Should you be performing enterprise in Romania or you happen to be thinking about performing business in Romania, it would possibly be a wise thing to be able to answer these standard questions and comprehend how your company is performing.
Economic statements are prepared in Romania only twice a year, so if you would like to have timely facts, you must find out to read a trial balance. A trial balance is prepared at the finish of every month, but be warned – accounting is just a further form of studying history so what you get at any time is at most effective the last month’s figures.
Feel of it in the following way, the balances on the debit side show the enterprise assets, meaning the items the organization spent its funds on, although the balances on the credit side show where the business got its money from.
The first two columns of the trial balance reflect the initial balances of your company’s accounts, the subsequent 2 columns the monthly movements, the next 2 reflect the year to date movements including the initial balances though the last 2 columns show the ending balances of one’s company’s accounts.
The trial balance can be a collection of all of the accounts utilized for recording the small business transactions, divided into classes. In Romania, every account is given a number and it’s not uncommon for accountants to speak only when it comes to the account numbers, producing your life a lot more complicated.
Having said that, should you know a number of numbers, you can sort it out eventually. I’ll point out the numbers that best answer the important questions.
Accounts starting with the number 7 point out revenues and accounts beginning with number 70 point out sales, so if you want to know your total sales sum up the accounts starting with 70 and this ought to be your turnover. So we can tick question no. 1.
1 critical aspect concerning the Romanian accounting regulations is that we move the costs and revenues to profit and loss in the end of each and every month, so a Romanian trial balance will never show balances for the expense and revenue accounts, that’s class 6 and 7 accounts. If it does, that implies you either have an incomplete or an incorrect trial balance.
Now, for question no. two, “Is my business generating profit?”, simply check account 121 which could be the Profit and loss account. If its balance is on the credit side that means your organization is producing profit, if the balance is on the debit side that means your company is producing losses. One more possibility to check no matter whether the balance in account 121 is appropriate is always to sum up all of the accounts starting with the number 7 and subtract the sum of all accounts starting with number 6, on the year to date columns. 7 points out to revenues and 6 to expenses. If amounts in class 7 are higher than amounts in class 6, you need to really feel relieved – your small business is creating profit.
We may also tick questions no. 2.
Moving on, you would like to know how much capital you might have on hand. That is very simple – just check the ending balance column of the accounts in class five that show values on the debit side. The result must answer the question, unless you have got been withdrawing money from your bank account for discretionary use and your accountant built up income inside the petty money account.
Accountants generally do that, it is not their fault – they simply follow the double entry rule (each transaction is recorded in two accounts – so if dollars is out from the bank account and you didn’t tell the accountant exactly where it went, your accountant will naturally assume that it’s within the petty cash – that signifies you may have the income out there on you).
The subsequent question is trickier since dollars you have to pay is spread into a bucketful of accounts (it should not be surprising as you have to pay lots of men and women – suppliers, personnel not to speak of taxes owed). auditing