Book keeping/Accounting for a community cafe

Jonno1
Jonno1 Registered Posts: 63 ? ? ?
I've volunteered my services to look after the book keeping/Accounting of a Community Cafe/Social Enterprise. So has anyone got any experience of book keeping for small cafes?

I've had a look at the (virtually) non-existent book keeping in the cafe which has happened in the past, and I'm trying to bring the records up to date so to have a new start (hopefully) compiling an Income statement and a balance sheet on a regular basis.

Some questions I have to ask?

How do I value stock - say for example at the end of a period there is a 1/4 full bottle of milk left, or half a packet of sugar, or 3 streaks of bacon?
Depreciation of assets - how do I calculate this? The records say the book value of the cooker in the cafe is £6,000.
The cafe has not made any payments to food suppliers since May 2012, and these have to be made soon. Do I post these as accruals or amounts payable on the balance sheet? Similarly for Utilities bills.
Voluntary donations of funds - do I post these to the Sales account on the Income statement or on the balance sheet (bottom) capital section?
Income from other sources, such as catering for small events - again do I post these to the sales account on the Income statement?

FYI - I passed level 4 AAT last year, and am trying to gain work experience in finance by volunteering. So I haven't done any financial accounting for 2 years or so, and even then that was just AAT assessments!
Any advice gratefully received!

Comments

  • coojee
    coojee Registered Posts: 794
    Jonno1 wrote: »
    I've volunteered my services to look after the book keeping/Accounting of a Community Cafe/Social Enterprise. So has anyone got any experience of book keeping for small cafes?

    I've had a look at the (virtually) non-existent book keeping in the cafe which has happened in the past, and I'm trying to bring the records up to date so to have a new start (hopefully) compiling an Income statement and a balance sheet on a regular basis.

    Some questions I have to ask?

    How do I value stock - say for example at the end of a period there is a 1/4 full bottle of milk left, or half a packet of sugar, or 3 streaks of bacon?
    Depreciation of assets - how do I calculate this? The records say the book value of the cooker in the cafe is £6,000.
    The cafe has not made any payments to food suppliers since May 2012, and these have to be made soon. Do I post these as accruals or amounts payable on the balance sheet? Similarly for Utilities bills.
    Voluntary donations of funds - do I post these to the Sales account on the Income statement or on the balance sheet (bottom) capital section?
    Income from other sources, such as catering for small events - again do I post these to the sales account on the Income statement?

    FYI - I passed level 4 AAT last year, and am trying to gain work experience in finance by volunteering. So I haven't done any financial accounting for 2 years or so, and even then that was just AAT assessments!
    Any advice gratefully received!

    Who are the accounts going to be sent to? Are they a charity and they going to the charity commission? What is the turnover of the cafe? Sorry to ask so many questions, it's just that if it's a charity with a low turnover (less than about £150k I think) then they may only need to prepare a receipts and payments account so you wouldn't need to bother with valuing assets, stock, creditors etc.
  • Jonno1
    Jonno1 Registered Posts: 63 ? ? ?
    Hi,
    Thanks for this. The cafe's turnover must be less than £150,000 per year, I'll enquire about the other things you ask. It is run by volunteers, though there is 1 paid member of staff as payments have to be made to HMRC.

    From what you are saying, I would only need to prepare a basic profit & loss account? I'm interested in helping the cafe to get on a more stable and secure financial footing, as it says its funding position is a little precarious at the moment. I would use the profit & loss account to monitor monthly financial performance, work out whether the cafe is actually making a small profit, and if it is not, strategies which could be put in place to restore some sort of financial health. For instance, work out whether the goods sold are being sold at a small profit just enough to cover costs. Or cut costs, change suppliers etc.
  • coojee
    coojee Registered Posts: 794
    Jonno1 wrote: »
    Hi,
    Thanks for this. The cafe's turnover must be less than £150,000 per year, I'll enquire about the other things you ask. It is run by volunteers, though there is 1 paid member of staff as payments have to be made to HMRC.

    From what you are saying, I would only need to prepare a basic profit & loss account? I'm interested in helping the cafe to get on a more stable and secure financial footing, as it says its funding position is a little precarious at the moment. I would use the profit & loss account to monitor monthly financial performance, work out whether the cafe is actually making a small profit, and if it is not, strategies which could be put in place to restore some sort of financial health. For instance, work out whether the goods sold are being sold at a small profit just enough to cover costs. Or cut costs, change suppliers etc.

    I think for statutory purposes at least a receipts and payments will be fine (note that this is on a strict money in money out basis and not in the accruals basis) You're right to want to get them on a more secure footing so whatever else you choose to do in terms of management accounts is up to you. I do the books for a pre school who only need R and P accounts but I do more for them that just that. I keep a running budget where I constantly update it for actual so I can second guess what the likely end figure is going to be. I also look at how many children they need per session to break even, that kind of thing. Not required for reporting purposes but useful management info.
  • Jonno1
    Jonno1 Registered Posts: 63 ? ? ?
    I took a look at the books last night. Staff of the cafe are taking money out of the till to pay for purchase of food to prepare for sale in the cafe. This is all noted down in the takings sheet at the end of each day, but should cash payment for purchases be made from the business bank account? If this is so, how can I convince the owners of the cafe that this is the right method to do so? Should a petty cash account be set up for this?
  • uknitty
    uknitty Registered Posts: 591
    I do the bookkeeping for a similar venture and there is a small petty cash float for purchases that is balanced at the end of the week.
  • coojee
    coojee Registered Posts: 794
    Jonno1 wrote: »
    I took a look at the books last night. Staff of the cafe are taking money out of the till to pay for purchase of food to prepare for sale in the cafe. This is all noted down in the takings sheet at the end of each day, but should cash payment for purchases be made from the business bank account? If this is so, how can I convince the owners of the cafe that this is the right method to do so? Should a petty cash account be set up for this?

    You'd be horrifed if you could see the things I let through at the pre school. We have so many contra entries it's unreal. Lots of the parents pay by cash so rather than bank it intact I let the supervisor use the cash to pay for snacks, end of term events etc she then sends me a cheque for the amount left over. It's a bit different because I do the books mainly remotely, everything has to be posted to me so if we wanted to bank the cash we'd be waiting for ever for me to pick up the cash to bank it. It works fine because I've known the supervisor and her deputy for the last 10 years since my kids were at the pre school and nothing has ever gone missing, the only time money went missing was recently when we had someone new in to cover for the supervisor's mat leave. Needless to say she didn't last long.
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