Be on time – start on time All cell phones should be turned off during class, if it rings…..I will answer ! No Internet use during class, unless part of classroom activity Appreciate other points of view Respect others desire to learn End on time
Please fill out the index card provided with the following information: Front Name, phone, & Back Industry experience What you hope to learn in Financial Basics.
Break into pairs, someone you dont know Spend 4 minutes interviewing each other; as you will introduce each other to the class Name What is your degree/program focus? What do you wish to get from this class? What are your Short term goals? (1 year) What are your Long term goals? (5 years)
The Institute for the Culinary Arts is teaming up with the National Restaurant Association Educational Foundation (NRAEF) to provide a double benefit for our students. By using the Competency Guide offered by the NRAEF, and using the Certification exam as the final exam for this course, the student benefits twice! If you complete the Certification Exam with a score of 75% or higher, and complete the requirements of this course, you will receive college credit for the course and certification towards the NRAEF ManageFirst Program.
Validated by over 200 restaurant, foodservice and hospitality organizations Resume builder Tangible accomplishment Can give you a hiring advantage over peers who didnt use ManageFirst How will this certificate help me?
The MFP credential recognizes students as having the academic and practical knowledge they need to succeed in the restaurant, foodservice, and hospitality industry. To earn the MFP credential, students must: Pass four Core Credential exams and one Foundation/Elective exam Provide documentation for 800 hours of industry work experience ManageFirst Professional TM (MFP ® ) Credential
MCC offers classes that support the following courses: NRAEF ManageFirst Core Credential Topics CHRM 2475 Leadership – Hospitality and Restaurant Management CHRM 2460 Cost Management – Controlling Foodservice Costs CHRM 2470 Supervision – Human Resources Management & Supervision CHRM 1020 Sanitation – ServSafe® Food Safety NRAEF ManageFirst Foundation Topics CHRM 2480 Purchasing – Inventory and Purchasing CHRM 1140 Food Production – Food Production CHRM 2350 Nutrition – Nutrition CHRM 2465 Financial Basics – Managerial Accounting ManageFirst Professional (MFP)
Inclement Weather Policy 2012 ICA High School Culinary Invitational Calling all Mentors!!!
Upon completion of this class, each student will be able to: 1.Define the meaning of Financial Management. 2.Recognize Generally Accepted Accounting Principles (GAAPs). 3.Understand auditing. 4. Distinguish difference between accounting specialties. 5.Understand the positions with accounting responsibility in the hospitality industry.
Guests Employees Vendors/Suppliers Owners/Investors Government Agencies Hospitality Industry Managers
Understanding accounting basics allows a Manager to monitor costs involved in providing outstanding guest service at a price that insures the restaurant is profitable. A Managers thorough understanding of their restaurants financial condition helps to make operating decisions that positively influence their guests dining experience.
Employees are the focus of many accounting procedures. Payroll taxes, wages, salaries and benefits. If your restaurant is going to provide employees with steady jobs and competitive wages, the Manager must be knowledgeable about accounting.
The businesses that sell products and services you need for your restaurant need to know about the creditworthiness of your operation. Questions about your operations financial health must be provided using standard financial reports that can easily be understood by outside organizations.
If your operation is a publicly held company, or held by private shareholders… Timely and accurate financial data is crucial. Standard reports are necessary so Investors can accurately measure the value of their investment. Banks and other lending institutions also require the use of standard accounting procedures to make sure you qualify to receive any loans or funds needed.
There are many Federal, State and Local government agencies that REQUIRE the reporting of financial information. Reports to compute payroll taxes Sales tax on revenue Taxes paid on the operations profit Compliance for non-profit corporations
An advantage of using generally accepted accounting principles (GAAP) is that you can compare your results to those of other similar operations. For example you can compare the rent, food costs, labor costs and other operating expenses amongst similar operations to see if you are in line with how other operations are performing
Future employers often evaluate a prospective Managers past success to predict future success. You may be asked about your previous impact on the revenue, costs and profits in the operations you have managed. A Manager must be able to speak knowledgably about accounting related aspects of your business. A Managers compensation and bonuses are often tied directly to the operations financial performance.
WHAT WHY HOW WHEN
The Process of analyzing, organizing, interpreting, recording, summarizing and reporting financial information in ways that are meaningful for owners, managers and other internal users and for lenders, government agencies, and other external users. Sometimes also referred to as Accounting
Managers use financial info to manage activities in their restaurant involving money that is earned and spent in the operation. The financial information must be organized and expressed in ways that are meaningful. Analysis and interpretation of data is necessary. Results must be recorded, summarized and reported to those needing to know about the economic health of the restaurant.
Accounting Activities Recording business information Compiling financial statements Filing tax returns Preparing cash budgets Analyzing budget variances Financial Activities Evaluating capital expenditures Determining strategies for raising new capital Negotiating a building lease Investing excess cash Determining dividend policy Purchasing land Managing working capital
The task of analyzing and recording financial transactions of a specific type (for example, sales, collection of revenue, and payroll) Financial Management and Bookkeeping are not the same, there is a big difference Financial management includes organizing, analyzing, interpreting, recording, summarizing and reporting financial information. A Bookkeepers primary task is to analyze and record transactions.
The process of developing and using accounting information to make business decisions, which involves organizing and presenting financial information in financial statements. The major focus is on the past. Examples of Financial accounting reports: Balance Sheet Income Statement Cash Flows
The accounting specialty that involves studying the restaurants internal controls and analyzing the basic accounting system to assure that all financial information is properly recorded and reported.
