Accounting for Hospitality Managers

Syllabus

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Chapter 1: Hotel Revenue Accounting

1. Revenue Centers
   a. Categories of Revenue Centers
   b. Revenue Centers and Financial Reports
   c. Minor Revenue Centers
2. Fundamental Revenue Concepts
   a. Revenue Accounts
   b. Net Revenue
   c. Gross Profit
3. Trade Discounts
4. Cash Discounts
   a. ROG
   b. EOM
   c. Transportation Charges
5. Recording Invoices and Discounts
   a. Gross Method
   b. Net Method
6. Internal Control for Food and Beverage Sales
   a. Guest Checks—Manual System
   b. Guest Checks—Automated System
   c. Debit and Credit Cards
   d. Guest Charges
   e. Accounting for Charged Tips
7. Accounting Personnel and Front Office Functions
   a. The Accounts Receivable Clerk
   b. The Cashier
   c. The Night Auditor
   d. A Summary of Front Office Accounting
   8.  Cash and Data Collection

Chapter 2: Hotel Expense Accounting

1.  Business Segmentation
2.  Financial Reporting Centers
3.  Responsibility Accounting
   a. Expenses
   b. Departmental Expense Accounting
4.  Examples of Hotel Expense Accounts
   a. Cost of Sales
   b. Payroll and Related Expenses
   c. Rooms Department Expenses
   d. F&B Department Expenses
   e. A&G Department Expenses
   f. Marketing Department Expenses
   g. Franchise Fees
   h. POM Department Expenses
   i. Utility Costs
   j. Fixed Charges
   k. Income Taxes
5. Accounting for Employee Meals
6. Accounting for Credit Card Fees
   a. Credit Card Fees on Bankcards
   b. Non-bank Credit Card Fees
7. Bad Debts
   a. Direct Write-Off Method
   b. Allowance Method                                                                                                                                  

Chapter 3: Property and Equipment Accounting

1. Acquisition Costs of Property and Equipment
   a. Land with Building to Be Demolished
   b. Land and Building for a Lump Sum
   c. Equipment Requiring Special Installation
   d. Land Improvements
   e. Building Repairs and Improvements
   f. China, Glassware, Silver, Uniforms, and Linen
2. Operating Leases and Capital Leases
3. Depreciation of Property and Equipment
   a. Straight-Line Method
   b. Declining Balance Method
   c. Sum-of-the-Years-Digits Method
   d. Comparison of Time-Factor Methods
   e. Depreciation for Partial Periods
   f. Productive-Output Method
4. Depreciation of China, Glassware, and Silver
5. Amortization of Leaseholds and Leasehold Improvements
   a. Leaseholds
   b. Leasehold Improvements
6. Sale or Disposal of Property and Equipment
7. Trade-In of Property and Equipment
   a. Exchange of Like-Kind Assets
   b. Exchange of Dissimilar Assets
   c. Tax Accounting for Exchange of Assets
8. Depreciation and Income Taxes
   a. Modified Accelerated Cost Recovery System
9. Appendix: Modified Accelerated Cost Recovery System (MACRS)

Chapter 4: Other Non-current Assets Accounting 

1. Intangible Assets
   a. Organization Costs
   b. Goodwill
   c. Franchises
   d. Trademarks and Trade names
   e. Patents
   f. Copyrights
   g. Pr-opening Expenses
   h. Liquor Licenses
2. Cash Value Intangible Assets
   a. Security Deposits
   b. Cash Surrender Value of Life Insurance

