Use of Financial Statements in Food and Beverage Operation Assignment

Use of Financial Statements in Food and Beverage Operation - Assignment Example Tax authorities need to evaluate the financial statements to determine the level of taxation to be applied to the business. The balance sheet is an important financial statement that indicates the position of a food and beverage enterprise’s assets and liabilities as well as the shareholders’ equity. In a balance sheet, the difference between assets and liabilities equals equity (Reid & Botanic, 2006). Income statements contain operating costs that are categorised as direct and indirect costs. Direct costs are those incurred in running specific functions such as casual labour and raw material supplies while indirect costs are non-specific expenses that support the entire business such as depreciation, cleaning and general office supplies. These expenses are considered in determining the shareholder incomes per share. The revenue earned in a particular period of time is also contained in the income statements. They help the owner of the food and beverage operation to know if the business made a profit as well as whether the profits attained conformed to the targets set for the business. Income statements also help the owner to determine whether the profits decreased or increased compared to earlier periods. If the owner is not the manager, he/she can use the income statements to appraise the restaurant manager’s performance. Cash-flow financial statements are important in tra cking the movement of monies in and out of the business. They can be used to identify irregular payments and also to track the business’s capacity to settle outstanding bills. The owner of the food and beverage operations can evaluate the net cash increase or decrease to determine if the business is achieving the growth strategy (Bowie & Buttle, 2004). It is important to recognize and appraise the need for a product in the company. The product may be necessitated by finished stock, innovations or demand from customers. Specifications should be done to ensure that all the necessary details are taken care of to offer customers the best value.  Ã‚