The process of using historical and estimated financial information to help managers plan for the future. The major focus is on the future. Examples of Managerial accounting reports: Inventory values Products received Sales history records Operating results and budget estimates.
The accounting specialty that involves planning and preparing for taxes and filing tax- related information with the appropriate government agencies. As you can imagine, accurately gathering and reporting your data, and paying the appropriate taxes in a timely fashion is one area that you do not want to be lax in.
The allocation of the cost of equipment and other tangible assets as an expense over a series of accounting periods according to the useful life of the assets. Usually depreciating equipment for example is preferred because it results in a faster write-off for tax purposes (than for financial reporting purposes)which then lowers your taxable income, reduces your taxes and conserves your cash.
Owners Those who have invested in the business. May be a sole proprietor, or partnership, or many people in a corporation. Board of Directors Usually found in large chains and corporations. These individuals are stockholders who are elected or appointed to represent all stockholders in the management of the business. Creditors Those who lend needed money to your business such as banks, or purveyors who provide products to your business.
Government Agencies IRS NE Dept of Revenue SEC Employee Unions Financial Analysts
Generally Accepted Accounting Principles. A set of standards that constitutes the framework against which accounting procedures and techniques are measured. These principles assure uniformity in the procedures and techniques used to prepare financial statements. GAAPs include the following 8 Principles:
The restaurant is distinct and separate from its owners. It generates revenue (sales), incurs expenses by using assets, and makes a profit, suffers a loss or breaks even even by and for itself.
The value of an asset is its agreed-upon cash equivalent. When a transaction occurs (such as a piece of equipment being sold) the price paid normally reflects its current fair value. Normally though the historical cost- NOT the current fair value is represented as the assets value in financial statements.
An Accountant assumes (unless there is reason to believe otherwise) that the restaurant will exist in the indefinite future. So if the restaurant were to close down, certain liabilities would be due immediately. Likewise, certain assets might need to be sold at a considerable loss. When accountants assume that the restaurant will continue operating there is no need to write down assets to a liquidation value or reclassify long term liabilities as being due immediately.
Statements of the restaurants financial condition including the income statement should be developed periodically. For example: Income tax regulations require annual filing of tax returns. Owners usually desire monthly statements about the economic health of the restaurant.
Expenses that are incurred must be matched with, and deducted from revenues that are generated in an accrual accounting system. Accounts Receivable- Amounts owed to the restaurant. Accounts Payable- Amounts owed by the restaurant (i.e. to suppliers)
Losses should be shown in financial records if there is a reasonable chance that a problem will occur. However should not be reflected until the loss actually occurs. (i.e. Lawsuit against the restaurant)
You should use the same procedures to collect accounting information each fiscal period. Otherwise you will not have accurate information to make your operating decisions.
The significance of financial events impact the financial viability of the restaurant (long term operation). Experience and judgment are necessary to determine whether it is practical to report minor financial events and or matters related to confidential information.
Relevant Current Accurate
A source document is a record from which financial information is initially drawn and entered into an accounting system. Examples of source documents: Schedule of employee hours worked Delivery invoices Sales data from register systems
Line Position A job held by an Employee who is in the chain of command; for example, the Restaurant Manager, Department Heads such as the Chef and Head Bartender, and other decision makers. Staff Position A job held by a technical specialist such as an accountant, who provides information to but does not make decisions for line personnel.
Bookkeepers are involved in some of the processes by which financial transactions of the restaurant are recorded and summarized. Bookkeeping services are often used by restaurant managers who supply source documents to external bookkeepers who in turn develop records, reports and financial statements for the manager.
Accountants often perform duties that include designing and monitoring the data collection system and source documents, summarizing information in financial statements, developing management reports, coordinating budget development, collecting information required by tax authorities and completing required external reports.
This is generally the Chief Accounting Officer in a large restaurant organization and oversees development and implementation of the accounting system. Usually the Controller supervises many employees in accounting departments.
Usually develops a wide variety of routine operating and control reports. For control purposes usually this person is responsible for product receiving, storing and/or issuing.
Large restaurant corporations may employ internal auditors to evaluate the operating effectiveness of the accounting information system.
External accountant (Such as a CPA) performs this service for a fee, rather than as an employee. External Auditors can be used to verify whether financial statements accurately reflect the financial position of the restaurant.
1- Establish Performance Standards (set a budget) 2- Collect financial information to measure the results of the operation 3- Make Comparisons between expected performance and actual performance 4- Take Corrective Action when necessary 5- Evaluate the results of the corrective action
The Manager must be in charge of the restaurant and must be the decision maker. The most effective balance between the Manager and Accountant is when the Accountant serves in a Staff position, which generally is an Advising position
Some Managers are very passive because they are unfamiliar with accounting principles or the use of accounting systems. These Passive managers usually: Do what the accountant says Never question the accuracy of accounting data Use accounting data regardless of how it is presented, even if they dont understand it Defer to the accountant the responsibility of making financial decisions View the accountant as a Necessary Evil rather than as a partner.
The Manager must know the information required for the short and long-term control of the restaurants operation. Once the Manager knows what information they need, the accountant can offer advice on the best way to gather that information. After receiving input from the Manager the accountant should design the information collection system that gathers the information needed for both management and accounting purposes.
Once financial statements are developed, the accountant can assist the Manager in analysis and make corrective action recommendations Wise Restaurant Managers carefully consider the advice of the accountant, however realize that it is ultimately the Managers responsibility to make the operating decisions. The Manager should ask questions about how the information was collected, and any potential for inconsistencies.
Read Chapters 1 – 2 – 3 in the book, Restaurant Financial Basics