Chapter 5: Hospitality Payroll Accounting

1. The Fair Labor Standards Act (FLSA)
   a. Computing Time Worked
   b. Recording Time Worked
2. The Employer/Employee Relationship
3. Wages and Salaries
   a. Gross Pay and Net Pay
   b. Regular Pay and Overtime Pay
   c. Calculating Overtime Pay
4. Payroll Deductions
   a. Governmental Deductions
   b. Voluntary Deductions
   c. Federal Insurance Contributions Act
   d. Federal Income Tax
   e. State and City Income Tax
   f. State Temporary Disability Benefit Laws
5. Employer’s Payroll Taxes
   a. FICA Tax Imposed on Employer
   b. IRS Form 941
   c. Unemployment Taxes
   d. IRS Form 940
   e. Depositing Payroll Taxes
6. The Payroll System
   a. Employee’s Earnings Record
   b. Payroll Register
   c. Payroll Journal Entries
   d. Payroll Bank Account
   e. Computerized Payroll Applications
7. Payroll Accounting for Tipped Employees
   a. Service Charges
   b. Employee Tip Reporting
   c. FLSA Minimum Wage Rate
   d. FLSA Tip Credit
   e. Net Pay of Tipped Employees
   f. State Wage and Tip Credit Provisions
   g. Overtime Pay of Tipped Employees
8. The Eight Percent Tip Regulation
   a. Operations Affected by the Eight Percent Tip Regulation
9. Tip Shortfall Allocation Methods
   a. Gross Receipts Method
   b. Hours Worked Method
10. Appendix: Special Research Reports

Chapter 6: Hotel Departmental Statements

1. Hotel Financial Information Systems
2. The Uniform System of Accounts
3. Basic Revenue and Support Center Statement Formats
4. Presentation of Payroll Expenses
5. Example of Hotel Departmental Statements
   a. Identification and Referencing of Departmental Statements
   b. Rooms Department Income Statement
   c. Food and Beverage Department Income Statement
   d. Telecommunications Department Income Statement
   e. Schedule of Rentals and Other Income
   f. Administrative and General Department Statement
   g. Marketing Department Statement
   h. Schedule of Utility Costs
   i. Schedule of Fixed Charges
6. Income Statement
7. Uniform System of Accounts for the Lodging Industry, Tenth Revised Edition
8. Appendix: USALI Summary Operating Statements and Sample Departmental Statements

Chapter 7: Hotel Income Statements

1. Elements and Conventions
2. Hotel Income Statement Formats
   a. Net Income Is Not Cash Flow
3. The Hotel DORO’s Income Statement
   a. Internal Formats
   b. External Formats
   c. Common-Size Income Statement
   d. Comparative Income Statement
4. Statement of Retained Earnings
   a. Statement of Retained Earnings for the Hotel DORO
   b. Statement of Income and Retained Earnings for the Hotel DORO
5. Uniform Systems of Accounts for the Lodging Industry, Tenth Edition

Chapter 8: Ratio Analysis of the Income Statement

1. Ratio Analysis of the Income Statement
   a. Prior-Period Ratios
   b. Industry and Trade Association Ratios
   c. Budgeted Ratios
2. Popular Income Statement Ratios
   a. Profitability Ratios
   b. Activity Ratios
   c. Operating Ratios
   d. Occupancy Ratios
   e. Stock Valuation Ratios
3. Rooms Department Ratios
   a. Profit Margin Ration
   b. Labor Cost Percentage
   c. Average Room Rate
   d. Occupancy Percentage
   e. RevPAR
4. Food and Beverage Department Ratios
   a. Profit Margin Ration
   b. Labor Cost Percentage
   c. Food Cost Percentage
   d. Prime Cost Percentage
   e. Beverage Cost Percentage
   f. Average Food Check
   g. Average Beverage Check
   h. Average Total Check
   i. Inventory Turnover Ratio
   j. Days’ Inventory on Hand Ration
5. Hotel Ratios
   a. Profit Margin Ratio–Hotel
   b. Profit Margin Ratio–Corporation
   c. Labor Cost Percentage
   d. Return on Equity Ratio
   e. Earnings per Share Ratio
   f. Price Earnings Ratio
6. Other Income Statement Ratios
   a. Number of Times Interest Earned Ratio
7. Reference List of Ratio Formulas

