Chapter 1 Hospitality Industry Accounting

Payroll taxes

...

sales tax

...

Ethical Analysis

1. Is it legal? 2. Does it hurt anyone? 3. Am I being honest? 4. Would I care if it happened to me? 5. Would I publicize my action?

Tax

A charge levied by a governmental unit on income, consumption, wealth or other basis.

uniform system of accountants

A series of suggested (uniform) accounting procedures which represent agreed upon methods of recording financial transactions within a specific industry segment

Owner's Equity

Assets= Liabilities + ______ ______

Liabilities

Assets= ______ + Owner's Equity

Costs of goods sold

Beginning inventory + purchases - ending inventory

Tax

Branch of accounting whose purpose is to compute taxes due

Cost

Branch of accounting whose purpose is to identify and control costs

Managerial

Branch of accounting whose purpose is to make management decisions using accounting information

Financial

Branch of accounting whose purpose is to record financial transactions

Auditing

Branch of accounting whose purpose is to verify accounting data and procedures

Financial Accounting

Business accountants who specialize in accounting are skilled at recording, summarizing, and reporting financial transactions

reconciled

Compared and matched

Product cost %

Cost of goods sold / Revenue

Product yield %

EP weight/ AP weight

Sales break-even point

Fixed costs/ contribution margin %

D

In order to become a CMA, professionals must meet.... A. the educational and experience requirements of the designation B. must complete an official examination, which includes the general areas of business analysis, management accounting and reporting, strategic management, and business applications C. requires compliance with ethical standards and practices D. all of the above

Certified Public Accountant (CPA)

In the United States, those individuals recognized as highly competent and professional in one or more of the branches of accounting have earned this designation

external auditors

Individuals or firms who are hired specifically to give an independent (external) assessment of a company's compliance with standardized accounting practices

internal auditors

Individuals who are directly employed by a company to examine that company's own accounting procedures

AICPA

Its mission is to provide members with the resources, information, and leadership that enable them to provide valuable services in the highest professional manner to benefit the public as well as employers and clients

Hospitality Financial and Technology Professionals (HFTP)

Members of hospitality professionals who work extensively in the areas of accounting and technology often become members of this. It offers its own certifications for hospitality professionals working in the accounting and technology areas, and it provides a global network for them.

Profit margin

Net income / total sales

Hospitality Accounting

Not a separate branch of accounting, but it is a very specialized area that focuses on those accounting techniques and practices used in restaurants, hotels, clubs, and other hospitality businesses.

Uniform System of Accounts for Restaurants (USAR)

Prepared for the National Restaurant Association (NRA) by Deloitte and Touche LLP, assists restaurant operators by suggesting a common language for the industry and by giving them an opportunity to compare the results of one restaurant to another and one accounting period to the other

Ethics

Refers to the choices of proper conduct made by an individual in his or her relationships with others

Expenses

Revenue - ______ = Profit

Profit

Revenue-Expenses= ______

ADR

Room revenue / Rooms sold

RevPar

Room revenue / rooms available

Occupancy %

Rooms sold / rooms available for sale

Contribution margin

Selling price- product cost

Liabilities

The amounts the business owes to others

Tax Accounting

The branch of accounting that concerns itself with the proper and timely filing of tax payments, forms, or other required documents with the governmental timely filing of tax payments, forms, or other required documents with the governmental units that assess taxes

Cost accounting

The branch of accounting that is concerned with the classification, recording and reporting of business expenses

expense

The cost of the items required to operate the business

Profit

The dollars that remain after all expenses have been paid

occupancy tax

The money paid to a local taxing authority based upon the amount of revenue a hotel achieves when selling its guest rooms, is typically due and payable each month for the room revenue the hotel achieved in the prior month

Institute of Management Accountants (IMA)

The organization that grants the CMA certification

controller

The person responsible for managing the hotel's accounting processess, may serve as the auditor or, in very large properties, full-time individuals are employed specifically to act as the property's in-house auditors

Accounting

The process of recording financial transactions, summarizing them, and then accurately reporting them

Managerial accounting

The system of recording and analyzing transactions for the purpose of making management decisions of precisely this kind

Certified Management Accountant (CMA)

This type of accountant assists business by integrating accounting inofrmation into the business decision process

Assets

Those items owned by the business

Check average

Total sales / Number of guests served

TRUE

True or False: The majority of hospitality managers are NOT likely to become CPAs or even certified members of HFTP.

Assets

_____= Liabilities + Owner's Equity

Revenue

______ - Expenses = Profit

cost

an expense, most often defined as "time or resources expended by the business."

audit

an independent verification of financial records

hospitality

defined as the friendly and charitable reception and entertainment of guest and strangers; refers to a specific segment of the travel and tourism industry

AICPA

is the national, professional organization for all Certified Public Accountants

Owners' equity

residual claims owners have on their assets or the amount left over in a business after subtracting its liabilities from assets

Accountant

simply a person skilled in the recording and reporting of financial transactions

Revenue

term used to indicate the money you take in

auditor

the indicidual or group of individuals that completes the verification

Sarbanes-Oxley ACT

this law prvides criminal penalties for those found to have committed accounting fraud