Chapter 1-6 : Financial Accounting

In March 2021, the University Sub Shop had $38,000 in revenue and $35,500 in expenses. What was the University Sub Shop's net income for March 2021?

$2,500

In 2020, the University Sub Shop had a net loss of $2,500. At the beginning of 2020 the University Sub Shop had equity of $17,000. In January 2020 the owners withdrew $10,000 and during the year they invested $5,000. What was the University Sub Shop's equity as of the end of 2020?

$9,500

The University Sub Shop generated $4,000 in operating cash, spent $10,000 in capital expenditures, and borrowed $5,000 from their bank in 2020. The company started the year with $3,500 in cash and had no other cash transactions besides these listed. What was the University Sub Shop's net cash change for 2020?

($1,000)

The University Sub Shop had $1,200,000 in assets as of December 2020 and $1,250,000 in liabilities for the same period. What was the University Sub Shop's equity for December 2020?

($50,000)

According to the U.S. Bureau of Labor Statistics, what percentage of businesses fail by the fifth year?

50%

The Small Business Administration provides loans to hotels and restaurants under which of the following programs?

7(a) and 504

Which of the following is not considered as a recent competitive threat to the restaurant industry?

Act of God

Partner relationship issues are important to develop and maintain with:

All of the above

Public policy issues facing the hotel and restaurant industries include:

All of the above

Which financial statement is for a point in time?

All of the above

Which of the following is not a limitation of the balance sheet?

All of the above are limitations

What are required of financial management, in addition to controlling of financial activities, to attain sustained business growth and competitiveness?

All the above

Which of the following statements is true about ratio analysis?

As part of a loan agreement, creditors may require hospitality businesses to maintain specific ratio standards.

Which financial statement can answer the question, "How much does the firm have in unredeemed gift cards?"

Balance Sheet

Which of the following statements about benchmarking is not true?

Benchmarking should only be done to compare a business with it competitors

The following are examples of companies that collect and publish club industry data except

CAA

The Finance and Operations Report for clubs is published by:

CMAA

Restaurant growth has historically been most closely correlated with the growth of:

Cities

Branded hotels in larger cities and suburbs, such as those created by Hilton, Sheraton, Hyatt, and Marriott generally used which type of legal structure?

Corporation

Which of the following is not a common financial issue impacting hospitality properties and firms?

Difficulty in opening a bank account

The following are examples of industry averages publications except:

Dow Jones Industrial Average

Which of the following is not considered as a recent competitive threat to the hotel industry?

Economic downturns

Which of the following is a reason that businesses may have higher than expected payroll costs?

Employees organize under a collective bargaining agreement

What are the three core decisions in hospitality financial management?

Environmental decisions

Intangible assets possess physical forms and generate long term benefits.

False

Which of the following is not generally considered as an impetus for the growth of and locations of the modern hotel and motel industry?

Fast food restaurants

Which of the following is not a common non-financial issue impacting hospitality properties and firms?

Food cost issues

Corporations were first created:

In the early 1800s

Which financial statement can answer the question, "How much did the firm generate in food and beverage sales?"

Income Statement

Which financial statement is the most used by operations managers?

Income Statement

Which of the following statement about off-balance sheet (OBS) financing is not correct?

Like any red flag in accounting and finance, it is illegal, even if proper parameters are followed

LLC is the acronym for:

Limited liability company

Which ratios deal with the company's ability to meet short-term obligations?

Liquidity

Which of the following is not part of the market environment in hospitality financial management?

Managers

Liquidity ratios are used to __________.

Measure the company's ability to meet short-term obligations.

Which of the following is not one of the basic legal structures used for organizing a company?

Multi-level partnership

Which of the following is not one of the primary advantages of a sole proprietorship?

Multi-level partnership

Which of the following is not part of the practice foci in hospitality financial management?

New Entrants

Limited partnerships are typically used when:

Non-working partners are utilized to provide equity capital

The NAICS, which is used for classifying industries, stands for:

North American Industry Classification System

Which of the following was not an early adopter of the franchise business model?

Olive Garden

Which of the following is not a class of ratios?

Productivity

Which of the following profitability ratios is calculated by dividing net income by total revenue?

Profit margin

Trends in Private Clubs is a publication of:

RSM

Which statement about ratios is NOT TRUE?

Ratios provide answers in and of themselves and are predictive

The National Restaurant Association has the ________ which is a monthly composite index tracking the health and outlook of the U.S. restaurant industry.

Restaurant Performance Index

Individual restaurant franchisees typically use which form of legal structure?

Sole proprietorship

The original motor inns generally used which type of legal structure?

Sole proprietorship

Which financial statement can answer the question, "How much cash did we generate in operations?

Statement of Cash Flows

The primary distinction of corporations is that:

They are legal entities separate and apart from their owners

When companies deliberately not recognize the proper bad debt expense and showing a higher accounts receivable balance:

This makes the companies look good because of the high accounts receivable

In performing vertical analysis on the income statement, the base (divisor, denominator) is:

Total Revenue

Financial performance typically refers to achieving or surpassing certain predetermined revenue and profit goals, whereas nonfinancial performance is defined more vaguely as achieving or surpassing certain nonfinancial standards, such as turnover, consumer satisfaction, employee satisfaction, accuracy, and speed

True

Hospitality businesses encompass a wide span of industries including but not limited to the hotel industry, the restaurant industry, the theme park industry, the cruise line industry, and the travel and tourism industry.

True

IT in hospitality businesses encompasses a tangible component of infrastructure and an intangible component of processes that are used to govern electronic data.

True

Several edge factors tend to play moderating roles in practice when hospitality businesses attempt to produce desirable performance.

True

Which of the following is not a typical current owner of hotels?

U.S. Government

The most common mistake inexperienced owners make regarding marketing expenses is:

Underestimating the cost of an effective marketing campaign

Which of the following is not a common occurrence that results in insufficient operating cash flow?

Unexpected cost overruns in building out the space

Many hotel management contract includes a clause to ensure hotels area following the guidance of which publication to ensure comparability?

Uniform System of Accounts for the Lodging Industry

To make the company look better with more cash, management may postpone the payments of accounts payables their vendors. This is an example of:

Window dressing

The following are examples of companies that collect and publish hotel industry data except:

Zagat

The systematic process starts with ___________ that delineates the relationships of key causal factors and the intended goals. Then proceeds to making predictions based on the framework and testing the predictions by real-world observations and practices, before drawing a conclusion of how to reach ___________ .

a theoretical framework, the intended goals

A horizontal analysis of balance sheet data involves a comparison of a balance sheet amount on a given date with the

amount for the same balance sheet item on a previous date

The National Restaurant Association provides the following information except:

data divided into types of restaurants, and per guest check

Which of the following statement is true?

employee turnover tends to positively correlate with training costs

Benchmarking is the process of:

evaluating something by comparing that mark or data point to a standard

Ratios are particularly useful to managers as indicators of:

how well operational goals are being achieved

Creditors typically use ratio analysis to evaluate the ____________of a business.

liquidity

Partnerships are businesses owned and operated by _________ owner.

more than one

Effective January 1, 2019, with the enactment of Accounting Standards Codification (ASC) Topic 842:

operating leases of 12 months or longer must be reflected on the balance sheet as both assets and liabilities

Hospitality financial management follows a systematic process and requires contextualized decision-making to ensure effective interactions of core decisions, market environment, assets options, practice foci, and edge factors, resulting in superior performance that leads to maximization of ______________________ in shareholders' value.

sustained growth

Which of the following is not one of the performance determinants of hospitality financial management?

sustained growth