Hotel Revenue
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Transcript Hotel Revenue
The Accounting Profession
What It Is
Accounting is a Profession
Commercial/Financial
Cost
Tax
Auditing
Budgeting
Government
Users of Financial
Information
Owner
Creditor
Manager
Government
Public
End Products
Balance
Sheet (Ch 2)
Income Statement (Ch 3)
Statement of Cash Flows (Ch 4)
Hotel Revenue
64.1%
Rooms
19.5% Food
5.1% Beverage
7.0% Other Departments
2.5% Telephone Department
1.8% Rentals and Other Income
Hotel Costs and Expenses
44.9%
Salaries, Benefits and
Meals
30.0% Operating Expenses
11.0% Cost of Sales
5.5% Energy Costs
8.6% Taxes, Management Fees,
Insurance
The Hospitality Business
Seasonal
Business
Fluctuating Demand
Short Conversion Time - Food
Selling Space - Now or Never
Labor Intensive
Intensive Fixed Asset Investment
Key Driver in Hospitality
Paid
Occupancy Percentage
# rooms sold / # rooms available
Assume Hotel has 200 rooms and sells
300 rooms in June
300 / (200 * 30) = 300 / 6,000 = 5.00%
Forms Of Business
Organizations
Sole
Proprietorship
Partnership
Limited Partnership
"C" Corporation
"S" Corporation
Limited Liability Company
A Review of Accounting
A Quick Summary
Uniform System of
Accounts
Industry
Uses a Uniform System
of Accounting
Lodging Operations,
Restaurants, Clubs
Generally Accepted
Accounting Principles
Provide
Uniform Basis For
Preparing Financial Statements
AICPA
FASB
GAAP
Principles of Accounting
Cost
Principle
Business Entity
Continuity of the Business Unit
Unit of Measurement
Principles of Accounting
Objective
Evidence
Full Disclosure
Consistency
Matching
Principles of Accounting
Conservatism
Materiality
Cash
Basis Accounting
Accrual Basis Accounting
Cash vs Accrual
Cash Basis Accounting
– Recognize revenue or expense
when cash received
Accrual Basis Accounting
– Recognize revenue when earned
– Recognize expense when incurred
Fundamental Equation
Assets = Liabilities + Owners Equity
Assets = Liabilities
+ Permanent OE
+ Temporary OE
Assets = Liabilities
+ Permanent OE
+ Revenue
- Expenses
Fundamentals of Accounting
Balance
Sheet
Assets - Things Owned
= Liabilities ( Obligations )
+ Equity ( Residual Claims on
Assets )
Fundamentals of Accounting
Income
Statement
Revenues
- Expenses
= Net Income
Temporary Accounts are Netted and
Closed to Equity (retained earnings)
Debits and Credits
Debits
on Left
Credits on Right
Debits Must Equal Credits Double Entry Bookkeeping
Debits and Credits
Debit
does not mean increase or
decrease
Credit does not mean increase or
decrease
Normal Balances
Asset
- Debit
Liability - Credit
Equity - Credit
Revenue - Credit
Expense - Debit
Normal Balances
Other Types of Accounts
Contra Assets - Credit
– Accumulated Depreciation
– Allowance for Bad Debt
Contra Equity - Debit
– Withdrawals
– Treasury Stock
Debit vs Credit
Assets and Expenses have a normal
balance of a Debit
– To increase the balance Debit
– To decrease the balance Credit
Liabilities, Permanent OE and Revenues
have a normal balance of a Credit
– To increase the balance Credit
– To decrease the balance Debit
Adjusting Entries
Needed
to make transition from
cash to accrual accounting
Example:
Pay $3,600 for a 3 year
insurance policy in January 2000
Fiscal year is July - June
Initial Entry
(January 1, 2000)
Debit
Prepaid
Insurance
Credit
3,600
Cash
3,600
June 30, 2000 Entry
Debit
Insurance
Expense
Prepaid
Insurance
Prepaid Insurance Balance = $3,000
Credit
600
600
June 30, 2001 Entry
Debit
Insurance
Expense
Credit
1,200
Prepaid
Insurance
Prepaid Insurance Balance = $1,800
1,200
June 30, 2002 Entry
Debit
Insurance
Expense
Prepaid
Insurance
Prepaid Insurance Balance = $600
Credit
1,200
1,200
December 31, 2002 Entry
Debit
Insurance
Expense
Prepaid
Insurance
Prepaid Insurance Balance = $0
Credit
600
600
Elements of Ethics
Privacy
of Communication
Conflict of Interests
Political Contributions (U.S.)
Company Records
Gifts, Favors, Entertainment,
Trips, Outings
Elements of Ethics
Use
of Company Assets
Anti-Trust Laws
Relations With Competitors
Relations With Suppliers
Relations With Customers
Ethics and Hospitality
Accounting
Is
the Decision Legal?
Is the Decision Fair?
Does the Decision Hurt Anyone?
Have I Been Honest With Those
Affected?
Ethics and Hospitality
Accounting
Can
I Live With My Decision?
Am I Willing to Publicize My
Decision?
What If Everyone Did What I Did?