Accounting for Restaurants

What makes Restaurant Accounting different?

Accounting is the process of recording all financial information of a business but you’ll find that not all companies do this the same way. It can differ in the kind of industry you set yourself in. Restaurant accounting doesn’t necessarily have to deviate away from the usual costing methods but it does have it’s subtle differences.

Restaurants use two accounting methods: Cash-basis accounting and Accrual accounting.

Cash method
The cash method is the most common accounting method for restaurants because customers pay for their food and services rendered right away. That means they don’t owe you money later on (like what might happen with a construction project). This also means restaurants probably won’t have an accounts receivable balance. With this method, activities are simply recorded when payment is received. While this might be the easiest method for restaurants, it’s not necessarily the most accurate.

Accrual method
The accrual method, on the other hand, records transactions as they happen, regardless of when payment occurs, which allows for a different analysis of activity, shows a more accurate perspective of how expenses are incurred and income is generated, and how income compares to expenses.

business.com editorial staff “Restaurant Accounting: How It’s Different.” 09 April 2020

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