Hospitality Industry Financial Accounting

Syllabus

---

Chapter 1: Introduction to Accounting

1. Accounting Defined
   a. Bookkeeping Versus Accounting
2. Branches of Accounting
3. Organizations Influencing Accounting
4. Forms of Business Organization
   a. Sole Proprietorship
   b. Partnerships
   c. Limited Partnerships
   d. Limited Liability Companies
   e. Corporations
   f. S Corporations
5. The Accounting Function in the Hospitality Industry
6. Principles of Accounting
   a. Cost
   b. Business Entity
   c. Continuity of the Business Unit (Going Concern)
   d. Unit of Measurement
   e. Objective Evidence
   f. Full Disclosure
   g. Consistency
   h. Matching
   i. Conservatism
   j. Materiality
   k. Revenue Recognition
7. Overview of Financial Statements
   a. Balance Sheet
   b. Income Statement
   c. Statement of Cash Flows
8. Cash Versus Accrual Accounting
9. The Fundamental Accounting
   a. Equation Effects of Transactions on the Accounting Equation

Chapter 2: Accounting for Business Transactions

1. Accounts
   a. Asset Accounts
   b. Liability Accounts
   c. Owners’ Equity Accounts
2. Debit and Credit
   a. Mechanics of Double-Entry Accounting
   b. Recording Changes in Assets, Liabilities, and Owners’ Equity
   c. Recording Changes in Revenues and Expenses
   d. Recording Owner’s Withdrawals
   e. Determining Account Balances
   f. Normal Balances
3. General Ledger
4. Journalizing
   a. Standard Account Forms
   b. Posting
   c. The Trial Balance
   d. Compound Journal Entries
5. Comprehensive Illustration—Journalizing, Posting, and Preparing a Trial Balance

Chapter 3: Accounting Adjustments

1. The Need for Adjustments
2. Cash Versus Accrual Accounting
3. Classification of Adjusting Entries
4. Deferral Adjustments Illustrated
   a. Prepaid Insurance/Insurance Expense
   b. Depreciation Expense
   c. Unearned Revenues
5. Accrual Adjustments Illustrated
   a. Accrued Wages Payable
   b. Accrued Utilities
   c. Accrued Assets
6. Failure to Prepare Adjustments
7. Comprehensive Illustration—Adjustments

Chapter 4: Completing the Accounting Cycle

1. The Accounting Cycle
   a. Adjusted Trial Balance
   b. Preparation of Financial Statements
   c. Closing Entries
   d. Post-Closing Trial Balance
2. The Worksheet
3. Reversing Entries
4. Comprehensive Illustration—Completing the Accounting Cycle

Chapter 5: Income Statement

1. Major Elements of the Income Statement
2. Relationship with the Balance Sheet
3. Sales
4. Cost of Goods Sold
5. Expenses
6. Gains and Losses
7. Income Taxes
8. Extraordinary Items
9. Earnings per Share
10. Income Statements for Internal and External Users
11. Uniform System of Accounts Internal Income Statements—A Contribution Approach
    a. Contents of the Summary Operating Statement
12. Departmental Statements
13. Uniform System of Accounts for Restaurants
14. Statement of Retained Earnings

Chapter 6: Balance Sheet

1. Purposes of the Balance Sheet
2. Limitations of the Balance Sheet
3. Balance Sheet Formats
4. Content of the Balance Sheet
   a. Current Accounts
   b. Non current Receivables
   c. Investments
   d. Property and Equipment
   e. Other Assets
   f. Long-Term Liabilities                                                                   g. Owners’ Equity
   h. Footnotes
   i. Consolidated Financial Statements

Chapter 7: Specialized Journal and Subsidiary Ledgers

1. Control Accounts and Subsidiary Ledgers
2. Specialized Journals
   a. Sales Journal
   b. Cash Receipts Journal
   c. Purchases Journal
   d. Cash Disbursements Journal
3. General Ledger
4. General Journal
5. Payroll Journal
6. Specialized Journals for Lodging Operations
7. Computerized Systems
   a. Hardware
   b. Software
   c. Hotel Computer Systems

Chapter 8: Cash

1. Internal Control of Cash
2. Voucher System
   a. Preparation of a Voucher
3. Petty Cash
4. Bank Reconciliation
   a. Preparing a Bank Reconciliation
   b. Illustration of a Bank Reconciliation
5. Gross Method of Recording Purchases
6. Net Method of Recording Purchases
7. Credit Card Sales
8. Integrated Cash Management for Multi-Unit Operations

Chapter 9: Receivables and Payables

1. Uncollectible Accounts Expense (Bad Debts)
   a. Direct Write-Off Method
   b. Allowance Method
2. Notes Receivable
   a. Interest-Bearing Notes
3. Notes Payable
   a. Non-Interest-Bearing Notes

Chapter 10: Inventory

1. Periodic Versus Perpetual Inventory Systems
   a. Taking a Physical Inventory
   b. Consigned Goods
   c. Transportation Costs
2. Inventory Valuation Methods
   a. Comparison and Evaluation of Inventory Valuation Methods
3. Estimating Ending Inventory and Cost of Goods Sold
   a. The Retail Method
   b. The Gross Profit Method
4. Lower of Cost or Market
5. Perpetual Inventory System