Chapter 9: Hotel Balance Sheets

1. Elements and Conventions
2. Assets
   a. Current Assets
   b. Non-current Assets
3. Liabilities
   a. Current Liabilities
   b. Long-Term Liabilities
4. Equity
5. Hotel Balance Sheet Formats
6. The Hotel DORO’s Balance Sheet
   a. Common-Size Balance Sheet
   b. Comparative Balance Sheet
7. The Statement of Retained Earnings

Chapter 10: Ratio Analysis of the Balance Sheet

1. Ratio Analysis of the Balance Sheet
   a. Liquidity
   b. Asset Management
   c. Debt Management
2. Ratio Analysis of the Hotel DORO’s Balance Sheet
3. Current Ratio
   a. Bank Standard
   b. Composition
4. Quick Ratio
   a. Bank Standard
5. Accounts Receivable Turnover Ratio
6. Average Collection Period Ratio
7. Inventory Turnover Ratio
8. Fixed Asset Turnover Ratio
9. Debt-to-Equity Ratio
10. Assets-to-Liabilities Ratio
11. Working Capital
    a. Computation of Working Capital
    b. Composition of Working Capital
    c. The Importance of Adequate Working Capital
    d. Causes of Inadequate Working Capital
    e. Causes of Excess Working Capital
    f. Factors Affecting Working Capital Requirements
12. Requirements Reference List of Ratio Formulas

Chapter 11: Statement of Cash Flows

1. The Purpose of the Statement of Cash Flows
2. Cash and Cash Equivalents
3. Format of the Statement of Cash Flows
4. Income from Operating Activities
   a. Marketable Securities
5. Cash Flow from Operating Activities
   a. Direct Method
   b. Indirect Method
6. Investing Activities
7. Financing Activities
8. Footnotes and Disclosures
   a. Income Taxes and Interest Paid
   b. Accounting Policy Regarding Cash
9. Non cash Investing and Financing Transactions
10. Demonstration Problem
    a. Preparing the Operating Activities Section
    b. Preparing the Investing Activities Section
    c. Preparing the Financing Activities Section
    d. Computing the Ending Cash Balance
    e. Preparing the Footnotes and Disclosures
11. Appendix: Additional Preparation Information

Chapter 12: Interim and Annual Reports

1. Role of the Independent Certified Public Accountant
2. Audit Service
   a. Purpose of an Audit
   b. Scope of an Audit
   c. Auditor’s Report
3. Review Service
   a. Purpose of a Review
   b. Scope of a Review
   c. Review Report
4. Compilation Services
   a. Purpose of a Compilation
   b. Scope of a Compilation
   c. Compilation Report
5. Consolidated Financial Statements
   a. Minority Interest
   b. Purpose of Consolidated Financial Statements
   c. Inter-company Transactions
   d. Investment in Subsidiary Account
   e. Consolidated Worksheet
6. Governmental Authority on Reporting by Public Companies
   a. The SEC
   b. The Sarbanes-Oxley Act of 2002
   c. The 10-K Report
7. Annual Report to Shareholders
   a. Letter to the Shareholders
   b. Financial Statements
   c. Notes to the Financial Statements
   d. Management Assessment of Internal Controls
   e. Report of Independent Public Accountants
   f. Certification of the Annual Report by Company Executives
   g. How to Read an Annual Report
   h. Financial Statements in an Annual Report
   i. Conclusion of an Annual Report
   j. Investor Relations Department

Chapter 13: Budgeting Expenses

1. Responsibility Accounting
2. Action Traits of Expenses
3. Variable Expenses
   a. Strategies for Budgeting Variable Expenses
4. Fixed Expenses
5. Semi-Variable Expenses
   a. High-Low Method
   b. Regression Analysis Method
6. Break even Point
7. Contribution Margin
8. Profit Target
9. Effects of Volume and Price Increases
10. Appendix: Regression Analysis

