Accounting in Romania

Consider this article as a language course. In the end, you should master Romanian accounting. I’ll try to turn it from pretty boring and technical language into an easy to follow method of staying on top of things.

I will help you get answers to some basic questions related to understanding the meaning of countable numbers in Romanian. The tutorial is about reading one of the most basic accounting results: the month-end trial balance.

Accounting provides answers to many questions, but the crucial ones are:

• What is my billing?
• Is the business making a profit?
• How much money do I have?
• How much money do I have to pay in the short term?
• How much money do I expect to receive in the short term?

If you are doing business in Romania or considering doing business in Romania, it would probably be a good idea to be able to answer these basic questions and understand how your business is performing.

Financial statements are prepared in Romania only twice a year, so if you want to have timely information, you need to learn how to read a trial balance. A trial balance is prepared at the end of each month, but be careful: accounting is just another way of studying history, so what you get at any given moment is, at best, last month’s figures .

The Romanian trial balance format generally has 4 columns, each divided into 2 sections: Debit and Credit. Think of it this way, balances on the debit side show the assets of the business, i.e. the things the business spent its money on, while balances on the credit side show where the business got the money from.

The first 2 columns of the trial balance reflect the opening balances of your business accounts, the next 2 columns the monthly movements, the next 2 columns reflect the year-to-date movements including opening balances, while the last 2 columns show the ending balances of your business accounts. accounts

The trial balance is a collection of all accounts used to record business transactions, divided into classes. In Romania, each account is assigned a number and it is not uncommon for accountants to speak only in terms of account numbers, which complicates their lives.

However, if you know some numbers, you can eventually figure them out. I will point out the numbers that best answer the key questions.

Accounts starting with the number 7 show revenue and accounts starting with the number 70 show sales, so if you want your total sales, add up the accounts starting with 70 and this should be your billing. So we can mark question no. one.

An important aspect related to the Romanian accounting rules is that we write income and expenses to profit and loss at the end of each month, so a Romanian trial balance will never show balances for income and expense accounts, i.e. class 6 and 7. . If so, that means you have an incomplete or incorrect trial balance.

Now for question No. 2, “Is my business making a profit?” simply check account 121, which is the profit and loss account. If your balance is on the credit side, it means your business is making a profit, if your balance is on the debit side, it means your business is making a loss. Another possibility to verify if the balance of account 121 is correct is to add all the accounts that start with the number 7 and subtract the sum of all the accounts that start with the number 6, in the year-to-date columns. 7 points to income and 6 to expenses. If the amounts in class 7 are higher than the amounts in class 6, you should feel relieved: your business is making a profit.

We can also mark questions no. two.

Moving on, you want to know how much money you have available. That’s simple: just check the ending balance column for accounts in class 5 that show values ​​on the debit side. The result should answer the question, unless you have been withdrawing money from your bank account for discretionary use and your accountant has accumulated money in the petty cash account.

Accountants usually do that, it’s not their fault, they just follow the double entry rule (every transaction is recorded in two accounts, so if money comes out of the bank account and you didn’t tell the accountant where it went, your accountant will will do). naturally assume that you are in petty cash, which means you have the money on hand).

The next question is more complicated because the money you have to pay is spread across a lot of accounts (it shouldn’t be surprising, since you have to pay a lot of people: vendors, employees, not to mention taxes owed). To arrive at the answer, check accounts in class 4 of the trial balance that show an ending credit balance. Generally, all accounts payable are recorded here. You may also have some short-term loans, so add the amounts under the second column from right to left for class 5.

The last questions I am going to answer are about the money you can receive. Just check class 4 again, but this time look for the accounts that show a debit ending balance. Those are the amounts the company is expecting to collect.

That should end it! If you need a more detailed explanation, simply give us a call and make an appointment. We will be happy to help you, after all, our motto is “Guide your investment in Romania!”