Hospitality Financial AccountingWeek 1Part 1

Hospitality Accounting in Action

Matakuliah : V0232 – Akuntansi Keuangan HotelTahun : 2009

1-1 Accounting ProcessIdentification

(Select economic events/

transactions)

Recording(Record,

classify, and summarize)

Communication(Prepare

reports; analyze and interpret)

Internal Users External Users

Investors/creditors

Present & potentialInvestorsCreditors

Other UsersTaxing authorities

Regulatory agenciesLabor unions

Economic planners

Management

Managers,supervisors, andcompany officers

1-2 Bookkeeping vs. AccountingBookkeeping

Involves only the recording of economic events

Just one part of the accounting process

Accounting

Involves identifying, recording, and communicating economic events

Types of Accounting:• Financial• Managerial

1-3 AssumptionsMonetary Unit Assumption

Only transaction data that can be expressed in terms of money can be included in the accounting records

Economic Entity AssumptionActivities of the entity must be kept separate from activities of the owner

1-4 The Accounting EquationASSETS = LIABILITIES + STOCKHOLDERS’ EQUITY

Assets are resources thatpossess future

economicbenefits.

Liabilities are creditor claims

on the assets andrepresent the debtsand obligations of

the entity.

Stockholders’ equity isthe stockholder’s residual

claim on totalassets.

TOTAL

ASSETS Stockholder’s claims on assets

Creditor claimson assets

= +

1-5 The Accounting CycleSteps in the Accounting Cycle1. Analyzing Transactions2. Journalizing3. Posting4. Trial Balance5. Adjustments6. Adjusted Trial Balance7. Financial Statements8. Closing Entries9. Post Closing Trial Balance

1-6 Uniform SystemsHotels

Uniform System of Accounts for the Lodging Industry

ClubsUniform System of Financial Reporting for Clubs

RestaurantsUniform System of Accounts for Restaurants

SpasUniform System of Financial Reporting for Spas

Hospitality Financial Accounting

Part 2Accounting Principles

2-1 Conceptual FrameworkCONSTRAINTSCONSTRAINTS

Objectives of Financial ReportingObjectives of Financial Reporting

QualitativeQualitativeCharacteristics ofCharacteristics of

Accounting InformationAccounting InformationElements ofElements of

Financial StatementsFinancial Statements

Operating GuidelinesOperating GuidelinesAssumptionsAssumptions PrinciplesPrinciples

CONSTRAINTSCONSTRAINTS

2-2 Qualitative Characteristics of Accounting Information

UsefulUsefulFinancialFinancial

Information has:Information has:

1. Predictive value1. Predictive value2. Feedback value2. Feedback value3. Timely3. Timely

RelevanceRelevance

1. Verifiable1. Verifiable2. Faithful representation2. Faithful representation3. Neutral3. Neutral

ReliabilityReliability

ComparabilityComparabilityandand

ConsistencyConsistency

2-3 Operating GuidelinesDetailed Guidelines for Solving Practical ProblemsDetailed Guidelines for Solving Practical Problems

4. Going Concern4. Going Concern

3. Time Period3. Time Period

2. Monetary Unit2. Monetary Unit

1. Economic Entity1. Economic Entity

4. Cost4. Cost

3. Full Disclosure3. Full Disclosure

2. Matching2. Matching

1. Revenue Recognition1. Revenue Recognition

MaterialityMateriality ConservatismConservatismCONSTRAINTSCONSTRAINTS

andand

ASSUMPTIONSASSUMPTIONS PRINCIPLESPRINCIPLES

2-4 Recording Business Transactions

1. Invested $8,000 in his business in exchange for common stock.2. Purchased $500 of supplies for cash.3. Purchased $4,000 of equipment on account.4. Received $3,000 cash for consulting services.5. Paid salaries of $8006. Paid the first month’s rent of $200.7. Paid $1,000 owned to a creditor.8. The corporation paid a dividend of $1,500 in cash to Sam Doty, the stockholder.

A. Review of Selected TransactionsA. Review of Selected TransactionsMr. Sam Doty opened and incorporated a hospitality consulting firm during theMr. Sam Doty opened and incorporated a hospitality consulting firm during themonth of September and provided you with the following data.month of September and provided you with the following data.

Instructions: Prepare the tabular summary for the transactions above.Instructions: Prepare the tabular summary for the transactions above.