Chapter 11: Property, Equipment, and Other Assets

1. Property and Equipment
   a. Lump Sum Purchase
   b. Depreciation
2. Intangible Assets
3. Other Assets

Chapter 12: Current Liabilities and Payroll

1. Notes Payable
2. Accounting for Payroll-Related Liabilities
   a. Payroll Records
   b. Regular Pay and Overtime Pay
   c. Payroll Journal Entries
   d. Reporting Tips
3. Other Current Liabilities
   a. Property Taxes

Chapter 13: Partnerships

1. Advantages of Partnerships
   a. Ease of Formation
   b. No Partnership Taxes
   c. Synergy
2. Disadvantages of Partnerships
   a. Limited Life
   b. Mutual Agency
   c. Unlimited Liability
3. General Versus Limited Partnerships
4. Partners’ Capital and Drawing Accounts
5. Formation of a Partnership
   a. Division of Income
6. Admission of a New Partner
7. Withdrawal of a Partner
8. Liquidation of a Partnership

Chapter 14: Corporate Accounting

1. Financial Statements
2. Advantages and Disadvantages of the Corporation
3. Taxes
4. Organizational Structure
5. Forming a Corporation
6. Common Stock
7. Dividends
8. Retained Earnings
9. Stock Subscription Plan
10. Preferred Stock
11. Cash Dividends Compared to Stock Dividends
12. Stock Splits
13. Treasury Stock
14. Book Value per Share of Common Stock
    a. Book Value Versus Market Value per Share

Chapter 15: Bonds, Leases, and Mortgages Payable

1. Disadvantages and Advantages of Bond Financing
   a. Disadvantages of Bond Financing
   b. Advantages of Bond Financing
2. Classifying Bonds
3. Other Features of Bonds
4. Journal Entries for Issuance of Bonds
   a. Sold Between Interest Payment Dates
5. Market Value Versus Face Value
   a. Bonds Issued at a Discount
   b. Bonds Issued at a Premium
6. Year-End Adjusting Entries for Bonds Payable
7. Effective Interest Rate Method of Bond Amortization
8. Bond Sinking Fund
9. Convertible Bonds
10. Retirement of Bonds
11. Leases
12. Pensions
13. Mortgages Payable

Chapter 16: Investments in Corporate Securities

1. Accounting for Investments
   a. Investments in Debt Securities
   b. Short-Term Equity Investments
   c. Long-Term Equity Investments
2. Valuation of Investments
   a. Held-to-Maturity Securities
   b. Trading Securities
   c. Available-for-Sale Securities

Chapter 17: Statement of Cash Flows

1. The Purpose of the Statement of Cash Flows
2. Classification of Cash Flows
3. Conversion of Accrual Income to Net Cash Flows from Operations
   a. Direct and Indirect Methods
4. Preparing the SCF
   a. Step 1: Determining Net Cash Flows from Operating Activities
   b. Step 2: Determining Net Cash Flows from Investing Activities
   c. Step 3: Determining Net Cash Flows from Financing Activities
   d. Step 4: Presenting Cash Flows by Activity on the SCF
   e. Interpreting the Results
5. Accounting for Other Transactions

Chapter 18: Analysis and Interpretation of Financial Statements

1. Analysis of Financial Statements
2. Horizontal Analysis
3. Vertical Analysis
4. Trend Analysis
5. Ratio Analysis
   a. Ratio Standards
   b. Purposes of Ratio Analysis
   c. Average Versus Ending Value
   d. Classes of Ratios
6. Liquidity Ratios
   a. Current Ratio
   b. Acid-Test Ratio
   c. Operating Cash Flows to Current Liabilities Ratio
   d. Accounts Receivable Turnover
   e. Average Collection Period
7. Solvency Ratios
   a. Debt-Equity Ratio
   b. Long-Term Debt to Total Capitalization Ratio
   c. Debt Service Coverage Ratio
   d. Number of Times Interest Earned Ratio
   e. Fixed Charge Coverage Ratio
   f. Operating Cash Flows to Total Liabilities Ratio
8. Activity Ratios
   a. Inventory Turnover
   b. Property and Equipment Turnover
   c. Asset Turnover
   d. Paid Occupancy Percentage and Seat Turnover
   e. Complimentary Occupancy
   f. Occupancy Percentage
   g. Average Occupancy per Room
   h. Multiple Occupancy
9. Profitability Ratios
   a. Profit Margin
   b. Gross Operating Profit Margin Ratio
   c. Gross Operating Profit per Available Room
   d. EBITD A Margin Ratio
   e. Return on Assets
   f. Return on Owners’Equity
   g. Earnings per Share
   h. Price Earnings Ratio
   i. Viewpoints Regarding Profitability Ratios
10. Operating Ratios
    a. Mix of Sales
    b. Average Daily Rate
    c. Revenue per Available Room
    d. Average Food Service Check
    e. Food Cost Percentage
    f. Beverage Cost Percentage
    g. Labor Cost Percentage
    h. Limitations of Ratio Analysis