Chapter 14: Forecasting Sales

1. Revenue Elements
   a. Sales Forecasting Methods
2. Moving Average Method
3. Percentage Method
4. Statistical Models
   a. Rooms Revenue Statistical Model
   b. Food Revenue Statistical Model
   c. Beverage Revenue Statistical Model
   d. Average Room Rate
   e. Contribution Margin
   f. Sales Mix
5. CVP Analysis
   a. Forecasting Sales Dollars
   b. Forecasting Sales Units
   c. Income Tax Considerations
   d. Forecasting Without Financial Statements

Chapter 15: Budgetary Reporting and Analysis

1. Budget Planning and Preparation
   a. Budgeting Fixed Costs
2. Budget Reports
   a. Budget Variances
3. Master and Flexible Budgets
4. Variance Analysis
   a. Manager’s Budgetary Working Papers
   b. Analyzing Variances to Ascertain Causes
5. Capital Budgeting Synopsis

Chapter 16: Financial Decision Making

1. Off-Season Analysis
   a. Quantitative Analysis
   b. Qualitative Considerations
2. Acquiring a Business
   a. Qualitative Considerations
   b. Covenant Not to Compete
   c. Using the Seller’s Financial statements
   d. Seller’s Legal Form of Organization
   e. Seller’s Salary Versus Buyer’s Needs
   f. Family-Operated Businesses
   g. The Impact of Financing on Profits and Cash Flow
   h. Selecting an Enterprise to Buy
3. Buying a Franchise
4. Leasing
   a. Leasing Realty
   b. Leasing Automobiles
5. Capital Budgeting
   a. Average Rate of Return
   b. Payback Method

Chapter 17: Cash Management and Planning

1. Cash, Cash Flow, and Profit
2. Cash Management
   a. Developing Cash Management Data
   b. Cash Budget Demonstration
3. Cash Management Tools
   a. Cash Float
   b. Lock box System
   c. Management of Excess Funds
4. Misleading Measures of Cash Flow
   a. EBITDA
   b. Free Cash Flow

Chapter 18: Casino Accounting

1. A Brief History
   a. Gaming Associations
   b. Today’s Casinos and Racinos
2. Casino Games
   a. Baccarat
   b. Blackjack
   c. Craps
   d. Keno
   e. Roulette
   f. Slot Machines
3. Principles of Casino Accounting and Internal Control
   a. Markers and Foreign Chips
   b. Cage Cashiering Controls
   c. Slot Machine Controls
   d. Table Game Controls
   e. Count Room Controls
   f. Vault Controls
   g. Handle, Win, and Drop
4. Principles of Casino Financial Accounting
   a. Gaming Revenue
   b. Financial Statements
   c. Complimentary Items and Allowances
   d. Payroll and Other Expenses

Chapter 19: Inventory Accounting

1. The Importance of Inventory Valuation
2. The Gross Profit Method
3. Approaches to Inventory Valuation
4. The Specific Identification Approach to Inventory Valuation
   a. The Specific Identification Perpetual Method
   b. The Specific Identification Periodic Method
5. The FIFO Approach to Inventory Valuation
   a. The FIFO Perpetual Method
   b. The FIFO Periodic Method
6. The LIFO Approach to Inventory Valuation
   a. The LIFO Perpetual Method
   b. The LIFO Periodic Method
7. The Weighted Average Approach to Inventory Valuation
   a. The Weighted Average Perpetual Method
   b. The Weighted Average Periodic Method
8. A Comparison of Cost Allocation Methods
9. LIFO Analyzed

Chapter 20: Assorted Topics

1. Feasibility Study
   a. Feasibility Study Format
2. Allocating Service Centers and Fixed Charges
   a. Bases for Allocation
3. Fair Value Accounting
   a. Measurement of Fair Value
   b. Transition Adjustment
   c. Limitations of Fair Value Accounting
4. Compound Value
5. Present Value
6. Compound and Present Values with Annuities