Do you know everything about your restaurant assets? Not just what they are, but how your restaurant’s assets interact with other critical elements of that indispensable, indisputably important financial report, the balance sheet?
Below, you’ll find RASI’s all-in-one resource on restaurant assets. In this article, we’ll cover:
- How assets of a restaurant are defined
- Difference between restaurant long-term vs. short-term assets
- How assets-in-place impact assets of a restaurant
- Key components of your balance sheet (liability, equity, and assets)
Remember, RASI’s comprehensive restaurant accounting services provide everything you need to keep on top of your restaurant assets, optimize profits, control costs, and much more!
Restaurant Assets – Overview
What exactly are the assets of a restaurant? Everything your restaurant owns and uses to run its operations – from food to real estate to equipment and more – are restaurant assets.
All assets are listed on the balance sheet in order to keep track of their values. It helps further to define your restaurant assets into short-term and long-term categories.
Each type has unique characteristics, and knowing how to track them provides a clear, concise financial picture for your business.
RASI’s accounting software platform offers superior visibility and tracking for the assets of your restaurant, and we’ll ensure all other aspects are accounted for. We’re here for you if you need help with financial reporting, payroll, inventory, or other restaurant asset management solutions!
Restaurant Assets: Long Term vs. Short Term
Not every restaurant classifies short-term assets the same, but here’s a good benchmark to follow:
Short-term assets in restaurants
These are any asset that will convert to cash within the next 12 months. This includes cash but also inventory and accounts receivable. Examples include:
- Merchandise
- Cash on hand
- Accounts receivable
- Food inventory
- Stocked alcohol
Long-term assets in restaurants
These are all assets expected to be owned and still in use within 12 months. Real estate, furniture, equipment (everything from ovens to POS equipment), and even a restaurant’s longer-term financial investments (such as bonds) are considered long-term assets of a restaurant.
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Differences Between Long-Term and Short-Term Assets
The distinctions between long-term and short-term restaurant assets are critical to understanding financial reporting. Depreciation is a vital aspect that impacts long-term assets, but not short-term ones.
Remember, short-term restaurant assets will convert to cash within a year. This simple fact makes evaluating and reporting on their actual and projected value easier.
If your restaurant currently has $3,000 in accounts receivable, that equates to $3,000 in short-term restaurant assets.
The same principle applies to food costs; whatever amount of food for recipes and menu preparation you have on hand is what you’d report as a short-term asset, even though you’d typically sell more than that amount on your menu.
Long-term assets are accounted for differently due to depreciation. Think of 12 months as the cutoff for depreciation. Long-term assets gradually reduce over each accounting period – say, every two months or quarter (whichever period is used for asset depreciation).
Let’s say you buy a freezer for $6,000 in January. By March, that value decreases. By June, it depreciates further.
Equipment, furniture, and other “hard” long-term assets are reported with regular depreciation factored in.
Other long-term restaurant assets (bonds, to take our previous example) are usually reported at their current market value. Hey, it’s hard enough for the talking heads on TV to predict the Dow Jones, let alone a busy restaurant manager!
The Balance Sheet: Putting it All Together
Your restaurant’s Balance Sheet is a clear picture of your business’s financial standing. The Balance Sheet starts with the assets of your restaurant. Then, liabilities are factored in. Liabilities include accounts payable, long-term debt, and other expenses.
Subtract your liabilities from your assets, and you have equity – essentially, the profit or loss from your business. Another way to think about equity is net assets. When liabilities exceed assets, it’s obviously time to change your course of action.
Check out our helpful article on the Balance Sheet for a deeper dive into understanding what all of this means!
RASI: Your Dependable Asset for Restaurant Financial Reporting
Now that you have a good grasp on the assets of your restaurant, it’s time to put this knowledge to use and efficiently run your business. With RASI’s automated software, we’ll help you keep track of short-term and long-term assets, whether you need assistance with depreciation, accounting, balance sheets, and more.
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Request a demo or contact us today – see why RASI is already an asset for restaurants everywhere. We look forward to hearing from you soon!
