Cover
Title Page
Copyright
About the Authors
Contents
Preface
1 Hospitality Industry Accounting
Unique Aspects of the Hospitality Industry
The Purpose of Accounting in the Hospitality Industry
Branches of Accounting
Financial Accounting
Cost Accounting
Tax Accounting
Auditing
Managerial Accounting
Why Hospitality Managers Use Managerial Accounting
The Uniform System of Accounts
Uniform System of Accounts for the Lodging Industry (USALI)
Uniform System of Accounts for Restaurants (USAR)
Uniform System of Financial Reporting for Clubs (USFRC)
Ethics and Hospitality Accounting
Ethical Analysis
Apply What You Have Learned
Key Terms and Concepts
Test Your Skills
2 Accounting Fundamentals Review
Bookkeeping and Accounting
The Accounting Equation
Recording Changes to the Accounting Equation
Double‐Entry Accounting
The Journal and General Ledger
Credits and Debits
Generally Accepted Accounting Principles
The Distinct Business Entity Principle
The Going Concern Principle
The Monetary Unit Principle
The Time Period Principle
The Cost Principle
The Consistency Principle
The Matching Principle
The Materiality Principle
The Objectivity Principle
The Conservatism Principle
The Full Disclosure Principle
The Hospitality Business Cycle
Apply What You Have Learned
Key Terms and Concepts
Test Your Skills
3 The Income Statement
The Purpose of the Income Statement
Owners
Investors
Lenders
Creditors
Managers
Income Statement Preparation
Format
Accounting Period
Revenue Data
Expense Data
Schedules
Income Statement Analysis
Revenue Analysis
Expense Analysis
Profit (Loss) Analysis
Vertical Analysis
Horizontal Analysis
Assessing Revenue Variance
Assessing Expense Variance
Assessing Profit Variance
Apply What You Have Learned
Key Terms and Concepts
Test Your Skills
4 The Balance Sheet
The Purpose of a Balance Sheet
Owners
Investors
Lenders
Creditors
Managers
Limitations of the Balance Sheet
Balance Sheet Formats
Balance Sheet Contents
Components of the Balance Sheet
Assets
Liabilities
Owners’ Equity
Balance Sheet Analysis
Vertical Analysis of Balance Sheets
Horizontal Analysis of Balance Sheets
Determining Variance
Inflation Accounting
Apply What You Have Learned
Key Terms and Concepts
Test Your Skills
5 The Statement of Cash Flows
Understanding Cash Flows
The Purpose of the Statement of Cash Flows (SCF)
Sources and Uses of Funds
Creating the Statement of Cash Flows
Cash Flow from Operating Activities
Cash Flow from Investing Activities
Cash Flow from Financing Activities
Net Changes in Cash
Supplementary Schedules
Statement of Cash Flows Analysis
Apply What You Have Learned
Key Terms and Concepts
Test Your Skills
6 Ratio Analysis
Purpose and Value of Ratios
Value of Ratios to Stakeholders
Types of Ratios
Liquidity Ratios
Solvency Ratios
Activity Ratios
Profitability Ratios
Investor Ratios
Hospitality‐Specific Ratios
Comparative Analysis of Ratios
Ratio Analysis Limitations
Apply What You Have Learned
Key Terms and Concepts
Test Your Skills
7 Food and Beverage Pricing
Factors Affecting Menu Pricing
Factors Influencing Menu Price
Assigning Menu Prices
Marketing Approaches to Pricing
Cost Approaches to Pricing
Menu Price Analysis
Matrix Analysis
Goal Value Analysis
Apply What You Have Learned
Key Terms and Concepts
Test Your Skills
8 Revenue Management for Hotels
Establishing Room Rates
The Hubbart Room Rate Formula
The $1.00 per $1,000 Rule
Alternative Room Rate Methodologies
Web‐Influenced Room Rate Methodologies
Revenue Management
Occupancy Percentage
Average Daily Rate (ADR)
Net ADR Yield
Flow‐Through
Gross Operating Profit per Available Room (GOPPAR)
Non‐Room Revenue
Food and Beverage Revenue
Telecommunications Revenue and Expense
Apply What You Have Learned
Key Terms and Concepts
Test Your Skills
9 Managerial Accounting for Costs
The Concept of Cost
Types of Costs
Fixed and Variable Costs
Mixed Costs
Step Costs
Direct and Indirect (Overhead) Costs
Controllable and Non‐Controllable Costs
Other Cost Types
Cost/Volume/Profit Analysis
Computation of Cost/Volume/Profit Analysis
Margin of Safety
Minimum Sales Point
Apply What You Have Learned
Key Terms and Concepts
Test Your Skills
10 Forecasting in the Hospitality Industry
The Importance of Accurate Forecasts
Forecast Methodology
Forecasting Restaurant Revenues
Forecasting Future Revenues
Forecasting Future Guest Counts
Forecasting Future Average Sales per Guest
Forecasting Hotel Revenues
Utilizing Trend Lines in Forecasting
Apply What You Have Learned
Key Terms and Concepts
Test Your Skills
11 Budgeting and Internal Controls
Importance of Budgets
Types of Budgets
Length
Purpose
Operations Budget Essentials
Prior‐Period Operating Results
Assumptions about the Next Period’s Operations
Knowledge of the Organization’s Financial Objectives
Developing an Operations Budget
Budgeting Revenues
Budgeting Expenses
Monitoring an Operations Budget
Revenues
Expenses
Profit
Variances
Budget Modifications
Cash Budgeting
Cash and Accounts Receivable Activities
Cash and Accounts Payable (AP) Activities
Cash Receipts/Disbursements Approach to Cash Budgeting
Managing Budgets through Internal Control
Management’s Concern for Assets
Accurate Data Collection and Comparison to Written Standards
Separation of Responsibilities
Cost Effectiveness
Regular External Review
Apply What You Have Learned
Key Terms and Concepts
Test Your Skills
12 Capital Investment, Leasing, and Taxation
Capital Budgeting
Establish a Business
Expand a Business (Increase Revenues)
Increase Efficiency (Reduce Expenses)
Comply with the Law
Capital Investment
Time Value of Money
Rates of Return
Capitalization Rates
Financing Alternatives
Debt Versus Equity Financing
Lease Versus Buy Decisions
Capital Versus Operating Leases
Taxation
Income Taxes
Capital Gains Taxes
Property Taxes
Other Hospitality Industry Taxes
Modified Accelerated Cost Recovery System (MACRS)
The Internal Revenue Service (IRS)
Apply What You Have Learned
Key Terms and Concepts
Test Your Skills
Index
EULA