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?