The primary aim of every company, irrespective of its size and its industry, is to maximize the financial effectiveness and efficiency of its operations. A major facilitator in this approach is the practice of maintenance of books of accounts that summarize all the financial transactions of the company (Chowdhury, 2007). These data are analyzed to obtain information which helps in decision making and cost streamlining along with planning for the funds requirement of the business and so on. Accounting techniques facilitate in the analysis of trends in the cost and sales patterns of the company and thus provides insights when significant deviation is observed (Horngren, 2008). Thus, accounting techniques are an indispensable tool for all companies. The restaurant is primarily offering services and is a constituent of the hospitality industry but it also deals with supplies of food and as such, it cannot be classified as a purely service oriented company. Accounting can facilitate major decisions as has been discussed below.
An annual budget is a major forecasting tool that is used to predict the sales pattern of the restaurant in the forthcoming year and accordingly estimate the costs associated to deliver the sales volume. It is a very helpful tool as it helps in inventory planning, materials planning, workforce planning along with planning for funds requirement at the aggregate level (Hilton, 2008). Annual budget ensures that the various departments in the restaurant (i.e. supplies acquisition, Human resources department) set their individual goals in synchronization with the broader organizational goals and they do not conflict with each other. Moreover, cash budget is of great importance as it helps to forecast the cash flow sufficiency of the restaurant and also helps to anticipate the additional funds that may be needed. This ensures that the restaurant gets the time to analyze and raise funds from the cheapest source at competitive interest rates while maintaining adequate liquidity in its short term.