2, “Is my business making profit?”, merely test account 121 which is the Profit and loss account. If its stability is on the credit score aspect which means your organization is making revenue, if the stability is on the debit aspect which means your organization is making losses. Another chance to test whether or not the stability in account 121 is right is to sum up all of the accounts beginning with the quantity 7 and subtract the sum of all accounts beginning with quantity 6, on the yr up to now columns. 7 factors out to revenues and 6 to bills. If quantities in class 7 are larger than quantities in class 6, it’s best to really feel relieved – your online business is making revenue.
We can even tick questions no. 2.
Moving on, you wish to understand how a lot cash you may have available. That’s easy – simply test the ending stability column of the accounts in class 5 that present values on the debit aspect. The consequence ought to reply the query, until you may have been withdrawing cash out of your checking account for discretionary use and your accountant constructed up cash in the petty money account.
Accountants normally do this, it isn’t their fault – they merely observe the double entry rule (every transaction is recorded in two accounts – so if cash is out from the checking account and also you did not inform the accountant the place it went, your accountant will naturally assume that it is in the petty money – which means you may have the cash out there on you).
The subsequent query is trickier as a result of cash it’s important to pay is unfold right into a bucketful of accounts (it shouldn’t be stunning as it’s important to pay lots of people – suppliers, staff to not communicate of taxes owed). To provide you with the reply, test accounts from class 4 of the trial stability that present a credit score ending stability. Usually all payables are registered right here. You may also have some quick time period loans, so add up the quantities underneath the second column from proper to left akin to the category 5.
The final questions I’m going to take is about cash that you just stand to obtain. Simply test class 4 once more, however this time search for the accounts that present a debit ending stability. Those are the quantities the corporate is ready to money in.
That ought to wrapped it up! If you want a extra detailed rationalization merely give us a name and arrange an appointment. We’ll be completely satisfied to help you, in any case our motto is “Guiding your investment in Romania!”