2-4 Recording Business Transactions (continued)

Answer:Answer:Summary of TransactionsSummary of TransactionsMonth of September 2008Month of September 2008

Assets = Liabilities + Stockholders’ Equity

Trans-action Cash +

Sup-plies +

Equip-ment =

Accounts Payable +

Common Stock

Retained Earnings

(1) +$8,000 +$8,000 Investment

(2) -500 +500

(3) +$4,000 +$4,000

(4) +3,000 +3,000 Service Revenue

(5) -800 -800 Salary Expense

(6) -200 -200 Rent Expense

(7) -1,000 -1,000

(8) -1,500 -1,500 Dividends

$7,000 + $500 + $4,000 = $3,000 + $8,000 $500

2-4 Recording Business Transactions (continued)

1.1. Prepare the Income Statement and Retained Earnings Prepare the Income Statement and Retained Earnings Statement from the Stockholders’ Equity Column of Statement from the Stockholders’ Equity Column of the the Summary of TransactionsSummary of Transactions for the month of for the month of September.September.

B. Financial Statement Relationship to Transactions and BalancesB. Financial Statement Relationship to Transactions and Balances

Stockholders’ EquityStockholders’ Equity

+ $8,000 (Investment by Stockholders)+ 3,000 (Service Revenue)- 800 (Salary Expense)- 200 (Rent Expense)- 1,500 (Dividends)

$8,500

2-4 Recording Business Transactions (continued)

Sam Doty

Hospitality Consultant

Income Statement

For Month Ended September 30, 2008

Revenues

Service revenue $3,000

Expenses

Salary expense $800

Rent expense 200

Total expenses 1,000

Net income $2,000

Sam Doty

Hospitality Consultant

Retained Earnings Statement

For Month Ended September 30, 2008

Retained Earnings, September 1 $ -0-

Add: Net income 2,000

2,000

Less: Dividends $1,500

Retained Earnings, September 30 $ 500

Answer:Answer:

2-4 Recording Business Transactions (continued)

2.2. Prepare the Balance Sheet from the Month-end Prepare the Balance Sheet from the Month-end Balances of the Balances of the Summary of TransactionsSummary of Transactions..

AssetsAssets

CashCash + + SuppliesSupplies + + Equip.Equip.$7,000 + $500 + $4,000$7,000 + $500 + $4,000

LiabilitiesLiabilities Stockholders’Stockholders’EquityEquity

Accounts PayableAccounts Payable$3,000$3,000

Common StockCommon Stock$8,000$8,000

R.E.R.E.$500$500

== ++

++++

++++

====

2-4 Recording Business Transactions (continued)

Sam Doty, Hospitality ConsultantBalance Sheet

September 30, 2008Assets

Cash $ 7,000Supplies 500Equipment 4,000 Total assets $11,500

Liabilities and Stockholders’ EquityLiabilities Accounts payable $ 3,000Stockholders’ Equity Common stock 8,000 Retained earnings 500 Total liabilities & stockholders’ equity $11,500

Answer:Answer:

2-4 Recording Business Transactions (continued)

3. Prepare the Statement of Cash Flows from the Cash Column of the Summary of Transactions for the month of September.

Sam Doty, Hospitality ConsultantStatement of Cash Flows for Month Ended September 30, 2008

Cash flows from operating activities Cash receipts from customers $3,000 Cash payments for expenses 1,000 Net cash provided by operating activities $2,000Cash flows from investing activities Purchase of supplies (500) Payment for equipment (1,000) (1,500)Cash flows from financing activities Sale of common stock $8,000 Dividends paid (1,500) 6,500Net increase in cash 7,000Cash at the beginning of the period 0Cash at the end of the period $7,000

2-5 Analyzing TransactionsIdentify the various transactions indicated by the information provided:

1. CASH ACCOUNTS RECEIVABLEincreased………………….. decreased_________________

2. RENT EXPENSE CASHincreased………………….. decreased_________________

3. SUPPLIES ACCOUNTS PAYABLEincreased………………….. decreased_________________

4. EQUIPMENT CASHincreased………………….. decreased_________________

5. ACCOUNTS RECEIVABLE REVENUEincreased………………….. decreased_________________

6. DIVIDENDS CASHincreased………………….. decreased_________________

2-5 Analyzing Transactions (continued)

Continue exercise by asking students for a transaction which Continue exercise by asking students for a transaction which increases the following:increases the following: Cash, Accounts Receivable, Supplies, Equipment, Cash, Accounts Receivable, Supplies, Equipment,

Accounts Payable, Common StockAccounts Payable, Common Stock

Continue exercise by asking students for a transaction whichContinue exercise by asking students for a transaction whichdecreases the following:decreases the following: Cash, Accounts Receivable, Supplies, and Cash, Accounts Receivable, Supplies, and

Accounts PayableAccounts Payable

2-5 Analyzing Transactions (continued)

1. Collection of an accounts receivable.2. Payment of the current month’s rent.3. Purchase of supplies on account.4. Purchase of equipment for cash.5. Rendering of services for a customer on account.6. The declaration of a cash dividend.

AnswerAnswer::